THE PHILIPPINES: A PHARMACEUTICAL MARKET RESEARCH

STUDYNadia Dias, Marketing Intern

Guide: Francis Pires, Business Head-International Division

PART I: AN INTRODUCTION TO THE DEMOGRAPHIC LANDSCAPE OF THE

PHILIPPINES• Introduction• The Demographic Landscape of the Philippines• Political Context• Economy• Healthcare in the Philippines• Pharmaceutical Supply Chain• Medical Human Resource Statistics

PART II: THE PHARMACEUTICAL MARKET IN THE PHILIPPINES

• The Pharmaceutical Market in the Philippines• Product Registration• Pharmaceutical Importers• Manufacturers and Distributors• Foreign Companies in the Philippines• Pharmaceutical Retailers in the Philippines• Pricing Regulation for the Private Sector

CONTENTS

• South-East Asian Archipelago.• 7,107 Islands.• Capital City-Manila.• 2,000/7,107 Islands Inhabited.• Urban Population: 31.8% to 50.32% (last 3

decades).• Fragmentary nature of Islands- challenge to trade

and commerce in the country.• Economy resilient to global shocks due to , lower

dependence on exports, relatively resilient domestic consumption, large remittances.

• 1 PHP (Filipino Peso)=0.020 USD=1.37 INR

INTRODUCTION

• Population: 102,624,209 • Growth Rate: 1.59%• Per Capita Income (IMF 2015): $7,282• GDP: USD 2,765 • Death Rate: 6.1 deaths/1000 population

0-4 years: 33.7%5-24 years: 19.17% Male population larger than female population

25-54 years: 36.86% 55-64 years: 5.89%65 & above: 4.38% Female population larger than male population

DEMOGRAPHIC LANDSCAPE

ESTIMATED POPULATION BY SEX

• Executive Branch: administrative/regulatory authority over health systems.

• Legislative Branch: approving annual budgets and allocating development funds.

• Dept. of Health (DOH): regulation and facilitation of health systems and processes in the Philippines.

POLITICAL CONTEXT

• 2011-2016- 6% economic growth.• FDI growth- lags behind regional peers.• ¼ of the Filipino population lives in poverty.• 50% <$2/day

THE ECONOMY

• Health Outcomes-Lags behind most of South-East Asia and North Asia

• Health Index UNDP-Rank 117, 0.749• Social and geographic barriers- inequitable

access to resources.• Lower-income families and less developed

areas- poor health status• Life expectancy in richer provinces is more

than 10 years longer than in poorer ones

HEALTHCARE

PROJECTED LIFE EXPECTANCY AT BIRTH

Number/Rate per 100,000 Population-5-Year Average (2008-2012) and 2013

Cause of Death 5-Year Average (2008-12) 2013

Number Rate Number Rate

Diseases of the Heart 1,03,170 110.3 1,18,740 121.1

Diseases of the Vascular System 66,754 71.4 68,325 69.7

Malignant Neoplasms 49,016 52.4 53,601 54.7

Pneumonia 45,303 48.4 53,101 54.2

Accidents 36,100 38.6 40,071 40.9

Diabetes Mellitus 22,287 23.9 27,064 27.6

Chronic Lower Respiratory Diseases 23,005 24.6 23,867 24.4

Tuberculosis, all forms 24,362 26.1 23,216 23.7

Nephritis, Nephrotic Syndrome & Nephrosis 13,599 14.6 14,954 15.3

Certain Conditions Originating from the Perinatal Period

11,904 12.8 10,436 10.6

Main Causes of Death, 1997-2006 (Selected Years

Rate per 100,000 Population (Rank)

Region 1997 1999 2000 2002 2003 2004 2005

I. Communicable Diseases

Pneumonia 43.1 (3) 44.0 (4) 42.7 (4) 43.0 (4) 39.5 (5) 38.4 (8) 42.8 (4)

Tuberculosis, all forms 32.2 (6) 38.7 (6) 36.1 (6) 35.9 (6) 33.0 (6) 31.0 (6) 31.2 (6)

II. Non-Communicable Diseases

Diseases of the Heart 69.8 (1) 78.4 (1) 79.1 (1) 88.2 (1) 83.5 (1) 84.8 (1) 90.4 (1)

Diseases of the Vascular System

54.1 (2) 58.4 (2) 63.2 (2) 62.3 (2) 64.0 (2) 61.8 (2) 63.8 (2)

Malignant Neoplasms 37.5 (5) 45.8 (3) 47.7 (3) 48.8 (3) 48.5 (3) 48.5 (3) 48.9 (3)

Chronic Lower Respiratory Diseases

23.3 (8) 22.7 (8) 24.6 (7)

Diabetes Mellitus 9.4 (9) 13.8 (9) 14.1 (9) 17.5 (9) 17.5 (9) 19.8 (9) 21.6 (8)

Chronic Obstructive Pulmonary Diseases & Allied Conditions

16.5 (7) 20.3 (7) 20.8 (7) 24.3 (7)

Main Causes of Death, 1997-2006 (Selected Years

Rate per 100,000 Population (Rank)

Region 1997 1999 2000 2002 2003 2004 2005

III. External Conditions

Transportation Accidents 39.9 (4) 40.2 (5) 42.4 (5)

42.3 (5)

41.9 (4)

41.3 (4)

39.1 (5)

IV. Others

Certain Conditions Originating from the Perinatal Period

17.1 (8) 19.8 (8)

19.8 (8)

17.4 (10)

15.9 (10)

14.5 (9)

Nephritis, Nephrotic Syndrome & Nephrosis 9.4 (10) 10.1 (10)

10.41 (10)

11.66 (10)

15.8 (10)

13.0 (10)

Ill-Defined and Unknown Causes of Mortality 25.5 (7)

Symptoms, Signs & Abnormal Laboratory Findings, NEC

26.3 (7)

Other Diseases of the Respiratory System 9.7 (8)

Source: FHSIS DOH, 2009

MORBIDITY: 10 LEADING CAUSES

RISK FACTORS AFFECTING HEALTH STATUS

PHARMACEUTICAL SUPPLY CHAIN

PHARMACEUTICAL SUPPLY CHAIN

• Monopolistic pricing exists in drug sales in hospitals.

• Drug prices in hospitals double those in retail pharmacies

• Access to essential drugs- constrained due to limited availability and high costs

• Availability depends on presence of doctors and drugstores in the region

• Doctor prescriptions must be signed by pharmacist- implementation is difficult

• 1988-Generic Drugs Act to make drugs more affordable• Failed to encourage use of generic drugs• Lack of information on safety and efficacy• Essential Drugs List established• 2009-DOH set Max. Retail Drug Prices for selected drugs• 1987-Philippines National Drug Policy (PNDP) • PNDP-Ensure quality and drugs and availability and

affordability to all sections of the Filipino population.• Essential Drugs List/Philippines National Drug Formulatory set

standards for procurement of drugs in the government sector.• Generics Act 2008-Compulsory Licensing, Parallel Importation,

Price Control, generic substitution• Regulatory Reforms supported Botika ng Barangays

Programme (BnB)-Sold drugs @ 62% cheaper

PHARMACEUTICAL SUPPLY CHAIN

SUPPLY CHAIN: MNCs●Pharmaceutical MNCs are mainly drug

traders●Import large amounts of their merchandise

from abroad●Giant MNCs hire manufacturing services of

InterPhil (Toll Manufacturer)●Zuellig-mostly distribution of MNCs drug

products

SUPPLY CHAIN: MNC DRUG TRADER

SUPPLY CHAIN: MNC DRUG IMPORTER

SUPPLY CHAIN: LOCAL MANUFACTURERS AND TRADERS

●Local Pharma sector-mix of manufacturers and traders

●Top 20 list-only 4 local companies●Local giant- United Laboratories owns 28%

local sales

SUPPLY CHAIN: LOCAL DRUG DEALER

SUPPLY CHAIN: LOCAL DRUG MANUFACTURER

FOREIGN SUBSIDIARY MANUFACTURERS

Interphil

TOLL MANUFACTURERS

Hizon Labs

Swiss Pharma

Euro-Med Laboratories

Lloyd Laboratories

Ace Pharmaceuticals

Allied

LOCAL MANUFACTURERS

Pascual Laboratories

United Laboratories

Asian antibiotics

Amherst

Westmont

AM-Europharma

AD-Drugstel

Euromed

IMPORTATION AND TRADING

GSK

Bristol Myers Squibb

Natrapharm

GX International

Medhaus Pharma

Prohealth Pharma

Cathay Drug

Pascual Laboratories

United Laboratories

MANUFACTURERS

DRUG SUPPLY CHAIN●MNCs-more trading/marketing/distribution

rather than manufacturing●Manufacturing-highly concentrated-one toll

manufacturer-InterPhil●Distribution concentrated-Zuellig●Locals- some only manufacturing●some locals-manufacture & trade & distribute

SHARE OF THE TOP THERAPEUTIC CLASSES TOTAL

PHARMA

Top 10 Ethical/Prescription Brands in the Philippines Moving Annual Total

September ’07 Php BillionRank Prescription Brand Indication Generic Name 4 Year %-CAGR

 

1 Novarsc (Pfizer) Hypertension Amoldipine 24.3  

2 Ventolin (Glaxo-SK) Asthma Albuterol 2.16  

3 Plavix (Sanofi-Aventis) Thrombosis Clopidogrel Bisulfate 22.78  

4 Augmentin (Glaxo-SK) Infection Amoxicillin+Clavulanate Potassium

1.29  

5 Neobloc (GX International)

Hypertension Metoprolol 19.6  

6 Lipitor (Pfizer) Hyper-Cholesterolemia

Atorvastatin 7.61  

7 Tazocin (Wyeth) Infection Tazobactam 18.44  

8 Zegen (United American-UL)

Infection Cefuroxime Axetil 31.37  

9 Plendin ER (Astra Zeneca)

Hypertension Felodipine -2.38  

10 Seretide (Glaxo-SK) Asthma Fluticasone+Salmeterol 23.66  

Top 10 OTC Brands in the Philippines Moving Annual Total September ’07 Php billionRank OTC Brand Indication 4 Year % CAGR  

1 Ceelin (Pediatrica) Vitamin Supplement 6.1  

2 Solmux (Westmont) Cough 8.84  

3 Neozep (Myra) Cold Relief 14.38  

4 Biogesic (Biomedis) Pain Relief 9.54  

5 Enervon C (United American)

Vitamin Supplement 0.33  

6 Alaxan (Therapharma) Pain Relief -4.77  

7 Myra E (Myra) Vitamin Supplement 36.01  

8 Xenical (Roche) Weight Mgt 48.35  

9 Centrum (Wyeth) Vitamin Supplement 13.13  

10 Cherifer (GX Pharma) Vitamin Supplement 22.77  

DISTRIBUTION OF DOCTORS PER SPECIALITY, 2006

THE PHILIPPINES’ PHARMACEUTICAL MARKET➔ Last decade- growth rate-12-14% annually➔ 2014-Filipino drug market-$4.3 billion➔ At par with Taiwan and indonesia➔ Increase at 4.9% CAGR-$8 billion in 2020➔ 3.93% market share in Asia Pacific

pharmaceutical market➔ 0.31%-Global Market Share➔ Generic substitution in private and public sector-

driver for manufacture of generic drugs➔ Increased expenditure on medicines by Clocal

Government Units➔ 2012-foreign pharmaceutical companies-70% of

Filipino pharmaceutical market

THE PHILIPPINES’ PHARMACEUTICAL MARKET

●GlaxoSmithKline, Novartis, Sanofi-largest foreign companies doing business in the Philippines

●Local companies- United Laboratories, Pascual Laboratories, GC International, Natrapharm

●Generic segment-Sandoz (Novartis), Orient Europharma (Taiwan), Getz Pharma (Pakistan)

●Multinationals-reducing priceso drugs-50% to compete with generic products

●Drug prices in Philippines-still remain highest in Asia

Why are drug prices so high?➔ Poor purchasing practices in Filipino hospitals.➔ High Retail Markups because of monopolistic

competition➔ Prohibitive cost of importing pharmaceutical

ingredients➔ Low rates of health insurance➔ Low rates of coverage for out-patient drugs➔ 2008-Universally Accessible Cheaper and Quality

Medicines Act-power to impose Max. retail price on drugs mentioned in the essential drugs list

➔ Philippines Respects International Property Rights (IPR)

➔ Cannot simply introduce generics that are under patent

PRODUCT REGISTRATION➔Companies that are involved in the

manufacture, import, export, distribution, retailing, packaging and re-packaging of pharmaceuticals

➔Companies require a Licence to Operate (LTO) before registering their product with the FDA

➔Licence to Operate (LTOs) from the manufacturer, distributor and / or importer

➔A Certificate of Agreement between the manufacturer and distributor or the manufacturer and importer for the product being registered

➔The Application for Registration of Pharmaceutical form

PRODUCT REGISTRATION● Information on product formulation and dosage● A Certificate of Analysis and Specifications for all

raw materials● Information on the manufacturing process,

including procedure, in-process controls, production equipment and packaging procedure

● Labelling materials● Stability studies● A product sample (which should include English

labels for the product registration number, the generic and brand names, the name of the product license holder, indications for use, dosage, warnings and precautions, the batch number and the expiration date)

PRODUCT REGISTRATION• Rules and regulations for import of pharmaceutical

goods• Follow registration procedure• Registration completed in the name of local

distributor/consultant lawyer• Despite payment for registration, direct rights over

product (marketing/distribution)• Can own rights to goods only once a Philippines

arm of the company is established• Import goods of its own registration

CERTIFICATE OF PRODUCT REGISTRATION

PHARMACEUTICAL IMPORTERS• Filipino pharmaceutical market heavily dependent on

import of raw and finished pharmaceutical products• Few foreign companies manufacture in Philippines• Import and distribute finished products• Import raw materials and outsource production to local

manufacturers• Authorizations required to import pharmaceutical drugs• 2000-Parallel Drug Importation Pharma Plan 50• Philippines International Trade Corporation (PITC)-

Source off-patent drugs from essential drugs list• Imports-Primarily from India-competed with prices of

branded products• Plan failed-limited volume of imports and weak

distribution network

Landed Costs Levied on Imported Pharmaceuticals

PHARMACEUTICAL MANUFACTURING

• One domestic manufacturer dominates manufacturing for most foreign pharmaceutical companies

• Interphil Laboratories- Zuellig Family Trust Companies- contracts from 15 to 20 foreign companies

• 2009-90% of Wyeth’s drug manufacturing in the Philippines+all local manufacturing for Pfizer

• Unilab (United Laboratories)- largest individual share in the domestic market

PHARMACEUTICAL MANUFACTURING

●All domestic and international manufacturing facilities producing drugs for the Philippines' market are required to meet Filipino Good Manufacturing Practice (GMP) standards

●domestic companies generally do not produce active substances but are limited to activities such as compounding active substances, packing bulk drugs into dosage forms, processing simple galenic medicinals into final drug form, and diluting concentrated extracts to marketable strengths.

PHARMACEUTICAL MANUFACTURING●gain access to new drugs either through their

domestic offices abroad or through licensing agreements with foreign pharmaceutical manufacturers.

●The percentage of market share by volume produced by domestic manufacturers is 48%

Manufacturer's’ Markup on Pharmaceutical Goods

PHARMACEUTICAL DISTRIBUTORS• Most distribution takes place through two major

local companies – Zuellig Pharma and Metro Drug-85% Distribution Channels in Philippines

• Do not have to comply with Good Distributing Practice (GDP) standards

• Some companies are engaged in manufacture and disstribution-EON Pharmatek and Biomed Pharma Inc.

• The Philippines Pharmaceutical Manufacturers Association (PPMA) is a non-stock, non-profit association.

• It was organized for the primary purpose of bringing together entities engaged in the manufacture and/or marketing of pharmaceutical products.

•

Wholesalers Price Markup

FOREIGN COMPANIES IN THE PHILIPPINES• ¾ of the top 20 companies in the Philippines are

foreign.• Control 66% of total industry sales• Market shares of individual companies: 1-6%• Only 30%of pharmaceutical sales are accounted

for by domestic Filipino companies• GlaxoSmithKline has its largest MNC

manufacturing facility in Philippines- exports to rest of SE AsiaCompanies 2003 2004 2005 2006 2007

Local 208 210 224 224 240

Foreign 165 171 194 203 231

FOREIGN & LOCAL PHARMA COMPANIES

PHARMACEUTICAL RETAILERS IN THE PHILIPPINES

• Pharma retail: Generic and Branded• Generic Drugs: Less expensive-cost 30-80%

less than their branded counterparts• Sale of generic or branded drug at a

particular pharmacy depends on the type of pharmacyGeneric Pharmacies:

• The Generics Pharmacy• Generika Generics• My Botika• Botika ng Bayan

Chain Retail Pharmacies:• Mercury Drug• Rose Pharmacy• Watsons• South Star Drug• United Pharm• Cherub's Face Pharmacy and

Medical Supplies• KChan Pharmacy• New Lords Pharmacy• Caslim Pharmacy and

General Merchandise

RETAIL MARKUPS

WHY INVEST IN THE FILIPINO PHARMACEUTICAL MARKET?

●Archipelagic nature places a premium on logistics.

●Value of market in 2020- $ 8 billion●Foreign investment- 70%●Discrepancy between generic and branded

drug prices●Monopolistic competition and open pricing●Generic Drugs Act- does not apply to private

companies●Respect for Intellectual Property Rights

WHY INVEST IN THE FILIPINO PHARMACEUTICAL MARKET?

●Per capita income of Filipino population $ 7282

●Population consumes higher percentage of branded drugs

Country Dose Manufacturer Branded/Generic Price

India 250 mg/100 tab SmithKline Beecham Amoxil $ 10

Philippines 250 mg/100 tab SmithKline Beecham Amoxil $ 25

India 150 mg/100 tab Glaxo Zantac $ 3

Philippines 150 mg/100 tab Glaxo Zantac $ 95

WHY INVEST IN THE FILIPINO PHARMACEUTICAL MARKET?

●11th largest in Asia Pacific●3rd largest in ASEAN●Thailand-generic manufacturing●Philippines- larger market share- value/unit●Offers higher value per unit●Potential to create and sustain brands

SALAMAT!