Interview: A.A. Santillana, Group Chairman & CEO, SV More, Philippines

The Chairman & CEO of SV More speaks about the path that led him to found

the company nearly three decades ago, what changes need to be made in

the future in order to maintain the current success of the company, and what

aspect of his company makes him the proudest.

 

What motivated you to become the founder of SV More in the 1980s?

I first joined the pharmaceutical industry in 1971. For seven years, I worked in a

multinational company as a marketing representative, up till the highest position in that

company. I left in 1978 and moved into entrepreneurship.

Many of my previous colleagues enjoyed their stay with an MNC but when they finally

retired, they started to realize that they had merely been employees rather than owners.

It came to my mind that I would have to put up my own company, which led to the birth

of SV More in 1986.

Since 1986, we have grown from 11 people to close to 400 today. Having finished our

first journey of 25 years, we have started looking into the rapid changes we need to

make to enter our next quarter of a century of existence. We are preparing for the next

journey, where my two sons along with the Company’s senior managers, will be taking

over the management of the company in two to three years from now.

What makes you the most proud of these first 25 years?

We have been helping young and intelligent Filipinos in realizing their dreams of

becoming a doctor. Already, we have supported 33 doctors in a combination of full-time

scholars and those who subspecialize in specific fields. We have provided them with

grants. We played a role in the financial and economic support of these doctors, among

other initiatives we have undertaken.

One of your mottos is ‘The Filipino Talent is worth the Investment in … Gold!’

What is so special about Filipinos?

Filipinos are known to be hard-working people with core values such as honesty and

integrity. We want to develop these values further by working with them. They believe in

what they can do, and we help them nurture what they believe in.

We do not ask them to work for us when they become doctors, but ask them instead to

find someone they can help. Once their practice grows and as they become wealthier,

they pay society back by sending new people to school.

SV More Group of Companies has grown rapidly in just 25 years. Can you

elaborate on today’s structure of the group?

We started with one company only, and put up another two years later. These three

main companies have their own subsidiaries. The main purpose of such structure is to

decentralize control from Metro Manila to the provinces. We find it very effective to

transform, or convert, our key people into actual shareholders of these companies.

Thirty percent of the equity has been transferred to our staff. For every ten million pesos

the subsidiary owns, they thus receive three million pesos. As a result, they will retire as

owners rather than employees. We implemented that system after roughly five years of

operations. We had to put this system in place to reward deserving employees too, and

to ensure that they would stay with us in the future. You have to take good care of them.

This system has helped us send some of the children of our very poor employees to

school. Our driver, for example, has a daughter who is a pharmacist now. He would not

have been able to do this without our support. Our love for our people makes us one of

the proudest and successful companies in the industry.

As an industry veteran you must have seen quite some changes in the market

environment. How do you compare the 1980s to today?

Except for the number of players, I have in fact not observed that many changes. We

still consider the prescription market as our top priority. We consider this to be the most

stable and healthiest sector to grow. There may be too many generics companies

already now, so we do not want to enter that business.

How difficult was it for you to establish your name in the market?

We had to develop the demand for our products. Apart from that, we needed the right

people to represent us as our ambassadors in the market place. If we are properly

represented, market the right products and have the right price and positioning, the rest

follows.

In addition to that, we need to focus on continuously improving the quality of our

products as well as their packaging.

We are one of the few companies that decided to have its own buildings nationwide. We

now have one in Davao and two in the Visayas aside from our main headquarters in

Metro Manila.

The Philippines is a pharmaceutical market where you can find medicines of both

high quality and very poor quality. As for local manufacturers, how do you look at

quality?

First of all, we have to be careful in choosing who we work with. Hizon Laboratories and

Lloyd Laboratories are world-class manufacturers. If you work with foreign

manufacturers, you have to carefully select to ensure that they work according to quality

standards. In India, for example, there are bad manufacturers in the region but also

many very good ones. We are prepared to take on South Korean manufacturers, which

can be among the best.

Why, after all these years, have you not decided to manufacture yourself?

We are now in the process of entering that stage of our company’s lifecycle. For these

first 25 years, we did not want to take up big loans to fund such investment, which is

why we have waited till the point where we have sufficient resources to build our own

facilities. Also, when we constructed our buildings in Mindanao and the Visayas, we did

not loan a single cent.

Now we have reached the point where we can afford manufacturing without external

funding. Self-sufficiency is very important to ensure that the operating cash remains

unaffected. In three to five years, we should have completed our first manufacturing

facility in collaboration with our Philippine-based manufacturers.

You have a broad portfolio of products. Which ones are you inclined to produce

in thePhilippines first?

At the moment, our B Complex preparations account for roughly 40 percent of our

revenues. We will bank on these products. At the same time, we will start to take in

higher value preparations, like gastro lines. Probably, you will see us partnering with a

South Korean company for that.

In the long run, we could even look at partnering up and going into higher value added

manufacturing together, provided that our partners would accept a 70-30 percent equity

deal.

There is a vast set of stakeholders in the pharmaceutical industry in

the Philippines today, each with their own interests and dynamics. As a

pharmaceutical company you may need to alter the type of negotiations you have

with the government, the distributors, and so forth. What do you consider to be

the right defensive strategy for the company in 2013?

We need to find the right people to join us. They are the most challenging and the most

difficult, but also the most important resource for the company. With the right people we

can create demand, and once there is demand you can grow.

To attract the right people we need to revolutionize incentives and the pays for our

medical representatives. For instance, we advertise in print how much we will pay them,

an initiative that is not necessarily being appreciated by some of my industry

colleagues. However, if someone wants to apply, you need to be transparent about

what you have to offer.

We are not interested in stealing away people from other companies. We prefer fresh

graduates that are easier to shape into our own corporate culture and values. In fact, we

have seen that some of our competitors try to take away some of our staff.

What do you set forward as the key performance indicators (KPI) for your staff?

Our biggest incentive is the rewards that are being earned by our people. If they earn

rewards, such as commissions and incentives, and they receive cars too for instance,

the company earns as well. This is the type of satisfaction we look for.

We want our people to be ‘growth and progress sensitive’. At the same time, you need

to provide them with enough challenges to stay abreast and motivated. More challenges

will eventually lead to more success and bigger rewards.

What do you see as the greatest challenge you face today?

The biggest challenge is the generation change. We need to understand how the next

generation will manage the company that will be handed to them. I always tell them that

they need to have a natural love for people. Being nice, firm and assertive is important.

Trust is very important, because it is those people that you trust that you will end up

respecting and admiring. This is the case for any relationship.

Going forward we can easily imagine three scenarios for the company: 1. You

become a big Filipino company with more and more market share, 2. You are

acquired by a local or international company, or 3. The future is status quo.

Which one of these three would you like to see happening?

Jean Paul D. Santillana: We are not that centered on market share. We set our targets

step by step, which for the medium term is PHP 6 billion, or 3.3 percent of the total

market. We will aim to achieve this target and then move from there.

Selling this Company is farthest from our mind and the name Santillana needs to stay

connected to this Company. From that perspective, we are looking at the first scenario.

Just like any other Filipino family, the Santillana family is very close-knit. My brother and

I are very close and handle the company in the same way that we handle our family and

relatives. That is our edge when we do business. This is a family-oriented business

where the members are considered part of the family. It has worked to our advantage to

run the Company in this manner.

A.A. Santillana: There are more than 400 drug companies doing business in

the Philippines. Eighty percent of the business, or more than PHP 100 billion, is being

dominated by twenty percent of these 400 companies. We are proud to be part of the

upper bracket of this twenty percent.

The pharmaceutical industry is a very rich and rewarding market, provided that you are

able to run your company properly. You cannot impose your requests on the

government, but as far as your company is concerned you can make the necessary

adjustments, especially on the kind of products, the kind of people, and the way you

treat them.

Remarks of Federico R. Lopez, chairman and CEO of First Philippine Holdings (FPH) Corporation at the 53rd Anniversary Celebration and Service Awards of FPHJuly 4, 2014Anniversaries, like we’re celebrating today -‐ 25 years in my case, 35 and 30 in the case of Nonoy and Tony – are always opportunities to look back, think, reflect and raise the question: “what was it all about?” Has the journey been worth it? How many lives are better because of our work? Am I a better person because I worked here at FPH? And is it a better company because I worked here?

The answers to most of these questions can wait till retirement and will probably be the right time to take score. But for now let me delve a little into the person I was as I joined FPH in 1989:

•was5 4 and unmarried• 160 lbs. with a Body Mass Index of 27.4 defined as “overweight”•had a 36 inch pants waistline•cholesterol/triglycerides scores close to 300 each•had borderline uric acid and blood sugar scores• was convinced that I could get all my daily nutritional fiber needs from oatmeal raisin cookies and deep fried banana turon• thought that an adequate night’s rest meant four to five hours of sleep, three cups of coffee plus a Starbucks Frappuccino for merienda• dinner for me was a hotdog sandwich and rootbeer at the Shell Select on Ortigas Ave. before I got home from work past 9pm each night.

At the rate I was going, one health specialist cautioned me that I would have a difficult time reaching retirement age without serious and possibly life-¬‐threatening health maladies.

Fortunately, however, our Chairman Emeritus launched the FPH Wellness Program in 1997 just about the time I got married. My then new wife Monina was shocked to learn she had just married someone with the worst blood chemistry results in the whole of FPH. So we were determined enough to make the journey together under the guidance of one of FPH’s wellness resources, Sanirose Orbeta, whom I can still remember saying “We will keep you away from taking any medication and you will do this all naturally via lifestyle modifications namely nutrition and exercise”.

Today I’m still happily married, also still 5 foot 4, and thanks to the FPH Wellness program and Sanirose, I still don’t take any maintenance medicines whatsoever. However, I’m now 27 pounds lighter, my pants are also 5 inches smaller around the waist and my Body Mass Index and blood chemistry results are now defined as normal, save for stubborn borderline blood sugar levels that I’m still jostling with but am confident I can bring under control in a few months via the right foods and exercise.

I don’t deny that these last two and a half decades were stressful to say the least but I believe that it was the supportive corporate environment at FPH that empowered me to make the right choices and modifications that literally saved my life. Today at 53, I’m even in better health than I was at the age of 28 when I first joined the company.

In similar respects, that’s how I see FPH and the changes it has been through over the same time horizon. When I joined in 1989, we were a company still searching for a core business, gross revenues of just Php22.77 Million and a Php22.73 Million net loss that was coincidentally just as small as its topline. We had an asset base of just Php1.34 Billion and a paltry Market Capitalization of only Php160 Million. In 1989 FPH had 46 employees and officers and an average age of 39.

Today, especially after observing everyone at our Cebu outing last week, I expected that we had an even younger average age. But to my surprise the other day when I inquired about our company demographics, I discovered that my hunch was not true. Although our number of employees at the

parent has doubled to 84, the average age has actually increased from 39 to 45 years old! At first that didn’t seem accurate.

However, upon closer inspection I found some interesting facts. In 1989, our eldest employee was our Chairman Emeritus who was 59 then. Steve Psinakis was second at 57. Nena Wieneke was at the time a willowy 49. Nonoy Ibañez and Ben Liboro were just youths of 38. Pearl Catahan was barely 36. Ricky Yatco and Vickie Martinez were just 34. Tony Mabasa was 30. I was 28 and so was Corie Miguel. And Milet Sabella was a youthful and girlish 26 at the time. Even Romy Venta, whom at the time to all of us already seemed like someone of eternal, timeless vintage was then just 53 years old (that’s my age this year).

But even if FPH is not demographically the younger organization we thought it was, it feels younger in terms of its dynamism. Today it can accomplish much more because our deepening bench gives us the ability to harness the energy of youth and fuse it with the wisdom of age and experience. That’s precisely what our focus on driving Strategic Clarity, Synergy and Talent Centricity throughout FPH is all about.

Today I see FPH in a sweet spot. Our consolidated revenues are now more than Php93.4 Billion. Today we also have a net income of Php2.35 Billion and an Asset base of more than Php295 Billion. From a market capitalization of less than Php159 Million in 1989, today we are valued at more than Php42 Billion with tremendous upside potential still to go.

Although 25 years have passed in the blink of an eye, I sometimes rummage through those memories and recall snippets of the struggles and battles we fought for FPH that got us where we are today. Those years have countless lessons embedded in them that are too valuable to be left lingering in our busy and oftentimes preoccupied minds. That’s why I’m so glad that our Chairman Emeritus had the foresight to commission Raul Rodrigo on yet another book on FPH’s history; one that, unfortunately, would also be Raul’s last work before his untimely death. However, I’d dare say that his writing is brilliant and classic Raul Rodrigo and his ability to have captured the drama behind events in FPH’s story through the eyes of many of us living through it was nothing short of superb. Many of us still get goosebumps reading and re-¬‐experiencing it all. You will all have the opportunity to do that for yourselves as we gift you with your own personal copy of “The Audacity DNA: Powering FPH Into The New Millennium” before you all leave this morning.

As we commemorate our 53rd anniversary today with what was a simple mass and ceremony I thought it would remind us of the journey our company has taken and the people like you and those that have come before you who make it what it is.

FPH is what our Chairman Emeritus calls a “living company” because it breathes, it laughs, it cries, and most especially because it remembers and learns from its past. That has been our strength at FPH and why those enduring values that have always mattered to us will also be the same ones that will continue to guide us well into the future.

Happy 53rd Anniversary to us all, and congratulations to our service awardees today! Thank you!

Interview: Armando de Rossi, Chairman & CEO, and Nicanor Villasenor III, COO, PHESI, Philippines

Armando de Rossi, Chairman & CEO, and Nicanor Villasenor III, COO of PHESI,

discuss the future of oil & gas vs. renewable energy, why they see a future in

the latter, and what the impact will be on local communities.

 

Government support is a defining factor for the success of renewable energy

projects in the Philippines. Do you believe that Filipino government policies

encourage the growth of renewable energy and are providing significant support

to small businesses and entrepreneurs? What can be done better?

Overall, the support of the government has been good, although there is more room for

improvement. Nevertheless, on the regulatory side, it is important to mention that right

now any developer that would start a new project has to deal with bureaucracy, which is

a very difficult task, as we have to deal with different government agencies that are not

aligned with each other. Apart from that, in off-grid areas there is also the issue of the

electric cooperatives: different legislators with different structures that create different

questions, especially when it comes to dealing with them.

Moreover, we would also like to see a change to the policy from the government of not

allowing more than 40 percent foreign ownership; which is a huge problem as there are

no Filipino technology companies to cover what we are doing here.

CMC-Asia, Inc. pioneered renewable energy in the Philippines back in 1979 and

are now partners with Berkeley Energy, who manage a Renewable Energy Asia

Fund (REAF). What are the reasons behind your strong focus and commitment to

renewable energy?

We always believed that the future of power generation lies in renewable energy and

not in oil and gas, especially in countries like the Philippines in which the majority of the

energy players are only focused on gas and coal. Our archipelago, and others like it,

has huge potential for hydro, wind and solar power generation. The opportunity came

when a true pioneer, Nicanor S. Villaseñor III, came to join forces with us taking over

Philippine Hybrid Energy Systems, Inc. (PHESI).

PHESI is a company of CMC-Asia, Inc. in partnership with Berkeley Energy. CMC-Asia,

Inc. has been operating renewable energy projects since 1979.

What do you consider have been the main milestones and achievements of PHESI

since you founded the company?

The main achievement has been the construction and the development of major hydro

power plants in the Philippines, for which we were both the EPC contractor and the

project developers. This capability to manage every aspect of a project has not just

been shown in the Philippines, but also in other Southeast Asian countries.

What were the main challenges that you faced at that time?

The number one challenge has always been bureaucracy. Still today, after 30 years in

the Country, we have plenty of problems when it comes to any kind of documentation.

The second challenge is the location of our projects, all of which are in remote areas,

where as a company you must deal, associate and identify yourself with the local

community, which is not a simple process.

The Aquino Government has recently awarded PHESI the Country’s first off-grid

Wind Service Contract: a 48 MW wind project with a total cost of approximately

US$116 million, in the resort town of Puerto Galera, Mindoro. What are your

expectations for this project?

Based on the project brief, each component of the three-phase energy project is worth

PhP2 billion and is capable of generating 16 MW each or 48 MW for a total project cost

PhP6 billion. Construction for the first phase, which is estimated to take 18 months for

completion, will be finished early 2015, 10 months ahead of the previous December

2015 target.

We believe that the impact of the Puerto Galera project will be a major boom, not only

for the local power supply, but for tourism too. The site is located about 1000m above

sea level, just 7 km away from the most beautiful diving spot and beaches of the Luzon

region, which on top of that is very close to Manila, just two and a half hours by car.

What impact will it have on the local community?

Our projects are mostly located on land belonging to indigenous communities, which

have never had access to electricity before. These remote communities will have

access to the main city located nearby. On top of that, a new industry will be open to

them: tourism. As a final consequence and probably the one with most important

impact, these people from the remote areas will be able to have access to jobs, mainly

in the power sector. PHESI is trying to become a partner to these communities by giving

attention to schools, and by giving medical assistance and support to agricultural

developments.

The Country’s wind capital is in Ilocos Norte in Luzon. Why did PHESI choose a

site in Mindoro?

PHESI has always been focused on island communities. One of the reasons why CMC-

Asia, Inc. and PHESI complemented each other so well in the first place is because

both are so focused on helping the development of these island communities. Why did

we choose Mindoro? We were ahead of many of our competitors in advancing this

strategy at first: most of the other power generation companies were working on

developing the main grid, while we saw the impact that renewable energy could have on

the development of the island communities, where there was a clear lack of power.

Mindoro has very good wind resources, and so the choice was a natural one.

The Philippine Government hopes to have over 500 MW of installed wind power

capacity in seven years. What are PHESI’s market ambitions? What projects are

in your pipeline?

Our market ambition, taking as a consideration our 48 MW plant, is primarily the

development of Mindoro. Mindoro is the seventh largest island in the Philippines. It is

located southwest of Luzon, and northeast of Palawan. The economy of Mindoro is

largely based on agro-industry, fisheries, and agriculture, and tourism is a lucrative

business as well. The land has great potential to be developed and we will try to

encourage that as much as possible.

At the same time, there is a great potential in Luzon, as everyone is expecting a

shortage situation in the coming years. We are envisioning a potential solution to this

through the interconnection of a submarine cable from Mindoro to Batangas.

There are numbers of MNC and local companies that are investing in wind energy

that have successfully infiltrated the Philippines power market. What is PHESI’s

competitive edge?

We are the only company focusing on off-grid. The rest of our colleagues are in the

main grid, therefore we are a showcase of potential in the off-grid area.  Moreover, we

are developing our wind outside of the feed in tariff, under a bilateral agreement.

What are the ambitions of CMC-Asia, Inc. for the coming years? Where would you

like to see your company in five years? 

CMC-Asia, Inc. will continue to focus on the island communities. As I mentioned before,

there is huge potential to tap in the off-grid rather than on the main grid. We are already

starting to develop some mini hydro plants in Mindoro. As a matter of fact, we were

awarded with a Service Contract for 10 MW mini hydro project in Mindoro by the

Department of Energy on December 9, 2013. We will definitely keep our strong CSR

component an integral part of our strategy as well.

I-Remit, Inc. Chairman and CEO, Bansan C. Choa is featured in ANC’s Company Call

Philippine Stock Exchange, Makati

July 31, 2013

Date Posted: 2013-08-05

I-Remit, the largest Filipino-owned non-bank remittance service provider was recently featured in ANC’s

Company Call to talk about the remittance trends and expansion plans.

Here is a brief summary of the media interview:

From ABS-CBN News.com

I-Remit diversifies to cushion vs dollar volatility

MANILA- I-Remit Inc. has moved to diversify its currencies and instruments to reduce any effects of the

volatile US dollar to its operations.

"As I-Remit has been doing for the last two years, we have already started to open up to other markets,"

Bansan Choa, chairman at I-Remit, told ANC.

Choa explained the firm started operations in China last year through an agreement with Industrial and

Commercial Bank of China (ICBC) and in Indonesia last month through Bank Internasional Indonesia.

The firm is now getting remittances from different countries and sending them back to China or Indonesia,

Choa said.

"With that, we should be able to cushion our conversion from Philippine peso because we have more

currencies right now that we are trading," Choa pointed out.

At the same time, he said "on top of that, we have already tried to amend our articles so we should be able

to do forward and other type of derivatives when it comes to trading our foreign currencies."

I-Remit, which focuses on servicing remittance needs of Filipinos around the globe, has presence in 24

countries and territories.