the philippines market research presentation
TRANSCRIPT
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THE PHILIPPINES: A PHARMACEUTICAL MARKET RESEARCH
STUDYNadia Dias, Marketing Intern
Guide: Francis Pires, Business Head-International Division
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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
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• 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
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• 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
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ESTIMATED POPULATION BY SEX
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• 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
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• 2011-2016- 6% economic growth.• FDI growth- lags behind regional peers.• ¼ of the Filipino population lives in poverty.• 50% <$2/day
THE ECONOMY
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• 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
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PROJECTED LIFE EXPECTANCY AT BIRTH
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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
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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)
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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
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MORBIDITY: 10 LEADING CAUSES
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RISK FACTORS AFFECTING HEALTH STATUS
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PHARMACEUTICAL SUPPLY CHAIN
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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
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• 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
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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
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SUPPLY CHAIN: MNC DRUG TRADER
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SUPPLY CHAIN: MNC DRUG IMPORTER
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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
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SUPPLY CHAIN: LOCAL DRUG DEALER
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SUPPLY CHAIN: LOCAL DRUG MANUFACTURER
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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
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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
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SHARE OF THE TOP THERAPEUTIC CLASSES TOTAL
PHARMA
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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
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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
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DISTRIBUTION OF DOCTORS PER SPECIALITY, 2006
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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
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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
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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
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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
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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)
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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
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CERTIFICATE OF PRODUCT REGISTRATION
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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
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Landed Costs Levied on Imported Pharmaceuticals
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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
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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.
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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%
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Manufacturer's’ Markup on Pharmaceutical Goods
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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.
•
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Wholesalers Price Markup
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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
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FOREIGN & LOCAL PHARMA COMPANIES
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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
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RETAIL MARKUPS
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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
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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
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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
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SALAMAT!