Cheap drugs: generic pharmaceutical manufacturers face stricter standards. (Spotlight).

It looks like Dr. Simi's days are numbered. The peddler of discount drugs is facing a mounting campaign from the trade association backed by big transnational drug companies. They want to convince the public that the dancing doctor's drugs are dubious.

Dr. Simi is the moustachioed mascot of Farmacias de Similares, a rapidly growing chain of drugstores that offers generic drugs at rock bottom prices. But besides the mudslinging campaign launched by the Mexican Association of Pharmaceutical Research Industries (AMIIF), the chain also faces fines and legal challenges from the government's consumer protection agency and the Mexican Institute of Intellectual Property over Farmacias de Similares slogan, "The same, but cheaper."

Due to loopholes in Mexican regulations, generic drugs can be marketed without proving, either clinically or in the laboratory, that they work the same as the original drugs they copy. In the United States and Europe, generic drugs must show they are as effective as patented originals. But in Mexico, regulation allows a distinction between "interchangeable generics," which have been proven to work the same as originals, and a host of drugs marketed as "generic," "similar," or "equivalent." While the active ingredient is the same, there may be different additives than the original, and they may never have been proved to work the same. Hence Farmacias de Similares current legal jam: Their drugs aren't the same, they're just similar.

"Farmacias de Similares claim is like saying that all that matters in a lemon Popsicle is the lemon flavor. It doesn't matter if the water was purified or if it was made in a clean plant," said AMIIF Executive Director Rafael Gual.

The dispute surrounding Farmacias de Similares is part of a movement that promises to shake up the nation's pharmaceutical industry for good.

The Health Secretariat is driving to push Mexico's regulatory standards up to the level of developed countries. A federal commission formed last year has been given a mandate to monitor the quality of food and drugs, similar to the U.S. Food and Drug Administration. In June, the public health sector--composed of the various government social security agencies--committed itself to purchasing generics that have demonstrated their equivalency to brand names. And on the drawing table is a project that would require the entire industry to re-certify all licensed drugs under new standards.

"It will have a huge effect. The entire industry is going to have to change, and those that don't could disappear," said Gual.

The drive to improve the quality of regulation also has been pushed by a rapidly globalizing market, as drugs and raw materials have begun to arrive from as far away as Asia. Better quality standards also will help domestic generic manufactures that are trying to increase Mexico's small but growing exports to other Latin American nations, as well as Africa and Asia.

"Mexico has all the elements to become a world-wide export power," said Dr. Jesus Ruiz Rosillo, the director of medical and regulatory affairs at the French-owned Sanofi-Synthelabo. But, he says, raising quality standards must come first.

Mexico's drug industry has been growing rapidly, moving up in 2001 to rival Brazil as Latin America's largest market. Valued at US$8.5 billion, Mexico's drug market is divided between the public and private sectors. While unit sales in the two camps are almost equal, the private sector, which buys expensive patented brands, spends almost seven times as much as the public sector, which buys mostly cheap, domestically produced generics.

The 27 international drug companies that belong to AMIIF, like Novartis, Bayer, and GlaxoSmithKline, are the leaders in terms of total sales and dominate the market in private pharmacies, but fierce competition between companies has ensured that no one holds more than 8% of the market's value.

Meanwhile, the hundreds of smaller domestic manufacturers focus on sales to the public sector. The government's recent commitment to buying only generics certified to be interchangeable with the originals will give a big boost to generic manufacturers that have already met international requirements, said Jorge Lanzagorta, director of the National Chamber of the Pharmaceutical Industry (Canifarma).

But if the Health Secretariat's wider plan to require re-certification of all generics passes, other manufactures will be in for a fight.

Victor Gonzalez Tones, owner of Farmacias de Similares and its main supplier Laboratorios Best, insists his companies' products meet health standards and that the new regulations are unnecessary.

"We just want to sell cheap drugs, we don't want to fight," said Gonza1ez, who is confident his chain will soon be the biggest nationwide. "In the future, millions of Mexicans will look at Dr. Simi as the savior of their pocketbooks."

Michael O'Boyle is a freelance writer and a finance reporter far a Mexico City daily.