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Generics revive Philippines pharma industry

December 21, 2015 at 09:06

Generics revive Philippines pharma industry

Felipe Salvosa

Local manufacturers and retailers thrive as multinationals pull back

An Indian pharmacist pulls out a box of medicines from a shelf at a Generic Drug Store at the Victoria Hospital in Bangalore on June 28, 2012. The Generic Drug Store which was opened in Bangalore recently by the medical education department in association with the Karnataka State Cooperative Consumer Federation sells branded generic drugs which are priced less than 50 percent of the Maximum Retail Price (MRP). Estimates by Dolat Capital show that the US generic market, currently estimated at USD350 billion (Indian Rupees 19,93,279.8 billion) which is 75 per cent of the pharmaceutical industry volume, is expected to grow by around 12-13 per cent over 2011-15. According to industry estimates, Indian companies are filling an average of 1,000 abbreviated new drug application (ANDAs) every year in the US to tap the opportunity. The bulk drug filings from Indian companies in US have also increased significantly. Of the total bulk drug filings in US, India accounted for 45 percent in 2009 and 49 percent in 2010, which further increased to 51 percent last year. AFP PHOTO/Manjunath KIRAN (Photo credit should read Manjunath Kiran/AFP/GettyImages)


The Philippines is a developing country in which nearly 70 per cent of healthcare spending goes to the private sector. This combination means that for most Filipinos, medicines are expensive.

But a regulatory shift has boosted the use of generics — cheaper copies of proprietary medicines with expired patents — and is shaking up the market to the benefit of local manufacturers.

The shift has followed a law passed in 2008 that imposed price caps and stiffer fines on doctors prescribing brand-name medicines instead of generics.

One result is that Unilab, a local pharmaceuticals group, has captured nearly 48 per cent of the pharmaceuticals market, at the expense of multinational giants such as Pfizer, Abbott Laboratories and GlaxoSmithKline.

Generic medicines took 65 per cent of the market in 2014, from less than 40 per cent in 2009, according to the Pharmaceutical and Healthcare Association of the Philippines, an industry lobby group.

Foreign pharmaceuticals makers suffered price caps imposed by a 2008 law on prescription drugs considered to be essential medicines, such as those used to treat hypertension, diabetes and pulmonary diseases.

In response, companies such as Pfizer have begun to introduce their own branded generic lines or have dismantled production in the Philippines altogether.

Increased use of generic drugs has been spurred by the emergence of generics-only pharmacies such as Generika and The Generics Pharmacy, two chains that have more branches between them than the retail leader Mercury Drug’s 1,000 stores.

FT Confidential Research, a Financial Times research service, expects the market share of generics to expand to 70 per cent by 2020, as the government bolsters spending on healthcare with revenues from rising taxes on tobacco and alcohol.

This year, the Philippine pharmaceuticals market is expected to grow 4.4 per cent to 152bn pesos ($3.25bn). Growth however is expected to accelerate to 4.7 per cent next year and 5 per cent in 2017–2018, with the administration of President Benigno Aquino raising healthcare expenditures by 38 per cent to 132.7bn pesos under the 2016 budget.

Felipe Salvosa is a researcher covering the Philippines at FT Confidential Research.


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