The Philippines' Pharmaceutical Market

PHILIPPINES PHARMACEUTICAL
MARKET STUDY
Trade Dynamics of the Filipino Market Place
Nadia Dias, Marketing Intern
Guide : Francis Pires, Business Head – International Division,
Wallace Pharmaceuticals Pvt. Ltd.

CONTENTS
Title Page No.
PART I: AN INTRODUCTION TO THE DEMOGRAPHIC LANDSCAPE OF
THE PHILIPPINES
Introduction.................................................................................................1-2
The Demographic Landscape of the Philippines................................................3
Political Context.............................................................................................4
Economy.....................................................................................................5-6
Healthcare in the Philippines......................................................................7-15
Pharmaceutical Supply Chain....................................................................16-20
Medical Human Resource Statistics...........................................................21-22
PART II: THE PHARMACEUTICAL MARKET IN THE PHILIPPINES
The Pharmaceutical Market in the Philippines............................................23-24
Product Registration.................................................................................25-26
Pharmaceutical Importers..........................................................................27-28
Pharmaceutical Manufacturing..................................................................29-30
Pharmaceutical Distributors......................................................................31-33
Foreign Companies in the Philippines........................................................34-36
Pharmaceutical Retailers in the Philippines................................................37-38
Conclusion: Why Invest in the Filipino Pharmaceutical Market?.................39-41
Contact References........................................................................................42
ANNEXURE I: Wallace Pharmaceuticals India Pvt. Ltd Certificate of Product
registration (CPR) for Glipizide-Glucolip......................................................43

1
INTRODUCTION
The Philippines is an archipelago in the South-East Asian region, located
between the South China Sea and the Pacific Ocean. Across the South China Sea,
to the west of Palawan Island, are the countries of Cambodia, the Laos People’s
Democratic Republic, and Viet Nam. China lies west of the Luzon coast while
further north are Korea and Japan. Across sea borders in the south are Indonesia,
Malaysia and Brunei. To the east of the Philippines lie the scattered island
territories of Saipan, Guam, Micronesia, and Palau. The country is comprised of
7107 islands, of which Luzon in the north is the largest, where the capital city of
Manila is located. To the south of Luzon are the Visayan Islands whose major
city is Cebu. Further south is the second largest island, Mindanao, where Davao
City is the main urban centre. Of the 7,000 odd islands, only 2,000 remain
inhabited.1
The urban population has doubled in the past three decades, from
31.8% in 1970 to 50.32% in 2008, while the rest of the population remains in
rural, often isolated areas.2
The fragmentary nature of these islands, spread over a vast surface area on the
ocean is in itself one of the greatest challenges to trade and commerce in the
country. despite this, the economy has been relatively resilient to global
economic shocks due to less exposure to troubled international securities, lower
dependence on exports, relatively resilient domestic consumption, large
remittances from about 10 million overseas Filipino workers and migrants, and a
rapidly expanding outsourcing industry. The current account balance has
recorded consecutive surpluses since 2003, international reserves remain at
comfortable levels, and the banking system is stable.3
1
WHO, Asia Pacific Observatory on Health Systems and Policies (2011), The Philippines
Health System Review, ISBN 978 92 9061 558 3, Vol 1 (2) : 1-3 , Manila
2
Health System Review, ISBN 978 92 9061 558 3, Vol 1 (2) : 1-3 , Manila
3
Ibid.

2
Map I: Regional Map of the Philippines4
4
The World Factbook 2013-14. Washington, DC: Central Intelligence Agency, 2013.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/rp.html

3
THE DEMOGRAPHIC LANDSCAPE OF THE PHILIPPINES
The population of the Philippines stands at 102,624,209 with a growth rate of
1.59%. According to the International Monetary Fund's 2015 survey, the Per
Capita Income of the Filipino population is $7,282.The age structure of the
Philippines' 100 million odd population is divided, with a majority of the
population being in the young to middle age group.
Death Rate of the Filipino population is 6.1 deaths/1000 population.
44.4% of the population in the Philippines is urban.5
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 population6
Figure I: Estimated Population by Sex in the Philippines7
5
6
7
Epidemiology Bureau, Department of Health (2013), The 2013 Philippine Health Statistics,
Survey, Monitoring and Evaluation Division, Manila : 7

4
POLITICAL CONTEXT
Since 1897, the Philippines has had seven constitutions. The latest ratified by
referendum in 1987 and now in effect, established a republican government
patterned after that of the United States with a strong executive branch, a
bicameral legislature, and an independent judiciary under a supreme court. The
executive branch through the national government agencies and local
government units exercises administrative and/or regulatory authority over the
health system as a whole. The legislative branch influences the health system in
two ways: a) by approving the annual budgets of national health agencies and
institutions; and b) by individual congressmen allocating their “development
funds” (PDAF or “pork barrel”) to specific health institutions for various
purposes. The judiciary affects the health system in both the government and
private sectors when it renders decisions in legal disputes involving health
agencies, institutions and individuals.8
The Department of Health in the
Philippines is the official government organisation of the Philippines that is in
charge of overseeing the national healthcare system by establishing and
enforcing minimum standards for facilities and services and promoting the
development of hospitals as well as a regulating the distribution, manufacturing
and sale of drugs.
8
Health System Review, ISBN 978 92 9061 558 3, Vol 1 (2) : 7, Manila

5
ECONOMY
The economic growth in the Philippines was accelerated by 6% between 2011-
2015. International reserves remain at comfortable levels, and the banking
system is stable. The Philippines has not sustained steady growth in foreign
direct investment, which continues to lag behind regional peers.9
The unemployment rate has declined somewhat in recent years but remains high,
hovering at around 6.5%; underemployment is also high, ranging from 18% to
19% of the employed. At least 40% of the employed work in the informal sector.
Poverty afflicts about a quarter of the population. More than 60% of the poor
reside in rural areas, a challenge to raising rural farm and non-farm incomes. The
government has been working to boost expenditures for education, health,
transfers to the poor, and other social spending programs. Infrastructure remains
underfunded and the government is relying on the private sector to help with
major projects under its Public-Private Partnership program. Continued efforts
are needed to improve governance, the judicial system, the regulatory
environment, and the overall ease of doing business.10
Notable achievements of the Philippine government include passage of laws that
liberalized the entry of foreign banks into the country; partially relaxed the
cabotage law by allowing foreign vessels to ply import and export cargo within
the archipelago; and passage of anti-trust legislation. Substantial progress has
also been made towards passage of a Customs Tariff and Modernization Act to
meet international standards and commitments. However, the Philippine
Constitution and other laws restrict foreign ownership in important
activities/sectors - such as land ownership and public utilities.11
Poverty continues to plague 1
/4 of the Filipino population, 60% of which inhabit
rural Philippines. 50% of the poor live on less than two dollars a day. The
production and consumption of illicit drugs like methamphetamine continues to
9
Ibid, 6.
10
Ibid.
11
Ibid.

6
be on the rise despise government efforts to prevent it, especially in rural area
where government control is limited.12
Figure II: Philippine GDP13
12
Ibid.
13
National Economic and Development Authority, Philippines (2015), Infographic: Philippine
GDP Grows by 5.2 Percent in Q1 2015, Philippines.
http://www.neda.gov.ph/2015/05/28/infographic-philippine-gdp-decelerates-5-2-percent-q1-
2015/

7
HEALTHCARE IN THE PHILIPPINES
Philippine health status indicators show that the country lags behind most of
South-East and North Asia in terms of health outcomes. While rapid
improvements were seen during the last three decades, these have slowed in
recent years. Women tend to live longer than men by five years, while average
life expectancy at birth for both sexes was about 72 years in 2007. Both
disability-adjusted life expectancy (DALE) and health-adjusted life expectancy
(HALE) are measures of the equivalent number of years expected to be lived in
full health. In 2007, the HALE was 59 years for men and 64 years for women.14
Figure III: Life Expectancy at Birth by Region15
The leading cause of death in the Philippines is heart disease, with rates steadily
rising from 70 per 100,000 population in 1997, to 90 per 100,000 population in
2005 (Figure III). This is followed by vascular diseases and malignant neoplasms
14
Health System Review, ISBN 978 92 9061 558 3, Vol 1 (2) : 7-14, Manila
15

8
(or cancer), with mortality rates of 63.8 and 48.9 per 100 000 population,
respectively.16
Figure IV: Main Causes of Death17
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)
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 Martality
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
16
17

9
Figure V: Mortality: 10 Leading Causes18
Number/Rate per 100,000 Population
Philippines
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
Communicable diseases continue to be major causes of morbidity and mortality
in the Philippines. As shown in Figure IV and Figure VI, infectious diseases
such as tuberculosis and pneumonia are leading causes of death. Malaria and
leprosy remain a problem in a number of regions of the country. Also shown in
the tables is the prevalence of non-communicable diseases, such as diseases of
the heart, diabetes mellitus and cancers. The National Nutrition and Health
Survey in 2003-2004 revealed the prevalence rates of risk factors for
cardiovascular diseases, such as coronary artery disease, stroke and peripheral
arterial disease Figure VIII shows the results of the study in tabular form.19
The
rise in non-communicable diseases along with the existing prevalence of
infectious diseases indicates the Philippines is in an epidemiologic transition
characterized by a double burden of disease. This disease pattern indicates that
18
19

10
even as degenerative diseases and other lifestyle-related illnesses are increasing,
communicable diseases are still widely prevalent.20
Figure VI: Main Causes of Morbidity21
20
21

11
Figure VII: Morbidity: 10 Leading Causes22
Figure VIII: Risk Factors affecting Health Status23
Social, economic, and geographic barriers result in inequity in access to services
and explain the inequity in health outcomes. Poor people in greatest need for
22
23
0
10
20
30
40
50
60
70
Risk Factors affecting Health Status
Prevalence >20 years (%)
Source: The Philippines Health
System Review, 2011

12
health care, namely, pregnant women, newborns, infants, and children, are under
cared for. The Philippines experienced dramatic improvements in levels of child
and maternal mortality and communicable disease control during the second half
of the twentieth century. However, gains have slowed in recent years, in part due
to the poor health status of those on low-income and living in less developed
regions of the country. Life expectancy in richer provinces is more than 10 years
longer than in poorer ones.24
To summarize, inequity in health status and access to services is the single most
important health problem in the Philippines. This inequity arises from structural
defects in the basic building blocks of the Philippine health system, including
the low level of financial protection offered – problems which until recently
have been inadequately addressed by reform efforts.25
HIV/AIDS Statistics
Philippines has the fastest growing HIV endemic in the world. in the last five
years, there has been an 587% increase in reports of people living with HIV.
HIV Rate: 0.08%
HIV/AIDS World Rank: 110
Population living with HIV/AIDS: 42,500
HIV/AIDS deaths: 600 (2015)26
24
25
26
Ibid, 6.

13
Figure IX: HIV Statistics27
27
Department of Health, Epidemiology Bureau (2016), HIV/AIDS and ART Registry of the
Philippines, March 2016.

14
Figure X: Infant Mortality: 10 Leading Causes28
28

15
Figure XI: Maternal Mortality29
29

16
PHARMACEUTICAL SUPPLY CHAIN
Pharmaceuticals reach consumers via a supply-driven distribution scheme.
Among the wholesalers and retailers, the drugstores have the greatest percentage
share in the market at 80.1% (chains have 62.7%, independent stores have
17.4%) while the hospitals have the smallest share at 9.7% (private 7.4%;
government 2.3%). Others account for 10.2% market share Clinics, NGOs at
9.9%; government agencies at 0.3%) (Pharmaceutical and Healthcare Association
of the Philippines, 2008).
Figure XII: Philippine Pharmaceutical Industry-National Distribution30
Monopolistic pricing exists in hospital drug sales, especially in private hospitals
where out-of-hospital purchases are discouraged. Drug prices in hospitals are
reported to be double those of prices in retail outlets (DOH, 2008). Access to
essential drugs is constrained by limited availability, irrational use and high
costs (DOH, 2008). Availability of medicines is dependent on the presence of
doctors to prescribe drugs and the existence of drugstores or pharmacies in the
area. Most government health professionals practice in urban areas, especially in
NCR and Region III. As private physicians charge for their services, long queues
30
The Philippines Healthcare Association of the Philippines, Philippine Pharmaceutical
Industry Factbook (2008), Ed. 7 : 92

17
for government physicians in the public health facilities are often the norm. Half
of the 3000 plus drugstores in the country are in NCR while the rest are in urban
areas nationwide. As a result, remote areas suffer from a shortage of drug
supply. To address this, some health workers dispense drugs though their own
clinics, RHUs, government hospitals and “Botika ng Barangayas outlets” or
pharmacies that operate without pharmacists. While there is a law mandating a
separation between the prescribing of physicians and the dispensing of
pharmacists, this is difficult to implement in practice. In the Philippines, doctors'
prescription must be counter-signed by a pharmacist, despite this, clinics and
Regional Health Units essentially dispense without pharmacies, while BnBs
operate as pharmacies with no pharmacist.31
Maximum Drug Retail Price (MDRP) monitoring among physicians and patients
commissioned jointly by the Department of Trade and Industry (DTI) and the
DOH in June 2010 reported that more than half of interviewed physicians
prescribe more innovator brands than generic brands, while only 13-18%
prescribe more generic brands than innovator brands for chronic diseases.
About two thirds of doctors prescribe the original brand while only 8% of them
prescribe generics for IV antibiotics. Among the patients interviewed, 90-98% of
them claimed that they generally follow the brand prescribed by their doctors,
except among patients requiring IV antibiotics, where about 7% of patients
would occasionally not comply with what was prescribed. Awareness of the
generic counterpart of medication among patients is variable; only 48% of
patients are aware of the generic counterpart of their medicines for hypertension
and heart disease, while 87% of them know the generics of oral/suspension anti-
bacterials. Patients receive information on the generic counterpart of their
medicines from doctors (41%) and pharmacies (34%). The patients perceive the
price of medicines as between somewhat cheap to somewhat expensive, but more
patients (60-63%) requiring IV antibiotics and antibacterials think that their
medicines are somewhat cheap (DTI & DOH, 2010).32
31
32

18
In 1988, the government legislated the Generic Drugs Act in order to make drugs
more affordable and accessible particularly for the poor. However, the Generics
Law failed to effectively encourage the extensive use of generic prescribing by
medical practitioners. Generic drugs, though cheaper than their branded
counterparts, do not sell due to customers’ lack of information on generic drugs’
safety and efficacy.
Regulatory reforms were implemented in the pharmaceutical sector in the late
1980s. An essential drugs list was established, a Generics Act promoted and
required greater use of generic medicines – 55-60% of the public now buy
generics – and capacities for standards development, licensing, regulation and
enforcement were strengthened at the Federal Drug Authority. In 2009, the DOH
set maximum retail prices for selected drugs and medicines for leading causes of
morbidity and mortality.
In 1987, the DOH promulgated the Philippine National Drug Policy (PNDP),
which had the Generics Act of 1988 and the Philippine National Drug Formulary
(PNDF) as its components. The objective o the PNDP was to ensure the quality
of drugs and medicines and make them available and affordable to all sections of
the Filipino people. The Generics Act promoted and required the use of generic
terminology in the importation, manufacturing, distribution, marketing,
prescribing and dispensing of drugs. The PNDF or essential drugs list served as
the basis for the procurement of drug products in the government sector.33
Related to this is the revised Generics Act of 2008 (RA 9502), which
strengthened the provision of and access to quality and cheap medicines through
mechanisms such as compulsory licensing, parallel importation, price controls
and generic substitution at the point of sales.34
Regulatory reforms also strengthened the Botika ng Barangay (BnB) Programme,
which sold drugs that are 62% cheaper than in commercial drug stores. Later in
2009, the DOH imposed maximum drug retail prices (MDRP).
33
Health System Review, ISBN 978 92 9061 558 3, Vol 1 (2) : 32, 101, Manila
34
Health System Review, ISBN 978 92 9061 558 3, Vol 1 (2) : 32, 101, Manila

19
Figure XIII: Share of the top 20 Therapeutic Classes to Total Pharma35
35
The Philippines Healthcare Association of the Philippines, Philippine Pharmaceutical

20
Top 10 Prescription and Ethical Drugs Sold in the Philippines36
Top 10 Ethical/Prescription Brands in the Philippines Moving Annual Total September ’07
Php Billion
Rank 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 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+Salmetrol 23.66
Top 10 OTC Brands in the Philippines Moving Annual Total September ’07
Php billion
Rank 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
36
The Philippines Healthcare Association of the Philippines, Philippinr Pharmaceutical
Industry Factbook (2008), Ed. 7 : 82-83

21
MEDICAL HUMAN RESOURCE STATISTICS IN THE PHILIPPINES
Distribution of doctors per speciality, 2006
Speciality
Metro
Manila
Luzon Visayas Mindanao Total
internal Medicine 2940 1637 907 580 6064
Pulmonology 399 118 79 32 628
Endocrinology/Diabetology 224 103 43 17 387
Oncology 128 36 19 11 194
Gastroenterology 185 55 45 13 298
Rheumatology 37 7 11 5 60
Nephrology 220 71 53 20 364
Cardiology 713 192 117 62 1084
Dermatology 712 226 64 69 1071
Paediatrics 3467 1979 985 643 7074
OB-Gynaecology 2748 1580 797 569 5694
General Surgery 1608 1011 506 441 3566
Orthopedic Surgery 470 216 123 84 893
Uro-Surgery 222 80 27 25 354
Opthalmology 616 160 78 53 907
EENT/ENT 699 362 122 124 1307
Psychiatry 322 82 76 42 522
Neurology 315 80 34 27 456
Total No. of Specialists 16025 7995 4086 2817 30923
General Practice 4653 5205 2644 2130 14632
Total No. of Doctors 20678 13200 6730 4947 45555

22
Figure XIV: Distribution of Doctors per Specialty, 200637
• 35% of the PhilHealth accredited doctors are based in the National Capital
Region alone. Moreover, the number of NCR (National Capital Region)-based
doctors is about eight times more than the average number of PhilHealth
accredited doctors in regions outside NCR.
• The total number of government doctors in the Philippines, as per a 2006
survey is 2,955.
• The total number of doctors in the Philippines as per the 2006 survey is
45,555.
37
1
10
100
1000
10000
100000
internalMedicine
Pulmonology
Endocrinology/Diabetology
Oncology
Gastroenterology
Rheumatology
Nephrology
Cardiology
Dermatology
Paediatrics
OB-Gynaecology
GeneralSurgery
OrthopedicSurgery
Uro-Surgery
Opthalmology
EENT/ENT
Psychiatry
Neurology
TotalNo.ofSpecialists
GeneralPractice
TotalNO.ofDoctors
Metro Manila
Luzon
Visayas
Mindanao
Total
Source:
Philippines
Health System
Review, 2011

23
PHARMACEUTICAL MARKET IN THE PHILIPPINES
The Philippines' pharmaceutical market is expanding at its fastest pace in
decades. Its market has been growing at a rate of 12–14 percent annually.
The Filipino drug market is set to reach $4.3 billion by 2014. This would
put the country on par with Taiwan and Indonesia, in terms of size.
The value of the pharmaceutical market in the country amounted to
$4billion in 2013, and it is expected to increase at a CAGR of 9.4% to
reach approximately $8 billion in 2020. The positive trend in the
healthcare market of the Philippines can be attributed primarily to the a
number of factors1
It has a 3.93% market share in the Asia Pacific
pharmaceutical market.2
Generic substitution in both the public and private sectors, which has been
a driver for the manufacture of generic drugs - Increased expenditure on
medicines by Local Government Units (LGUs) - Government initiatives
for the prevention and management of chronic diseases - an improved and
updated regulatory environment. In 2012, foreign pharmaceutical
companies captured 70 percent of the Filipino market. That is less than in
previous years, when market share was 80 percent. GlaxoSmithKline,
Novartis and Sanofi are among the largest foreign pharmaceutical
companies doing business in the Philippines. Among domestic drug
companies, United Laboratories, Pascual Laboratories, GC International
and Natrapharm are the largest.
The generics segment is increasingly important in the Philippines. In
addition to local manufacturers, many foreign manufacturers have entered
the market. Some of the fastest growing companies include Novartis'
generic arm Sandoz, Taiwan's Orient Europharma (OEP) and Getz
Pharma of Pakistan. To compete with these generic and off-brand
products, many multinational companies are reducing the prices of some
brand name drugs by as much as 50 percent. Drug pricing levels are higher
1
Dr. Jibran K., (2015), "Philippines Pharmaceutical Market in 2020", [Online : Web]
Accessed 10 Sept. 2016 URL https://www.linkedin.com/pulse/philippines-
pharmaceutical-market-2020-dr-
2
The Philippines Healthcare Association of the Philippines, Philippinr Pharmaceutical

24
in the Philippines than in almost any other Asian country. Poor purchasing
practices by Filipino hospitals, high retail markups and the prohibitive
cost of importing pharmaceutical ingredients are just a few reasons for
this. Other reasons include low rates of health insurance and low rates of
coverage for outpatient drugs. To increase healthcare access, the Filipino
government has mandated price controls on certain essential drugs. In
2008, it passed the Universally Accessible Cheaper and Quality Medicines
Act. This act granted the president and the secretary of health the power to
impose maximum retail prices on drugs included in the Philippines'
Essential Drug List (last released in 2008).3
In the Philippines, there are legal or regulatory provisions affecting
pricing of medicines. These provisions are aimed at the level of
manufacturers, wholesalers and retailers. The government runs an active
national medicines price monitoring system for retail prices. Regulations
exist mandating that retail medicine price information should be publicly
accessible. The e-EDPMS (electronic-Essential Drug Price Monitoring
System) database is under construction.4
In 2009, an Act mandated a 50 percent price reduction on 21 molecules
and their preparations. This affected drugs including Pfizer's hypertension
drug Norvasc and GlaxoSmithKline's antibiotic Augmentin. Fearing
further cuts, foreign drug companies voluntarily cut prices on an
additional 16 drugs.5
3
4
5

25
PRODUCT REGISTRATION
Companies that are involved in the manufacture, import, export,
distribution, retailing, packaging and re-packaging of pharmaceuticals in
the Philippines must obtain a License to Operate (LTO) before they can
register their product with the Philippines Food and Drug Administration
(FDA). An LTO takes one to two months to process.
Pharmaceutical product registration requires the following information:
• 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
• 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).

26
Figure XV: Requirements for Registration6
Unlike other import markets, the Philippines market is marred with rules
and regulations for importers of pharmaceutical goods. In order for an
importer to bring his/her pharmaceutical products into the country, they
must follow the required registration procedure in order for their drugs to
be sold in the Philippines. This registration is completed in the name of
local distributors or through a consultant lawyer representing the
importing companies. This registration however, leaves the importer with
no direct rights over the product registration, despite his payment for the
same. The only way around this is if the company opens a Philippines
branch of their business in the Philippines.
6
ibid.

27
PHARMACEUTICAL IMPORTERS
The Filipino Pharmaceutical industry depends heavily on imports for both,
raw materials and finished products. Very few foreign pharmaceutical
companies undertake their own manufacturing in the Philippines. Instead,
they import and distribute finished pharmaceutical products, or they
import drug ingredients and outsource production to local manufacturers.
Some of the major local companies that import pharmaceuticals into the
Philippines are:
• Eon Pharmatec, Inc.
• Aspen Philippines
• Philippine Pharma Procurement Inc.
• Khriz Pharma
• Raquel Abbas
• Pharex-Pascual Laboratories, Inc.
• Marzan Pharma
• Pasteur Pharma
• All-Bio Pharma
• Medicamenta Inc.
• Merck Inc.
• Zynova
• Wellness AG
• Pasture Pharmaceuticals
• The Cathay Drug Co.
• Sherryville Medical Healthcare products
• Servier Philippines
Legal provisions exist requiring authorization to import medicines. Laws
exist that allow the sampling of imported products for testing. Legal
provisions requiring importation of medicines through authorized ports of
entry do not exist. Regulations or laws exist to allow for inspection of
imported pharmaceutical products at authorized ports of entry.

28
Import tariff may apply to all imported medicines or there may be a
system to exempt certain products and purchases. The import tax or duty
may or may not apply to raw materials for local production. It may be
different for different products. Some raw materials are banned for import.
In 2000, the government implemented the Parallel Drug Importation (PDI)
Pharma Plan 50. Through the Philippine International Trade Corporation
(PITC), the government imported off-patent drugs from an essential drug
list. The imports, which were primarily sourced from India, competed
directly with the same branded products marketed in the Philippines by
trademark owners with existing marketing authorization from the (BFAD).
However, due to the limited volume of imports (only about 0.16% of the
total comparative pharmaceutical market) and limited distribution network
(only 70 out of 600 government hospitals), the Plan failed to bring down
drug prices and increase the access of the poor to cheaper medicines.7
Figure: XVI: Landed Costs Levied on Imported Pharmaceuticals8
7
Aldaba, Rafaelita M. (2008), "Assessing Competition in the Philippines Market",
Philippines Institute for Development Studies, 2008-23 : 34-35
8
Health Action International, Philippines Components of Medicine Prices
Flowcharts created from market research date on select drugs, namely: Amlodipine
tab/5mg (Novarsc); Atenolol tab/50 mg (Tenormin); Atorvastatin tab/20 mg (Lipitor);
Co-amoxiclav tab 500+125 mg (Augmentin); Cotrimoxazole tab/400+80 mg (Bactrim);
Glibenclamide tabb/5 mg (Caonil); Paracetamol tab/500 mg (Panadol)

29
PHARMACEUTICAL MANUFACTURING
One domestic manufacturer dominates production for most foreign
pharmaceutical companies in the Philippines. Interphil Laboratories
(Zuellig Family Trust Company) handles contracts from 15 of the 20
biggest foreign pharmaceutical companies doing business in the
Philippines. In 2009, it managed 90 percent of Wyeth's local drug
manufacturing. In the same year, it managed all local manufacturing for
Pfizer.
Apart from Interphil, Unilab, the largest Filipino company has the largest
individual share of the domestic market. Other firms that service foreign
pharmaceutical companies include Hizon Laboratories, Swiss Pharma and
Euro-Med Laboratories. All domestic and international manufacturing
facilities producing drugs for the Philippines' market are required to meet
Filipino Good Manufacturing Practice (GMP) standards.
With the exception of Unilab and Chemfields, 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. Because the cost of
R&D is prohibitive, domestic pharmaceutical companies gain access to
new drugs either through their domestic offices abroad or through
licensing agreements with foreign pharmaceutical manufacturers.
The Philippines is a member of the World Trade Organization. Legal
provisions granting patents to manufacturers exist and is enforced. These
cover pharmaceuticals, laboratory supplies, medical supplies and medical
equipment.
There are 61 licensed pharmaceutical manufacturers in the Philippines. In
2007, domestic manufacturers held 31.3% of the market share by value
produced. The percentage of market share by volume produced by

30
domestic manufacturers is 48%. There are 40 manufacturers that are Good
Manufacturing Practice (GMP) certified.9
Figure XVII: Manufacturers' Markup on Pharmacwutical Goods10
9
10

31
PHARMACEUTICAL DISTRIBUTORS
Very few foreign pharmaceutical companies do their own manufacturing
and distribution in the Philippines.
Most distribution takes place through two major local companies – Zuellig
Pharma and Metro Drug.(Zuellig Family Trust Companies) Together, these
two companies control 85 percent of distribution channels in the
Philippines. Unlike manufacturers, wholesalers and distributors do not
have to comply with Good Distributing Practice (GDP) standards.
Some companies in the Philippines are engaged in both, distribution as
well as manufacture of pharmaceutical products. Examples of such
companies are EON Pharmatek and Biomed Pharma Inc. Speed Comm
Distribution also deals with distribution of pharmaceutical products in the
Philippines.
Figure XVIII: Wholesaler's Price Markup on Pharmaceutical Goods11
11
Ibid.

32
The Philippines Pharmaceutical Manufacturers Association (PPMA) is a
non-stock, non-profit association established in September 30, 1950. It
was organized for the primary purpose of bringing together entities
engaged in the manufacture and/or marketing of pharmaceutical products
for the attainment of continually upgrade the standards of the
pharmaceutical manufacturing industry in the Philippines, promoting and
encouraging pharmaceutical research and technology development with a
view to utilizing indigenous material and cooperating with the medical
and allied professions for the betterment of the healthcare delivery system
in the country.12
Member companies of the PPMA include:
• Abbott Philippines
• Amber Packaging Corporation
• Apo
• Ashford Pharmaceutical Laboratories Inc.
• AstraZeneca Philippines
• Baxter
• Bayer
• Catalent
• ClarkChem Inc.
• DKSH
• Eisai
• E.L. Laboratories, Inc.
• Flexo Manufacturing Corporation
• Folares Pharmaceuticals, Inc.
• GDL Capsule Phils, Inc.
• GlaxoSmithKline
• GX International, Inc.
• Hizon laboratories Laboratories, Inc.
• Interchemex, Inc.
• Interphil Laboratories, Inc.
12
The Philippines Pharmaceutical Manufacturing Association Accessed 15 Sept 2016
URL http://www.ppma.ph/#

33
• Janssen Pharmaceutica
• La Croesus Pharma, Inc.
• Lejal Laboratories, Inc.
• Bi Lilly, Inc.
• Lloyd Laboratories, Inc.
• Mead Johnson Laboratories Philippines
• Natrapharm, Inc.
• Netpak Philippines, Inc.
• Novartis Healthcare Philippines
• Pascual Laboratories, Inc.
• Premier Creative Packaging, Inc.
• Pfizer, Philippines, Inc.
• Pharmatrix Corporation
• Philmed
• Phoenix Pharmaceutical, Inc.
• Reckitt Benckiser Healthcare
• Roche Philippines
• Sanofi-Aventis Philippines
• Schering Plough Philippines
• Shimadzu Philz Corp.
• San Miguel Yamamura Packaging Corp.
• Swiss Pharma Research Laboratories, Inc.
• Takeda Pharmaceuticals
• Telstar Manufacturing Corporation
• Theo-Pam Trading Corporation.
• UNIMEX
• YSS Laboratories Co. Inc.13
• United Laboratories Inc.
• MD Pharmaceuticals Inc.
13
Ibid.

34
FOREIGN COMPANIES IN THE PHILIPPINES
Altogether, there are more than 500 drug traders, 700 drug importers, and
5,000 drug distributors in the Philippines. However, three quarters of the
top 20 pharmaceutical companies are foreign. Foreign pharmaceutical
companies control 66% of total industry sales , with market shares of
individual foreign companies ranging between 1% and 6%. 143 European
companies command a combined market share of 38% and 76 U.S.
companies control a combined share of 28%. Only 30%of pharmaceutical
sales are accounted for by domestic Filipino companies. In addition to
GlaxoSmithKline, Novartis and Sanofi, they include Pfizer, Wyeth, Abbott
Laboratories, AstraZeneca, Johnson & Jonson and Bristol Myers Squibb.
Unlike most foreign pharmaceutical companies, GlaxoSmithKline
conducts its own manufacturing in country. It has the largest MNC
manufacturing facility in the Philippines, which it uses to produce drugs
for both the Philippines and other Southeast Asian markets.
Other foreign pharmaceutical companies are using the Philippines as a
base for expansion into the rest of Southeast Asia. In 2009, for example,
Novartis established its Southeast Asian headquarters just south of
Manila. The company also plans to conduct clinical trials in the
Philippines for many of its future key products, especially vaccines.
Similarly, pharmaceutical multinational corp, Aspen, imports finished
pharmaceutical products into the Philippines via its Philippines outpost.
Presence of Foreign versus Local Pharmaceutical Companies in the
Philippines
COMPANY 2003 2004 2005 2006 2007
LOCAL 208 210 224 224 240
FOREIGN 165 171 194 2003 231

35
Figure XIX: Foreign and Local Pharma Companies: Share Trend14
14
The Philippines Healthcare Association of the Philippines, Philippinr
Pharmaceutical Industry Factbook (2008), Ed. 7 : 67

36
Figure XX: Share of Foreign and Local Companies per Therapeutic
Class in Pesos15
15
The Philippines Healthcare Association of the Philippines, Philippinr
Pharmaceutical Industry Factbook (2008), Ed. 7 : 69

37
PHARMACEUTICAL RETAILERS IN PHILIPPINES
In the Philippines, pharmaceutical retail is of two kinds: generic and
branded.
Generic drugs are always less expensive, it costs about thirty percent to
eighty percent less than the brand name drug. Generic drugs mean more
cost-savings to the consumers. Its use can save patients and even
insurance companies thousands of dollars without compromising the
quality of health care. According to the U.S. Congressional Budget Office,
generic drugs save consumers an estimated $8 to $10 billion a year at
retail pharmacies. Even more billions are saved when hospitals use
generics.
There are different categories of pharmacies in the Philippines that sell
either generic or branded drugs. Depending on the type of pharmacy or
hospital, the prices of the drugs sold also vary. Thus, drugs sold at a
government pharmacy will be cheaper than those sold at a chain pharmacy
but the stock availability is limited.

38
Figure XXI: Retail Markups on Pharmaceutical Goods16
Pharmacies selling generic drugs in the Philippines include:
The Generics Pharmacy
Generika Generics
My Botika
Botika ng Bayan
Branded drugs are costlier and are sold at retail pharmaceutical
chains all around the country such as:
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
16

39
CONCLUSION: WHY INVEST IN THE PHARMACEUTICAL
MARKET OF THE PHILIPPINES?
The Philippines as an archipelago challenges trade and commerce in the
region. It's highly fragmentary geographic nature challenges traders and
places logistics at a premium. This in turn puts a heavy toll on the cost of
goods in the region, especially pharmaceutical drugs and services.
Moving away from the geographical dimension of the Philippines, there
are a number of factors that present Philippines as a viable investment
candidate in the Pharmaceutical market.
Firstly, The Filipino Pharmaceutical market is set to grow rapidly and be
valued at $ 4 billion by 2020. The Foreign investment already accounts for
70% of pharmaceutical manufacturing and distribution in the Philippines
with some of the World's largest pharmaceutical companies like Pfizer,
Zuellig, Wyeth, Abbott and GlaxoSmithKline already holding a significant
market share in the country.
Secondly, it is evident that there is a large discrepancy between generic
and branded drugs in the Philippines. This discrepancy, especially seen in
the highly priced branded drugs is due to the monopolistic competition
and open pricing followed by the few private companies in the country.
There is big scope for good branded generics accompanied with robust
marketing and promotion.
Though there are laws in place, such as the Generic Drugs Act, and the
Philippines National Drug Policy that are meant to regulate drug prices,
there is these laws do not permeate into the private sector. Unlike India
that possess Drug Price Control Orders (DPCO) and ample competition,
The Philippines' open pricing and lack of brand competition, allows
companies to raise drug prices.

40
An example of DPCO in India for MNCs versus open pricing of MNCs in
the Philippines is as follows:
Country Dose Manufacturer
Brand
Name/Generic
Price
India 250 mg/100 tab SmithKline Beecham Amoxil $ 10
Phillipines 250 mg/100 tab SmithKline Beecham Amoxil $29
India 150 mg/100 tab Glaxo Zantac $3
Philippines 150 mg/100 tab Glaxo Zantac $95
* Source: Dr. K Balasubramaniam, "Retail Prices in Asia-Pacific Region", HAI News, No 86ec 1995
From the table above, it is evident that any pharmaceutical company
interested in investing in the Philippines stands to make larger profits
here.
Though a quarter of the Filipino population lives in dire poverty, the per
capita income of the per capita income of the Filipino population is $
7,282 dollars that is almost $ 2,000 more than that of India ($ 5,350). This
automatically means that the Filipino population is wealthier, thus being
able to spend more on quality medication.
Despite there being generic counterparts to branded drugs, much of the
population opt into consuming branded drugs that are of a higher price.
This is often due to the belief that higher priced drugs will be of a
superior quality. Though generic drug pricing and the Botika ng
Barangays (BnB) programme do exist in the Philippines, the biggest task
for the government continues to be the effective implementation of these
rules.
The Philippines pharmaceutical market is ranked 11th as the most
attractive pharmaceutical market in the Asia-Pacific market and 3rd third
largest in ASEAN, after Indonesia and Thailand. Why then, invest in the
Philippines rather than Thailand?
At a 67 million, Thailand's population is 2
/3rds that of the Philippines,
automatically portraying the former as a larger market. Thailand is also a
largely generic manufacturer market, allowing lesser scope for branded or
branded generics manufacturers to enter the market. Furthermore, though

41
Thailand possesses bigger market in terms of units sold, the Philippines
has a larger market share when it comes to value per unit. This is mainly
because of the open pricing and monopolistic competition practiced in the
country.
For Wallace Pharmaceuticals, investment in the Philippines market the
sale of cardio-vascular drugs and proton pump inhibitors offers scope for
the growth of the company in the Philippines. The Philippines healthcare
profile shows the largest morbidity of cardio-vascular diseases making it a
good target market for the penetration of Wallace's cardio-vascular drugs.
The Filipino Pharmaceutical market shows a huge potential to create and
sustain brands.
It is a market that shows great respect for Intellectual Property Rights and
will not simply allow the sale of generic and combination drugs which are
patented.

42
CONTACT REFERENCES
Philippines Pharmaceutical manufacturing Association
Phone: +632 893-4230
Fax: +632 7531040
Address:
Room 1217,
Cityland10 Tower II,
6817 Ayala Avenue cor.
HV dela Costa Street,
Makati City,
Metro Manila-Philippines
E-mail: info@ppma.ph
Food and Drug Association of the Philippines
Centre for Drug Regulation and Research
Licensing: +632 857 1989
Registration: +632 857 1986/87
Department of Trade and Industry
Foreign Trade Service Corps: 3F DTI International Building
375 Sen. Jil J. Puyat Ave., Makati City
Phone: +632 465 3380
E-mail: ftsc@dti.gov.ph
Bureau of Import Services: 3F Tara Building
389 Jil J Puyat Ave., Makati City
Ph: +632 403-1420
E-mail: bis_ifd@dti.gov.ph
Philippines International Trading Corporation
National Development Company Building
116 Tordesillas Street
Salcedo Village
1227 Makati City
Phone: +632 818 9801
Fax: +632 892 20 54/ 892 07 82
E-mail: pitc@pitc.gov.ph

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