This Market Study was carried out during my internship training period at Wallace Pharmaceuticals, India, Pvt. Ltd. it is a presentation proposal to the company in view of making future investment in the Philippine Pharmaceutical Market. The Philippines pharmaceutical market is a complex institution owing to its expensive medical care, monopolistic competition, and lack of government controlled drug pricing, all within a country that has high levels of poverty. The research study delves further into the pharmaceutical market, methods of investment and the advantages of investment in the said market. N.B: This presentation is based solely on secondary internet research. Though 100% accurate and cited, some information (figures) are dated due to lack of current and up to date information availability on the internet. The presentation is part of a market research study.

1. THE PHILIPPINES:
A PHARMACEUTICAL MARKET
RESEARCH STUDY
Nadia Dias, Marketing Intern
Guide: Francis Pires, Business Head-International Division

2. 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

3. • 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

5. • 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

6. ESTIMATED POPULATION BY SEX

7. • 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

8. • 2011-2016- 6% economic growth.
• FDI growth- lags behind regional peers.
• ¼ of the Filipino population lives in poverty.
• 50% <$2/day
THE ECONOMY

9. • 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

10. PROJECTED LIFE EXPECTANCY AT BIRTH

11. 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

12. 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)

13. 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

14. MORBIDITY: 10 LEADING CAUSES

15. RISK FACTORS AFFECTING HEALTH STATUS

16. PHARMACEUTICAL SUPPLY CHAIN

17. 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

18. • 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

19. 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

20. SUPPLY CHAIN: MNC DRUG TRADER

21. SUPPLY CHAIN: MNC DRUG IMPORTER

22. 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

23. SUPPLY CHAIN: LOCAL DRUG DEALER

24. SUPPLY CHAIN: LOCAL DRUG MANUFACTURER

25. 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

26. 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

27. SHARE OF THE TOP THERAPEUTIC
CLASSES TOTAL PHARMA

28. 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
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

29. 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

30. DISTRIBUTION OF DOCTORS PER SPECIALITY,
2006

31. 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

32. 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

33. 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

34. 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

35. 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)

36. 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

37. CERTIFICATE OF PRODUCT REGISTRATION

38. 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

39. Landed Costs Levied on Imported Pharmaceuticals

40. 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

41. 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.

42. 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%

43. Manufacturer's’ Markup on Pharmaceutical Goods

44. 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.
•

45. Wholesalers Price Markup

46. 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 Asia
Companies 2003 2004 2005 2006 2007
Local 208 210 224 224 240
Foreign 165 171 194 203 231

47. FOREIGN & LOCAL PHARMA COMPANIES

48. 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 pharmacy
Generic 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

49. RETAIL MARKUPS

50. 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

51. 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

52. 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

53. SALAMAT!