Cure-all: Investment in chemicals and pharmaceuticals has grown since being named a strategic sector

Of all the sectors deemed as strategic for Hidalgo’s economic development, chemicals and pharmaceuticals are perhaps the least explored territory. Unlike the well-known centres of Guadalajara and Cuernavaca, Hidalgo did not have any pharmaceutical laboratories, for example, when the current government took office in 2016.

But the state’s ambitions to develop the sector may not be as unlikely as they first seem. “The keys to the pharmaceuticals sector are logistics and human capital,” José Luis Romo Cruz, Hidalgo’s secretary of economic development, told OBG. “We can offer firms in the business the logistical infrastructure to access one of the largest markets on the planet, as well as competitive advantages for exports.”

Incoming

There has been growing investment since the government made the sector a priority. Mexican company Sifatec began operations in the state in 2010 at the Tula industrial park from which it manufactures, commercialises and exports agro-chemical and chemical products, as well as laboratory equipment. In May 2017 the firm announced an MXN80m ($4.3m) expansion of its facility.

The largest investment has come from Quimpharma, the Mexican laboratory, which is investing MXN102m ($5.5m) in a new facility to produce pharmaceutical products and dietary supplements, promising some 300 jobs.

Chemical gas producer Criogas, meanwhile, is slated to begin operations at the new Platah industrial park in the second half of 2018 – after a MXN35m ($1.9m) investment that will create 39 jobs. Criogas will be joined in Platah by fellow domestic chemicals company, Cinética Química, which is also due to begin operations in the second half of 2018 on the back of a MXN50m ($2.7m) investment that could create 35 jobs. Cinética works in water treatment, the paper segment and cosmetics. Also in Platah is Farcomer, which is investing MXN30m ($1.6m) in a factory producing packaging for pharmaceutical products via its new subsidiary, Gamex Pack.

Logistical Advantages

The clustering of companies in the sector in Platah, which the state government is promoting as Mexico’s new industrial hub, points clearly to Hidalgo’s principal advantage for chemical-pharmaceutical companies: logistics.

Platah is five minutes from both the Mexico City-Pachuca motorway and the Arco Norte ( Northern Arc) – the ring road for the Mexico City metropolitan area. Just as proximity to the country’s capital gives companies easy access to a large consumer market, the Arco Norte’s connections to major national motorways makes Platah a sensible place to distribute across the country. Furthermore, at its westward end, the Arco Norte becomes a motorway to Guadalajara, where many laboratories are found.

In the case of Farcomer, Hidalgo’s location was the top advantage when the firm, which is mainly dedicated to distributing medicine across Mexico, saw an opportunity in the medical packaging segment.

“Being in Hidalgo allows us to secure a large enough piece of land with excellent road connections,” Deni Abonza, chief legal officer at Farcomer, told OBG. “From here we can easily reach north, south, east or west of Mexico.”

Winning Climate

Hidalgo also offers pharmaceutical firms an ideal climate in which to operate – both in terms of the weather and the business environment. “The state government was very supportive with the paperwork and logistics,” Abonza told OBG.

The state’s mild climate is ideal for pharmaceutical companies which must meet certain international standards with regards to, among other things, temperature. With average temperatures between 12°C and 17°C, depending on the season, Pachuca is an ideal location, offering a clear advantage over the southern and northern states of Mexico, which can be much hotter, and helping to support development.