Medmex, S.A. de C.V. is a joint venture founded in 1993 between Medical Supply Co. and Equipos para la Salud, S.A. Medical Supply Co is a Canadian company based in Toronto, Canada. The company is specializes in the manufacture of blood analysis equipment and instruments for the medical industry. The company’s sales for 1993 were $250 million USD. This figure has beensteady over the past five years. Equipment for blood analysis can vary from sophisticated large equipment for all types of blood analysis to small equipment. Large and sophisticated equipment is usually expensive compared to more basic models and is targeted for large hospital and laboratories that require handling various tests at the same time. Other type of equipment consists of smaller blood testanalyzers targeted to smaller hospital, clinics, and laboratories at lower prices. This type of unit can manage only one test at a time, but can perform a wide variety of analysis. Instrumentality varies from instruments for blood analysis to other surgical type tools. The company has been exporting since the mid 1980s mainly to Mexico and the U.S.
Equipos Para la Salud is a Mexican companybased in Monterrey, Mexico that specializes in the distribution and manufacture of medical instruments and equipment. Actually the company only manufactures surgical instruments and clothes used at hospitals. However, given their distribution capabilities they distribute a variety of medical equipment. Since 1989, Equipos Para la Salud has distributed equipment from Medical Supplies. Additionally thecompany, whose sales are $60 million USD, has experienced occasional exports to Central America. However, there has not been a total managerial engagement in this type of activities. That is, management has not focused on exports and they only respond to some spontaneous orders.
In 1992, Ron Davis, president of Medical Supplies, and Humberto Villarreal, managing director for Equipos para laSalud initiated negotiations for investing in a new company that could manufacture one of the product lines of Medical Supplies. Mr. Villarreal represent a group of venture capitalists who want to expand their business horizons given the economic growth Mexico was experiencing under President Salinas’s administration. Aditionally, Mr. Davis envisioned the possibility of manufacturing in Mexico;reducing costs and gaining advantage of the recently signed North America Free Trade Agreement (NAFTA) and the treaties Mexico has with other countries, In 1990, Mexico reached an agreement with Chile with a tariff reduction schedule that will eliminate tariffs between the two countries in 1999. Additionally, Mexico signed agreements with Colombia, Venezuela, Ecuador, and maintains good tradingrelationship with Argentina and Brazil due to Mexico’s membership in ALADI. Equipos para la Salud also offers strategic advantages that are important to Mr. Davis. In a country, and region, where business relationships and contacts are essential for successful business deals, Mr. Villarreal and the group of investors have developed relationship with the main Hospitals in the country. In addition, someof the board members for Equipos para la Salud are in fact prestigious doctors with experience in the field and good contacts.
In October 1993 the deal for the joint venture was Mr. Villarreal became the CEO for Medmex and Mr. Davis the president of the Board. Medical Supply shifts the manufacture for the MDBT –series 230 to Mexico while providing technology and training for Mexican workers.The MDBT-230 is a small blood analyzer with a computerized system that allows for a wide variety of tests. Its size and price make it affordable for the small clinics and labs. The price of this type of products varies from $9,000 USD to $13,000 USD, and in its size is no larger that a personal photocopier. Given the economic limitations of most developing countries and the growing government...