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HEALTHCARE

LIFE SCIENCES
REVIEW

&

PHARMACEUTICALS:
SHAKING UP THE SYSTEM
LIFESTYLE MATTERS:
PAGE 21

DIABETES & ONCOLOGY


PAGE 12

INTERVIEW
WITH :
CARVING
OUT A MEDICAL
RAUL
MANLAPIG,
DEVICE MARKET
PRINCIPAL MANAGING
PAGE 56

CASE STUDY: SILANES


FOCUS
ON:
PAGE 70

DIRECTOR, ARUP
PAGE 30

A BOOM IN BPO
PAGE 20

CONVERGENCE IN ACTION:
INTERVIEW
WITH:
FOCUS
ON DIABETES
DR. ENRIQUE
T.
PAGE ONA,
82

SECRETARY OF HEALTH
PAGE 34

MEXICO 2013
COFEPRIS Revamped
Mikel Arriola, the man who changed an institution and an industry PAGE 18

PHILHEALTH:

published in association with

A PRIORITY FOR THE AQUINO ADMINISTATION. PAGE 7

PHILIPPINES
2013

March 2014

In a world of constant change,

we stretch beyond the limits


The healthcare information management (HIM) industry is changing rapidly. From new
technologies that open up possibilities for bringing services closer to people to a
complete overhaul of how health issues are reported and diagnosed, the old ways of
providing healthcare are quickly becoming obsolete.
Pointwest backs up its long experience in HIM with its highly-skilled and agile IT staff
to make sure you keep up with the changes, especially as the industry gets a major
overhaul with the shift to ICD 10 and its effect on the IT infrastructure of HIM
providers.
The shape of healthcare is changing. With Pointwest as your HIM partner, youll be
assured that you will stay fit, no matter what shape the industry becomes.

Head Office
12th Floor Citibank Center 8741 Paseo de Roxas
Makati City 1226, Philippines
Website: www.pointwest.com.ph
Facebook: www.facebook.com/Pointwest.PH
Twitter:
@PointwestPH MARCH. 2014
PHILIPPINES

Contact Person:
Renato B. Quizon
Executive Director
Business Development
rene.quizon@pointwest.com.ph
Mobile: +63917 861 0345
Phone: +632 814 1102

Acknowledgements
Pharmaboardroom would like to thank
Dr. Enrique T. Ona, Secretary of Health,
Mr. Alexander Padilla, President and CEO
of PhilHealth, Mr. Kenneth Hartigan-Go,
acting Director FDA Philippines,
Teodoro B. Padilla, Executive Director and
Reiner W. Gloor, Adviser, Pharmaceutical
and Healthcare Association of the
Philippines (PHAP) and Thelma TobiasGo,
President, The Philippine Chamber of the
Pharmaceutical Industry (PCPI) for their
contributions to this report.

PHILIPPINES MARCH. 2014

CONTENTS
7 CONNECTING THE DOTS
8 QUANTIFYING THE MARKET
9 HIGH STAKES FOR NEW STAKEHOLDERS
9 MATURE NEIGHBOR DOWN UNDER
10 RELEVANCE: TO BE OR NOT TO BE?
11 CORPORATE CALLING
12 LIFESTYLE MATTERS
13 MABUHAY! NAMASTE!
14 WHATS RITE IN A NAME
14 SALES 2 MANUFACTURING
16 EN PRISE!
17 THE RE-TALE: A STORY OF GENERICS
18 MORE GOVERNMENT, MORE PRIVATE
19 PIONEERING HARMONY
20 A BOOM IN BPO

INTERVIEWS

24 
Interview with: Gregorio Navarro, Managing Partner & Ceo, Deloitte Philippines
Interview with: Maria Cristina G. Beng Coronel, President, Pointwest
27 
Technologies
Interview with: Raul Manlapig, Principal Managing Director, Arup, Philippines
30 
Interview with: Jason Carroll, General Manager, Janssen (Philippines)
32 
Interview with: Dr. Enrique T. Ona, Secretary Of Health, Department Of Health
34 
Interview with: Alexander A. Padilla, President & Ceo, Philhealth
36 
Interview with: Dr. Kenneth Y Hartigan-Go, General Director, Fda
38 
Interview with: Teodoro B. Padilla & Reiner W. Gloor, Executive Director &
40 
Advisor, Phap
Interview with: Thelma Tobias-Go And Ed Ocampo, President Of Pcpi & Vp Of
41 
Scheele Laboratories
Interview with: Thomas Weigold, Country President And Managing Director,
42 
Novartis
Interview with: Juanito Luna, Founding President And Ceo, Prosel
44 
Interview with: A.A. Santillana, Group Chairman & Ceo, Sv More, Philippines
46 
This report was prepared by Pharmaboardroom.com
Project Director: Koen Liekens
Project Publishers: Julie Avena

Project Coordinators: Alina Manac, Ibtissam Sadouni


Contributors: Teddy Lamazere

Graphic Assistance: Omar Rahli, Nisha Albuquerque


Copyright
All rights reserved. No part of this publication maybe reproduced in any form or by any means, whether electronic, mechanical or otherwise including
photocopying, recording or any information storage or retrieval system without prior written consent of Focus Reports.
While every attempt is made to ensure the accuracy of the information contained in this report, neither Focus Reports nor the authors accept any
liabilities for errors and omissions. Opinions expressed in this report are not necessarily those of the authors.

PHILIPPINES MARCH. 2014

PHILIPPINES MARCH. 2014

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philippines report

PhiliPPines:

Harvest, by Adrian Morales.


Credit Julita Geronimo, Globo
Asiatico Enterprises Inc.

Connecting the Dots

he inclusion of healthcare as a priority on the


presidential agenda has led to knock-on consequences that are being felt across the healthcare
value chain in the Philippines. Universal healthcare coverage (UHC) has been cemented, which has
led to a shift from branded medicines to generics,
leading many players to a strategic repositioning. The
most successful players have been those who focused
on a strategy that was inclusive of all stakeholders
and aligned with the presidential agenda of affordable
and accessible healthcare.

This sponsored supplement


was produced by Focus Reports.
Project Director: Koen Liekens
Project Coordinators: Alina Manac,
Ibtissam Sadouni
Project Publishers: Julie Avena
Contributors: Teddy Lamazere
Graphic Assistance: Omar Rahli,
Nisha Albuquerque
For exclusive interviews and more info, please
log onto www.pharmaboardroom.com
or write to contact@focusreports.net
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rolled 83 percent of the population. The
When the new administration took
enrolment rate means that these are people
over in 2010, our mantra was to include the
that have come under the health insurance
previously overlooked poorest segment of
program at one point or another. Whether
the population, says Enrique Ona, secrethey can avail of benefits is what our covtary of health of the Philippines. Through
erage rate focuses on. Our covered rate is
our Department of Social Welfare, we had
really around 73 to 74 percent, explains
identified 5.2 million households -which
Alexander Padilla, president and CEO of
could include four to five family memPhilHealth. Our key priorities remain
bers- as part of the poor layer of society. In From left: Dr. Enrique T. Ona, secretary of
membership and benefits. In line with the
terms of people, that number comes down health; Alexander Padilla, president and
CEO of PhilHealth
to roughly 25 million, or a quarter of the
countrys population, said Ona. Now, the
challenge of the Department of Health (DOH) is to address the
next layer of society, the so-called near poor that are not yet enrolled in the PhilHealth scheme. The projected number of famiIn IMS Health vocabulary, the Philippines would
lies from this layer is 14.7 million, essentially 58.8 million Filipicount as a Frontier Market. Along with Malaysia and
nos, that should be enrolled by the end of 2014, Ona explains.
Bangladesh, these markets are expected to each
Since 2010, the Aquino administration has reached a numhave a sales increase of USD 2.7 billion by 2017.
ber of major achievements on the healthcare front. The amendFor the Philippines, this would mean an approximate
ment to the National Health Insurance Act, officially called
doubling in value. Nonetheless, the Philippines benRepublic Act 10606, was essential in the sense that it made it
efi ts from the strong momentum of the many marmandatory for all Filipinos to be covered through the national
kets in the Asia-Pacifi c region, driven in large part
insurance body PhilHealth. Officially, PhilHealth now has enby macroeconomic growth, rising healthcare spend,
and urbanization. Based on the IMS market prognosis, the CAGR of the Philippines will average around
3.8 percent to 4 percent through 2017, up from the
current three percent. Among the factors that are
expected to fuel this growth are improvements in
healthcare facilities across the country, the continued push for generic medicines and for genericsonly pharmacies, and the eventual implementation
of UHC, according to IMS Health.

Quantifying the market

Philippines Total Annual Sales Value (ExMNF USD)


US$ Bn
3,500
3,000
2,500
2,000
1,500

2,019
45.8%

Branded Generics
Originator Generics
2,212
46.8%

1,000
500
0

Unbranded Generics
Other
2,703

2,449

2,515

2,585

47.8%

49.3%

49.9%

51.2%

43.8%

42.6%

41.2%

38.4%

37%

35.9%

2006

2007

2008

2009

2010

2011(f)

Source: IMS MIDAS Data, QTR 1 2011, forecast from Market Program 2011-2015

Pharmaceutical sales, USD Bn


Pharmaceutical sales, USD per capita
Pharmaceutical sales, % of health expenditure
Pharmaceutical exports, USD Mn
Pharmaceutical imports, USD Mn
Source: IFPMA, 2012; Business Monitor International

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2.911
31
34.50
43.4
777.1

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Presidents desire, we will have each and every Filipino registered
as part of PhilHealth. When it comes to health, the political will
is certainly there.

HigH StakeS for New StakeHolderS


To make healthcare affordable, in 2008, the government
implemented the Universally Accessible Cheaper and Quality Medicines Act, which included the Maximum Drug Retail

Mature Neighbor Down Under


It may seem natural for executives to move from one Southeast
Asian market to the other, be it
Indonesia, Vietnam, Malaysia or
the Philippines: these emerging
economies share trends, such
as moves towards UHC or an increased use of generics. In the
long run, IMS Health expects
them to follow the developed Patrick Tete,
managing director,
markets, some of which such as Servier
Taiwan and Australia are only a
stones throw away. The French MNC Servier saw its
senior executive Patrick Tete move into a position
as managing director of Servier Philippines in early
2013, having previously served as CEO of Servier
Australia for over eight years. In an attempt to better understand the road ahead for the Philippines,
PharmaBoardroom asked Tete for a comparison.
Apart from quality issues, counterfeit medicines
and corruption, Tete points out that the most striking change was the combination of a low-income
market with the absence of reimbursement. Two
thirds of healthcare expenditures in the Philippines
are private, while more than 50 percent is out-ofpocket. Filipino households consider medical care
as a low priority and close to 45 percent of the average monthly family expenditure goes on food. The
majority of Filipinos also barely have any access to
health services. Another major difference with Australia is the fact that we do not see the same types
of patients here. In the Philippines, it is all about
treating very sick patients. A survey conducted on
hypertensive patients indicated that half of those
patients already suffered end organ damage, which
usually refers to damage occurring in major organs
fed by the circulatory system (heart, kidneys, brain,
eyes). Filipinos consult doctors, but do so very late,
Tete says.

Price (MDRP) scheme. The MDRP called for a 50 percent


price reduction on 21 molecules, and introduced some systematization to drug pricing in the country. It led many multinational corporations (MNCs) into a period of negative growth,
but those with the right portfolios continued to grow.
The requirement for the industry to deliver relevant products is a question of alignment with the needs of the patients,
FACT SHEET PHILIPPINES
Per capita total expenditure on health (PPP int. $)
Per capita government expenditure on health (PPP int. $)
Total expenditure on health as a percentage of gross
domestic product
General government expenditure on health as a
percentage of total expenditure on health
Private expenditure on health as a percentage of total
expenditure on health
General government expenditure on health as a
percentage of total government expenditure
Social security expenditure on health as a percentage
of general government expenditure on health
External resources for health as a percentage of total
expenditure on health
Out-of pocket expenditure as a percentage of private
expenditure on health

142
50
3.61
35.34
64.66
7.55
29.67
1.35
83.57

Source: IFPMA, 2012; WHO

Life through Discovery


Philippines: The 3rd largest market for Servier in Asia
Servier Philippines: Over 30 years of dedicated
service and commitment to healthcare

Servier Foundation is committed to


re-invest all profit into R&D

Every

Script for a Servier product


is an

Investment to

Medical Research and Education.


SERVIER PHILIPPINES, INC.
#2 Orion corner Mercedes Streets, Bel-Air Village, Makati City Philippines
Tel. Nos. 897-8990 to 97
Fax No. 897-9027

Website: www.servier.com

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From left: Teodoro Ted Padilla, executive director, PHAP; Reiner


Gloor, advisor, PHAP; Thomas Weigold, president and managing
director, Novartis

the government and the country at large. We have observed a


shift with many of the industrys stakeholders, including several NGOs, now taking a more holistic view beyond drug prices.
The sector is now taking a joint approach to define a sustainable future for the healthcare system as a whole, says Reiner
Gloor, advisor to the Pharmaceutical and Healthcare Association of the Philippines (PHAP), an industry association largely
composed of MNCs. Now, we have reached a point where
we have gained the trust of groups that were traditionally opposed to big pharma, explains PHAPs executive director
Teodoro Ted Padilla. Apart from the NGOs, this includes
institutions such as the Department of Health, the local FDA
and PhilHealth.

UHC turned the government from a mere stakeholder into


an increasingly important customer, which was particularly
beneficial to local manufacturers. We also have the feeling that
the industry has changed, explains Thelma Tobias-Go, president of the Philippine Chamber of the Pharmaceutical Industry
(PCPI), the leading industry association for Filipino-owned,
mostly generic, manufacturers. President Aquino has pledged
to improve healthcare in the country and the Department of
Health now has one of the largest budgets in the government.
The local industry has faith in President Aquino and wants to
try to work with the government as a new customer.
UHC was a particular attempt to reduce out-of-pocket expenditures in the Philippines, which accounted for 54 percent of
total healthcare spending in 2010, according to a World Bank
report published in 2012.

relevaNce: to be or Not to be?


Survival for most MNCs in the post-MDRP period meant a refocusing on a few therapeutic areas of the highest unmet medical need. This means knowing and understanding where your
strengths as an organization lie, and what limitations exist due
to the local healthcare system at a specific point of time, says
Thomas Weigold, president and managing director of Novartis

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Tel.: +632-9827000
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11

philippines report
them out of the hospitals. We have to make sure that
Healthcare Philippines, the third largest MNC in the
the impact on patients improves, Tamesis concludes.
Philippines today. The Philippines has a high unmet
medical need in many different therapeutic areas.
But looking at the most relevant ones, hypertension,
corporate calliNg
respiratory, diabetes kill many patients in the Philippines, while we have innovative and quality affordWhen AstraZenecas CEO Pascal Soriot took ofable medicines to manage and control the diseases!
fice late 2012, he set out a strategy relying heavily on
In addition several specialty solutions like transplant,
emerging markets. He now looks at the Philippines as
cancer treatments or neurological medicines are Dr. Beaver R.
a source of cautious growth. In spite of a number of
Tamesis, president
needed urgently as well, says Weigold.
headwinds, we look at the Philippines as a country of
& managing
The innovators have to ask themselves: What are director, MSD
large opportunity. There is a large population and a
we doing to play actively in a relevant space? says
high unmet medical need. And even though economic
Beaver Tamesis, president and managing director of MSD Philgrowth may have been deceiving in the past, the economy has
ippines, a company growing in high single digits despite a flat
been growing rapidly for six consecutive quarters now, says Gamarket for MNCs. MSD followed the demographic shift in disgan Singh, country president, AstraZeneca Philippines.
ease profiles from predominantly infectious diseases to non-comWe have decided to stay focused on the innovative brands in
municable diseases. Apart from diabetes, coronary heart disease
the market and are constantly seeking for new launch opportuniand hypertension, vaccines for rotavirus and HPV are high on
ties both from our HQ as well as in-licensing opportunities. We
the agenda. Even contraception has seen explosive growth of 38
have strategized ourselves in such a way that enables us to keep
to 40 percent since the controversial Reproductive Health and
the patient at the center of everything we do. At the same time,
Responsible Parenthood Act came through, explains Tamesis.
we are also looking at knowledge partnerships with physicians,
But he also finds relevance beyond portfolios. We are spending a
developing future therapy areas and market needs, as well as
lot of efforts on patient compliance programs. We have to be seen
clinical trials tailored to these market needs, Singh adds. Overas partners that are relevant in reducing patient risk and keeping
all, we are buoyant about the space we are playing in. We know

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that our future will be distinctly different
from the past, but it will be equally glorious as our past has been, he concludes.
Stephen Saad and Gus Attridge, the
executives that run South Africa-based
MNC Aspen, Africas largest pharmaceutical company, set up a subsidiary
in Metro Manila in 2011, a bold and

aggressive move. The Philippines is a


market where brand equity is flourishing even as branded generics make their
mark in the local pharmaceutical industry, says Marcelina Ace Itchon, president and CEO of Aspen Philippines.
Both scenarios are opportunities that
Aspen can build on. We have the capa-

bility to prolong the lifecycle of selected


innovator products and a robust pipeline of quality and affordable medicines
that we can bring into this market in
due time. The audacity of Aspens top
management to invest in the Philippines
as its first foot in Southeast Asian soil
has paid off: in just two years, the Phil-

Lifestyle Matters
DIABETES 4.3 million Filipinos suffer from diabetes and another 6.6
million have pre-diabetes, according to the estimates of the International Diabetes Federation. The
main problem is that most people
with diabetes do not control their
blood sugar very well. Poorly controlled diabetes is the leading cause
of kidney failure and blindness and Christine Marie
D. Rosal, country
the second leading cause of ampu- manager, Novo
tations after traffic accidents. It is Nordisk
also associated with increased risk
of heart attacks, strokes, dementia and impotence in
men, explains Christine Rosal, country manager Philippines for Novo Nordisk, a diabetes focused MNC with
its headquarters in Denmark. More than 10,000 people each year in the Philippines get end-stage renal
disease and each year more than 60,000 people die
because of diabetes.
DOCTORS EYE: Increasingly, diabetes patients have
been flooding the National Kidney and Transplant Institute (NKTI), the leading transplant institute in Southeast
Asia, primarily in kidney transplants. Whether the kidney
failure primarily came from diabetes or from something
else has become harder to pinpoint. But the number one
cause of end-stage renal disease in the Philippines and
this hospital is diabetes, says Jose Dante Dator, executive director of the NKTI.
ONCOLOGY An estimated three out of every 100 Filipino women are expected to contract breast cancer before age 75, the highest incidence rate in Asia. Further
2008 data of the Philippine Cancer Society indicated
that 13 out of 100 males and 12 out of 100 females in
the Philippines would have had some form of cancer if
they would have lived up to age 75.
PharmaBoardroom asked Julie Geronimo about her
take on the changing oncology landscape, ever since
she set up a niche distribution company, focused on
oncology products, roughly two decades ago. In the
1980s, oncology as a niche area did not yet have the
exposure it has today. I started working in this area at

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a local company that merged into present-day Hospira.


When I tried to find suppliers that could deliver our
oncology products, I realized that this market needed
a new player that could deliver oncology products more
rapidly and in smaller volumes, Geronimo explains.
The supply gap became the raison dtre for Globo
Asiatico, where Geronimo is still president and CEO.
The importance of the oncology area has changed.
Because of the shift in dispensing from doctors to
hospitals and an increased derived demand through
new cancer centers, the share of oncology products
is on the rise. In the past, for instance, 90 percent of
oncology products were being dispensed by doctors,
with hospitals only accounting for 10 percent. Today,
we see a 50-50 balance between the two, reveals
Geronimo.

Management team, Globo Asiatico

DOCTORS EYE: The Philippine Cancer Society


pinpoints breast and lung cancer as the two leading
cancer types in the Philippines today, and their prevalence is on the rise. The chief factor for this growth
rate is lifestyle. In cancer, 80 percent is lifestyle and
the other 20 percent is genetic. Nutrition, exercise,
stress can all affect the development of cancer in a
person, said Antonio Villalon, medical oncologist at the
St. Lukes Medical Center, a prestigious tertiary hospital in Metro Manila.

13

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Mabuhay! Namaste!
At an October 2013 Summit marking the
25th anniversary of the 1988 Generics Act,
Health Undersecretary Madeleine Herrera
said that five to six out of ten Filipinos now take generic
medicine. Traditionally, the majority of these generics has
been supplied by Filipino manufacturers. The growing use of
generics in a prescription-driven market like the Philippines,
however, has brought in a number of big names from abroad.
Quite frankly, it was an open invite to the much more experienced branded generics players from the worlds generic
powerhouse next door: India.
Indirectly, the government policy has worked in favor
of the Indian companies, says Sanjay Singh, general
manager in the Philippines for Torrent, one of Indias largest pharmaceutical companies. As prices were lowered
with the MDRP, it was made clear that even though prices
would go down, quality would be maintained. The MDRP
helped to eliminate the dilution in the relationship between price and quality. Since most Indian companies
used to face the prejudice of bringing in low quality products, the perception change due to MDRP mostly benefit-

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ted us Indians, he continues. Currently,


Torrent is growing at annual rates of up to
45 percent in the Philippines, a clear sign
that the country has entered the generics era.
In spite of extensive experience in a domestic market
four times the size of the Philippines, the Indians are still
riding the learning curve as the Philippine pharmaceutical market matures. Though perceptions are changing,
some of the most prestigious Philippine hospitals continue to blacklist products manufactured in India. As more
and more entrants cement their foothold in the market,
a thought-provoking development to follow will be the
partnering opportunities. Looking at the current pace
of entry of branded generics players in this market, it is
time to pick up on cooperation as part of our strategy.
We are now doing the groundwork to establish in-licensing alliances in this market, says Singh. For European,
US and Japanese companies with limited portfolios, in
particular, the marketing muscle, experience and growing
foothold of Indian players can be an attractive proposition to enter the Philippines.

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ippine subsidiary has grown to 111 employees
and counting, and the Philippines is now referred to as the launch pad to Asia within
the Aspen Group.

wHatS rite iN a Name

We moved all of RiteMEDs medical representatives to United Laboratories and used the
savings generated in three ways: bringing prices
down further, a trimedia campaign for branding, and providing additional discounts to drugstores. Instead of pushing the drugstores or the
doctors to give our medicines to the patients, we
targeted the patients directly, explains Ochave.
Brand loyalty, as several reports of the market
research firm Nielsen indicate, is particularly
high in the Philippines and, combined with the
limited disposable incomes of the population,
means opportunities for branded generics.

The MDRP did not only leave the MNCs cornered in 2008: United Laboratories, the largest pharmaceutical company in the Philippines
and generics manufacturer, was also affected.
But desperate times call for desperate measures, and United Laboratories was forced to Romeo B. Carbonel Jr, president,
& Minerva A. Carbonel, chief of
experiment with new business models.
operations, RBC-MDC
Initially, RiteMED, one of Uniteds subSaleS 2 maNufacturiNg
sidiaries, followed the same model as any branded generics
organization, pricing its products 20 to 70 percent lower
Before the introduction of UHC, most major private hospitals
than their innovative equivalents, and marketing aggressively
in the Philippines had to rely on imported products. With the
through an extensive field force. The 2008 price cut, however,
MNCs showing only limited interest in small volumes, all too
forced the company to follow the MNCs and lower its prices
often certain products would never actually make their way to
too. The subsidiary soon started losing money. It was clear
market. It was a situation that skewed market prices upwards,
that we had to make a drastic turnaround, admits Jose Mawith several critical
ria Joey Ochave, senior vice president business development
care companies margroup for United Laboratories.
keting their products
at premium prices.
We identified a
MEETING THE GAPS IN CRITICAL CARE
gap in the products
that were not avail Premier Filipino-owned hospital products company in the
Philippines
able or approved by
Best partner in the hospital critical care area
the FDA and only occupied a small mar- From left: Ace Itchon, president and CEO,
Aspen Philippines; J. De Ruyter Toto
ket, and those that Oroceo, president and general manager,
were being exclusive- Delex Pharma International
ly marketed by large
companies, where the level of competition was low and the prices
augmented. We could bring down prices in such niche markets
and compete head on with existing large players, explains J. De
Ruyter Toto Oroceo, president and general manager of Delex
Pharma International (DPI), a Filipino hospital products company. At the end of the day, we contribute directly to the vision
of the president, the Department of Health, the FDA and our
current administration to make pharmaceutical products in the
Philippines more affordable, so that also the poor layers of society can be reached. Since its incorporation in mid-2009, DPI has
already grown to a staff of close to 100. In three to five years,
DELEX PHARMA INTERNATIONAL,
DPI will achieve PHP 1 billion (USD 22.5 million) sales revenue
INC.
LJP Suites, 189 Mindanao Avenue
and will have its own manufacturing facility, hopes Oroceo.
Barangay Bahay Toro, Quezon City,
Traditionally, pharmaceutical marketing organizations in
Philippines
Tel. No: (632) 426-0150,
the
Philippines have partnered with toll manufacturers for their
(632) 426-0270, (0632) 426-0271,
Fax No: (632) 376-2885
production needs. But many, especially those in rapidly growing
contactus@delexpharma.com,
niche areas, quietly dream of major investments such as their
www.delexpharma.com
own manufacturing plant.

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From left: Jean Paul D. Santillana, vice president - Overall Marketing


Office, S.V. More Group of Companies; Alberto Santillana, president
& CEO, SV More Group; Albert-Jan Santillana, senior vice president
for Real Property Administration, S.V. More Group of Companies
Team photo, Delex Pharma International

On the vitamins and supplements side, for instance, the SV


More Group has grown primarily on the back of its B Complex
solutions, while it selectively outsourced its manufacturing.
First of all, we have to be careful in choosing who we manufacture through, says Alberto Santillana, group chairman
and CEO. Hizon Laboratories and Lloyd Laboratories, both
leading Philippine toll manufacturers, are world-class players.
If you work with foreign manufacturers, you have to carefully
select to ensure that they work according to quality standards.
In India, for example, there are bad manufacturers in the region but also many very good ones. We are prepared to take on
South Korean manufacturers, which can be among the best.

Today, after 25 years, Santillana is part of the group of


Filipino entrepreneurs ready to invest in manufacturing. For
these first 25 years, we did not want to take up big loans
to fund an investment for manufacturing, which is why we
have waited till the point where we have sufficient resources
to build our own facilities. Now we have reached the point
where we can afford manufacturing without external funding.
Self-sufficiency is very important to ensure that the operating
cash remains unaffected. In three to five years, we should have
completed our first manufacturing facility in collaboration
with our Philippine-based manufacturers, adds Santillana.

RBC-MDC Corporation:
Your partner for complete
and ecient distribuon
Compee.Cotet.
Complete.
Compee dantae. With a combined work
experience of almost 200 years in the Philippine
Pharmaceucal industry, the RBC-MDC management
team has built an ecient operaonal system that
focuses on their growing aliates and local customer
base. The company is dynamic and prides itself in its
experience and experse in all facets of the distribuon
business, which directly answers the needs of mareng
companies.

RBC-MDC Corporation
RBC Corporate Center, Don Jesus Boulevard
Alabang Hills, Muntinlupa City 1770
Tel: +632 842-25-89
Email: macarbonel@rbc-mdc.com
Website: http://www.rbc-mdc.com/

Consistent Performance and Sustainable Growth. For


over 13 years, the company has delivered signicant
sales growth, consistent performance and meaningful
partnerships which have helped Filipinos gain access to
aordable health care and live quality lives.
Complete Soluons. The company oers complete
supply-chain soluons for the expanding Philippine
healthcare market.

9.
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Top 20 leading philippine pharmaceutical companies based on Value
(less V06, V07, A13 & K01)* as of MAT December 2011
Rank

Company

% CAGR 4Years

Top 20 leading philippine pharmaceutical companies based on Counting


Units (less V06, V07, A13 & K01)* as of MAT December 2011
Rank

Company
TOTAL PHARMA MARKET

% CAGR 4Years
3.16

TOTAL PHARMA MARKET

3.06

UNITED LAB

5.40

UNITED LAB

PFIZER INC.

3.21

GLAXOSMITHKLINE

6.92

GLAXOSMITHKLINE

2.41

PFIZER INC

3.46

NOVARTIS

11.18

PASCUAL LABS

8.73

MSD

6.33

SANOFI-AVENTIS

0.98

SANOFI-AVENTIS

4.25

ABBOTT LAB

6.81

ASTRAZENECA

1.07

JOHNSON

1.26

BOEHRINGER INGELHEIM

2.30

INTERMED MKTG

2.53

JOHNSON

3.08

TAI SHO PHARM

10

PASCUAL LABS

8.92

10

INTERNATIONAL PHAR

16.71

11

ROCHE PHILIPPINES

2.55

11

BOEHRINGER INGELHEIM

6.55

12

NATRAPHARM

9.58

12

GX INTERNATIONAL

6.07

13

ABBOTT LAB

6.50

13

NOVARTIS

10.10

14

BAYER PHARM

2.04

14

CNN GENERICS

15

SERVIER PHILS

1.83

15

MUNDIPHARMA GMBH

0.46

16

CATHAY DRUG CO

42.90

16

PONDS CHEMICAL

7.66

17

MERCK INC

5.72

17

AM-EUROPHARMA CORP

18

INVIDA

1.56

18

NATRAPHARM

10.17

19

GETZ PHARMA

26.87

19

RHEA

2.37

20

GX INTERNATIONAL

4.32

20

MSD

3.52

3.29

1.52

999.00

7.90

Source: IMS Health Philippines, Inc. IMSPlus Combined using Dec 2011 Database. Above excludes sales of V06 General Nutrients, V07 Other
non-therapeutics, K01 Intravenous solutions, A13 Tonics

The investments of local pharma companies shows their level


of confidence in the Philippine economy. In the last three years,
only about 40 percent of investments were from foreign investors. This was not the case before, when most Filipinos were
investing their money abroad. The changing dynamics imply
that the Filipinos have regained confidence in the country, its
leadership and its economy, says Gregorio Navarro, managing
partner and CEO of Deloitte Philippines, Navarro Amper & Co.
From an MNC perspective, the Philippines is now indeed
solely considered for marketing and sales activity. There is, however, one remaining MNC manufacturing in the country. Our
facility in Cainta (a municipality in the Rizal province, just next
to Metro Manila) is a mid size manufacturing facility that has
about 100 to 120 employees, says Francis del Val, president and
managing director of GSK Philippines. It manufactures products for both our pharmaceutical and consumer divisions and
goes back a while: we recently celebrated our 50 years of manufacturing in the Philippines.
Divesting is not in the plans of GSK either, as the company to
continue to manufacture in the Philippines. We are very proud
of this manufacturing facility because it serves as a testimony to
GSKs commitment to be a partner in Filipino nation building. It
also shows that Philippine manufactured products can be world
PHILIPPINES
MARCH.
2014
S11
FOCUS REPORTS
FeBrUarY 2014

class. Our site exports to many neighboring countries and we


certainly look forward to more of that in the future, on top of catering to the increasing demand in the local market, says del Val.

eN priSe!
In chess, a piece is considered en prise if it is unprotected and
can be captured. In the Philippines, just like in chess, it is impossible to understand the moves of the game in a single snapshot.
To really understand what is shaking, and where the growth sits,
one needs to become part of the game.
The IMS Health figures show around three to four percent
growth in the marketplace, but we are now at a point in time
where the business models in this market are changing. The rise
of generics and increasing government intervention through price
controls have introduced a certain level of complexity. Below this
complexity, however, there are many positive signs, remarks
Raymund Azurin, chief executive of Zuellig Pharma Philippines.
Distributors can be considered centerpieces on the chessboard.
But how many centerpieces can the market handle? The Zuellig Corporation and its subsidiary Metro Drug already occupy
more than 80 percent of the distribution market, but a number
of niche distributors successfully made inroads too.

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money, which generally will also dispense


In 2000, there was a significant opDevelopment Fund (NDF), says
the medicines themselves. Today, there
portunity to enter the growing dispensing
that the Ministry of Economic
are roughly four to five active distribubusiness, says Romeo Romi Carbonel,
Affairs recognized the waning
tion
companies
cater to the
dispensing
president and CEO of niche distributor
Total number of listed and OTC
biotech that
companies
in 2012:
71 (up from
opportunities in Taiwans prize
market.
Within
this market,
the oncology
RBC-MDC. A former vice president of AsTotal
revenues
of
companies
in
2012:
USD
3.31
billion
(up 27% from 2
industry, and looked toward inareaofiscompanies
one of the first
focal USD
areas,13.86
as on-billion
traZeneca Philippines, at that time known
Total market capitalization
in 2012:
cubation. For the past thirty
cologists
prefer to in
dispense
the medicines
as Astra, Carbonel set up RBC-MDC 13
Total
market
capitalization
of
companies
April
2013:
USD
15.7 billio
years, this country has been very
themselves. says the COO.
years ago to serve the dispensing market.
Market cap growth, January 2009 April 2013: 520%
successful in semiconductors,
Around 1997-1998, we started recog- From left: Francis del Val, president &
he reports. But managing
increasingly,
16.00 T.
director, GSK; Raymund
nizing that there was a growing number
tHe re-tale: a Story of geNericS
the profit margins Azurin,
in thischief
fieldexecutive, Zuellig Pharma
13.86
Total revenue
of doctors with the desire to increase the Philippines
14.00
are shrinking. Meanwhile, in the
Total
market
value
financial side of their profession, by hanThe policy shifts in favor of generic
year 2000, the human genome
12.00
of listed companies
dling their diagnosis and business of dispenses products under
medicines wereNo.
coupled
with the proliferation of retail
was sequencedand like many
one roof. Because the top distributor would not handle Astras
chains
10.00that heavily advertised the availability of lower
other countries, Taiwan became
dispensing business at that time, RBC took on Astra as my its
priced generic alternatives. Indeed, the biggest success stovery excited about the future of
8.00
first principal, explains Carbonel. Today, the company can
ries as a result of these policy shifts are the retail chains
biotech. The sector was chosen
71
celebrate39 companies as principals during its 13th anniversary
Generika
6.00 and The Generics Pharmacy: with around 450
as an important driver in the
since incorporation Now, we are investing into a new wareand 1,500 outlets mushrooming across the Philippine terridiversification of our economy
3.51
3.31
house that will double our existing capacity. Our volumes are intory4.00
respectively, access to affordable generics has changed
away from high tech.
37
creasing and our organic growth is tremendous, Carbonel adds.
dramatically.
2.00 1.43 Their rising power changed the interface beReflecting on his place in the
In general, the Philippines differentiates itself because of its
tween healthcare suppliers, patients and modern retail, esecosystem, Su says, the reason
0.00
strong dispensing market, says Minerva Mini Carbonel, COO
pecially
as the healthcare industry is not necessarily used to
2007
2008
2009
2010
2011
2012
the government created this
of the family-owned RBC-MDC. Before going to a hospital,
modern retail practices, such as the strong focus on abovefund is to help build new indusMarket Observation
System, Taiwan Stock Exchange, April 2013
most patients will see a family doctor for a small amount ofSource:
the-line
marketingPost
activities.
tries from the ground up, when
there is not yet much guarantee of success. In this way, the private sector can build confidence. The NDF must set the firethen others will join in
by throwing more kindling!
Among the private sector, the fire is now raging. According
to the Market Post Observation System of the Taiwan Stock
Exchange, the market capitalization of listed and over-thecounter (OTC) biotech companies in Taiwan has grown an
astounding 520% in the last four years alone, from USD 2.5
billion in January 2009 to USD 15.7 billion in March 2013.
Of course, biotech tends to be a much longer-term play than
high tech. Investors have had to taper their expectations. Before the mentality shifted, many of the early-mover companies
had to demonstrate steady revenues before they could get into
the larger rounds of financing. But increasingly, companies
are able to sell the dream: Some time ago, reports Lee-Chen
Liu, president and CEO of the startup EirGenix, investors
in Taiwan would always ask if they could see a return within
two or three years. Now, they ask about the product, and the
potential. Now, they seem willing to wait.
EirGenix recently bought DCBs biopharmaceutical pilot
plant facility, with an eye toward providing contract development
and manufacturing services (CDMO) to the world. Our experience was quite remarkable, Liu says. We raised USD 18 million
in just two months. Our investors include active pharmaceutical
ingredient (API) producer Formosa Laboratorieswhich owns
20 percent of the companyventure capital firms, and banks. I
have never seen a fundraising round go this fast in the US.
Billion USD

Biotechnology Industry Market Capitalization, 200720

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When you would go to a pharmacy in the Philippines ten
years ago, you would not be able to find or buy generic medicines. We recognized the opportunity to create a project of
our own that would give access to quality affordable generic
medicines to as many communities as possible. This project
would primarily be a business enterprise but it would have a
strong social side this is Generika, says Julien Bello, vice
president of the company. Generika is organized to make a
meaningful social impact on communities all over the country. Educating people and giving them access to quality affordable medicines is the primary objective, as this goes a
long way towards preserving their overall health at the lowest
cost, adds Teodoro Ferrer, president of Generika.
Today, even Mercury drug the countrys dominant retail
chain, is changing. From a traditional basket of premiumpriced branded medicines, its outlets now also carry generic
medicines. In terms of prices, the cost of medicine has gone
down tremendously in the country. Generic medicines are
already 50 to 70 percent cheaper than their branded counterparts, while prices are pushed down even more because
of the competition in the market. This, together with the
Cheaper Medicines Act (MDRP) of 2008, has been very beneficial to the patients, explains Bello.

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PHILIPPINES MARCH. 2014

From left: Julien B. Bello, vice president, Generika; Teodoro L.


Ferrer, president, Generika; Kenneth Hartigan-Go, acting director,
FDA Philippines

more goverNmeNt, more private


Looking back, the ambitions of President Aquino to steer the
healthcare industry in a direction of affordability and accessibility has paid off. PhilHealth took off, prices dropped, patients saw
their choices widened and both local and international companies found ways to grow through relevance and niche strategies.
However, much work remains to be done. The inclusion
of UHC on the presidential agenda has been a giant leap forward. Now, the political promise should follow or come in
parallel with an upgrading of the countrys health systems,
believes Kenneth Hartigan-Go, acting director general of
the Food and Drug Administration (FDA) of the Philippines.
We should also require operational managers to support the
six building blocks for health systems as articulated by the
World Health Organization (WHO) in 2007: health awareness, health financing, information & communication technology applications in health, human resource management
in health, clinical service delivery between clinical and public
health, and access to products, says Hartigan-Go.
In the next phase, the Philippines will need to find more
way to improve the overall quality of healthcare in the Philippines. A great avenue forward, which still remains largely
unexplored when it comes to healthcare facilities, would be
privatization, remarks Ramonito Monching Tampos, president and managing director of the German-headquartered
MNC Merck. Already, real estate mammoths such as Ayala
Land, Greenfield Development Corporation (part of United
Laboratories) and Metro Pacific Investment Corporation are
seeking control of private hospitals across the country.
Furthermore, there will need to be a change as to how healthcare is funded in the Philippines, in order to move away from the
out-of-pocket model. Statistics show that only 30 percent of the
population can afford to buy medicine, says Tampos. Another
question is then to find out how this percentage will evolve with
the implementation of PhilHealth and universal healthcare. All
eyes are now turned towards 2016, when presidential elections
will select the successor to current President Benigno Noynoy
Aquino III who will have the difficult task of setting the future
direction of the healthcare sector in the Philippines.

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Pioneering Harmony
As a founding member of the AssoThe Philippines, for instance, is a very
ciation of Southeast Asian Nations
open market which is also why there
(ASEAN), the Philippines has been
is so much competition. A country like
a frontrunner in the push for greater
Indonesia, however, is very protective
regional cooperation. Though the
and works very differently than the Philconcept of ASEAN pharmaceutical
ippines. Yet, when we look at the popuharmonization was put forward by From left: Dr. Lloyd Balajadia, executive
lation levels, these markets play a very
Malaysia and agreed upon by the director, Lloyd Laboratories Inc; Zenaida
important role within Southeast Asia,
Senior Economic Officials Meeting Balajadia, chairman of the board-Lloyd
explains Lloyd Balajadia, managing di(SEOM) as early as 1999, a regional Laboratories Inc.
rector of Lloyds Laboratories, one of
pharmaceutical trade and regulatory
the leading contract manufacturers
framework has not yet been introduced. The process is
in the Philippines with a joint-venture plant in India and a
expected to be lengthy and fears exist that it will threaten
field force in Vietnam. Although all countries are evolving
the competitiveness of local Filipino manufacturers, as
towards the Pharmaceutical Inspection Convention and
they struggle to beat down the cost of labor and electricPharmaceutical Inspection Co-operation Scheme (PIC/S),
ity. Others, particularly those with operations across the
it will still take a while before we reach a certain harmony
region, are optimistic about the potential opportunities
on standardized quality levels. There is still limited conASEAN harmonization may bring.
sistency in the way manufacturing facilities are being
Harmonizing the ASEAN Common Technical Dossier
constructed in the region. At the same time, despite free
(ACTD) document is a first step. Business-wise however,
trade agreements, the commercial approaches remain to
each country has its own commercial approach to pharma.
be very different from country to country, he concludes.

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20

FOCUS ON:

A boom in BPO
Although outsourcing has arguably been
around since the time of the Industrial
Revolution, the concept of hiring a third
party to perform a certain amount of
activities including HR, finance, administration, customer service, and many others
has been a game changer for businesses
around the world since the late 1980s and
early 1990s. Although countries such as
India established themselves early in the
business process outsourcing (BPO) market, in recent years, there has been a shift
towards more diverse locations in recent
years, including South America, Eastern
Europe and Asia Pacific.
The Philippines has been a huge recipient
of this geographical shift, and according to
the Business Process Association of the Philippines (BPAP), one of the biggest areas of
growth has been in BPO for the healthcare
sector: healthcare information management
(HIM) services grew by 172 percent in 2011.
HIM encompasses electronic medical records,
medical claims recovery, patient education,
clinical data management, insurance processing, and other services.
Pointwest, a local Filipino BPO, provides
outsourced pharmacy benefit management
(PBM) to the US, the processing and paying
of prescription drug claims. With an army of
pharmacists, as well as registered nurses and
data analysts, Pointwest wishes to expand
further into this area, capitalizing on its IT
capabilities. We recognize that the healthcare sector is a sector of growing importance
to the BPO industry, says Marina Cristina
G. Beng Coronel, the companys president.

Focus on: a boom in BPO


PHILIPPINES MARCH. 2014

This is a belief shared by many others in the


sector. Cognizant, specialized in IT services
and putting its technological capabilities at
the service of the healthcare sector, claims
through the voice of its Assistant Vice President Jeffrey Williams: Within the BPO
industry, the HIM sector has continuously
been the fastest growing sector in recent
years.
Companies like TTSI have specialized in
medical transcriptions and are capable of
great accomplishments. Managing Director
Margarita Paz states: On average, we are able
to produce around 50,000 to 60,000 lines of
transcription per day, or about 1.2 million
lines per month. The company is also looking
to move beyond transcription services and
find new ways to service the healthcare sector: We also offer mobile solutions for health
data reporting and social progress monitoring through Unstructured Supplementary
Service Data (USSD), which works like an
SMS and equips remote areas where internet
connection is scarce allowing them to submit
required data in a timely manner, she
explains.
Many companies in the Philippines understood early on the relevance of the BPO market, mainly fueled by demand from the US
market, and the sector grew at a faster pace
than the government realized. Since many
of the local companies were getting contracts
from major US contractors back in the early
2000s, the government at first did not even
know how many of these companies flooded
the market, explains Monchito Ibrahim,
deputy executive director at the Department

21

of Science and Technology. According


to BPAP, today the Philippines is the
second largest market for BPO services
in the world, just after India. The associations BPO roadmap predicts a 25
percent yearly increase in activity
between 2011 and 2016.
In contrast to Western markets, the
workforce in the Philippines is only set Jeffrey Williams, Assistant
to grow. Many Filipino BPO companies Vice President, Cognizant
Philippines
have drastically invested in talent in
order to support US shortage. Beng of
Pointwest clarifies: As the US workforce was getting older, the pressure
on finding talent for the healthcare
sector became increasingly high. This
gap in supply and demand created the
push for outsourcing in the healthcare
sector, one of the outsourcing indus- Ibrahim Monchito, Deputy Executive Director, Department
trys last frontiers.
of Science and Technology
There is not a single country that (DOST)
has the talent pool that the Philippines
has when it comes to servicing international healthcare clients, says Williams of Cognizant. Ibrahim backs this
up: If we manage to raise the number
of certified Filipinos in the industry,
other nations will witness the competence of our locals and generate more
dynamism and enthusiasm for this Margarita M. Paz, Managing
industry. Through training we knew Director,Total Transcript
these companies would reach higher Solutions (TTSI)
value services in medical coding for
instance, one of the new upcoming
and promising niches for HIM services.
Of course, training and talent pool
is a result of a public and private effort.
It helps greatly that the Philippine
government is supportive of the BPO
industry, says Beng. When we first
Maria Cristina G.Beng
started in 2003, BPO was a very new Coronel, president, Pointwest
factor in the healthcare sector. When Technologies.

it comes to recruitment, we now go


to the colleges and universities. We
reach out to these institutions to
market the BPO industry as an
alternative career for pharmacists.
Both industry and government have
aligned on a series of priorities with
the introduction of industry-recognized standards and accreditations,
or scaling key talent initiatives. In
fact both are crucial as the Philippines needs to adapt to the always
more demanding requirements of
other countries, especially the US.
Here, Beng adds: US companies are
facing a deadline on October 1, 2014
to switch from ICD-9 to ICD-10
when it comes to their coding needs.
Our company has also prepared a
solution to help companies cope with
this mandatory change. It is clear
that only companies with the capacity to react and adapt can survive in
this very competitive environment,
already pressured on costs. This cost
situation is well defined by Ibrahim:
Imagine a price per sheet going
from one dollar to five cents and you
understand the extent of fierce competition and price war the industry
was coping with.

PHILIPPINES MARCH. 2014

22

Philippines IT-BPO and GIC Industry


Revenue Targets for 2016
US$ Billions

IPPP
CAGR:
19%

25.0
20.0

CAGR:
29%

3.2

7.1

8.9

13.4

11.0
CAGR:
22%

CAGR:
11%

CAGR:
17%

2006

2009

2010

2011

2012e

% of GDP

2.6%

4.2%

4.5%

4.9%

5.6%

6.2%

7.8%

Direct
employment

240K

423K

525K

638K

772K

900K

1.3M

Indirect
employment

600K

1.1M

1.3M

1.6M

2.0M

2.3M

3.2M

Source: BPAP

PHILIPPINES MARCH. 2014

Base
Accelerated
Case 2016 Case 2016

Interview with: Gregorio Navarro, Managing Partner & CEO,


Deloitte Philippines

24

INTERVIEW WITH:

Gregorio Navarro, Managing Partner


& CEO, Deloitte Philippines
Focus Reports: In your whitepaper Whats
next for the Chosen Land? you linked the
countrys strong economic growth to President Aquinos good governance. At the
same time, you warned for possible changes
after the 2016 presidential elections. How
sustainable is the growth model for the
Philippines today?
GREGORIO NAVARRO: The challenge for the
government and the country is to be able
to sustain our growth. What we need to
talk about is how to achieve inclusive
growth. Over the past three years of the
Aquino administration, we have experienced a mostly jobless growth, because 70
percent of the economy is based on consumer spending.
The largest industry we have is the business process outsourcing (BPO) sector, which
already employs roughly 1 million people in
the country. Most of these employees are
young people with disposable incomes. The
second driver of expenditure comes from the
eight to ten million Filipinos that work overseas. They regularly remit money back home,
which on an annual basis amounts to an
influx into our economy of approximately
USD 20 billion. We are second or third to
Mexico and India in this regard.
The question is where all these remittances should go. Inflation is around 3.2 percent and interest rates offered by banks are
extremely low at less than one or two percent,
although they lend money at six to eight percent. In the past, there have been concerns
that the global financial crisis would reduce

the overseas remittances. The reality, however, is that the remittances increased over
the years and is still expected to continue
growing. Now, we need to find a model to
translate and mobilize this influx into more
jobs and opportunities to our people.

FR: What type of inclusive measures do you


feel should be taken by the government to
ensure sustainable economic growth?
GREGORIO NAVARRO: The Philippine pharmaceutical industry today is valued at slightly
over USD 3 billion with a growth rate of
roughly three percent. The forecast for the
coming years is roughly 4.6 percent annual
growth. The healthcare sector is valued at
roughly USD 10 billion, about 65 percent
of which is privately funded. Private insurance coverage is also low, and only covers
around 8.5 percent of the market.
Moreover, roughly 30 percent of the population of the Philippines is poor. They live
on less than USD 2 per day. In terms of absolute numbers, this translates to roughly 30
million people living below the poverty line.
Our economy produces one million jobs per
year, but every year more than that number
enter the working age. Fifty percent of the
population is below 24 years old, while two
thirds of the population is below 34 years old.
Every year, we have roughly 400,000 to
500,000 new graduates. As a result, many of
these jobseekers look for opportunities
abroad, something which also translates into
a significant human resources challenge for
accounting and advisory firms like ours.

Gregorio Navarro, MANAGING PARTNER & CEO, DELOITTE PHILIPPINES


PHILIPPINES MARCH. 2014

25

FR: Foreign investors need to find answers to


the questions they have when entering a market. How would you assess the current state
of FDI in the Philippines?
GREGORIO NAVARRO: For the first half of 2013,
FDI in the Philippines sat at around USD 2.2
billion, compared to USD 1.9 billion for the
same time last year. It is a positive development but in absolute numbers this still does
not compare to the USD 20 billion in Indonesia or even the amount Vietnam gets.
Compared to the region, our FDI is still very
small.
However, it is very encouraging to see the
increasing level of investment coming from

The changing dynamics imply that


the Filipinos have regained
confidence in the country, its
leadership and its economy.
local companies and other local investors. In the
last three years, only about 40 percent of investments were from foreign investors. The biggest
investments were actually made by Filipinos.
This was not the case before, when most Filipinos were investing their money abroad. The
changing dynamics imply that the Filipinos
have regained confidence in the country, its
leadership and its economy. More than 60 percent of our stock market now also consists of
investments by local investors. To me, there is
no better indication of confidence in the economy than when you see Filipinos themselves
investing and expanding their operations in the
country.
Private consumption continued
to drive overall growth
Demand side: contribution to GDP growth
12

Private consumption

Govt consumption

Capital formation
Net exports

Discrepancy
GDP growth

10

Percent

Across the profession, the average attrition rate


sits at around 33 percent. Almost all depart for
better opportunities abroad, rather than competitor firms or private industry within the
Philippines.
To achieve inclusive growth we need two
things: jobs and a focus on core industries
agriculture tops that list. Today, the agricultural
sector represents only 19 percent of our economy, while close to 40 percent of the population
works on land. We still import many food items.
It is only until recently that we again became a
net exporter of rice products.
Another area of the economy that could lead
to a more sustainable growth is manufacturing.
Even though many foreign companies have
moved to China, we are seeing now some
renewed interest in the country. The recent
political turmoil between China and other
neighboring countries, the natural calamities
in Japan and Thailand, etc. have caused foreign
businesses to take another look at the Philippines. In order to encourage foreign direct
investments, we also need to continue investing
in the energy sector to make our energy costs
more affordable. The increasing cost of labor is
another aspect that needs to be contained.

-2

-4
2008

2009

2010

2011

2012

Source: National Statistical Coordination Board (NSCB)

PHILIPPINES MARCH. 2014

Interview with: Gregorio Navarro, Managing Partner & CEO,


Deloitte Philippines

26

Philippines growth in 2012 was amongst


the highest in the region
Regional GDP growth rates
2010

12

2011

2012

10

Percent

Vietnam

Malaysia

Indonesia

Thailand

Philippines

China

Source: World Bank East Asia and Pacific (EAP) Economic Update

Philippines: Economic indicators, 2008-2012


Economic indicator

2008

2009

2010

2011

2012

Per capita GNI, Atlas method ($)

1770

1870

2060

2210

...

GDP growth (% change per year)

4.2

1.1

7.6

3.9

6.6

CPI (% change per year)

8.3

4.1

3.9

4.6

3.2

Unemployment rate (%)

7.4

7.5

7.3

7.0

7.0

Fiscal balance (% of GDP)

(0.9)

(3.7)

(3.5)

(2.0)

(2.3)

Export growth (% change per year)

(2.5)

(22.1)

34.9

(6.3)

8.5

Import growth (% change per year)

5.6

(24.0)

32.9

2.4

5.1

Current account balance (% of GDP)

2.1

5.6

4.5

3.2

2.9

External debt (% of GNI)

34.1

32.0

31.2

28.8

...

() = negative, ... = data not available, CPI = consumer price index, GDP = gross domestic product,
GNI = gross national income.
Source: ADB. 2013. Asian Development Outlook 2013. Manila;
ADB staff estimates; economy sources;
World Bank. 2013. World Development Indicators Online.

Gregorio Navarro, MANAGING PARTNER & CEO, DELOITTE PHILIPPINES


PHILIPPINES MARCH. 2014

Interview with: Maria Cristina G. Beng Coronel, President, Pointwest


Technologies

27

INTERVIEW WITH:

Maria Cristina G. Beng Coronel,


President, Pointwest Technologies
Focus Reports: How do you compare yourself
to big players such as SPi Global and Cognizant, when it comes to healthcare expertise?
BENG: Since we are both an IT and BPO company, Pointwest Technologies has an edge
over companies that focus on BPO alone.
Our IT expertise serves as an enabler to our
BPO solutions.
RHEA: Here in the Philippines, our industry
is transitioning from BPO into Business Process Management (BPM). This is a reflection
of the convergence between IT and BPO services. As companies focus on integrated endto-end solutions, there is a need to be able
to support the IT systems that serve as the
underlying foundation for BPO solutions.
There is also a growing demand from
local companies in the Philippines for BPM
services. We expect local companies to participate in the move to cloud services. Pointwest is ideally situated to provide the expertise, talent and solutions in this area.
BETH: Most BPO companies in the Philippines started as call centers. Now, many are
trying to reposition their voice services to
address the needs of the healthcare market.
For its part, Pointwest Technologies decided
to move into pharmacy benefit management
(PBM).
PBM is a unique feature of mature markets or developed economies like the US. For
most of the European economies, the state
provides healthcare services. In the US, however, the private sector can opt to sign up for
prescription drug coverage for their employees, in addition to their health plans.
We are now active in this segment, and

recognize the importance of healthcare in


both the US and developed countries in general, where changing legislation is increasing
demand for IT and BPM services.

FR: When we speak of an increased use of


mobile devices and tablets, there must be a
significant difference between mature markets such as the US versus developing markets such as the Philippines. How do you
adapt your business development approach
accordingly?
RHEA: In the Philippines, for example, the
adoption rate of electronic medical records
(EMRs) is very low compared to markets
such as the US and Australia. We try to learn
from markets such as the US, to better
understand what technologies can be used
and deployed.
BENG: There are providers in the Philippines
that are already offering telehealth services,
for example in the area of radiology. This
trend has already taken off in markets such
as Sri Lanka and India.
Our experience in reaching those Filipinos that do not have access to hospitals
comes from the banking sector. We are servicing the unbanked segment through a
mobile system that gives them access to
banking facilities, in the same manner that
health can be brought to the people. We feel
this model can also be applied to the field of
healthcare, so that segments of the population who have no access to hospitals can,
through mobile phones, tablets, and other
technologies, obtain healthcare services.

Maria Cristina G. Beng Coronel, PRESIDENT, POINTWEST TECHNOLOGIES


PHILIPPINES MARCH. 2014

29

David Wakely Photography/Anshen + Allen

Andrew Watson Photography

Arup Associates

With our broad understanding of the


healthcare environment, Arup has the
expertise to ensure patients, clinicians and
administrators benefit from well-designed
facilities that are cost-effective, energyefficient, appropriate to their context and
flexible for future development.

Charlotte Wood Photography

Creating caring environments


to meet tomorrows needs

Images
1 Ysbyty Aneurin Bevan, Blaenau Gwent, United Kingdom
2 Cairns Base Hospital, Queensland, Australia
3 Womens and Childrens Hospital in China
4 Maggies Cancer Caring Centre, Hong Kong, China
5 Laguna Honda Hospital, San Francisco, USA
6 East Asia Hospital, Ho Chi Minh City, Vietnam
7 Moorfields Eye Hospital, London, United Kingdom

Morley Von Sternberg

Kalson Ho

PHILIPPINES MARCH. 2014

30

Interview with: Raul Manlapig, Principal Managing Director, Arup, Philippines

INTERVIEW WITH:

Raul Manlapig, Principal Managing


Director, Arup, Philippines
Focus Reports: The Philippine economy is
growing at a rapid pace, making it attractive for foreign investors. Yet, to what
extent have you seen the countrys growth
reflecting in more investment in infrastructure?
RAUL MANLAPIG: The growth of the Philippine economy is being fueled by strong
domestic consumption and an increase in
investments. Large business groups such
as Ayala, San Miguel, Metro Pacific, The
Lopez Group, Aboitiz, SM Holdings, the
Gokongwei group to name a few have diversified into other sectors such as power,
infrastructure communication, mining,
water and healthcare. These moves towards
diversification have increased their investments over the past couple of years.
Also, a recent World Bank economic update
indicated that public spending grew to an
equivalent of 16.8 percent of GDP with infrastructure showing the highest increase. However, despite the increased public spending
infrastructure spending only accounted for
2.5 percent of GDP, which is below the SE Asia
average of about 5 percent of GDP. There
seems to be a lack of foreign direct investments due to unattractive terms compared to
other SE Asia nations. The lack of FDI is a big
challenge to the government in successfully
implementing strategic infrastructure projects and is seen to weaken our economic competitiveness.
It is obvious that we are not seeing the
same pace of growth in infrastructure investment compared to investments in private led
projects in manufacturing, power generation,

Raul Manlapig, PRINCIPAL MANAGING DIRECTOR, ARUP, PHILIPPINES


PHILIPPINES MARCH. 2014

real property development, etc.


Rapid urbanization in Metro Manila, for
example, with an estimated population of 12
million, has put a strain on its public infrastructure systems such as connectivity,
energy, water, waste disposal, sanitation,
drainage, hospitals and so on. The government will need to address this swiftly, and key
to this is being able to attract private sector
interest in partnering with them.

FR: How does this reflect on Arups global


and local set of capabilities in the healthcare
sector?
RAUL MANLAPIG: Arup has more than 40
years experience in the healthcare industry
and has completed 2,500 healthcare projects
under its name. This has provided us with
an in-depth understanding of the challenges
confronted by the industry such as continually improving quality of care, patient experience and financial performance. Arups
global skills draw on an unparalleled range
of services across planning, design, engineering and business consultancy to develop
integrated solutions across healthcare
estates, workforce and operations.
We combine our global and local skills set
to offer the most cost-effective service possible. The Philippines healthcare sector is a
high potential market, as the demands for
adequate hospitals and access of the poor to
better healthcare services and facilities are
high in the country. With our experience we
can help clients achieve end-to-end provisions of world class healthcare services efficiently and sustainably.

31

FR: During a recent speech, British Ambassador to the Philippines Stephen Lillie spoke of
huge opportunities for British companies
due to an improved business environment in
the country. Health undersecretary Teodoro
Herbosa said in the same event that several
opportunities are likewise available as the
government is looking to modernize hospitals
to provide healthcare. What is your message
to the government on Arups readiness and
willingness to take on such healthcare projects?
RAUL MANLAPIG: The Philippines is grappling
with the challenges of drastically improving
the quality of healthcare and patient experience while at the same time achieving the
financial performance. Healthcare is very
expensive and at least 60 percent of our population is without proper healthcare services
and facilities. Our unique trust ownership
fosters a distinctive culture and an intellectual independence, which enable us to invest
in R&D and develop our experts to become
leaders in their fields. Our global reach gives
us the advantage of bringing in relevant
resources in dealing with the myriad of issues
those healthcare industries around the world
face. We are able to apply our learnings from
various projects to suit local challenges that
have been encountered before by other countries. Our approach to healthcare is based on
understanding and bringing together estates,
leadership, workforce and operations. We
believe that it is only through an in-depth
understanding in each of these areas, and the
links between them that truly sustainable,

patient-oriented solution can be delivered.

remove from here

FR: How do you want to shape the future of


the Philippines?
RAUL MANLAPIG: The Philippines is an emerging nation and needs change in many different areas. For example, we are experiencing
the effects of urbanization in the same way
that China, Brazil, Indonesia and others are
undergoing. With the increasing population
of Metro Manila and other urban areas there
is a need for us to look at urbanization issues
and be able to transform our growing cities
into smart and green cities. We will have to
deal with issues such as urban mobility, more
efficient use of energy and sustainable buildings. Increased use of vehicles presents a genuine threat to economic security for many
nations, including the Philippines, due to the
need to import fuel. Investment in urban
transport and communications infrastructure is critical for the enhancement of economic potential in urbanized areas. There
should be targeted investment to drive significant growth and economic development.
Hong Kong and Singapore for example, have
invested heavily on rail systems, as we can
see their growth has been sustained for many
years and will likely to be sustained for many
years more as they continue to spend in
improving their systems alongside the
growth of their economies. Our government
needs to act fast enough to address this need
to facilitate our growth, for example, soliciting private investors to invest in PPP.

PHILIPPINES MARCH. 2014

32

Interview with: Jason Carroll, General Manager, Janssen Pharmaceutical


Companies, a division of Johnson & Johnson (Philippines.) Inc.

INTERVIEW WITH:

Jason Carroll, General Manager,


Janssen (Philippines)
Focus Reports: Mr. Carroll, how would you
introduce Janssen Philippines?
JASON CARROLL: It is hard to discuss Janssen without first talking about the companys founder, Dr Paul Janssen. In the
years before his death in 2003, he filed
over 100 patents, authored 700 scientific
Publications and had oversight on the
formulation and synthesis of 80 New
Chemical Entities with the scientists at
Janssen.
Dr Paul Janssen is globally recognized as one of the greatest formulation
scientists in history. He built the company that would become Janssen Pharmaceutica in 1956 and Janssen has been
part of the Johnson & Johnson Family
of Companies since 1961.
Janssen, now one of the most innovative companies in the world, was first
introduced into the Philippines in 1982.
Janssen Philippines specializes not only
in innovative medicines in oncology and
immunology, but also has-over the counter (OTC) and pain treatments that serve
many thousands of patients. As a company, our vision is to ensure that in the
eyes of our employees, our customers
and our competitors, we are seen as the
most reputable pharmaceutical company
in the Pharmaceutical industry. .
FR: It seems that everything is in place,
but there is still work to be done on raising the awareness on the reputation and
values that Janssen Philippines stands
for in this market. What do you see as

your tasks to enhancing this awareness


level?
JASON CARROLL: We have made a number
of decisions in recent times to lift our
visibility in the Philippines. The first
was to build a new, sustainable office to
provide our loyal team an enjoyable place
to work as well as to attract new talent
into the organization. We have also
invested in the development of an industry leading training & development center to ensure our customer facing team
members are highly skilled in their interactions with customers. We wish to focus
on the science behind our products in
order to differentiate our products
within the industry. We believe that we
have the current and future products to
back up our confidence to do so.
Another core priority is to ensure that
we have the best technology available in
the industry. Just two years ago, many
of our representatives did not even have
access to laptops. In just 18 months, laptops, smartphones, iPads and the industry leading electronic territory management system is the norm for our team.
We have come a long way to understanding the value of sales force effectiveness
and interactive learning.
As well as these things, , our customer
facing team proudly wear a Janssen uniform, which is quite unique for the
industry. We are so immensely proud of
the Janssen heritage and wish to showcase the organization that we represent.
In terms of people, we search for tal-

Jason Carroll, GENERAL MANAGER, JANSSEN PHARMACEUTICAL COMPANIES OF JOHNSON & JOHNSON, A DIVISION OF JOH
PHILIPPINES MARCH. 2014

33

ent with a thirst for knowledge, confidence,


persistence and the ability to listen. Janssen is an equal opportunity employer. We
wish to be seen as an organization that
looks after its people, provides them with
tremendous benefits and challenges them
on a daily basis. I want our employees to be
convinced that they do not want to work
anywhere else just continue to grow with
Janssen. Already today, I feel that we are
close to reaching this mindset with our latest internal survey suggesting that 90% of
our people feel strongly about remaining
with Janssen through the next 12 months.

FR: Do you see think that the Philippines has


the potential to become a major growth
driver for Janssen in Southeast Asia?
JASON CARROLL: With a population approaching 100 million, the Philippines has tremendous potential to be a strong growth driver
for healthcare in Southeast Asia over the
next two decades. That said, I believe it will
still take considerable time to build momentum. The average age of the population is
significantly lower when compared to typical western countries. One also needs to
consider the fact that the average spend on
healthcare is only USD 97 per year at the
present time. Out of pocket spend is the
norm and reimbursement remains rare. If
GDP continues to grow in high single digits
(as it has over the last few years), then the
Philippines will certainly be a major economic force in many industries including
healthcare in 10 20 years from now. The
country has a young population with great
ambitions. Once these younger generations
reach their peak in a few years from now,
the Philippines will be unstoppable.
Janssen Philippines has a number of
promising new compounds approaching.
These compounds will be in areas such as

With a population approaching 100


million, the Philippines has
tremendous potential to be a strong
growth driver for healthcare in
Southeast Asia over the next two
decades. That said, I believe it will
still take considerable time to build
momentum.
Oncology, Infections Diseases (HIV, Hepatitis-C, Multidrug resistant TB) and Diabetes

FR: In 2013, Janssen Pharmaceuticals


received the FDA approval for INVOKANA
for type 2 diabetes. Will this be an important
growth area?
JASON CARROLL: Diabetes is a significant
health issue in the Philippines, with 8 per
cent of Filipinos currently diagnosed with
Type-2 Diabetes and the reality is that the
impacted population is expected to double
within the next decade. Certainly Type-2
Diabetes is a disease in need of treatment
options... We are awaiting approval of
INVOKANA in the Philippines and we hope
to bring this product to the Filipino population in 2015..
FR: What is the type of legacy you want to
build in the Philippines?
JASON CARROLL: In the next two years, I
would like to build a path toward long-term
sustainable growth for our Philippine operations. I would also hope that Janssen can
become an employer of choice within the
Philippines through our excellent people,
outstanding products and ethical reputation.

HNSON & JOHNSON (PHILIPPINES.) INC.


PHILIPPINES MARCH. 2014

34

Interview with: Secretary of Health, Dr. Enrique T. Ona

INTERVIEW WITH:

Dr. Enrique T. Ona, Secretary of


Health, Department of Health
Focus Reports: President Aquino has recently
stated that the Philippine Health Insurance
Corporation, PhilHealth, now covers 81 percent of the population of the Philippines, as
part of the governments universal healthcare plan. So far, what has universal healthcare brought to the country?
DR. ENRIQUE T. ONA: The most important
reform, or change, was the inclusion of
health as a growth driver of the Philippines. Essentially, our ambition was to
make sure that all Filipinos, especially the
poor, were to be included in our national
health insurance program.
In fact, the country already had health
insurance, so-called Medicare, since 1969.
This system only covered the formal sector:
those employed. The poor were presumed
to be taken care of through our government hospitals and had no official insurance system.
In 1995, the first Law on PhilHealth was
passed. This Law stated that in 15 years, all
Filipinos should be enrolled or covered
through national health insurance. By
2010, however, only 54 per cent of the population was covered, essentially the formal
sector.
PhilHealth mandated that every Filipino, meaning both the formal and informal sector, would be enrolled through a
single insurance wherein the poor would
be enrolled through a premium paid for and
shared by the national and local governments. In practice, the majority of the local

Secretary of Health, DR. ENRIQUE T. ONA


PHILIPPINES MARCH. 2014

governments were unable to afford their


share in the program. As a result, many of
the poor were not enrolled.
When the new administration took over
in 2010, our mantra was to include the previously overlooked poorest segment of the
population. Through our Department of
Social Welfare, we had identified 5.2 million households as part of the poor layer of
society. Note that we spoke of households,
which could include four to five family
members. In terms of people, that number
comes down to roughly 25 million, or a
quarter of the countrys population.

FR: What are your priorities in terms of


investments in the healthcare infrastructure in the Philippines?
DR. ENRIQUE T. ONA: The allocated investments to improve our local government
health facilities as well as our national government hospitals have significantly gone
up in the last two years. We have a program
called the Health Facility Enhancement
Program (HFEP), which sets targets for
budget allocation to improve our health
care facilities through 2016.
For instance, for the improvement of
our smallest political units covering three
to five thousand people or 500 families on
average, so-called barangays, these areas
would normally have small health units
with one midwife, one barangay health
worker, etc., usually volunteers. Their main
task is to provide local families with infor-

35

mation on health care, as well as the basic


primary care or preventive measures.

FR: What are some of the main illnesses you


prioritize on your agenda over the next few
years?
DR. ENRIQUE T. ONA: In the next three to five
years we should also be tackling the neglected
tropical diseases, such as dengue and leptospirosis, which you still find in the Philippines today. We have doubled our budget to
detect and treat these diseases. At present,
we have 27 out of 82 malaria-free provinces
in the Philippines. By definition, this implies
that the province cannot have a single malaria
patient in five years. By 2016, we aim to have
40 provinces malaria-free. Overall, we aim to
eliminate these diseases from being a public
threat. Rabies is also still a problem in our
rural areas. Though we have programs to
tackle diseases like rabies, the laws are not
being properly implemented.
HIV, too, is an increasing problem in the
Philippines. From 1983 up to 2013, the total
number of HIV cases sat at around 12,000,
representing less than 0.5 per cent of the population. We expect a substantial, almost geometric, increase in HIV cases in the Philippines. We have already proposed amendments
to our HIV laws and are becoming more
aggressive in our public education efforts for
the young. Believe it or not, but 80 percent of
the new cases is the result of unprotected
homosexual or bisexual contact. Now, we are
proposing certain amendments to the HIV
law to ensure better reporting and prevention
of its prevalence.
FR: What have been some of the major successes thus far?
DR. ENRIQUE T. ONA: We have reached a number
of major achievements with this government
on the healthcare front. First of all, we have

been able to pass a major law on the funding


of health care in the Philippines, through
increased taxes on alcohol and tobacco products.
Second is the passage of our reproductive
health and responsible parenthood Act, which
will soon make it possible for us to aggressively address the problem of maternal and
infant mortality, especially for the poor and
near poor.
The third achievement is the amendment
to our national health insurance Act that
clearly states that all civilians should be covered through our national insurance, PhilHealth, with particular emphasis on the poor
and near poor. It is now mandatory, rather
than a choice, to be enrolled.

FR: What potential do you see to turn the Philippines into a medical tourism destination?
DR. ENRIQUE T. ONA: The Department of Tourism
is very active in making the Philippines a priority destination, and it is a program that we
too should strategically encourage. However,
we leave the implementation to the private
sector, as all our attention is currently
required to reach universal healthcare and
help the poor. We are pleased to note that we
have at least half a dozen hospitals that have
received international and ISO accreditations.
It is also worth noting that the Philippines
has partnered with the United Nations Economic Commission for Europe (UNECE) to
turn Manila, and the Philippines, into the
center for public private partnerships (PPP).
The modernization of our DOH hospital is for
instance open to PPP investments. We are
also about to start our first major PPP for the
Philippine orthopedic center, and, we have
around 25 other major government hospitals
open to this strategy.

PHILIPPINES MARCH. 2014

36

Interview with: Alexander A. Padilla, President & Ceo, Philhealth

INTERVIEW WITH:

Alexander A. Padilla, President &


Ceo, Philhealth
Focus Reports: 2013 was the year in which
the National Health Insurance Act took
effect. What are the implications of this
law for PhilHealth and the healthcare system in the Philippines?
ALEXANDER A. PADILLA: The implications are
significant. Officially called Republic Act
10606, this new law will be governing the
Philippine Health Insurance Corporation.
It brings a number of innovations.
The most important novelty exists in
the subsidy given by the national government. We used to have partial subsidies
between the national and the local governments, in order to pay for the premiums of the poor. For the first time around,
the national government has now allotted
PHP 35 billion for the poor. This represents a threefold increase from last years
support program, set to cover a total of
14.7 million families, which translates
into 53 to 54 million individuals, for an
annual premium of up to PHP 2,400 per
year. In other words, we are talking about
half of the Philippine population now covered by the national government. Our role
as PhilHealth is to ensure that all of these
premiums are being translated into actual
names and addresses. We will need to
assign these people to particular rural
health units, where they are supposed to
receive their preventive and curative benefits.
Another new aspect is that the fact that
we will be embarking on a new relationship with the local government units

Alexander A. Padilla, PRESIDENT & CEO, PHILHEALTH


PHILIPPINES MARCH. 2014

(LGUs). The primary role of PhilHealth


and the LGUs was to enroll the poor. The
national government is taking over enrollment, whereas the proportion of the poor
are now identified by one government
agency: The Department of Social Welfare
under the National Household Targeting
System Poverty Reduction Scheme. They
provide a list of people which PhilHealth
merely adopts. The LGUs in turn will to
sponsor those doing business with them,
as well as the other workers in the informal sector, such as the barangay workers.
In this way, I also see us increasing our
enrolment in a qualitative manner.
Other effects of the new law sit on the
preventive side, which will go beyond the
usual examinations, blood counts, and so
forth. By next year, we will be using the
Point of Care Benefit Package 2 or PCB 2.
For the first time, the rural health units
will be providing medicines for at least
two of the most common non-communicable diseases: diabetes and hypertension.
The new law also gives us a particular
bias towards the poor. In this way, we have
embarked on a no-balance billing, particularly for the medical care provided to
them. This system implies that the poor
should not be paying a single cent for their
medicines, for their room, and even for
the professional fee, though the latter is
harder to implement.
Aside from that, we will also be introducing the point of care enrolment. Even
though we have planned to enroll the

37

aforementioned 14.7 million families, we


understand that some leakages may occur.
With this we refer to other members of the
poor, who are not enrolled in PhilHealth nor
are they sponsored by local governments or
any other groups. When they will now get
sick, they can be enrolled by the local hospitals to become part of the poor paying the
annual premium of PHP 2,400. To such people, our services are being made immediately
available, without a waiting period.
If we implement this well, we could safely
say that all of the poor regardless where
they come from- will be 100 per cent covered
in two years from now.

FR: At the State of the Nation address this


year, President Aquino stated that 81 per
cent of the population is now covered by PhilHealth. Many decision-makers among the
medical and business community doubt its
accuracy. Can you clarify this discrepancy?
ALEXANDER A. PADILLA: The 81 per cent, which
is now 83 per cent already, is our rate of
enrolment. The enrolment rate means that
these are people that have come under the
health insurance program at one point or
another. Whether they can avail of benefits,
is what our coverage rate focuses on. Our
covered rate is really around 73 to 74 per
cent. We thus speak of a discrepancy between
the enrolment and covered rate.
FR: Budget pressures require you to focus on
generic medicines. However, what do you
consider as a healthy balance to ensure a certain degree of quality and innovation?
ALEXANDER A. PADILLA: When I was at the
Department of Health, the struggle between
generic and innovative medicines was critical. At PhilHealth, however, this struggle
assumes a less important role.
When we offer a case rate amount, such

If we implement this well, we


could safely say that all of the
poor regardless where they come
from- will be 100 per cent
covered in two years from now.
as dengue at PHP 8,000 for instance, we pay
that amount once the procedure has been
done. This payment is being made regardless
of the medicines that were actually used.
These could have been branded, generic, or
even in violation of the Philippine National
Drug Formulary (PNDF).
While we still reimburse the same amount
in such cases, if we find violations of these
rules in our post audit, we will deduct the
violated amount from future reimbursements. This is a post audit or monitoring system as far as PhilHealth is concerned.

FR: Lastly, what is your take on the political


will towards improving healthcare in the
Philippines?
ALEXANDER A. PADILLA: President Aquinos
commitment to PhilHealth reflects in our
own programs. He has a particular bias to
the poor and in line with his ambitions,
already half of the population now falls
under national coverage. When it comes to
health, the political will is certainly there.
In a matter of two years, the budget of the
Department of Health has increased from
roughly PHP 35 billion to PHP 80 billion.
With the approval of the Sin Tax Reform,
the Responsible Parenthood Act and with
the new PhilHealth Law all done in less than
three years, we see a clear political commitment and a presidential bias towards health.

PHILIPPINES MARCH. 2014

38

Interview with: Dr. Kenneth Y Hartigan-Go, General Director, Fda

INTERVIEW WITH:

Dr. Kenneth Y Hartigan-Go,


General Director, Fda
Focus Reports: One of the FDAs main concerns is to protect the quality of medicines
in the market. Both the MNCs and the local
Philippine manufacturers are required to
adhere to very strict standards in this
regard. Many of them, however, have
expressed their concerns over the quality of
imported products. From an FDA perspective, do you see this as a challenge? If so,
how can this challenge be addressed?
DR. KENNETH Y HARTIGAN-GO: We are concerned over the quality of many generic
medicines that are currently being marketed and sold in the Philippines. A 2006
survey indicated that only 20 out of 70 local
pharmaceutical manufacturers surveyed
were following cGMP guidelines. Since
then, the number has improved. In one way
or the other, all companies are now compliant with good manufacturing practices.
However, our audits remain nothing but a
snapshot of the company. There are limited
guarantees to the robustness of the quality
and methods according to which these
manufacturers operate. We have been
assured that more than 60 local companies
are cGMP compliant. However, this does
not mean that the quality of their products
is good.
For the overseas importers of finished
products we will soon inspect their cGMP suppliers compliance. At the moment, registration for those companies is based on paper
certificates. As a regulatory agency, we validate these documents.

Dr. Kenneth Y Hartigan-Go, GENERAL DIRECTOR, FDA


PHILIPPINES MARCH. 2014

FR: What strategies have you implemented


to address these issues?
DR. KENNETH Y HARTIGAN-GO: The first step is
the application of the ASEAN common
technical document (ACTD). Up until
recently, if companies could not comply
with the document, we would create a
national simplified regulatory route within
the country. As from August 1, 2013, this
ACTD process has been adopted.
Second, the Philippine FDA now requires
its inspectors to inspect the overseas manufacturing facilities of companies that export
finished products to the Philippines.
Our third strategy is for generic products
especially those belonging to category four
(indicating low permeability and low solubility) to undergo bioequivalent testing as a
mandatory requirement for license renewals.
Anything new would also require bioequivalence data from now on. At the moment, we
only have three bioequivalence testing centers
in the country. They were charging PHP 1 million (USD 25,000) per product to be tested.
Because these are private industry centers, we
as the regulatory body have no legal ground
to gain access to their data. Although the government has accredited these three centers,
we had never thought of imposing data transparency. This will now change. In fairness, we
also need to bring down the prices of bioequivalence testing. As part of our strategy,
we also intend to create more bioequivalence
testing centers around the country.
The fourth strategy is the imposition of
product stewardship by the industry. Unlike

39

big pharma, generics companies rarely engage


in post-marketing surveillance of their own
products. This will also change as we will start
implementing Risk Management Planning
(RMP). RMP is enshrined in Law RA9502, which
is a law from 2008 requiring companies to invest
in product monitoring. Though signed in 2008,
this law has not yet been implemented. As an
operational manager, it is my task to implement
this law.
To further level the playing field, a fifth strategy is the application of a 2010 document called
the APEC (Asia Pacific Economic Cooperation)
Declaration of Ethical Marketing Practices for
Biopharmaceuticals. This document was signed
by APEC member countries in Hawaii but never
implemented in the Philippines yet. Just six
weeks ago, we at the FDA created a marketing
communications unit to prepare an FDA guideline on what is ethical or unethical in terms of
marketing practices. The Philippine Pharmaceutical and Healthcare Association of the Philippines (PHAP) has pushed through an ethical
code of practice for the MNCs in the Philippines
that is aligned with the IFPMA guidelines. Local
companies, however, have not yet adopted such
guidelines on a voluntary basis. To address this
disparity, FDA will in time implement APEC
guidelines for all players in the market.

FR: We took note of the FDAs intentions to


raise registration fees. Can you elaborate?
DR. KENNETH Y HARTIGAN-GO: In our view, we feel
that no Filipino taxpayer should be subsidizing product registrations of individual companies. At PHP 20,000 (USD 500) our fees for
three to five years of registration are still very
low, especially taking into account that other
countries charge up to PHP 480,000 (USD
12,000). In principle, we do not view this as
raising fees but as correcting and restructuring fees.

Universal healthcare coverage is a


political promise that should follow
or come in parallel with an
upgrading of the countrys health
systems.
FR: From an FDA perspective, what is your
take on what universal healthcare will do to
this market?
DR. KENNETH Y HARTIGAN-GO: Universal healthcare coverage is a political promise that
should follow or come in parallel with an
upgrading of the countrys health systems. It
is a step forward for the country, but should
also require operational managers to support
the six building blocks for health systems as
articulated by the World Health Organization
(WHO) in 2007: health governance, health
financing, information & communication
technology applications in health, human
resource management in health, health service delivery between clinical and public
health, and access to products.
At present, our approach to achieving the
WHO building blocks is still very fragmented
and inefficient. Without the support of these
building blocks, our country will never achieve
universal health care coverage. More than
financing alone, universal healthcare coverage
is about having the right services ready, clear
and consistent regulations, good corporate governance, communication flow between local and
national governments, and so forth.

PHILIPPINES MARCH. 2014

Interview with: Teodoro B. Padilla & Reiner W. Gloor,


Executive Director & Advisor, Phap

40

INTERVIEW WITH:

Teodoro B. Padilla & Reiner W. Gloor,


Executive Director & Advisor, Phap
Focus Reports: In 2010, the Aquino government pledge to make universal healthcare
coverage a priority. Three years later, where
do the MNCs stand within this changing
landscape?
REINER W. GLOOR: Healthcare should be more
than a game of prices alone. We have
observed a shift with many of the industrys
stakeholders including several NGOs now
taking a more holistic view beyond drug
prices. The sector is now taking a joint
approach to define a sustainable future for
the healthcare system as a whole.
TEODORO B. PADILLA: For many years now,
PHAP under the guidance of Reiner Gloor
has been building its relationship with the
various stakeholders of the sector. Now, we
have reached a point where we have gained
the trust of groups that were traditionally
opposed to big pharma. As a result, we are
now acting as partners with one goal in common: to increase the access to healthcare in
the Philippines. Apart from the NGOs, this
includes institutions such as the Department of Health, the local FDA and the Philippine Health Insurance Corporation (PhilHealth).
FR: The Philippines pharmaceutical market
has a CAGR of around 3% now. What are
your observations and expectations about
the growth in this market?
REINER W. GLOOR: The Philippines is a market
with a big population that unofficially
should now exceed the 100 million people.
Growth in value sits at around 3% now,
while growth in volume is around 8%. The

growth in volume, however, is almost


entirely accounted for by the expansion of
generics. Many of these generics are in fact
not related to the compounds that recently
bec a me pr ice - cont rol led , suc h a s
Paracetamol. In my own opinion, I think
that the MNCs currently touch around 15
out of 100 million people in the Philippines.
For the years ahead, I would expect to see
between 3 to 5 percent growth in value and
up to 5 or 6 percent in volume growth.

FR: What is your advice on the Philippines


to MNCs?
REINER W. GLOOR: A CEO here needs to be
patient. To pursue his goals, he needs to
remain flexible and adapt to the market
needs. In the long run the outlook is certainly positive, albeit at lower growth rates.
I do believe that we need to be satisfied
with somewhat lower returns.
TEODORO B. PADILLA: Apart from remaining
patient, it is important to continuously
engage with the different industry stakeholders, most particularly the legislators
and the Department of Health. At the end
of the day, these people have the desire to
better understand the sector and its challenges but most importantly to deliver the
best health service possible.

Healthcare should be
more than a game of
prices alone

Teodoro B. Padilla & Reiner W. Gloor, EXECUTIVE DIRECTOR & ADVISOR, PHAP
PHILIPPINES MARCH. 2014

Interview with: Thelma Tobias-Go And Ed Ocampo, President Of Pcpi &


Vp Of Scheele Laboratories

41

INTERVIEW WITH:

Thelma Tobias-Go And Ed Ocampo,


President Of Pcpi & Vp Of Scheele
Laboratories
Focus Reports: Generic drugs, which are
now on the rise, quickly become a commodity. Can you elaborate on how local generics manufacturers can build a competitive
edge and differentiate themselves?
THELMA TOBIAS-GO AND ED OCAMPO: The basic
principle still comes down to differentiation through marketing efforts in terms
of packaging, product placement, and so
forth. More than promotional efforts, the
industry is also increasingly looking into
partnerships. The government has already
opened its doors for public-private partnerships (PPP).
While it is being said that a real PPP
has not yet been created, I personally
believe that we now have a number of
informal PPPs. A first case can be seen in
the computerization of the local FDA.
Lets consider the following specific
example. To reduce costs, the government
has a procurement services unit in its
Department of Budget and Management.
All the different government offices procuring anything like office supplies for
instance are stockpiling under the
PSTDM. The idea is to have a certain government entity like PIPC a government
operated and controlled corporation
under the Department of Health to stockpile common molecules like
paracetamol and push other departments in the government, like the
Department of Justice. This can really
push the local industry.

More than promotional


efforts, the industry is
also increasingly
looking into
partnerships. The
government has
already opened its
doors for public-private
partnerships (PPP)
FR: Roughly a decade ago, there were roughly
200 Filipino pharmaceutical manufacturers
in the market. In 2010, this number had
already come down to 130. What is the situation today? Is there also room and willingness to consolidate?
THELMA TOBIAS-GO AND ED OCAMPO: At present,
there are roughly 65 pharmaceutical manufacturers in the Philippines. In terms of
consolidation, many of these businesses are
still family-owned, which has perhaps
refrained the industry from consolidating
over time. Alternatively however, we are
now working together on other capabilities.
Part of our business model is to look at
joint-ventures, partnerships, mergers and
acquisitions. Mergers are of course a farfetched idea for most of these family-owned
structures but partnerships, often with offshore companies, are becoming a trend.

PHILIPPINES MARCH. 2014

Interview with: Thomas Weigold, Country President And


Managing Director, Novartis

42

INTERVIEW WITH:

Thomas Weigold, Country President


And Managing Director, Novartis
Focus Reports: The role of generics is on
the rise in the Philippines, much like in
many other markets. While Novartis has
its generics arm through Sandoz, this is
not (yet) the case for every MNC. From
a broader perspective, what do you see
as a suitable survival strategy for innovative products in the Philippines?
THOMAS WEIGOLD: The dynamics of the
big MNCs are very different nowadays.
Companies that strongly believe in
research will keep bringing new molecules to the different markets. More
than new molecules alone, MNCs are
also bringing new combinations. At
Novartis, for instance, we have a unique
offering: a triple combination in antihypertension treatment. Combinations
are not only more cost-effective for
patients, it also makes them stick to
their necessary treatments.
There is a much bigger volume business in generics at the moment, because
a large part of the Filipino population
still cannot afford more innovative medicines. We have to accept this trend and
play our role in our segment of the market. With the right strategy, companies
like Novartis can do good business here.
FR: When you first arrived in the Philippines two years ago, you made a public
announcement on the intention to focus
on a few therapeutic areas. Apart from
hypertension, these included asthma,
diabetes and specialty areas. How much
progress have you made in these two

years and where do you see room for


improvement?
THOMAS WEIGOLD: It was part of the strategy to prioritize our portfolio. The Philippines has a high unmet medical need
in many different therapeutic areas. As
a company, it is very easy to expand into
painkillers, anti-infectives, and so forth.
However, we have chosen to pick the
right offer and only address a number of
selected therapeutic areas. Our organization has been aligned according to this
strategy. We have been working on our
capabilities in these areas and have vigorously trained our people to thoroughly
understand and specialize in these areas.
We have turned them into experts on
these diseases. Now, we are on the way
to launching a range of new products in
areas such as respiratory. In hypertension and diabetes we are already present.

FR: Some of the country managers of


MNCs here in the Philippines have
described the Philippines as a prototype
market, mainly because it is possible to
launch new products very rapidly here. Do
you look at this market in a similar manner?
THOMAS WEIGOLD: The approach of the
FDA Philippines is quite straightforward,
so I would agree with that statement.
What we try to do as an organization is
to provide the FDA with all the necessary
documents and quality information.
When we submit our dossiers, we already
provide all the necessary data so that our

Thomas Weigold, COUNTRY PRESIDENT AND MANAGING DIRECTOR, NOVARTIS


PHILIPPINES MARCH. 2014

43

application is complete. Data quality and


transparency are key in this process.

FR: A topic worth addressing is clinical trials, particularly if we look at the 100 million population of diverse ethnical backgrounds. What footprint do you want to
leave behind in the Philippines in this
regard?
THOMAS WEIGOLD: Clinical research is a very
important part of our strategy. As a company we are convinced that we need to
drive business by data. We need to be able
to tell the story behind the white pill.
After Toyota, we are the biggest MNC globally that invests into R&D. The stor y
behind the white pill has to be transparent, evidence or fact-based, and has to be
told to the right people often payers,
sometimes the government and, to a large
extent, the doctors.
We can produce a lot of data in Europe
or the US, which is a good thing in itself.
However, there are different genetic preconditions in different ethnic groups.
Therefore, even once we have a product
registered we feel that we should continue
to do research to provide more data at a
local level. This cannot be done everywhere, but in a large population of 100
million people like the Philippines, this
can be an asset. Today, we already are the
number one company engaged in research
in the Philippines. The Philippines has
many well-trained doctors, partly overseas
and partly here. The education system and
research facilities are there too, and we
have programs to work together with different universities and hospitals to establish clinical research sites. Again, the fact
that English is an official language is a
major asset now that all clinical studies
are being conducted in English.

FR: Where do you hope to see Novartis Philippines in three to five years from now?
THOMAS WEIGOLD: The pipeline of products we
can potentially launch in the next five years
in the Philippines is very big. Regardless of
any promotional muscle, which is a marketing technique from the past, it is about
matching medicines with medical needs.
Programs like PhilHealth are also likely to
provide additional avenues to achieve
greater access to health care. I think that we
can become an even bigger player in the
future.
As an industry, I hope we continue to
approach doctors in a professional manner.
We should always continue to work on the
image and reputation that we have as an
industry.
Apart from GDP growth, there are many
ongoing positive developments in the Philippines. I think that Novartis will probably
be one of the most preferred partners in the
Philippines vis vis the other stakeholders
of the sector. I am quite convinced that we
will be an even stronger player in the future.
Going forward, it will be very interesting
to observe how the implementation of the
ASEAN harmonization process will play out
in the future. In five years from now, we will
be able to gradually assess the impact of
what will happen on this front. Some of the
concerns we have raised already is quality
verification. In countries like Indonesia and
Philippines, counterfeit drugs are still a
major issue. Now how are we going to control
the illegal trafficking of counterfeit drugs if
the borders of these geographically complex
archipelagos open up? We will also need to
look at price levels between different countries, as it would perhaps become easier and
cheaper to import Novartis products from
another market. This is food for thought for
the future.

PHILIPPINES MARCH. 2014

44

Interview with: Juanito Luna, Founding President and CEO, PROSEL

INTERVIEW WITH:

Juanito Luna, Founding President


and CEO, PROSEL
Focus Reports: What was your initial vision
when you started PROSEL in that garage 30
years ago?
JUANITO LUNA: I had not finished college and
saw my chances to climb the MNC echelons
as very low back then. In my view, the only
opportunity to get into product management and research, was to start on my own.
I was not born to be in corporate management; I was born to be an entrepreneur.
My vision was to make new products, or
variants of existing products, available to
the patients. More than once, it were the
doctors themselves asking for new alternatives to the MNCs products. Though the
local industry may be strong today, it is
worth mentioning that three decades ago
the entire Philippine pharmaceutical
industry was controlled by the MNCs.
The fact that, as a family-owned company, we do not report to any investors,
gave the flexibility to hire as many employees as we felt necessary. While there are
companies that are integrated new technologies to reduce their workforce, we were
the only company recruiting 108 undergraduates at once. From a personal perspective, I was an undergraduate too. Now, I
want them to have the opportunity to
work. Today, PROSEL employs 256 people,
which is a relatively high number compared
to a turnover of less than PHP 200 million
(roughly USD 4.5 million).
FR: Looking at your therapeutic focus, where
do you see most growth coming from in the
future?

Juanito Luna, FOUNDING PRESIDENT AND CEO, PROSEL


PHILIPPINES MARCH. 2014

JUANITO LUNA: For 17 years long, we were


known to be the Prednisone company in
the market. The name Prednisone or Predwould mean PROSEL and vice versa, to an
extent were both names became interchangeable. This is how popular our products became.
With the earnings of this first line of
products, we were able to invest in new
areas. The fact that we launched our products at the request of the doctors was a
blessing. The Food and Drug Administration (FDA) of the Philippines would release
two to three of our products per year, while
other companies were struggling to obtain
approvals.

FR: Now that you are celebrating PROSELs


30th birthday, what do you consider to be
the companys main accomplishments?
JUANITO LUNA: The fact that we were able to
provide the medical field with products
that were not available in the market is an
accomplishment in itself. W hen we
launched some of our first products, it was
the medical community thanking us to
come out with the right products at the
right price. At that time, products were still
being imported from abroad and marketed
in the Philippines at premium prices. Yet,
just like for any MNC, these suppliers
would not have the flexibility to really
adjust their products to local market needs.
For me, the doctors were the guides to
the creation of our product portfolio.
Today, all of our products have been introduced at their request. This approach alone

45

makes our products unique in the world. Our


promise is one of a better sense of well-being.
PROSEL is the owner of Pred Lines, the only
company with the widest range of dosage
strength of the steroid, Prednisone. Pred, as
the product is called, is the most commonly
used glucocorticoid for the treatment of several auto-immune diseases such as collagen
diseases, vasculitis syndromes, gastrointestinal inflammatory diseases and renal autoimmune disease. The patients that use our
products suffer from diseases such as cancer
and asthma, and need a wide array of dosages
to satisfy their needs.
PROSEL has been the only company in the
Philippines that decided to put the price of
the products on the trade boxes, a move that
was not well received by the drugstores at
first. Upon consultation with the drugstores,
however, we adjusted the prices to take into
account their margins. We realized that we
needed to put a cap on our prices to ensure
that the end user, the patient, would receive
a low price.

FR: What else is in the cards for the future of


PROSEL: manufacturing, an acquisition, ?
JUANITO LUNA: It certainly is not my desire to
invest in manufacturing facilities. Manufacturing activities are vulnerable and would
increase the risk exposure of our organization.
We already received an offer out of India
to buy out our company. However, it was my
understanding that these investors were
mainly interested in one of our products,
rather than our entire company. If they only
have an interest in one product that accounts
for 70 per cent of our revenues, what will happen to the rest of the staff?
Instead, we are now looking at converting
the company into a foundation. This will be
our next big move. As from next year, we will

When we launched some of our


first products, it was the medical
community thanking us to come
out with the right products at the
right price.
start changing our marketing materials to
efficiently and effectively approach the doctors. We will be highlighting our products
with longer usage and make clearer distinctions between our product lines.
We will also become less dependent on
Prednisone as our key brand. Internally, for
instance, we already do not set sales targets
for our staff for this product anymore. Simply
put, each annual quota equals the sales of the
previous year. Because of our prior focus on
Prednisone we have lost the opportunity to
capitalize on our other products. We need to
diversify our organization and reduce this
dependence.
As from next year, we will start as a new
company! We will also isolate the vitamins
business and create a so-called PROSEL networking business. Rather than a pyramid
marketing scheme, however, we have
designed our own scheme called the Preferred
Entrepreneur Representative and Associate
Program (PERAP). Through PERAP, we aim
to increase the entrepreneurial capabilities
of the Filipinos.

PHILIPPINES MARCH. 2014

46

Interview with: A.A. Santillana, Group Chairman & CEO, SV More, Philippines

INTERVIEW WITH:

A.A. Santillana, Group Chairman &


CEO, SV More, Philippines
Focus Reports: What motivated you to
become the founder of SV More in the
1980s?
A.A. SANTILLANA: I first joined the pharmaceutical industry in 1971. For seven years,
I worked in a multinational company as a
marketing representative, up till the
highest position in that company. I left in
1978 and moved into entrepreneurship.
Many of my previous colleagues
enjoyed their stay with an MNC but when
they finally retired, they started to realize that they had merely been employees
rather than owners. It came to my mind
that I would have to put up my own company, which led to the birth of SV More
in 1986.
Since 1986, we have grown from 11
people to close to 400 today. Having finished our first journey of 25 years, we
have started looking into the rapid
changes we need to make to enter our
next quarter of a century of existence. We
are preparing for the next journey, where
my two sons along with the Companys
senior managers, will be taking over the
management of the company in two to
three years from now.
FR: What makes you the most proud of
these first 25 years?
A.A. SANTILLANA: We have been helping
young and intelligent Filipinos in realizing their dreams of becoming a doctor.
Already, we have supported 33 doctors in
a combination of full-time scholars and
those who subspecialize in specific fields.

A.A. Santillana, GROUP CHAIRMAN & CEO, SV MORE, PHILIPPINES


PHILIPPINES MARCH. 2014

We have provided them with grants. We


played a role in the financial and economic support of these doctors, among
other initiatives we have undertaken.

FR: SV More Group of Companies has


grown rapidly in just 25 years. Can you
elaborate on todays structure of the
group?
A.A. SANTILLANA: We started with one company only, and put up another two years
later. These three main companies have
their own subsidiaries. The main purpose
of such structure is to decentralize control from Metro Manila to the provinces.
We find it very effective to transform, or
convert, our key people into actual shareholders of these companies.
Thirty percent of the equity has been
transferred to our staff. For every ten million pesos the subsidiary owns, they thus
receive three million pesos. As a result,
they will retire as owners rather than
employees. We implemented that system
after roughly five years of operations. We
had to put this system in place to reward
deserving employees too, and to ensure
that they would stay with us in the future.
You have to take good care of them.
This system has helped us send some
of the children of our very poor employees to school. Our driver, for example, has
a daughter who is a pharmacist now. He
would not have been able to do this without our support. Our love for our people
makes us one of the proudest and successful companies in the industry.

47

We are one of the few companies that


decided to have its own buildings nationwide. We now have one in Davao and two in
the Visayas aside from our main headquarters in Metro Manila.

Albert-Jan Santillana, senior


vice president
for Real Property Administration, S.V. More Group of
Companies

Jean Paul D. Santillana,


vice president - Overall
Marketing
Office, S.V. More Group of
Companies

Angel Paguia - VicePresident - Personnel


Administration

Gemma Dela Cruz Vice-President and


Comptroller

Milette Hojilla - Senior


Vice-President - Materials Management &
Procurement Office

Maxima Cabatic Executive


- Vice-President and Chief
Comptroller

How difficult was it for you to establish your


name in the market?
A.A. SANTILLANA: We had to develop the
demand for our products. Apart from that,
we needed the right people to represent us
as our ambassadors in the market place. If
we are properly represented, market the
right products and have the right price and
positioning, the rest follows.
In addition to that, we need to focus on
continuously improving the quality of our
products as well as their packaging.

FR: The Philippines is a pharmaceutical market where you can find medicines of both high
quality and very poor quality. As for local
manufacturers, how do you look at quality?
A.A. SANTILLANA: First of all, we have to be
careful in choosing who we work with.
Hizon Laboratories and Lloyd Laboratories
are world-class manufacturers. If you work
with foreign manufacturers, you have to
carefully select to ensure that they work
according to quality standards. In India, for
example, there are bad manufacturers in the
region but also many very good ones. We are
prepared to take on South Korean manufacturers, which can be among the best.
FR: Why, after all these years, have you not
decided to manufacture yourself?
A.A. SANTILLANA: We are now in the process
of entering that stage of our companys lifecycle. For these first 25 years, we did not
want to take up big loans to fund such
investment, which is why we have waited
till the point where we have sufficient
resources to build our own facilities. Also,
when we constructed our buildings in Mindanao and the Visayas, we did not loan a
single cent.
Now we have reached the point where we
can afford manufacturing without external
funding. Self-sufficiency is very important
to ensure that the operating cash remains
unaffected. In three to five years, we should
have completed our first manufacturing
facility in collaboration with our Philippinebased manufacturers.

PHILIPPINES MARCH. 2014

48

PHILIPPINES MARCH. 2014

49

Company index
Arup ................................................. 30, 31
Aspen .............................................. 12, 14
Astrazeneca .................................... 11, 16
Cognizant ........................................ 20, 21
Delex Pharma International (DPI)...... 14
Department of Science and Technology.21

Novo Nordisk......................................... 12
Pharmaceutical And Healthcare
Association Of The
Philippines (PHAP)................... 10, 39, 40
Philippine Chamber Of The
Pharmaceutical Industry (Pcpi)...... 10, 41

Deloitte ............................................ 16, 24

Philhealth ........... 8, 9, 10, 18, 34, 36, 37, 43

Fda..........10, 14, 18, 33, 38, 39 40, 41, 42, 44

Pointwest.................................... 20, 21, 27

Generika .......................................... 17, 18

Prosel .................................................... 44

Globo Asiatico ..................................... 12


Gsk ........................................................ 16

RBC MDC ............................................. 17


Secretary Of Health .................... 8, 34, 35

Hizon ..................................................... 15
Ims ........................................................ 16
Janssen ........................................... 32, 33

Servier .................................................... 9
St. Lukes Medical Center..................... 12

Lloyd................................................. 15, 19

Sv More Group .......................... 15, 46, 47

Merck .................................................... 18

Torrent .................................................. 13

MSD ................................................. 11, 16

TTSI ................................................. 20, 21

National Kidney And Transplant Institute


(NKTI) ................................................... 12

United Laboratories ............................. 14

Novartis ................................ 10, 11, 16, 42

Zuellig ................................................... 16

PHILIPPINES MARCH. 2014

50

PHILIPPINES MARCH. 2014