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Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas
A Profile of the Philippine Pharmaceutical Sector
Celia M. Reyes, Rouselle F. Lavado, Aubrey D. Tabuga Ronina D. Asis, and Maria Blesila G. Datu DISCUSSION PAPER SERIES NO. 2011-11
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A Profile of the Philippine Pharmaceutical Sector Celia M. Reyes, Rouselle Lavado, Aubrey D. Tabuga, Ronina D. Asis, and Maria Blesila G. Datu
Abstract The Philippines is one of the biggest pharmaceutical markets in the ASEAN region, next only to Indonesia and Thailand.1 It is a lifeline to thousands of Filipino workers and a significant contributor in terms of value of output. This industry is one of the fastest growing industries in the country. Meanwhile, its output, drugs and medicines, account for 46 percent of the total medical out-of-pocket expenses of Philippine households. For poorer people, this percentage goes up to 55 percent.2 Making essential drugs and medicines more affordable especially to the poor and underserved is one of the Millennium Development Goals (MDGs). It is therefore essential to examine the profile of the pharmaceutical industry in the country to better understand the supply chain of drugs and medicines for policy formulation purposes. Using administrative data from agencies that have regulative powers over the industry, a profile of the Philippine pharmaceutical industry was developed. As of December 2009, the Food and Drug Administration’s records show that there are 284 drug manufacturers, 438 drug traders, 634 drug importers, 4,719 drug distributors of which 3,956 are wholesalers, and 32,538 retail outlets. Manufacturing is dominated by multi-national brand originator giants and numerous local generics/branded generics producers. Meanwhile, trading is done by few large companies and thousands of small retail outlets. The industry players are diverse and formulating policies therefore must take into consideration how each player may be affected by policy issuances.
2008 PHAP report 2006 Family Income and Expenditure Survey (FIES) 1
A Profile of the Philippine Pharmaceutical Sector
A. Introduction B. Demand for Drugs and Medicines 1. Out-of pocket spending on medical care 2. Projected Out-of-Pocket expenses for drugs and medicines 3. Government Expenditures on drugs and medicines 4. Total projected demand for drugs and medicines C. Supply of Drugs and Medicines 1. Industry Structure 2. Industry Players 3. Profile of Manufacturers 4. Profile of Selected Toll Manufacturers 5. Profile of Traders D. Contribution of the Pharmaceutical Industry to the Philippine Economy 1. Investments 2. Employment 3. External Trade 4. Taxes 5. Essential Drugs 6. Linkages with the Domestic Economy E. Summary of Findings
mitigation. drugs and medicines account for 46 percent of the total medical out-ofpocket expenses of Philippine households.3 It is a lifeline to thousands of Filipino workers and a significant contributor in terms of value of output. treatment. This industry is one of the fastest growing industries in the country. Drug products. this percentage goes up to 55 percent. diagnostic. cure. The Philippine pharmaceutical industry was valued at PhP121 billion based on the IMS 2009 estimates. The pharmaceutical industry is dominated by the ethical products (69%). Although foreign companies dominate the market in terms of peso value sales. Ronina D. parts. or prevention of disease in man and/or intended to affect the structure or any function of the human body. followed by the OTC products (24%).4 Making essential drugs and medicines more affordable especially to the poor and underserved is one of the Millennium Development Goals (MDGs). Non-drug products meanwhile include nutritionals and infant milk preparations. The sector includes both drug and non-drug products. Asis. cosmetics. baby care. from 2005 to 2009. In fact. as defined in the PHAP 2008 report. the local and foreign companies split almost equally the 3 4 2008 PHAP report 2006 Family Income and Expenditure Survey (FIES) 3 . Meanwhile. It is therefore essential to examine the profile of the pharmaceutical industry in the country to better understand the supply chain of drugs and medicines for policy formulation purposes. The value of the Philippine pharmaceutical industry has been on the rise in the past years. Both the local and foreign pharmaceutical companies contribute to this fast growth rate. Interestingly. Reyes.DRAFT: FOR DISCUSSION PURPOSES ONLY A Profile of the Philippine Pharmaceutical Sector Celia M. Aubrey D. Tabuga. Datu May 2011 A. For poorer people. and the rest are nutritionals (7%). refer to medicine or other substance (either ethical/prescribed or over-thecounter drugs) intended for use in the diagnosis. but which does not include devices or their components. and other medical devices. Rouselle Lavado. Introduction The Philippines is one of the biggest pharmaceutical markets in the ASEAN region. and accessories. the average rate of annual growth of peso sales by the local ones in 2005 to 2009 surpasses those of foreign companies (14 compared to 5 percent). next only to Indonesia and Thailand. and Maria Blesila G. the market has been increasing at an annual average rate of 8 percent.
which is the profile of the industry engaged in the supply of drugs and medicines.000. external trade. the profiles were developed by also describing the local and foreign companies. This sets the stage or rationale in discussing the profile of the pharmaceutical industry. and botanical products pay its workers on the average an annual salary of around P460. and the profiles of manufacturers and traders of drugs and medicines. size. This report was developed based on administrative data from the Food and Drug Administration (FDA) formerly Bureau of Food and Drugs (BFAD). there is a limited body of literature devoted to understanding the magnitude and depth of its contribution to the Philippine economy in terms of output.6 Indeed. or a 7.120 in 2005.5 This illustrates the robustness of the Philippine pharmaceutical industry and the vast opportunities that it offers. The 2006 Census of Philippine Business Establishments shows that manufacturing establishments of pharmaceuticals. medicinal. B. Unfortunately. and some projections only to show how the market of the industry potentially grows over time. The discussion starts with the structure shown by a simplified framework that aims to explain how the players interact with one another. chemical. Section D then discusses the contribution of the industry in terms of investments. the demand for drugs and medicines is discussed in Section B. particularly the drugs and medicine sector. Demand for Drugs and Medicines According to the Philippine National Health Accounts. supply of essential drugs. in terms of structure. Section C. government spent P609 per person 5 6 PHAP 2008 Report Only among establishments with average total employment of 20 and over 4 . employment. the pharmaceutical sector is a vibrant industry. Manufacturers of these products are also among the top grosser in terms of value of output.2 percent growth. To provide a depth in the analysis.000 Corporations. per capita spending on health was P1. firm-level records from Securities and Exchange Commission (SEC). government expenditures. This section is followed by the main focus of this report. corporate information from various official websites of pharmaceutical establishments. almost three-folds the average annual salaries of workers in the manufacturing sector. key players and governing institutions. and others such as the Top 10. and linkages with the domestic economy. This paper is divided into several sections. survey data from the National Statistics Office. First. investment and trade among others. It includes the discussion on out-of pocket expenditures on drugs and medicines by the households. This report therefore examines the pharmaceutical industry. followed by a description of the industry players. As earlier mentioned the pharmaceutical industry is a lifeline to thousands of workers in the country and is among the top-paying industries.market share when it comes to actual unit sales. employment. In 2005. taxes.978 in 2004 and P2. The final section summarizes the results.
Per capita health expenditure by source of funds at current prices. which covers only a small share in the expenditure. HMOs. Table 1. 5 . the main source of funds for health expenditure has been private sources which have shown a gradual increase. accounting for 59 percent of total private sources. private insurance. however. From 2000 to 2005. provided for P1. 2005. Private sources.while social insurance (Philhealth and Employees’ Compensation) spent P233 per capita. Government funding continues to be the second main source of funds. it has shown a steady decline in its share in the total health expenditure of the country.253. has shown an increase in its coverage over the six year period. Social insurance. However. 2004-2005 (Philippine pesos) Source of funds Private sources Out-of-pocket Private insurance HMOs Employer-based plans Private schools Government Social Insurance Others All sources 2004 1156 927 49 85 71 24 608 191 31 1978 2005 1253 1026 51 83 67 25 609 233 34 2120 Source: Philippine National Health Accounts. which include out-of-pocket. NSCB. employer-based plans and private schools.
0 1.0 80.1 31.3 51.0 20.0 100.0 2000 2001 2002 Social Insurance 2003 2004 2005 Others 7.0 28.4 58.6 9.2 1.9 36. NSCB 6 .6 7.1 1.0 0.2 58.3 54.6 30.1 11.2 58. NSCB Figure 2.2 59.7 Government Private Sources Source: Philippine National Health Accounts.0 31.0 60.5 1. Share of Health Expenditure by Source of Funds.7 1.5 9.6 9.Source: Philippine National Health Accounts.0 40.0 40.2 1. 2000‐2005 120.
Expectorant. Analgesic.8 percent of total medical expenditure.8 20. Table 2. Vitamins.2 percent of the per capita total expenditures. nurses. VCO. Medical charges or professional fees come in second. hilots. Hospital room charges take up 20. eyeglasses. about 3. Antacid. Out-of pocket expenditures on medical care. 2006 Type of medical expenditure Drugs and medicine Medical charges Hospital room charges Other medical goods and supplies Food supplements Dental charges Contraceptives Other medical health services Total Amount (Philippine pesos) 529 282 228 36 24 19 14 4 1136 Share (in percent) 46. adhesive. etc Pills. Bandage.1 percent.000 families. etc. etc. etc. DXN. Ex. condoms. and others Service fees for herbolarios. midwives. The FIES is conducted triennially by the National Statistics Office and is the source of the official estimates of poverty data for the country.1 3.4 100 Source of basic data: 2006 Family Income and Expenditure Survey Table 3.2 2.2 percent and food supplements came in fifth at 2. Definitions of types of medical expenditure Type of medical expenditure Definitions Drugs and medicine Includes: Antibiotic. Etc. Other medical goods and supplies represented 3. Based on the latest FIES survey of 2006. and Others Hospital room charges Medical charges Dental charges Other medical goods and supplies Other medical health services Contraceptives Food supplements Source: 2006 FIES Questionnaire. NSO Room charges: Public or Private Service fees of Doctors.6 percent) of total medical expenditure. Out-of pocket spending on medical care The Family Income and Expenditure Surveys7 provide details on out-of pocket expenses by families. Includes: Alcohol. the per capita expenditure on medical care is Php 1. accounting for 24.1. faith healers. The sample size for the 2006 survey is 38.6 24. Service fees for dentist. 7 7 . plaster.7 1.1 1.1 percent.136. Drugs and medicines constitute almost half (46. INTRA. cold rub.2 0.
2006 (Philippine pesos) Decile Per capita income Family income First less than 9. spent P5118. The figures under the per capita income column show the range of per capita income for that decile.190 Second 9.190 – 64.638 less than 48.Expenditure on medical care varies depending on income of the families. or tenth decile.994 – 16. an individual spent on the average P1136 for medical care.015 Fifth 20. the population is sorted by per capita annual income and divided into 10 equal groups.947 Greater than 434. the first decile represents the poorest 10 percent of the population while the tenth decile represents the richest 10 percent of the population.684 160.016 -127.993 48. This assumes an average family size of 5. the figures under the family income column show the range for the family income for that corresponding decile. On the other hand.1 – 20. 2006 (Philippine pesos) Per capita income decile Type of medical 1 2 3 4 5 6 7 8 9 expenditure Total medical care 100 155 201 307 441 533 834 1153 1789 Drugs and medicine 53 83 110 165 209 265 415 536 861 Hospital room charges 18 23 26 48 72 99 150 239 326 10 5118 2262 1123 8 .316.420 Eight 41. Income ranges for the different income deciles.475 – 208.735 Tenth Greater than 86. spent on the average P100 for their total medical care while those in the richest 10 pecent of the population.465 Sixth 25. NSO In 2006.466 – 160.040 Ninth 56. or deciles. Medical expenditure of households by income group. Table 5.421 – 282. The first decile is the lowest income group while the tenth decile is the highest income group. Table 4.580 Fourth 16.408 208. The income ranges for the different deciles are shown in Table 4.096 – 41.1 – 56.493 102. Individuals belonging to the poorest 10 percent of the population.404 -25. or the first decile.095 127. This is about 43 times the average spending of those in the first decile and almost 3 times those in the ninth decile.684. Thus.316 64966 – 81.403 81581 – 102.735 Source of basic data: 2006 Family Income and Expenditure Survey.947 282.409 – 86.494 – 32.475 Seventh 32. To show the variation across income groups.041 – 434.638 – 12. The individuals in the tenth decile also spent on the average P 2262 on drugs and medicines that year.965 Third 12.
This increase was most evident in the individuals belonging to the seventh to tenth deciles.8 2. 2006 (Percent) Per capita income decile Type of medical expenditure 1 2 3 4 5 6 7 8 9 Drugs and medicine 53 53.7 24.3 1. Per capita expenditures by income decile.7 0.6 18 20.6 4. This represents an average annual growth rate of 16.7 1.2 0.7 18.2 Other medical health services 1 1.9 0.2 21.9 1 1 1.7 19.4 49.7 49.7 1.6 Other medical goods and supplies 5 5. Distribution of medical expenditure by type and by income group.7 47. NSO Table 6.7 53.5 48.9 20.1 Dental charges 1 0.8 2.9 25.8 12.2 2.5 25.5 25.7 0.9 22.3 3.2 1.6 3.1 Hospital room charges 18 14.8 46.3 18.3 Comparison of the per capita expenditures in the Philippines between 2003 and 2006 reveals an increase in both total medical care expenditure with a 63 percent growth.7 1.6 16.6 3.8 4 2.5 0.Medical charges Dental charges Other medical goods and supplies Other medical health services Contraceptives Food supplements 15 1 5 1 6 1 29 1 8 2 9 2 40 2 10 2 8 2 63 2 14 2 9 3 114 5 19 3 9 10 121 5 19 5 11 9 203 8 28 4 10 14 283 12 41 3 17 21 449 29 57 5 17 45 1320 112 136 8 41 116 Source of basic data: 2006 Family Income and Expenditure Survey.4 3.3 Contraceptives 6 5. and drugs and medicine having a 59 percent growth over the three year period.1 0. NSO 10 44.7 0.2 5 4.1 1.3 0.3 24.3 1 0.7 percent for drugs and medicines.9 2 2.9 15.5 1 Food supplements 1 1. 2003 and 2006 (Philippine pesos) Drugs and medicine Total medical care Decile 2003 2006 2003 2006 First 36 53 69 100 Second 58 83 111 155 Third 92 110 168 201 Fourth 118 165 224 307 9 .5 54.5 Source of basic data: 2006 Family Income and Expenditure Survey. Table 7.8 2.2 Medical charges 15 18.6 1 0.3 1 1 2.
Table 8.68 2007 617 88.94 a/Based on assumption that per capita spending will increase by 16.040 64.043 184.7 percent annually.869 91.476.7 2015 2124 103.958 155. Population is projected to grow by 2. Government Expenditures on drugs and medicines In addition to out-of-pocket expenses by households.746.85 2011 1145 95.504 54.674 109. the government also spends on medicines and drugs. Projected out-of-pocket demand for drugs and medicines. and population grows annually at an average rate of 2.494.521 219.352. NSO 2.04 percent annually. 3. out-of–pocket expenses by the total population can be estimated for the period up to 2015. The expenditures of all provinces are obtained from the Statement of Income and 10 . Projected Out-of-Pocket expenses for drugs and medicines Using the per capita spending figures from NSO and the projected population.78 2009 841 91. the rate posted between 2003 and 2006.Fifth Sixth Seventh Eighth Ninth Tenth Philippines 139 182 233 355 529 1320 333 209 265 415 536 861 2262 529 262 356 498 731 1126 2856 698 441 533 834 1153 1789 5118 1136 Source: Family Expenditure and Income Survey 2003 and 2006.912.464.14 2010 981 93.617.38 2012 1336 97.04%.438 130.25 2013 1559 99.114. 40 2008 720 89. The projections indicate that out-of pocket demand for drugs and medicines will reach around PhP 92 billion in 2010 and around PhP 220 billion in 2015.527.905 45.246 77.564. 2006 to 2015 a/ Total spending Per capita spending (billion Philippine Year (Philippine pesos) Population pesos) 2006 529 86.1 2014 1820 101. the rate posted between 2003 and 2006. The figures presented below assume that per capita spending on drugs and medicines will increase by 16.7% annually.
The figure is expected to increase to Php 2. The figure goes up by about PhP 1. The hospitals/health centers normally procure from medical representatives and give the medicines to patients for free. it is safer to assume that most of drugs expenditure by DOH retained hospitals were sold to patients. they rarely give drugs for free anymore. medicines and supplies. Nutrition and Population (HNP).4 billion in 2015 when expenditures for medical supplies are added. It is estimated that local government units (LGUs) spent Php 1. Thus. gauze. syringes. Central government spending on drugs is not included due to possible double counting expenditure by households (which is captured by FIES) and hospitals.6 billion on drugs and medicines in 2009. they ask patients to buy these outside. Most provinces rarely charge medicines from patients. drugs given for free during medical missions. The percentages are based on the disaggregated expenditures of one province. It would be very difficult to disaggregate what actually was spent as subsidies on drugs using government funds and what was paid for by households. using data from an earlier study. Since the SIEs contain aggregate information on Health.Expenditures (SIE) forms collated by the Bureau of Local Government Financing of the Department of Finance. 11 . Average growth rate for 2003-2007 is calculated (4. it is assumed that all expenditures by provinces are given to patients as subsidies. and bulk purchases of provincial health center for distribution to health centers. When drugs and supplies run-out. There is no data available at the national level that disaggregates expenditures by LGUs at this level. A factor of 18% was used for drugs and medicines expenditure while 30% was used for drugs. medicines and supplies. Field work in four provinces conducted in previous project support this assumption. and others. To generate projections for the period until 2015. Since DOH retained hospitals were allowed by DBM to retain their income in 2003. Medical supplies normally consist of oxygen tanks.31%) which is used to project the expenditures for 20082010. Expenditures on drugs and medicines by LGUs are comprised of pharmaceutical purchases of provincial hospitals.1 billion in 2015. an estimate based on other studies was used to obtain the percentage spent on drugs.
This shows an average annual growth rate of total demand of around 17 percent.70 2.24 2014 2.1 157.86 2011 1.63 2. it is forecasted that total demand will rise up to around 222 billion pesos in 2015.38 130.71 222. the structure of the pharmaceutical sector was described in a simplified framework.7 219.56 2. Total projected demand for drugs and medicines.53 Source of basic data: Bureau of Local Government Financing of the Department of Finance 4.94 Government 1.93 2.74 2010 1.03 186.78 77.1 Total spending 66.85 1.04 C.01 2. Structure of the Supply Chain Based on drug registration data from the Food and Drug Administration.93 3. and medical supplies.77 2.11 2013 1.77 1.85 109.62 2009 1. Table 10. It aims to describe in general the 12 . more than triple that of 2008’s. Projected LGU expenditures on drugs. Supply of Drugs and Medicines 1. medicines.55 111.1 184. medicines and medical supplies 2008 1.25 155. 2008.2015 (billion Philippine pesos) Projected expenditure on Projected expenditure on Year drugs and medicines drugs.14 91.Table 9. 2008-2015 (billion Philippine pesos) Year 2008 2009 2010 2011 2012 2013 2014 2015 Out-of pocket expenses 64.85 3. Total projected demand for drugs and medicines Table 10 shows the combined projected demand for drugs and medicines from both out-ofpocket expenses and government spending.76 93.10 3.7 1.33 78.38 2015 2.15 132. Assuming that there is no substantial change in the annual population growth rate of the country.98 2012 1.63 1.56 1.01 3.
a giant toll manufacturer. 16 out of the top 20 pharmaceutical companies are MNCs. Second. Pfizer. Johnson & Johnson. These are GlaxoSmithkline. Another common denominator among MNCs is Zuellig which does most of the distribution of MNCs’ drug products. Bristol Myers Squibb. Interphil also manufactures 91 percent of Wyeth’s drug products that are locally manufactured. In terms of sales. United Laboratories. MSD. Also. Boehringer Ingelheim. Interphil produces drug products for not less than 30 MNCs. Among the few local toll manufacturers which MNCs use are Hizon Laboratories. Multinational pharmaceutical companies share several common characteristics. are categorized as drug traders. 13 . The simplified framework does not provide a total picture of the industry but can be used to understand how the players interact with one another up to some levels of the supply chain. Roche. In fact. and Bristol Myers Squibb. MNCs typically imports a large proportion of their merchandise from abroad. the industry is dominated by MNCs. All the top 16 except for GSK. is characterized by a local leader. First. These 16 companies make up 65 percent of the total sales of the top 20 companies. Novartis. giant MNCs like GSK and Pfizer. Swiss Pharma and Euro-Med Laboratories. For instance. which according to SEC documents is a locally-owned subsidiary of the foreign company Manchester Holdings. Astrazeneca. The pharmaceutical MNCs are primarily drug traders. Abbott Laboratories. Wyeth. Sanofi-Aventis. and many small local players. Bayer. based on raw data from FDA. it was found that Pfizer subcontracts all its local production (in terms of drugs) to Interphil. based on IMS sales data for 2009. MNCs subcontract very little proportion of their drugs to local toll manufacturers.flow of goods from importation/production down to distribution. and Merck Inc. Servier Philippines. Even GSK and Bristol Myers Squibb which are partly manufactures are themselves huge drug traders. Schering Plough. The Philippine pharmaceutical industry. The typical structure of the supply chain of MNC drug traders is simplified and shown in the diagram below. a lot of the giant MNCs hire the manufacturing services of Interphil.
Typical Supply Chain of a MNC Drug Importer 8 Based on drug‐related business 14 . After production which include repacking and labelling. The finished products go directly to its distribution unit or affiliates. Interphil then dispatches the products to Zuellig or other affiliates for distribution. There are also MNCs which can be considered purely importer. is a pure importer as far as drugs is concerned. while the materials for production go to its toll manufacturer. Zuellig.Figure 3. in many cases. Servier Philippines Inc. for instance. The diagram below illustrates the product supply chain of an importer.. Typical Supply Chain of a MNC Drug Trader8 The MNC trader purchases both finished drug products and raw and intermediate materials. Interphil. Figure 4.
and Allied. Ace Pharmaceuticals.The local pharmaceutical sector. Figure 5. they also import finished products and distribute them to the local market either through their own distribution units or affiliates. Prohealth Pharma. and Westmont). The diagram below illustrates the supply chain of a typical local drug trader. and GX International. AD Drugstel. Pascual Laboratories. as it is called. GX International. Euro-med. Pascual and United Laboratories. AMEuropharma. among others. and something in between. usually local toll manufacturers. The local pharmaceutical companies can be categorized into two broad groups – the drug traders and the drug manufacturers. Unilab. package. These companies include Lloyd laboratories. among others. The drug traders are Natrapharm. owns 28 percent of the total sales of the Top 20 pharma companies. The other locals included on top are Pascual Laboratories. or repackage the latter’s drug products. Medhaus Pharma. Swiss Pharma. is a mix of manufacturers. on the other hand. Natrapharm. This group subcontracts production of their drugs to toll manufacturers. traders. However. The local manufacturers included United Laboratories (along with its subsidiaries namely Asian Antibiotics. for instance. process. they also act as toll manufacturers for 15 . The other manufacturers are so-called toll manufacturers because they are primarily contracted by drug traders to manufacture. Unilab and Pascual are manufacturers-traders while Natrapharm and GX are considered traders. Although there are only four local companies which are included in the top 20 pharma companies. manufacture their own brands and distribute these through their own subsidiaries. Cathay Drug. Hizon Laboratories. Typical Supply Chain of a Local Drug Trader The second group consists of local manufacturers which are manufacturing either for themselves and/or for other companies. The two groups are not mutually exclusive such that there are companies which exhibit the characteristics of both groups. Amherst. At the same time. the top spot is occupied by a local giant – United Laboratories.
and distribution rather than manufacturing. Local toll manufacturers serve mostly small local drug traders while Interphi caters mainly to large foreign companies/MNCs.g. One probable basis for the links. should seriously think of upgrading to gain certifications that guarantee high quality standards. Some are doing mainly manufacturing while several others do manufacturing. Manufacturing activities are highly concentrated to one giant foreign toll manufacturer – Interphil and most of the distribution is done by Zuellig. Figure 6. The diagram below shows the typical basic structure of the supply chain of a local drug manufacturer. still some do not engage in manufacturing at all. between these local toll manufacturers and the MNCs is their membership in the industry organization in which the MNCs are a part of (e. marketing. A PHAP official explained that the reason why MNCs. several insights can be presented. Typical Supply Chain of a Local Drug Manufacturer From the discussion above. particularly its members. Also. A few local toll manufacturers like Hizon and Swiss Pharma have served several MNCs but only for a very negligible proportion. The local ones in contrast are more diverse.several companies. MNCs are more into drug trading. have not really shifted into hiring the services of local tolls is because they still have a lot to improve in terms of their manufacturing practices and facilities. PHAP). These companies. the official mentioned. Interphil has maintained a good reputation in 16 . This is the main reason why MNCs still give most of the toll manufacturing works to Interphil. albeit weak. The division of labour is more pronounced among MNCs than among locals. the locals are linked more closely with one another just as the foreign ones are within the foreign/MNC circles. trading and distribution at the same time.
9 The MNCs’ long relationship with Interphil is an established fact partly because the process in which it has been selected by MNCs is a long and tedious one thereby switching from one toll manufacturer to another is not easy. that were manufactured abroad because the data contains the country of origin and manufacturer. On the average. distributors. Only very few of the top MNCs are manufacturers. three-fourths of their drug products are imported as finished products. one can examine the operation of each pharmaceutical company with respect to the drugs that it imports and/or produces locally. In fact. they do not rely much on importation. the highest share of imports is only 52 percent (that is in the case of Transfarma Philippines. Pfizer for example. On the average. importers. Aside from this. All drugs that originated in other countries were then counted and the sum was divided by the total number of drugs that Pfizer traded. all top foreign companies/MNCs are primarily drug traders or importers. Drugs with the same generic name and brand but which have varying strengths were registered differently and hence counted separately in the calculations. The data was extracted from the list of registered drugs of the FDA which contains not only the manufacturer. and country of origin. Depending on their levels of sales.terms of its manufacturing practices and technology. 9 Source: interview with a PHAP official 17 . It was convenient to show all drugs traded by a company. brands and generic names of each drug registered in the FDA but also the names of corresponding drug traders. Inc. The results are what were encoded in the last column of the tables below. From the list. Although only four (4) of the top local pharmaceutical establishments are manufacturers. and they do several distribution activities.). MNCs do not rely much to the local pharmaceutical industry. One can see almost the exact opposite looking at the top local companies. only 23 percent of their drug products were imported as finished products. the top MNCs import roughly 23 to 100 percent of their drug products. Except for Bristol Myers Squibb and GlaxoSmithkline which have manufacturing facilities in the Philippines. Tables 11 and 12 below show the proportion of drugs supplied by top foreign and local companies which are imported as finished products. The drugs that Pfizer traded were counted in terms of their registration numbers and each unique registration number pertains to a unique drug product.
56 100 100 89. Inc. Share of imported finished products in top 20 foreign pharmaceutical companies in the Philippines. Bristol Myers Squibb (Phils.08 83. Inc. Inc. Inc. Solvay Pharma. Sanofi-Aventis Philippines Inc. 1/ Share of imported drug products to total drug products only.drugs with different strengths were counted separately. vaccines.Table 11.98 51. Pfizer.3 100 76. Inc. Eli Lilly Phils. herbal medicines.97 73.. Inc. Inc. medical devices and veterinary medicines. Merck Inc.) Inc. based on FDA's registered drugs list . Getz Pharma phils. Wyeth Phils. Phils.. Merck Sharpe & Dohme (IA) Corp Servier Phils. Johnson & Johnson Phils.02 87. does not include home remedies. Inc. Roche Phils.. Boehringer Ingelheim Phils.22 88. AstraZeneca Pharmaceuticals. Inc..87 86 96. 18 .42 82. Abbott Laboratories Phils.15 Sources of basic data: IMS 2009 Rankings and Sales figures and Food and Drug Administration (FDA). 2/ Weights were based on 2009 sales data from IMS. Inc.36 60. PL Asia Pacific Inc. Weighted average 2/ Category Manufacturer/Trader/Importer Trader/Importer/Distributor Trader/Importer/Distributor Trader/Importer Trader/Importer/Distributor Trader/Importer Trader/Importer/Distributor Trader/Importer/Distributor Trader/Importer Trader/Importer Manufacturer/Trader/Importer Trader/Importer Trader/Importer/Distributor Trader/Importer Importer Trader/Importer Trader/Importer/Distributor Trader/Importer/Distributor Trader/Importer Trader/Importer Share of imported drugs 1/ 72.4 23.11 61. Phils.61 50 93. Inc.33 80.24 95. (Mead Johnson) Bayer Phils. Inc. 2009 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Company Glaxosmithkline Phils. Schering Plough Corp. Novartis Healthcare Phils. Inc..
Inc. based on FDA's registered drugs list . 2/ Weights were based on 2009 sales data from IMS. herbal medicines. Transfarma Philippines. Multicare Pharmaceuticals Phils. Elin Pharmaceuticals Prohealth Pharma Phils. 1/ Share of imported drug products to total drug products only. Inc. Share of imported finished products in top 20 local pharmaceutical companies in the Philippines. 19 . Inc. Inc.1 2. GX International Inc.74 .Table 12.. 13. Inc. Marcopharm Inter Unimedix Category Manufacturer/Trader/Importer/Distributor Manufacturer/Trader/Importer Trader/Importer/Distributor Trader/Importer/Distributor Trader/Distributor Manufacturer Trader/Importer/Distributor Manufacturer Trader/Importer/Distributor Trader/Importer/Distributor Trader/Importer Trader Trader Trader/Importer/Distributor Trader/Importer/Distributor Weighted average 2/ 22. Intermed Mrktng. Pharmaceuticals.84 Sources of basic data: IMS 2009 Rankings and Sales figures and Food and Drug Administration (FDA).08 8. Inc. Herbs & Nature Corp. Pascual Laboratories Natrapharm Inc.56 0 11.33 . Cathay Drug Co. Phils. Terramedic Int'l. Inc. Inc.96 .29 0 33..22 0 0 35.. 3. . vaccines. medical devices and veterinary medicines. Rhea Pharmaceuticals Corp. Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Company United Laboratories Inc. does not include home remedies.17 10.drugs with different strengths were counted separately. Medhaus Pharma. Prosel Pharmaceuticals & Distributors. Euro-med Laboratories Phil.16 6 16. 2009 Share of imported finished products 1/ 29. AM Europharma Corp..11 52. Inc.
The number of village retails outlets is likewise rapidly growing.719 drug distributors of which 3. The majority of the manufacturers and traders are based in Metro Manila (see Table 13).538 retail outlets. as of May 2010. and 32. diagnostics agents. Industry Players As of December 2009. This was followed by a giant distributor – Zuellig Pharma with a net sales amounting to P57 billion. 634 drug importers. Pfizer. The industry’s market grows with the contribution of both the local and foreign companies (MNCs). Meanwhile. nd). Meanwhile. The number of BNBs grew by 55 percent from 2006 to May 2010. Roche. Abbott Laboratories. Several multinationals continue to dominate the rest of the top spots. The foreign companies dominate the market in terms of peso sales but both local and foreign ones split in the share in terms of counting units suggesting a robust and progressive development of the sector. Manufacturing is dominated by MNC brand originator giants and numerous local generics/branded generics producers. essential drugs in the therapeutic classes .2. a local manufacturer. The multi-billion pesos pharmaceutical industry is led by a retailer chain – Mercury Drug which made around P71 billion in net sales in 2008. and hormones and hormone antagonists among others. there are 59 pharmaceutical manufacturers which were listed by the FDA as having good manufacturing practices (GMP). 438 drug traders. Bristol Myers Squibb. came in third with around 23 billion. antidotes.956 are wholesalers. 20 . Bayer. These are Wyeth Philippines. Notably. GlaxoSmithkline. The pharmaceutical industry is a rapidly growing industry with the number of companies growing at 26 percent from 2003 to 2007. now split into 10 PHAP 2008 11 Analysis based on the FDA list of registered drugs and the Philippine National Drug Formulary (PNDF). antineoplastic and immunosuppressant. the Food and Drug Administration and the Department of Health have been recently given stronger regulatory powers. nose and throat preparations. The Botika ng Barangay is also becoming increasingly visible in the regions. United Laboratories. 4. if any. foreign companies dominate all therapeutic classes except for ear.immunologicals. Local companies supply very few. Meanwhile. 10 In the supply of essential drugs.11 The manufacture and trade of drugs and medicines in the country are carried out by diverse players. trading is also done by few large companies and thousands of small retail outlets. a third of the retailers are concentrated in NCR and Region 4. and Novartis. the Food and Drug Administration’s records show that there are 284 drug manufacturers. Over 80 percent of the market is captured by the top 20 pharmaceutical companies (HAI. Boehringer Ingelheim.
510 2. No. a distributor-importer/exporter is one that imports or exports raw materials. it should be considered a retailer.082 512 123 32.Licensing Section –FDA. does not have any drug distributor/trader and has only 123 retail outlets to cater to its 4.098 1. A manufacturer.260 1.239 1. ornamenting.861 185 175 309 554 168 247 359 138 84 151 305 76 52 55 0 4. refers to an establishment engaged in any and all operations involved in the production of health products including preparation. packing. a distributor-wholesaler procures raw materials. distributors and retailers by region. Also. Table 13. There are 634 registered importers of drugs and medicines. altering.197 2. compounding. A trader is also categorized as manufacturer. active ingredients and/or finished products from local establishments for local distribution on wholesale basis. of drug manufactures. processing. repacking. ARMM. Meanwhile. It does not include however those engaged in compounding and filling of prescriptions in drugstores and hospital pharmacies.255 5. active ingredients and/or finished products for its own use or for wholesale distribution to other establishments or outlets.272 1. defined in RA 9711.1 million inhabitants.CALABARZON and MIMAROPA. traders. If the establishment sells to the general public. a very poor region. 21 . Region 4. formulating.719 Retail outlets 5.233 2.191 1. The distribution of drug distributors across regions is also shown below. They are concentrated in NCR. Majority of distributors are wholesalers.064 4. as of December 2009 Region NCR Region 1 Region 2 Region 3 Region 4 Region 5 Region 6 Region 7 Region 8 Region 9 Region 10 Region 11 Region 12 CAR CARAGA ARMM Total Drug manufacturers 112 6 4 32 51 2 16 27 2 3 7 17 4 0 2 0 285 Drug traders 353 2 2 15 38 1 2 11 2 2 2 4 0 2 2 0 438 Drug distributors 1.236 1. and Region 7.095 2.538 Source: Regulation Division I . filling. finishing and labeling.171 1.
Table 14. Number of Drug Distributors by Region, as of December 2009 Total Distributors 1,861 185 175 309 554 168 247 359 138 84 151 305 76 52 55 0 4,719
Region NCR Region 1 Region 2 Region 3 Region 4 Region 5 Region 6 Region 7 Region 8 Region 9 Region 10 Region 11 Region 12 CAR CARAGA ARMM Total
Importer 535 2 0 16 33 5 5 27 2 4 3 1 0 1 0 0 634
Wholesaler 1207 183 175 292 517 162 241 331 136 80 147 304 76 50 55 0 3956
Others 119 0 0 1 4 1 1 1 0 0 1 0 0 1 0 0 129
Source: Regulation Division I - Licensing Section –FDA
There are several types of drug retailers. These are drugstores, Botika ng Barangay, Botika ng Bayan, Chinese retailers, and retailers of non-prescription drugs. The most common type is the drugstore (73%), followed by the Botika ng Barangay (24%).
Retailers (Non‐ prescription Drugs), 332
Botika ng Barangay, 7,961
Botika ng Bayan, 78 Chinese, 308
Figure 7. Number of drug retailers by type, as of December 2009, Source: FDA
The value of the industry is roughly estimated at P318 billion in 2008. This is based on sales data of 296 pharmaceutical establishments included in the Top 10,000 Companies of the country. The top list included 48 manufacturers of drugs and medicine including biological products, 131 wholesalers, and 117 retailers. All these translate into P179 billion worth of assets, and P85 billion of equity. Table 15 shows the average sales, profits, assets, liabilities, and equity of the three groups of players in the pharmaceutical industry. Table 15. Financial data of top players in the pharmaceutical industry, 2008 (‘000 Philippine pesos) Data Total Average Manufacturers drugs & medicines including biological products Sales 89,334,731 1,861,140 Profits 7,657,650 159,534 Assets 80,457,241 1,676,193 Liabilities 27,195,763 566,578 Equity 53,261,477 1,109,614 No. of establishments 48 Wholesalers of medicinal and pharmaceutical products Sales 116,364,929 888,282 Profits 3,650,269 27,865 Assets 55,678,914 425,030 Liabilities 37,092,336 283,148 Equity 18,586,579 141,882 No. of establishments 131 Retailers of drugs and pharmaceutical goods Sales 112,770,309 963,849 Profits 2,152,594 18,398 Assets 42,666,063 364,667 Liabilities 29,481,272 251,977 Equity 13,184,791 112,691 No. of establishments 117
Source of basic data: Top 10,000 Corporations
The institutions that governed the drugs and medicines sector are the Food and Drug Administration (FDA) formerly Bureau of Food and Drugs (BFAD), Department of Health (DOH), and Intellectual Property Office. The FDA is the government body that has the jurisdiction over all matters that concern safety, quality, and efficacy of drugs and medicines. Its mandates include issuance of license to import any drug and medicine and product registration. The FDA has continued to evolve from its predecessors, the Food and Drug Administration established in the late 1960s created under RA 3720, and the Bureau of Food and Drugs in 1982. In 2009, the then BFAD was renamed back into FDA and was further strengthened by virtue of Republic Act 9711. This law is an act that:
“Strengthens and rationalizes the regulatory capacity of the agency by establishing adequate testing laboratories and field offices, upgrading its equipment, augmenting its human resource complement, giving authority to retail its income…amending certain sections of the RA No. 3720, and appropriating funds.” The FDA has eight divisions namely: Office of the Director, Administrative Division, Policy, Planning and Advocacy Division, Regulation Division I, Regulation Division II, Product Services Division, Laboratory Services Division, and Legal, Information and Compliance Division. The Office of the Director provides overall management, direction, supervision, and control over the Bureau while the administrative division provides general administrative and logistic support services. The functions of Policy, Planning and Advocacy Division are to develop plans, policies, and programs with respect to regulation of drugs, processed foods, and the like. It also provides technical information and assistance in terms of food and drug policies and services. It is the unit that is tasked to develop and maintain the management information system of the agency. The Regulation Division I meanwhile has the functions of inspection and licensing for importation, exportation, distribution, and retailing. It also monitors and ensures the quality of processed drugs and foods, among others. This division assists in monitoring adverse reactions. On the other hand, the Regulation Division II performs inspection and licensing for the manufacture and re-packing of processed drugs, foods, medical devices, and others (in vitro diagnostic reagents, cosmetics, and household hazardous substances). It monitors and ensures compliance of manufacturers with requirements of current Good Manufacturing Practices (cGMP) and Hazard Analysis Critical Control Points (HACCP). Both regulation divisions I and II enforce orders of confiscation, seizure, and condemnation in case of violation of the food and drugs laws. These divisions are also assigned to develop capability of regulation officers at the field. The Project Services Division on the other hand formulates standards and guidelines for registration, evaluates and processes applications for registration, issues product registration certificates, and assists in monitoring violations. This unit does the auditing and accreditation of Bioavailability Testing Centers. The Laboratory Services Division meanwhile conducts laboratory tests on finished products to determine compliance with standards of safety, efficacy, purity and quality. It also conducts tests on packaging materials used for the products. It is tasked to establish scientific databases for use in the development of product standards. In addition, it produces properly bred laboratory
IPO may also conduct compulsory licensing. It also monitors advertisements and promotion to assure compliance with guidelines on the medical and nutritional claims. and Center for Device Regulation. This division likewise handles consumer complaints on products regulated by the FDA.animals used for toxicological examinations. vaccines. These new subsections are called Centers and shall be established per major product category. implement cost-containment and other measures. The DOH is responsible for ensuring access to basic public health services to all Filipinos through the provision of quality health care and regulation of providers of health goods and services. drugs and other related products. Lastly. Lastly. include other drugs and medicines in the list subject to price regulation. use of invention by government. The IPO was given the authority over all issues concerning the requirements for patentability of drugs and medicines. that is granting a license to exploit a patented invention even without the agreement of the patent owner. In the new law. Information. In addition. deputize government entities for any assistance needed. each center will have at least – 1) Licensing and Registration Division. 25 . and Compliance Division of the FDA provides the legal advice in the enforcement of laws and regulations. The Secretary of Health. It conducts administrative proceedings and quasijudicial hearings on related cases. in events of national emergency and such other cases of urgency and public interest (Section 93 of RA 9502). The Intellectual Office (IPO) is another government institution involved in the pharmaceutical sector. and biological. resolutions and other administrative issuance pertaining to regulation of processed food. The FDA is under the Department of Health (DOH). It also conducts inspection and audit for analytical laboratories to be recognized by BFAD-LSD. Center for Food Regulation and Research. infringement and/or violations of intellectual property rights. and Research. and 3) Laboratory Support Division. These are Center for Drug Regulation and Research which will include veterinary medicines. 2) Product Research and Standards Development Division. It is the unit that prepares recommendations. it provides and conducts training to Regional FDRO's in Centers for Health Development mini-laboratory. Radiation Health. by virtue of RA 9502. new subsections of the FDA shall be established. the Legal. Center for Cosmetics Regulation and Research which includes household hazardous/urban substances. and others necessary to implement the provisions on the law. bioassay and biological research and development. In the Food and Drug Administration Act of 2009 (RA 9711). the principal health agency in the country. has the power to recommend the maximum retail price of drugs and medicines subject to price regulation. impose administrative fines and penalties.
Out of the 55 establishments included in this profile.13 Interestingly. all unpaid workers were employed by local establishments.12 To add depth into the analysis. Paid employees refer to all persons working in the establishment that receive pay and those working away from the establishment paid by and under the control of the establishment.3.12 Hence. 47 were local ones while 8 were considered foreign companies. In 2006. workers receiving pure commissions only. The profile refers to 55 drug manufacturing establishments that have average total employment of 20 and over. or 13. 2006. sera and plasma. 63 percent of the total. and those on indefinite leave. a comparison between the local and foreign/ predominantly foreign companies were included where data are available.gov. The local manufacturing establishments employed 91 percent of this work force. This was particularly true for the paid employees. Also.ph. Employment refers to the number of persons who worked in or for the establishment as of November 15.2006 Census of Philippine Business and Industry 26 . there are more male. This group refers to PSIC Code 24241 in the 2006 CPBI or those that are engaged in the manufacture of drugs and medicines including biological products such as bacterial and virus vaccines. establishments that operated with ATE less than 20 were not included. particularly drug manufacturers. 82 percent of the total unpaid workers of the manufacturing firms were female. Among all the workers. This aims to provide details into the extent of operation and economic contributions of both groups. drug manufacturers employed a total of 14. than female in local firms’ roster whereas there are more female (54% of the total) employees in foreign manufacturers than male. while majority of the paid workers were male. paid vacation or holiday. On the average. while the foreign ones employ the rest. 13 12 www. These did not include consultants.census. regardless of the number of months the establishment is in operation. Unpaid workers refer to the working owners who do not receive regular pay. Notably. These included those who were on sick leave. most of the unpaid were female. Average total employment (ATE) is the sum of the number of persons who worked in or for this establishment for all months of the year divided by 12. an average of 271 people per establishment. this study utilized the results of the 2006 Census of Philippine Business and Industry (CPBI) conducted by the NSO. Concepts and definitions . The establishments included were only those which had an average total employment (ATE) of 20 and over. there were more male (62 percent of total) than female (see Figure 8). home workers. In fact.555. To develop a profile of pharmaceutical manufacturers. a local firm employed 288 while a foreign manufacturer employed 170. 916 individuals. These also include apprentices and learners without regular pay and persons working for at least 1/3 of the working time normal to the establishment without regular pay. Profile of Manufacturers One of the key players in the industry is the manufacturing sector.
563 4. NSO Table 16. about 111 workers worked on the actual production of drugs and medicines on each of the establishments.645 14. Employment in manufacturing establishments by type and sex. Figure 8.189 5. There were also more male production workers than female. Philippines. On the average. 41 percent of all workers were production workers. Employment of pharmaceutical manufacturing establishments with total employment of 20 and over by type of capital participation.910 13. 2006 Total Average Employment by Type All Foreign Local All Foreign Local Paid employees Male Female All Unpaid Workers Male Female All 15 67 82 15 67 82 0 1 1 . 27 9. . . 2006 Source: 2006 CPBI.473 167 103 270 78 92 170 182 104 287 0 1 2 .361 8. The local firms employ 85 percent of the total production workforce.In the sector.834 626 735 1.
901. local manufacturers paid more for each employee compared to the foreign firms (Table 18).7 Foreign 1. In 2006. they compensated their employees about twice the amount (about P794. the aggregate amount of salaries and wages they paid was five times than the amount that the foreign ones have paid. 2006 Average annual Gross salaries salaries and wages and wages (per worker) Number of Type workers ‘000 Philippine pesos All 14.000 per employee.555 5.540 429.169 462. manufacturers paid P6. NSO Manufacturers of pharmaceutical products also contributed about P422 million to the employees’ SSS/GSIS payment.081. because local firms employed more.361 1.819. almost three-folds the average annual salaries of workers in the overall manufacturing industry for that year.361 8. In fact.916 626 735 1. Each employee received an estimated average amount of P462.555 167 104 271 78 92 170 183 106 288 In terms of compensation.3 Source: 2006 Census of Philippine Business and Industry.578 4.7 Local 13. Foreign establishments paid higher wages and salaries than their local counterparts. the pharmaceutical manufacturing sector pays one of the highest rates in the manufacturing industry.916 6.712 14.204 5. In fact. NSO 9.629 794. Average salaries and wages of pharmaceutical manufacturers by type of establishment. Table 17.977 13. 28 . However in terms of the total.000. In terms of the averages.000 per person). 94 percent of the total amount of contributions of the entire sector came from local firms.Total Employment Male Female All Source: 2006 CPBI. 700 or about US$9. Philippines. Local firms collectively contributed much higher to SSS/GSIS of employees than did the foreign ones.000 per employee) that local establishments paid to their personnel (P429. averaging about P28.9 billion in salaries and wages.
Employer's contribution to SSS/GSIS by type of ownership.263 35.Table 18.581 10 634. 2006 (‘000 Philippine pesos) Type All Foreign Local Total 422. 2006 (‘000 Philippine pesos) Average per Type of revenue/subsidies Total establishment Value of products/by-products sold Value of industrial services done for others Value of non-industrial services done for others Value of goods for resale Interest Income Dividend Income Commissions and fees earned Other income Total revenue Source: 2006 Census of Philippine Business and Industry. computers and computer peripherals and accessories. 90 percent of the revenues generated by foreign companies came from the sale of products or by-products.8%) and from industrial services done for others (6%). 14 Next only to semi‐conductor devices.378 61. Philippines.479.1 billion per establishment.22 Source: 2006 Census of Philippine Business and Industry. Philippines. precious metals.534 1.00 19. This total amount ranked 7th highest among all the subsectors in the manufacturing sector.279.835.854 1. The large volume (92 percent) of revenues as expected was generated from the sale/resale of their products. averaging 1.289 Notably.236. and cigarettes. Revenue of pharmaceutical manufacturing establishments with total employment of 20 and over by type.856 Average per employee 28.297 761.001 373. 29 .904 863.716 3. but also from reselling of goods (16.283 11.268 59.953 70. motor vehicles. Meanwhile. NSO In terms of output.799 167.124. refined petroleum. the total revenues of manufacturers amounted to around P62 billion in 2006.407 386. those of the local companies came not only from selling of products or by-products (74%).618 6. NSO 47. Table 19.933 13.27 29.968 9. The rest came from reselling of goods.14 Much (82%) of the revenues were generated by local pharmaceutical companies.
2006 Meanwhile. It is interesting to note that local firms collectively spent much more on R&D than the foreign ones did.6 million compared to locals’ 6 million pesos per establishment. In terms of the average amounts however. the total cost that manufacturers incurred in 2006 amounted to P47 billion. Composition of total revenues by type of pharmaceutical companies. or P345 million. 30 . The second largest percentage (27 percent) went to payment of non-industrial services done by others. Each establishment spent on the average around P6. The biggest chunk of the costs. paid by manufacturers went to the purchase of raw materials. these establishments are also importing products by volume to resell them into the domestic market. Another relatively large chunk of the cost went to purchase of goods for resale.3 million for R&D. 7. R&D expenditure was a very tiny part of the total cost at only 0.Figure 9. the foreign ones have slightly higher expenditures than the local ones. 43 percent. In fact. This shows that aside from producing their products in their own manufacturing plants.7 percent. 82 percent of the total R&D amount spent by all manufacturers came from local manufacturers.
an average of P6.627 Raw materials.744 126.889 6. Each foreign manufacturer has incurred on the average 3.586 15.791 Total cost 46.297 249.889 6.Table 20. The largest amount of capital expenditures was spent for machinery and equipment (P207 million).214.126 231.712 25.511 709. This was followed by transport equipment (P98 million) and buildings (P30 million).007. Meanwhile.691 Other cost 837.398.092 819.081.107 6.568 6.970 11.320 1.038 60. the foreign ones also have significantly higher amount of bad and doubtful debts.072 8.049. The foreign companies have spent on the average significantly higher amount (at 20 million pesos) than the local manufacturers (at 4 million pesos) in capital expenditures.507 10.930 5.059 Cost of industrial services done by others 1. lubricants.626 14.705 243.857 Interest expense 471.7 million in bad and doubtful debts in 2006 while a local manufacturer had only 0.388 148.870 Bad and doubtful debts 34.164.203 132. about 23 million per establishment compared to 16.182 121 6.443 14.955 Foreign 764. Cost by type for pharmaceutical establishments with total employment of 20 and over by type of capital participation.282 28.702 284.011 15.362 1. Transport 31 .882 44.669 117.123.637 33.577 5.441 8. 87 percent of the total amount was incurred by the foreign establishments.948 Electricity and water purchased 730.013.039 5.517 8.700 2.233 264.328 38. other materials and supplies purchased 20.912.4 million for every establishment which was almost the same as the expenditure on R&D.726.861 Local 298.100 Goods purchased for resale 8.046 93 23.455 1.119 127.618 4.375 419.637 375 7.513 39.439 Local manufacturers have spent higher amount in terms of depreciation of their fixed assets.188.217 168. Philippines.6 million per foreign establishment.248 51.116.713.352 13.998 Research and experimental development 345.899.093 million.076 15.273 624 22.955 Cost of non-industrial services done by others 12. oils and greases purchased 349.609 3.836 264.890 Source: 2006 Census of Philippine Business and Industry.543 Indirect taxes 360.296 29.546. On the average.974 1.513. In terms of bad and doubtful debts.220 852.364 84. 2006 (‘000 Philippine pesos) Total Type of cost All Foreign Local 14.052 Fuels. manufacturers have poured in a sum of P351 million worth of capital expenditures in 2006.417 691.934 Depreciation of fixed assets in 2006 1.092 Computer software expense 8.926 357.168 4.220 7.558 158 6.742 16. NSO Average per establishment All 365.
242 6.916 3524 7. transport equipment (36%) and buildings and other structures (34%) have the biggest share in the fixed assets of foreign establishments.equipment (28%) and other machinery and equipment (55%) have the largest share in the capital expenditures of pharmaceutical manufacturers in 2006.752 192.672 241 821 142 Other machinery and equipment 193.626 8.486 2849 Other fixed assets 15.992 1792 9. local manufacturers have higher book value of fixed assets. Land and other machinery and equipment composed the largest share in terms of book value for local manufacturers at 46 percent.4 billion) and buildings (P2.784 4. Capital expenditures by type of fixed assets for pharmaceutical establishments with total employment of 20 and over by type of capital participation. about 325 million pesos per establishment.890 133.4 billion).001 158. Table 21.134 25.076 149 Total 351. Foreign companies have poured 50 percent of capital expenditures on transport equipment. 2006 (‘000 Philippine pesos) Total Average per establishment Type of fixed assets All Foreign Local All Foreign Local Land Buildings. followed by machinery and equipment (P5.249 6382 19. On the average.543 79. In contrast.650 542 517 546 Transport equipment 98. other structures and land improvements 29.593 284 1. The value of intangible assets was P9 million. Other machinery and equipment however constituted the biggest chunk in the local establishments’ capital investment at around 70 percent.608 7018. NSO The total book value of fixed assets that manufacturers have put in amounted to P16 billion. Philippines. Meanwhile.551 18.570 6. The bulk (P7 billion) was on land. compared to foreign ones which had about 86 million each. 32 .844 4090 Source: 2006 Census of Philippine Business and Industry.806 59.944 404 ICT machinery and equipment 13. only the local manufacturers held intangible assets in 2006 at a value of 9 million pesos.
935 21. Meanwhile. Philippines.051 9051.009 148.022 126.281. the industry can accommodate further growth as there is considerable underutilization of capacity. 2006 Capacity utilization rate/inventories Frequency Below 50% 2 50% .330 Total inventories as of December 31. NSO 33 .069 6.976.196 91.824 ICT machinery and equipment 991.026 1. Table 23.892 46.090 686.571 4.235 Total 15. NSO In terms of capacity utilization.762 18.057 231.744 17.421 13.846 325. 2006 10.493 12.090 16.858 696.438.469 152. Book value of fixed assets by type and value of intangible assets for pharmaceutical establishments with total employment of 20 and over by type of capital participation.Table 22.89% 22 90% .007 Total value of intangible assets 9.659 977.722 Source: 2006 Census of Philippine Business and Industry.960. other structures and land improvements 2. Distribution of establishments by capacity utilization rates.427 169.856 80. Thirty-eight (38) of them had operated only from 60 to 89 percent capacity utilization rates while ten out of the 55 manufacturers had rates below 60 percent.956 Transport equipment 940. 10 out of the 47 local ones had a utilization rate of below 60 percent. There were only 7 out of the 55 establishments which had capacity utilization rates of 90 percent and above.139 2.803 Other machinery and equipment 4.339.328 28.451.220 85.086 Buildings.838 2.102 30.206.024 2.275.991 1.365 165 193 Source: 2006 Census of Philippine Business and Industry.526.602 243.707 20.765 15. 2006 9.962.325 290.100% 7 Total inventories as of January 1.69% 16 70% . All 8 foreign establishments had capacity utilization above 60 percent.482 14.103 Other fixed assets 164.559 3.59% 8 60% . 2006 ('000 Philippine pesos) Total Average per establishment Type of fixed assets All Foreign Local All Foreign Local Land 6.917 44.
92 Sandoz Phils. it is the leader when it comes to manufacturing for the giant MNCs. Novartis.Interphil Laboratories. 13 percent of the drugs and medicines it manufactures do not have entries under trader. Interphil Laboratories is one of the industries’ biggest toll manufacturers. 6. the manufacturer performs as the trader. Glaxosmithkline. Interphil manufactures or processes around 500 registered drug products in various forms and descriptions.29 Wyeth 8. Interphil is the main toll manufacturer in the country used by multinational drug traders. Clarithromycin tablet and granules for suspension. Table 24. Traders of drugs that Interphil manufacture for. This industry is led by several key players such as the Interphil Laboratories. these were counted as two (2) drugs/medicines.24 Johnson & Johnson (Phils. Interphil is a Filipino-owned subsidiary of Manchester Holdings. Inc. 4. this profile summary relied on the information posted at each of the company’s website. Among Interphil’s clients are the giant pharmaceutical companies Johnson & Johnson. 6. Schering Plough. at least 75% of drugs manufactured by Interphil are estimated to be owned by foreign companies.52 Boehringer Ingelheim 6. In fact. Profile of Selected Toll Manufacturers The toll manufacturing industry for drugs and medicines is a diverse sector. Hizon and Lloyd Laboratories. In the FDA drug list. as of February 2010 Drug trader Share to total Interphil 13.) Inc 9.13 34 .72 Abbott Lab 6. This section briefly describes several toll manufacturers and their linkages with one another. If Interphil produced say. a foreign holdings corporation (based on SEC records).1. Drugs were counted across varying strengths and forms. Composed of over 500 employees. Wyeth. Boehringer Ingelheim. Inc. Pfizer. Because collecting data is difficult (interviewing each of them is not feasible). Inc. by proportion of total drug products manufactured. the United Laboratories subsidiaries. and data from the Food and Drug Administration (FDA). In fact. if any. The table below lists Interphil’s clients and the number of drugs which they manufacture for each of their clients.4.70 Pfizer. Abbott. The FDA noted that in cases where no traders were specified in the drug database. and AstraZeneca. Interphil is also engaged in drug trading. for about 40 companies. There are also a number of relatively smaller actors.
Inc. Novartis Healthcare Phils. tablets. Hizon’s manufacturing strengths are in liquids. and parenteral products in ampoules.2. Its MNC clients are Abbott Lab. food supplements and cosmetic products. Galderma. Phils. ointments. 15 In terms of R&D. Phils. and capsule/tablet filing in bottles.17 2. Essex Sanofi-Aventis Phils Inc Chemway Pharma Inc PL Asia Pacific Roche 20 Others Source of basic data: FDA list of registered drug (as of February 2010) 4. it now has more than 50 clients most of which are local drug traders. capsules and vials. lotions/shampoos.17 2. HLI is one of the few local toll manufacturers used by MNCs drug traders. dry granules or powder for suspension. hard gelatine capsule products. is one of the most popular local toll manufacturers and was the very first pharmaceutical manufacturer in the country. over-the-counter drugs. Secondary packaging involves labeling of blister strips. With around 400 regular and 200 contractual employees. Inc.38 1. Primary packaging covers liquid filling with pilfer proof caps.56 2. and Wyeth among others. Founded more than a century ago. creams.30 4. Inc.15 3. HLI does not undertake R&D. Inc. Inc. The most dominant products that HLI manufactures are generic off-patent drugs and multivitamins. boxes or bottles. Stiefel Philippines. Multicare Pharma. it provides manufacturing as well as packaging services for its clients. HLI’s packaging services involve both primary and secondary packaging.78 1. AstraZeneca Pharm'ls. GlaxoSmithkline.17 1. the share of MNCs/foreign clients in HLI’s manufacturing activities comprises only 30 15 Source: Hizon Laboratories official website at www. and promotional materials assembly and packaging. (HLI) The Hizon Laboratories Inc. Merck.98 1. Its manufacturing services cover prescription medicines.Glaxo SmithKline Schering Plough Corp.com 35 .. soft gelatine capsule products. Meanwhile. sachet filling.38 1. tea bagging.hizonlab.35 4. Duncan Pharm'ls. However.75 3. packaging with in-line bar-coding check. blister packaging.37 2. Hizon Laboratories. Inc..19 8. PITC Pharma Inc Bayer Philippines.78 1. child resistant packaging. Inc.
Inc.53 Pharmspec N.03 0.79 GX Int'l. as of February 2010 Trader % to total Trader % to total Hizon Lifelink Pharma Corp 19.53 Pediacare Pharma Phils Inc YSS Laboratories Company. Phils.66 Wyeth Phils (Inc. Plant Operations. The Cathay YSS Distributors Co. 2.A.40 Boie Inc Glaxo SmithKline 1.72 0.53 Euro-Therapeutics. These figures were validated using the list of registered drugs of the FDA.92 0.79 0.26 Chira Pharmaceuticals Inc Abbott Lab 0.17 The other 5 percent that it obtains locally are for sugar and ethyl alcohol.98 Trevenodd Corp 0.V.79 One Pharma Company.R.19 0. 0.79 Pharma Nutria N.66 Willore Pharma Corp Essenpharma 3.L 1. Inc Sigma Medical Solution Trading CO.09 0. 3.79 Jralph Pharm'ls. Inc. Corp.40 Natrapharm. Inc. Inc.40 OEP Philippines.26 Carel's Pharma'l Inc PNSV Asia Corp 1.40 Pharmatrix Corp Pharmahex.45 0.13 Winthrop Pharma'l Phils Inc 0. Zuellig 1.64 0.62 0. Inc.06 0. Table 25 shows the list of HLI clients by the proportion of drugs it manufactures for them. Although it can also be classified as a trader 16 Source: Data were obtained from Hizon Laboratories.56 0.45 0. Inc Novartis Healthcare Phils.77 0..26 Patriot Pharm'ls.83 0. From this list.53 Charmwood Pharmaceuticals Galderma Philippines Inc.43 0.13 Icon Pharma Corp Bristol Myers Squibb Inc. Inc. Inc. Inc. 2.26 Pharma Dynamic.percent..32 0. 2. Inc.69 0. The Cathay Drug Co. Traders of drugs that HLI manufacture for. Corp. Inc.77 0.66 S. Heallen Pharma Inc. Table 25. Blooming Fields Phils. 1. 4. Phils 1.40 Hizon Labs. 17 Source: Data were obtained from Hizon Laboratories. it was found that 60 to 70 percent of the total drugs HLI manufactures or processes are indeed being done for local drug traders. Inc. Kazan Pharma. More Pharma Corporation Transfarma Phils Inc 3.77 0. 1. Inc. Inc 1.A. Plant Operations via E‐mail. It was also found that it does not import finished products for reselling.19 0. by proportion of drug products manufactured. Mead Johnson Nutrition Phil Inc 1. Inc. Inc.53 QX Pharm'ls..19 0.06 Source of basic data: FDA list of registered drug (as of February 2010) Hizon imports 95 percent of the raw materials it uses for manufacturing drugs and medicines. 3.. Inc. Wyeth Consumer) Genesis Pharma. PL Asia Pacific Phils Inc.. 1. Inc 3. Medisphere Corporation 14. 1. Inc. Inc. Multicare Pharm'ls.53 Al-mine Int'l. Edmond Pharma S.92 0. 16 The other 70 percent is done for local drug traders.40 Metropharma Phils.45 0.. via E‐mail. 36 .19 0.92 8 Others 1. Inc 4.
lloydlab. brand names and even forms. finance. It has also started exporting drugs in Nigeria. 18 Source: Official website of Lloyd Laboratories at http://www.3.19 Unlike Hizon and Interphil. Cefalexin. non-penicillin pharmaceutical. Lloyd Laboratories. Its manufacturing complex is located in a 4-hectare lot at the First Bulacan Industrial City in Malolos. but have different strengths have different DR numbers. Steroid. Bulacan north of Manila.900 drugs in different forms and descriptions. 37 .because it manufacturers also for its own trading activities as shown in the table above). human resource and other areas of business management. The Lloyd team is composed of over 200 personnel that work in industrial pharmacy. cosmetics. pharmaceutical manufacturing. At present it serves around 90 drug traders and manufactures/repackages more than 1. veterinary. 4. marketing. It only trades 2 percent of the total drugs it manufactures.Lloyd Laboratories.). It then upgraded into a total contract toll manufacturer when it complied with BFAD requirements that every repacker should have complete quality control facilities. Those drugs with the same generic names. Inc. Inc. Lloyd is also more predominantly a toll manufacturer because it does very little trading by itself.com 19 The estimated number of drugs is based on FDA’s list of registered drugs. Lloyd Laboratories’ facility holds the space for manufacturing and packaging of Penicillin. HLI does not do distribution. household and food products.18 Lloyd Laboratories started out solely as repacker for medicines in blister form in 1989. Lloyd does produce mainly for locals and predominantly small drug traders. is one of the country’s leading toll manufacturers of pharmaceutical and other related products and services in the Philippines and elsewhere in the world. Drugs have been counted based on their Drug Registration numbers (DR No.
Inc.10 0. Inc Jesriel Pharm'ls. Int'l. Brel Pharm'l. Rhiza Pharm'ls..73 1.37 0. Kaufmann Pharma Inc Le Jumont Pharm'l.10 0. Randril Int'l.10 0. 25 others Share to total 0.26 0. Inc. Vitalink Health Products.A.26 0. Goldcoast Pharm'l. Foramen Products Inc Gamot Phils. Philppine Home Pharmaceuticals Prosel Pharm'ls. Inc. Lloyd Labs. Phils.37 0.. Buenar Labs.. Inc.10 0.52 1. Inc.Table 26.10 0. Su-Heung Int'l. Remed Pharm'l. Inc.58 0. Inc. Inc.15 1. Inc.24 3.35 3. Medlink Pharma Phils.16 0.Zen's Research Inc.34 5.89 0. Inc.20 1. Inc. Inc.62 1.35 3.93 3.26 0. Nutramedica . Inc. Littman Drug Corp Mediprime Pharmaceuticals Inc.31 0.20 1. Share to total 8.63 0. B Phar Wescrib Company S.26 0.V More Pharma Corp Zylan Pharmaceuticals.30 2.26 0. Inc. Traders of drugs that Lloyd Laboratories manufacture for by proportion of drug products manufactured. La Croesus Pharma Inc.16 0. Inc.86 5.. Pharma Nutria NA Inc.42 0. Generics Pharmacal Phils. Interhealthcare Pharm'ls.31 0. Inc..58 Trader Corbridge Group Phils.30 2. Corp. Totalcare Pharma Inc Ultramed Pharma'l Inc GX Int'l.72 3.16 0. Inc.47 0. Inc. Co. And Dist. Inc. Solvang Pharm'ls.. Inc. DB Manix Int'l. Inc.68 1.35 3.57 1. CX Euro-Therapeutics Inc.25 2.10 0. as of December 2009 Trader Eurohealthcare Exponents Inc.10 0. Medgen Laboratories Inc.31 Source of basic data: FDA list of registered drug (as of February 2010) 38 . Inc. Westfield Pharm'ls. Patriot Pharmaceuticals Corp Pharmacare Products Co IAE Pharma'l Corp 888 Pharma Distributors First Fil-Bio Import Export Corp. JM Tolmann Lab Kamire.63 0.18 4.81 5. Inc. Generics Inc. Aldril Pharm'ls. Metz Pharm'ls. Vamsler Phils.40 3. Inc. Corp.21 0.Inc. Natrapharm.57 1.57 1. Innoderm.51 2.26 0.31 0.52 0..10 0. Therape Pharma'l Inc Wellness AG Inc.36 1. Basic Pharm'l.. Germed Pharmaspec N. Inc.16 0. Corp.10 1. Ace Altomed Pharmaceuticals Inc Healthprime Pharma Phils Inc Innogen Pharma group Inc Pacific Pharm'l. Inc.05 0.. Folares Pharmaceuticals Inc.53 6.10 0. Eadriex Pharm'l. Inc. Primera Pharma Prohealth Pharma Phils..26 0.89 0. Medhaus Pharma.16 0.20 1. Inc. Phil. Kramer Pharm'l.37 0.31 0. Dr.
39 .Central Visayas 40 164 VIII . Although only a third of the wholesalers are large firms. In the 2006 CPBI.Central Luzon 3 227 IVA .687 Total traders 965 37 146 78 230 296 62 86 294 204 68 84 166 161 103 9 52 3.Eastern Visayas 6 62 IX . Table 27. 109 billion out of the total 113 billion pesos revenues of all wholesalers). These establishments are those that have less than 20 employed persons. wholesalers of medicinal and pharmaceutical products It is important to note that small enterprises dominate the pharmaceutical trading business in terms of number. in terms of revenues.MIMAROPA 3 59 V – Bicol 86 VI . However. Meanwhile.e. two-thirds of all wholesalers and ninety-two percent of retailers are considered small enterprises (see Figure 10). a total of 3.5.Western Visayas 39 255 VII .SOCCSSARGEN 5 98 ARMM 9 CARAGA 4 48 Philippines 350 2. the playing field is more even when it comes to the retailers where more than half (55 percent) of the total revenues of retailers are generated by the small enterprises.687 retail outlets of drugs and pharmaceutical goods) were included. In fact. Profile of Traders Pharmaceutical traders consist of wholesalers and retailers.Cagayan Valley 5 73 III . the picture turns the opposite way. Regional distribution of pharmaceutical traders1/ Region Wholesalers Retailers NCR 182 783 CAR 37 I – Ilocos 12 134 II . The table below shows the distribution of pharmaceutical traders among the regions.037 traders (that is 350 wholesalers and 2.CALABARZON 11 285 IVB . at least with respect to the wholesalers. Many of these traders were concentrated in Metro Manila and nearby regions.037 1/ Retailers of drugs and pharmaceutical goods. they generate 96 percent of the total revenues of all wholesalers in 2006 (i.Zamboanga Peninsula 10 74 X .Northern Mindanao 23 143 XI .Davao 11 150 XII .
Likewise.100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 214 117 2473 233 Large Small Wholesalers Retailers Figure 10. Share of Pharmaceutical Traders in Total Revenues by Size of Establishment The pharmaceutical traders employed a total of 38. Meanwhile.051 employees in 2006. Large establishments employed an average of 55 while small ones had only about 7. it is essential to take into account that small establishments employed the majority (52%) of the workers in the industry. Numbers of Pharmaceutical Traders by Size of Establishment 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Wholesalers Retailers Large Small Figure 11. policy-wise. 40 . averaging roughly 13 for each establishment. However. wholesalers had an average employment of forty (40) while retailers had about 9 employees per establishment. retailers employed around 63 percent of the total employment.
000. Table 28. Share of traders to total employment by type and size On the average. more than three-folds those of the small establishments. Retail stores spent around P150. traders paid each of their employees a sum of P241. Large establishments paid much higher annual salary.614 Source of basic data: 2006 CPBI 41 .338 Small 7 115.450 Small 10 102.637 Small 7 114.000 per employee for the year while wholesalers spent P390.000 in gross salaries and wages 2006.238 Large 55 376. Employment and wages and salaries of traders by size. The gap is even wider among wholesalers where the large ones paid compensation over four times that of the small traders.849 Large 31 248.100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% By type By size Wholesalers Small Retailers Large Figure 12.051 Retailers 9 152.591 Large 101 448. 2006 Average annual Average wages and salaries Trader/size employment (Philippine pesos) Wholesalers 40 389.582 Total 13 240.
000 100.000 200.000 250.The average compensation for employees in the pharmaceutical trading industry was highest for those in Metro Manila and CALABARZON and lowest in ARMM and Bicol Region. The key revenue sources for them were obviously goods for resale which consisted as high as 97 percent of the total revenues. On the average. In total. In fact.000 50.000 300. The figure below shows the gross wages and salaries in the rest of the regions in the country. each wholesaler had on the average 12 times more revenues compared to the retailers. Also.000 ‐ Figure 13.000 350. 42 . 400. the industry had contributed a total of P185 billion worth of revenues of which the large establishments contributed more than three-fourths of the amount. the average revenue of a large trader was 26 times those of a small one. an establishment raised around P61 million in revenues in 2006. 2006 Table 29 shows the revenues by type of pharmaceutical traders according to establishment size and category.000 150. Average wage and salary in pharmaceutical trading establishments by region.
094 269.383 190.056 2 59.184 133.177 388.452 34 21 13 14 536 62 16.895 256.061 1.Table 29.506 49.821 308.934 189.733 1.456.814.industrial services done for others Value of other non.099 2 25. 2006 (‘000 Philippine pesos) Type/source of revenues Total Small TOTAL Revenue from main activity Value of goods for resale Value of industrial services done for others Value of non.782 198.957 315.821 217.155 77.044 61.664 48.666 1.006.821 230.233 2.100 2706 Large 138.394 180.industrial services done for others Income from renting and leasing Interest income Dividend income Commissions and fees earned Other income Total revenue No. of establishments 6.307 36.471 4.218 382 659 568 91 733 12 5.581 404 657 575 82 813 13 6.394 41.909 4.851 3037 6.443 367.200 168.326.401 305.339 133.155 91.450.233 3.293 417.063 56.024 113.449.173 426.286 43.238.157 29. Revenue by type of pharmaceutical traders.786 350 Retailer 6.887 31.394 69.253 141.707.280 44 102 81 20 101 1 1.243 4.702 331 Wholesaler 110.942 29 18 11 18 0 540 71 26.324.006.539 184.566.445 247.industrial services done for others Value of other non.288 27.480.763 2 15.438 0 1.602 2687 43 .756 34.515 71.033.183 133.industrial services done for others Income from renting and leasing Interest income Dividend income Commissions and fees earned Other income Total revenue AVERAGE Revenue from main activity Value of goods for resale Value of industrial services done for others Value of non.138 183 60.233 2.805.377 556.049 323.219.
986 551.329 272.405 95.229 2.750 973.030 61.361 89.139 312.659.916 8.610 346.651 313.575 Cost of non-industrial services Done by others 8.723 Real estate purchased Fuel purchased 579.068.925.788 456.802.309 49.611 34.276 7.846 108.828.136.658 260.Table 30.611 39.788.393 114.831 430.710 483.820 Computer software expense 55.814 171.148 Other costs 742.309 5.668 894 211 Cost of industrial services Done by others 235 63 1.129.488 66.320 2.234.725.870 565.382 127.464 Total costs 166.928 13.642 46.861.868 Electricity purchased 878.911 594.537 122.400 1.617 483.492 Goods purchased for resale 151.304 46 Electricity purchased 289 121 1.835 256.239 231.462 1.105 543.086 634.777 290.558 39.046 Real estate purchased Fuel purchased 191 35 1.103 6.309 100.481 1.847 Research and experimental development 39.427 152.708 153.300 23.070 AVERAGE Materials and supplies purchased 406 61 3.269. Costs incurred by pharmaceutical traders by type.705. 2006 (‘000 Philippine pesos) Type of cost Total Small Large Wholesalers Retailers TOTAL Materials and supplies purchased 1.303 Bad and doubtful debts 162.754 36.219 Depreciation of fixed assets 777.549 Indirect taxes 908.769 326.249 127.478 225.030.630.740 477.381 86 44 .205 6.831.736 298.135 9.492 505.643 1.899 Cost of industrial services Done by others 714.951 9.519.630 552.964 49.161 Interest expense 348.782 97 Goods purchased for resale 49.513 57.760 615.150 165.
365 Computer software expense 18 4 140 140 Research and experimental development 13 120 98 Bad and doubtful debts 53 3 461 440 Depreciation of fixed assets 256 84 1.961 19.720 383.918 1.Table 30.758 Total costs 54.943 14. of establishments 3037 2706 331 350 792 18 160 3 2 3 101 47 24.894 561 21.666 1.797 1.613 2687 45 .777 287. 2006 (‘000 Philippine pesos) Type of cost Total Small Large Wholesalers Retailers Cost of non-industrial services Done by others 2.787 No.444 Other costs 245 40 1.027 Interest expense 115 21 878 854 Indirect taxes 299 116 1. Costs incurred by pharmaceutical traders by type.
as a whole. had poured in a total amount of 1. albeit modestly. followed by buildings. the key expenditure item for traders is basically goods for resale which consisted around 90 percent of total costs. an average of P590 million for each trader. Table 31 below presents the detailed composition of capital expenditures in absolute amounts. In terms of cost structure.8 billion pesos worth of fixed assets in 2006. other structures and land improvements (33 percent).6 million pesos. Among various types of fixed assets. Each establishment has spent about P55 million with small ones spending P15 million while the large firms paid out P384 million.2 million for each firm).The pharmaceutical trading industry incurred a total amount of P167 billion pesos in costs. Interestingly.4 billion pesos (or P4. traders have put in the largest investment (36 percent) into transport equipment (owing to the nature of the business). In terms of R&D. only large firms have spent. on research and experimental development amounting to a total of 39. The trading sector. smaller establishments invested in P406 million (or P150. and computers and other machinery and equipment (summed at 29 percent).000 per establishment) while large firms poured in the bulk of the industry’s capital expenditures with P1. 46 .
706 31.234 24. Wholesalers make up 60 percent while retailers shared 40 percent of the total investment. the trading industry had invested a huge amount of P8 billion worth of fixed assets as of the year 2006. 47 .299 improvements Transport equipment 638.234 495.485 199. other structures and land improvements Transport equipment Computers and peripherals Other machinery and equipment Other fixed assets Total fixed assets System and application software No.7 million for each establishment.916 31 0 38 96 12 47 0 194 0 2.039 171. of establishments 31.295 8 197 210 77 97 0 589 10 3. with 36 percent.475 Other fixed assets 276 276 Total fixed assets 1. This amount averaged around P2.145 26.950 61.821 31.266.669 267.492 127.911 Other machinery and equipment 294.315 Computers and peripherals 232.4 percent and other machinery and equipment at 16 percent.295 73 1578 1197 519 808 1 4177 95 331 Wholesalers 24. Capital expenditures by type and size of establishments.037 0 28 90 23 10 0 150 0 2. Small companies had a share of 30 percent of the total book value of fixed assets.382.788. other structures and land improvement.234 Buildings.687 Essentially.467 380.093 522. 2006 (‘000 Philippine pesos) Item Total Small Large TOTAL Land 24.256 33.737 406. other structures and land 598. This is followed by transport equipment at 27.206 37 521.226 1. The biggest chunk of these assets was into buildings.511 System and application software AVERAGE Land Buildings.938 240 1. while large companies had 70 percent.264 69 1416 1087 570 477 1 3619 89 350 Retailers 102.740 242.425 396.925 258.Table 31.457 166.392 76.
Aside from these.090 1.727 Buildings.992 4. the contributions are in the forms of taxes.212.983 200.942 4. one can see that the sector contributes significantly to the Philippine economy not only in terms of investments but more importantly of employment.156 1. The largest chunk of land value (90%) came 48 .816 31 13.175 348. The pharmaceutical industry consisting of manufacturers and traders had poured in a total amount of 2.908 384. 2006 (‘000 Philippine pesos) Type/Item Total Small Large Wholesalers Retailers TOTAL Land 797.208 16 2.1 billion pesos worth of fixed assets in 2006.258 Computers and peripherals 468.185 Total fixed assets 8.678 1.205 350 43.447 212.074 651.078 961. and others (Figure 14).532 262 964 728 154 129 419 5 2.Table 32.986 Transport equipment 2.554 256.732 129 355 262 44 3 95 0 887 3 2.380 331 421.401.463 2. other machinery and equipment (24%).176 1.950 Book value of intangible assets AVERAGE Land Buildings.966.538 635. Book value of fixed assets by type and size of establishments.059 1. manufacturers and traders alike.317 117.161 3.529 5.166 1.037 8. earnings in terms of external trade.599 9.800 1.397.513 3.662 153 3.538 1.272. The book value of combined fixed assets as of 2006 was at 24 billion pesos.777 1. of establishments 465.356 584.083.934 4.854 79 570 242 75 4 237 1 1.937 380 13.471 Other machinery and equipment 1.334 Book value of system and application software 391.752 3.092 1.566 636.819 448.355 5.838.502.460 766 1.333 710.300 1.824 1. Contribution of the Pharmaceutical Industry to the Philippine Economy In the profiles of pharmaceutical companies.681. or an average of 8 million pesos per establishment. other structures and land improvements 2.016.071 41 17.530.161 381.016 1. The fixed assets comprised of land (32%).706 456.561. buildings and other structures (22%).687 D.244.070 6.670 3.557 10.928 350. other structures and land improvements Transport equipment Computers and peripherals Book value of system and application software Other machinery and equipment Other fixed assets Total fixed assets Book value of intangible assets No.988 Other fixed assets 13.928.389 267. and indirect effects to the local economy.
051) in retail and wholesale of pharmaceutical products alone comprises 17 percent of the total employment for 49 . One way to determine this is by looking at the values of services. and other establishments not included in the survey. This estimate does not include small-sized manufacturing establishments. Interestingly. industrial and non-industrial. done for others as well as the cost of services done by others. Notably.8 billion in ICT machinery and equipment.mostly from the manufacturers. Figure 14. an amount of at least P385 million in R&D in 2006. Forty-five percent of the employment is in the drugs and pharmaceutical goods retail business. Book value of fixed assets of pharmaceutical establishments by type (manufacturers and traders). employed at least 52. wholesaling. 2006 CPBI The industry has also invested. Much of the R&D expenditures came from the local manufacturers.967 in 2006. these flows totaled 24 billion pesos. The employment (38. the pharmaceutical sector had invested a total amount of P1.092 pharmaceutical establishments included in the 2006 CPBI of the NSO. The industry’s contribution to the economy can also be examined through its linkages with others. albeit small. This comes from the 3. and retailing sectors. suggesting the deep network amongst various players in the industry. The industry consisting of manufacturing. The higher the amounts of revenues and costs related to this aspect signals the depth of linkages that the establishments have with the domestic economy.
Employment in the pharmaceutical industry by sector. it has the potential of enhancing the country’s balance of payments position or contributing to the drain in foreign exchange reserves. The manufacturers paid P6.the entire wholesale and retail trade sector of the Census of Philippine Business and Industry.2 percent of the total amount paid by all manufacturing establishments with ATE 20 and above.20 Meanwhile. The total salaries and wages for the combined sectors was P16 billion. In 2008.700 per employee on the average. For instance.000 for each employee. Figure 15. 2011 50 .1 billion in gross salaries and wages to its employees.5 percent of the total employment in all of manufacturing establishments (with ATE 20 and over). or P462. 2006 As previously discussed. one local pharmaceutical company just started exporting to Nigeria.census. pharmaceutical manufacturing contributes 1.gov. The pharmaceutical industry has been steadily increasing its exports as it diversifies its products and markets. spent P9.622 based on CPBI preliminary estimates accessed from http://www.html Retrieved March 15.7 million to our foreign exchange reserves. the pharmaceutical industry is one of the highest paying industries. an average of P241. 20 The sector’s total employment in 2006 was 228.9 billion in salaries and wages in 2006. To the extent that the pharmaceutical industry engages in trade with the rest of the world. exports of these products contributed USD 31.ph/data/sectordata/cpbi06_wrttx. The traders meanwhile. This amounts to 4.
Source: World Bank.519. Imports of medicinal & pharmaceutical products (F.B.109 2003 21.54 2009 722.02 2004 27. World Integrated Trade Solution (WITS) The foreign trade statistics from the National Statistics Office show that the value of imports of medicinal and pharmaceutical products has been steadily increasing over time. Net imports reached USD 625 million in 2008.926.1 2005 28.98 Source: Foreign Trade Statistics.44 Sources: 2002-2006 data. This means that these products continue to drain our foreign exchange reserves.B.317.718 27.624. Export in medicinal & pharmaceutical products (F.082 9.03 2008 657. value in US$) Year Value Growth rate (%) 2002 21.055 12.S.529 4. Table 34.97 2006 30. NSO Imports of medicinal and pharmaceutical products continue to outpace exports. value in U.287 8.O.484.749.825 6.831 12. Dollars) Year Value Growth rate (%) 2002 364. 51 .Table 33.O.999.187 2.55 2007 35.162. 2007-2008 data.79 2007 584.357 2003 395. Processed by: Bureau of Export Trade Promotion (BETP).350.119 -9.09 2006 521.57 2004 419.196.163. Latest data show that value of imports has reached USD 722 million in 2009.850.703.051.13 2005 458.008 16.749 9.006.06 2008 31.208 4.466 13.
Inc.85 10 Herbs & Nature Corp. 40.53 3 Natrapharm Inc.2 million.045. 12 Int'l. top manufacturers of pharmaceutical products paid P411 million in taxes and licenses alone in 2006. Inc.23 Multicare Pharmaceuticals Phils.60 7 Cathay Drug Co.107 2005 429.100 2004 392.82 11 Terramedic .. 17 of the top 20 foreign companies paid a total of Php 282. all foreign corporations.73 2 Pascual Laboratories 10. Inc. 66. 133.515. Local corporations paid on the average Php 8. 2008 (‘000 Philippine pesos) 1/ Rank Company Taxes and licenses 1 United Laboratories Inc.188.4 Prosel Pharmaceuticals & 16 Distributors.740. For instance. 14 Elin Pharmaceuticals 837. Inc. 52 . United Laboratories topped the list of taxpayers. 1.98 8 AM Europharma Corp.258 2007 549.176.384. Taxes paid by top 20 local companies.312. 9 Inc. On the other hand. .70 4 GX International Inc. 838. Table 36. Pharmaceuticals.516.823 2008 625.392. 922. Inc.73 15 Prohealth Pharma Phils.936 Pharmaceutical companies contribute to the country by paying taxes and licenses. 2.125.553 2006 491.495. 2. Inc.613.87 13 Rhea Pharmaceuticals Corp.94 6 Euro-med Laboratories Phil.00 5 Intermed Mrktng.6 million in taxes and licenses in 2008 while foreign corporations paid an average of Php 16.6 million. 11.5 million... 22. Net imports of medicinal and pharmaceutical products Year Net imports (in US dollars) 2002 343. 974. Boehringer Ingelheim Phils..323. followed by Wyeth and Glaxosmithkline Phils.09 17 Transfarma Philippines.. 6. .248 2003 374. Phils.897. Inc.Table 35. Fifteen of the top 20 local corporations paid a total of Php 128. Inc came in second.924.
Inc. 9 Boehringer Ingelheim Phils. 4. Inc. 25. 8. 2008 (‘000 Philippine pesos) 1/ Taxes and Rank Company licenses 1 Glaxosmithkline Phils.569. 11.616 Source: SEC.. 14. 1/ Refers to taxes and licenses only for 2008 or period closest to 2008 depending on data availability.113 11 Bristol Myers Squibb (Phils. 22.) Inc. 22.. Inc. 8.37 .619 3 Wyeth Phils. Inc. 52. Simple average 16..676 7 Sanofi-Aventis Philippines Inc. Phils. Taxes paid by top 20 foreign companies.413 8 Johnson & Johnson Phils. 6..475 4 Abbott Laboratories Phils. Inc. 1/ Refers to taxes and licenses only for 2008 or period closest to 2008 depending on data availability. Marcopharm Inter Unimedix Simple average Weighted average 2/ 260. 3.497 10 Roche Phils. . Inc.. 5.18 19 20 Medhaus Pharma.124 19 Eli Lilly Phils.576 18 PL Asia Pacific Inc. 7. Inc. 5. Inc. 30. . 10. 12 Bayer Phils.253 2 Pfizer. Inc. 40. Inc. Inc. .497 20 Getz Pharma phils.12 49. 2/ Weights are based on 2008 Sales Table 37. Inc.139.077 16 Merck Inc.340 13 Schering Plough Corp.430 14 Merck Sharpe & Dohme (IA) Corp 11. .349 17 Solvay Pharma.486 15 Servier Phils.85 Source: SEC. Phils. Inc.436 5 Novartis Healthcare Phils. 2/ Weights are based on 2008 Sales 53 . Inc.597 Weighted average 2/ 19.781 6 AstraZeneca Pharmaceuticals.
This group also includes all companies which are operating in other countries.518 1..188 3 14.48 Abbott Laboratories Phils.74 Schering Plough Corp.976 1. Inc.548 9 23.41 Johnson & Johnson Phils.43 Merck Sharpe & Dohme (IA) Corp Servier Phils.49 Pascual Laboratories 3.62 Wyeth Phils. 4.967 1 66.266 17 18 19 20 11.435 4 40. refer to those with capitalization of 10 percent or more coming from foreign nationals.78 AstraZeneca Pharmaceuticals.320 15 2.Table 38.68 Sanofi-Aventis Philippines Inc. The data are based on the authors’ calculations using the FDA list of registered drugs that contains information on the manufacturers and the 7th Edition of the Philippine National Drug Formulary. The data on drugs include home remedies but exclude veterinary medicines and herbal medicines.11 Bristol Myers Squibb (Phils. The tables below show the number and percentage of essential drugs manufactured by local and foreign companies by therapeutic category. 8 27 23 11 9 15 29 1. 54 . Merck Inc. SEC (taxes and licenses data) Rank 1 4 10 3 12 19 20 26 6 14 2 5 . Inc.415 1.948 8 3. 9. Phils.192 16 4.192 5 11. 9.5 It is interesting to examine the contribution of the pharmaceutical companies in terms of manufacturing/supplying essential drugs.44 Novartis Healthcare Phils. Inc. Inc. local companies are defined in this paper as those with 90 percent and above paid-up capital which are owned by Filipino citizens.18 Glaxosmithkline Phils.08 10.173 6 6.800 13 ND Bayer Phils. 4. on the other hand.49 22. Inc. 3. GX International Inc. Inc.374 12 25.055 7 5. Inc. Inc.393 14 22.25 Pfizer.34 Natrapharm Inc. Source: IMS(Sales data). 2009 (Million Philippine pesos) Company Sales Rank Taxes and licenses United Laboratories Inc. Inc.516 10 10. (Mead Johnson) 2.5 Roche Phils. Foreign companies. 26..419 11 52.. 4. The data on drugs were updated as of the end of December 2009 except for Immunological which were based from records as of February 2010. 3. 2.39 Boehringer Ingelheim Phils. 2. 2.35 2. 3. The objective of these tables is to present which group (that is. Rank of top 20 pharmaceutical companies in sales and taxes paid.. 5. Also.) Inc. the local firms or the foreign ones/MNCs) supply which essential drugs. 3. Inc.289 2 30.
no local companies manufacture vaccines (that is. All drugs under the category that were tagged as being manufactured by local firms were then aggregated. that drug was tagged as being manufactured by both local and foreign companies. it should be emphasized that these foreign companies are not operating in the country. However.To develop the tables below. Immunologicals). 55 . and Throat Preparations. The tables indicate that foreign pharmaceutical companies manufacture the larger proportions of essential drugs compared to the local companies. Also. About 93 percent of essential vaccines are produced by foreign companies. This same procedure was done for the foreign companies. It is the MNCs operating in the Philippines which import these drugs as finished products so they get to the local market. The reference on which is the manufacturer was the list of registered drugs from the FDA. The only therapeutic class where local companies outperform MNCs is the Ear. 89 percent of medicines acting on the nervous system are manufactured by foreign pharma companies while only 48. All of the essential vaccines are imported. For example. Regardless if there is only one (1) local company that produced the drug and a lot of foreign companies do produce it. each essential drug under each therapeutic category was tagged if it is being manufactured by any local and/or foreign company. For instance. as mentioned earlier.4 percent are manufactured by local companies. The sum for each group was then divided by the total number of essential drugs under each of the 22 therapeutic classes to get the percentages. there are no local companies which manufacture vaccines but there are no foreign companies either operating in the Philippines which manufacture these drugs. Nose.
nose. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Therapeutic category Medicines acting on the nervous system Medicines acting on the musculo-skeletal system and joints. as per PNDF) because some drugs are included in multiple categories. Number of essential drugs manufactured by local and foreign pharmaceutical companies/MNCs by therapeutic category 1/ Manufacturer Local companies 44 6 60 0 39 5 17 12 3 6 2 5 17 21 4 25 0 22 24 8 16 6 Foreign companies/MNCs 81 21 81 38 59 5 21 12 48 16 4 17 24 53 5 29 10 26 37 7 21 6 Local and/or foreign companies/MNCs 82 21 85 38 59 6 23 12 48 16 5 18 25 54 5 31 10 28 39 8 21 8 Total number of essential drugs 2/ 91 23 97 41 66 6 23 12 58 18 8 39 27 55 5 45 13 35 40 10 22 8 No. and throat preparations Vitamins and minerals Disinfectants Sources of basic data: Food and Drug Administration (FDA). 7th Edition. and DOH Philippine National Drug Formulary (PNDF) Volume 1.Table 39. 56 . except for Immunologicals which is based on list as of February 2010. and PNDF Volume 1. Securities and Exchange Commission (SEC). 2008. 2/ Do not add up to total number of essential drugs (627.December 2009. Anti-infectives Immunologicals Cardiovascular medicines Diuretics Respiratory medicines Antiallergics Antineoplastic and immunosuppressants Medicines affecting the blood Blood products and blood substitutes Antidotes Gastrointestinal medicines Hormones and hormone antagonists Medicines acting on the uterus Medicines correcting water electrolyte acidbase and caloric disturbances Diagnostic agents Dermatological and mucous membrane agents (topical) Ophthalmological preparations Ear. 7th Edition. 2008. 1/ Based on FDA's drug list as of end.
7th Edition. 7th Edition.5 75 75 100 Sources of basic data: Food and Drug Administration (FDA).6 98. except for Immunologicals which is based on list as of February 2010. and PNDF Volume 1.2 33.6 92. 2008. and DOH Philippine National Drug Formulary (PNDF) Volume 1. 2008 57 .7 95.9 No.5 92.4 100 64.9 76.9 0 59.3 100 82.5 80 70 80 72.3 25 12. and throat preparations Vitamins and minerals Disinfectants Local companies 48. nose.6 0 62.2 92.8 63 38.3 87. Anti-infectives Immunologicals Cardiovascular medicines Diuretics Respiratory medicines Antiallergics Antineoplastic and immunosuppressants Medicines affecting the blood Blood products and blood substitutes Antidotes Gastrointestinal medicines Hormones and hormone antagonists Medicines acting on the uterus Medicines correcting water electrolyte acid-base and caloric disturbances Diagnostic agents Dermatological and mucous membrane agents (topical) Ophthalmological preparations Ear.Table 40.8 88.9 96.4 26.7 89.9 62. 1/ Based on FDA's drug list as of end.4 100 100 100 82.1 61.5 95.5 97.9 Local and/or foreign companies/MNCs 90. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Therapeutic category Medicines acting on the nervous system Medicines acting on the musculo-skeletal system and joints.3 80 60 92. Securities and Exchange Commission (SEC).8 88.5 46.9 100 5.4 76.3 83.1 83.2 80 55.4 83.December 2009.2 100 68. Proportion of essential drugs manufactured by local and foreign pharmaceutical companies/MNCs by therapeutic category 1/ Manufacturer Foreign companies/ MNCs 89 91.9 50 43.3 73.7 89.9 74.6 88.1 91.3 91.
The most important sectors are (i) private medical. The Input-Output Table of the Philippines shows that pharmaceutical manufacturing industry requires the output of 66 sectors to manufacture drugs and medicines. 22 The forward linkage index for the manufacture of drugs and medicines is relatively low at 0. The backward linkage index measures the relative importance of a sector as purchaser of raw material inputs from the all the production sectors. lower than the index for the total manufacturing sector.8349. (v) fish canning. The five most important suppliers are (i) other agricultural crops ( wheat. In turn. the pharmaceutical manufacturing sector supplies inputs to 55 sectors.2311.Meanwhile. (vi) social work. 21 22 NSCB.21 The pharmaceutical manufacturing industry backward linkage index is 1. 58 . (iv) manufacture of refined coconut oil and vegetable oil. 2000 Input-Output Accounts of the Philippines. (viii) other hospital activities and medical and dental practices. (vii) manufacture of glass container. plastic materials and other man-made fiber except glass. the pharmaceutical industry has many linkages with the other sectors of the economy. An industry with higher forward linkages than other industries means that its production is relatively more sensitive to changes in other industries’ output. and (x) manufacture of synthetic resins. The forward linkage index indicates the relative importance of the sector as a supplier of raw materials to the entire production system. An industry with higher backward linkages than other industries means that expansion of its production is more beneficial to the economy in terms of causing other induced productive activities. dental and other health services. (vii) chicken. (vi) manufacture of starch and starch products. (ii) manufacture of basic industrial chemicals. (ix) manufacture of drugs and medicines. fish and other marine oils and fats (except coconut milk). (iii) other crude vegetable oil. (ii) public health and welfare services. NSCB. (v) manufacture of drugs and medicines. 2000 Input-Output Accounts of the Philippines. (viii) petroleum refineries including LPG. milled oats. and (x) cattle. It shows the degree by which the output of one sector is utilized by the other industries for further production. indicating that its output is not used by other sectors as much as the other manufacturing sectors. (iv) manufacture of perfumes. spice crops and construction related crops). including veterinary services. (iii) egg production. (ix) manufacture of miscellaneous chemical products. cereal crops. cosmetics and other toilet preparations.
2648 1. In 2009.43 0.8349 To determine the contribution of the foreign and local drug pharmaceutical companies to the domestic economy.878 0. Table 42. Using I-O analysis.2311 Forward linkage index 2.60 2.34 While local companies have lower sales than foreign companies. their contribution to the domestic economy is greater because a larger proportion of their sales are produced domestically.96 Local Companies 23. 2009 (billion Philippines pesos) Category Total intermediate inputs Compensation Depreciation Indirect taxes-subsidies Operating surplus Total primary inputs Total inputs Foreign Companies 13. the contribution of the pharmaceutical industry is estimated. 59 .34 0.84 1.74 0.74 32.37 0.Table 41. the I-O analysis is employed. On the other hand. Contribution of pharmaceutical industry to local economy. Backward and forward linkages of manufacture of drugs and medicines Sector Manufacturing Manufacture of drugs and medicines Backward linkage index 1. it is estimated that close to PhP 19 billion were contributed by the foreign companies to the domestic output.34 billion. In terms of compensation to workers in the country.62 5.03 8. The proportion of drugs imported by foreign companies is estimated to be 76 percent while the corresponding proportion for local companies is 22 percent. local companies contributed about PhP32 billion. foreign companies paid PhP 1.12 18.37 billion while local companies paid PhP 2.95 5.37 2.
24 Making essential drugs and medicines more affordable especially to the poor and underserved is one of the Millennium Development Goals (MDGs). account for 46 percent of the total medical out-of-pocket expenses of Philippine households. and firm-level records from the Securities and Exchange Commission (SEC). Manufacturers are also among the top grosser in terms of value of output.000. This industry is one of the fastest growing industries in the country.000 workers in 2006 according to the Census of Philippine Business and Industry (CPBI) 2006. almost three-folds the average annual salaries of workers in the manufacturing sector. Using administrative data from agencies that have regulative powers over the industry. chemical. 634 drug importers. The number of village retails outlets is likewise rapidly growing.000 Companies of the country.000 Corporations data. The value of the industry is roughly estimated at P318 billion in 2008. The number of BNBs grew by 55 percent from 2006 to May 2010. Moreover. The industry is also among the top-paying industries. and botanical products pay its workers on the average an annual salary of around P460. the Food and Drug Administration’s records show that there are 284 drug manufacturers.25 As of December 2009. Summary of Findings The Philippines is one of the biggest pharmaceutical markets in the ASEAN region. and 117 retailers. this percentage goes up to 55 percent.E. and 32. the market has been increasing at an annual average rate of 8 percent. the pharmaceutical industry is a lifeline to thousands of workers in the country. from 2005 to 2009. survey data from the National Statistics Office’s Census of Philippine Business and Industry. It is therefore essential to examine the profile of the pharmaceutical industry in the country to better understand the supply chain of drugs and medicines for policy formulation purposes. Meanwhile. In fact. The top list included 48 manufacturers of drugs and medicine including biological products. next only to Indonesia and Thailand. Sales data were also obtained from the IMS and the PHAP report. Both the local and foreign pharmaceutical companies contribute to this fast growth rate. The manufacturers and traders of pharmaceutical products jointly employed around 53. Top 10. For poorer people. The value of the Philippine pharmaceutical industry has been on the rise in the past years. its output. a profile of the Philippine pharmaceutical industry was developed. All these translate into P179 billion worth of assets. This is based on sales data of 296 pharmaceutical establishments included in the Top 10. and P85 billion of equity. 4. This report utilized data on drugs and medicines registration from the Food and Drug Administration (formerly Bureau of Food and Drugs). medicinal.956 are wholesalers. The CPBI 2006 shows that manufacturing establishments of pharmaceuticals. 438 drug traders.23 It is a lifeline to thousands of Filipino workers and a significant contributor in terms of value of output.719 drug distributors of which 3.538 retail outlets. drugs and medicines. The Botika ng 23 24 2008 PHAP report 2006 Family Income and Expenditure Survey (FIES) 25 Only among establishments with average total employment of 20 and over 60 . 131 wholesalers.
They are concentrated in NCR. Manufacturing is dominated by multi-national brand originator giants and numerous local generics/branded generics producers. Several multinationals continue to dominate the rest of the top spots. Region 4. These are Wyeth Philippines. usually local toll manufacturers. a local manufacturer. The most common type is the drugstore (73%). Prohealth Pharma. Meanwhile. Majority of distributors are wholesalers. The finished products go directly to its distribution unit or affiliates. At the same time. a third of the retailers are concentrated in NCR and Region 4. The supply chain can be describes in several ways depending on the type of pharmaceutical establishment. now split into CALABARZON and MIMAROPA. The majority of the manufacturers and traders are based in Metro Manila. Botika ng Bayan. There are 634 registered importers of drugs and medicines. trading is done by few large companies and thousands of small retail outlets. Botika ng Barangay. came in third with around 23 billion. for instance.Barangay is also becoming increasingly visible in the regions. a very poor region. they also import finished products and distribute them to the local market either through their own distribution units or affiliates. among others. Chinese retailers. Servier Philippines Inc. there are 59 pharmaceutical manufacturers which were listed by the FDA as having good manufacturing practices (GMP). ARMM. and Region 7. This was followed by a giant distributor – Zuellig Pharma with a net sales amounting to P57 billion. These are drugstores. Amherst. Zuellig. Pfizer. There are also MNCs which can be considered purely importer. in many cases. and Westmont). GlaxoSmithkline. is a pure importer as far as drugs is concerned. After production which include repacking and labelling. Medhaus Pharma. The multi-billion pesos pharmaceutical industry is led by a retailer chain – Mercury Drug which made around P71 billion in net sales in 2008. Bristol Myers Squibb. The drug traders are Natrapharm.. AM61 . Over 80 percent of the market is captured by the top 20 pharmaceutical companies (HAI. as of May 2010. The second group consists of local manufacturers which are manufacturing either for themselves and/or for other companies. does not have any drug distributor/trader and has only 123 retail outlets to cater to its 4. Pascual Laboratories. Cathay Drug. This group subcontracts production of their drugs to toll manufacturers.1 million inhabitants. Interphil then dispatches the products to Zuellig or other affiliates for distribution. Meanwhile. There are several types of drug retailers. United Laboratories. Notably. Abbott Laboratories. Meanwhile. while the materials for production go to its toll manufacturer. Bayer. The multinational trader for instance purchases both finished drug products and raw and intermediate materials. The manufacture and trade of drugs and medicines in the country are carried out by diverse players. Interphil. Roche. The pharmaceutical industry is a rapidly growing industry with the number of companies growing at 26 percent from 2003 to 2007. GX International. The local manufacturers included United Laboratories (along with its subsidiaries namely Asian Antibiotics. the Food and Drug Administration and the Department of Health have been given stronger regulatory powers. Meanwhile. Boehringer Ingelheim. the local pharmaceutical companies can be categorized into two broad groups – the drug traders and the drug manufacturers. nd). and retailers of non-prescription drugs. and Novartis. followed by the Botika ng Barangay (24%).
In 2006. paid by manufacturers went to the purchase of raw materials. This was followed by transport equipment (P98 million) and buildings (P30 million). Euro-med.037 traders (that is 350 wholesalers and 2. averaging 1. The largest amount of capital expenditures was spent for machinery and equipment (P207 million).7 percent.4 billion).9 billion in salaries and wages. The total book value of fixed assets that manufacturers have put in amounted to P16 billion. among others. or repackage the latter’s drug products. In fact.Europharma. Each employee received an estimated average amount of P462. the industry can accommodate further growth as there is considerable underutilization of capacity. The two groups are not mutually exclusive such that there are companies which exhibit the characteristics of both groups. manufacture their own brands and distribute these through their own subsidiaries.1 billion per establishment. the pharmaceutical manufacturing sector pays one of the highest rates in the manufacturing industry. Small enterprises. dominate the pharmaceutical trading business in terms of number. There were only 7 out of the 55 establishments which had capacity utilization rates of 90 percent and above. process.000. In 2006. The bulk (P7 billion) was on land.4 billion) and buildings (P2. Pharmaceutical traders consist of wholesalers and retailers. Meanwhile. The value of intangible assets was P9 million. two-thirds of all wholesalers and ninety-two percent of retailers are considered small enterprises. those that have less than 20 employed persons. However. In terms of capital expenditures. and Allied. In terms of compensation. drug manufacturers employed a total of 14. The other manufacturers are so-called toll manufacturers because they are primarily contracted by drug traders to manufacture. the total cost that manufacturers incurred in 2006 amounted to P47 billion. Ace Pharmaceuticals. a total of 3. These companies include Lloyd laboratories. 43 percent. or P345 million. 916 individuals. almost three-folds the average annual salaries of workers in the overall manufacturing industry for that year. In the 2006 CPBI. an average of P6. manufacturers paid P6. AD Drugstel.687 retail outlets of drugs and pharmaceutical goods) were included. The biggest chunk of the costs. Hizon Laboratories. The total revenues of manufacturers amounted to around P62 billion in 2006. R&D expenditure was a very tiny part of the total cost at only 0. manufacturers have poured in a sum of P351 million worth of capital expenditures in 2006. Thirty-eight (38) of them had operated only from 60 to 89 percent capacity utilization rates while ten out of the 55 manufacturers had rates below 60 percent. One of the key players in the industry is the manufacturing sector. In terms of capacity utilization. This comes from the 2006 CPBI conducted by the National Statistics Office where 55 manufacturers with average total employment of 20 and over were included. 700 or about US$9.4 million for every establishment which was almost the same as the expenditure on R&D. they also act as toll manufacturers for several companies. 62 . This total amount ranked 7th highest among all the sub-sectors in the manufacturing sector. an average of 271 people per establishment. for instance. Swiss Pharma. Pascual and United Laboratories. followed by machinery and equipment (P5. package.
it is essential to take into account that small establishments employed the majority (52%) of the workers in the industry. smaller establishments invested in P406 million (or P150. Retail stores spent around P150. the trading industry had invested a huge amount of P8 billion worth of fixed assets as of the year 2006. Likewise. an average of P590 million for each trader. albeit modestly. Each establishment spent about P55 million with small ones spending P15 million while the large firms paid out P384 million. pharmaceutical traders had poured in a total amount of 1. 109 billion out of the total 113 billion pesos revenues of all wholesalers). In total. On the average. In terms of compensation.051 employees in 2006. only large firms have spent. they generate 96 percent of the total revenues of all wholesalers in 2006 (i. However. each wholesaler had on the average 12 times more revenues compared to the retailers. the industry had contributed a total of P185 billion worth of revenues of which the large establishments contributed more than three-fourths of the amount. the average revenue of a large trader was 26 times those of a small one. Interestingly. averaging roughly 13 for each establishment. wholesalers had an average employment of forty (40) while retailers had about 9 employees per establishment. followed by buildings. The pharmaceutical traders employed a total of 38. Large establishments employed an average of 55 while small ones had only about 7. and computers and other machinery and equipment (summed at 29%).000 per employee for the year while wholesalers spent P390. Small companies had a share of 30 percent of the total book value of fixed assets. The biggest chunk of these assets was into buildings. The key expenditure item for traders is basically goods for resale which consisted around 90 percent of total costs. Meanwhile. Also. The pharmaceutical trading industry incurred a total amount of P167 billion pesos in costs in 2006. more than three-folds those of the small establishments. other structures and land improvements (33%). traders paid on the average each of their employees a sum of P241. Meanwhile.7 million for each establishment. the playing field is more even when it comes to the retailers where more than half (55 percent) of the total revenues of retailers are generated by the small enterprises. Among various types of fixed assets. retailers employed around 63 percent of the total employment. traders have put in the largest investment (36%) into transport equipment (owing to the nature of the business). Essentially.8 billion pesos worth of fixed assets in 2006.2 million for each firm). Meanwhile. This amount averaged around P2. Wholesalers make up 60 percent while retailers shared 40 percent of the total investment.4 billion pesos (or P4. policy-wise.Although only a third of the wholesalers are large firms.000 per establishment) while large firms poured in the bulk of the industry’s capital expenditures with P1. on research and experimental development amounting to a total of 39.6 million pesos. while large companies had 70 percent.000. In terms of R&D.e. a trading establishment raised around P61 million in revenues in 2006. In fact.000 in gross salaries and wages in 2006. The key revenue sources for them were obviously goods for resale which consisted as high as 97 percent of the total revenues. other structures and 63 . Large establishments paid much higher annual salary.
Formulating policies therefore must take into consideration how each player may be affected by policy issuances.4 percent and other machinery and equipment at 16 percent. they consist of few giant establishments and numerous small producers/traders.land improvement. the pharmaceutical sector is a vibrant fast-growing industry that contributes significantly to the Philippine economy not only in terms of value-added but more importantly in terms of generating much needed employment. In summary. The industry players are diverse. This is followed by transport equipment at 27. 64 . with 36 percent.
ph/data/pressrelease/2008/pr0830tx.References Food and Drug Administration.” Accessed September 8. Accessed September 8. Philippine Pharmaceutical Industry Factbook.cfm?page_id=642&parent=630 National Statistics Office.html Department of Health (DOH). Philippine National Drug Formulary (7th Edition) Volume 1 Pharmaceutical & Healthcare Association of the Philippines (PHAP). “2007 Official Population Count.ph/default. 7th Edition. “Division/Functions”.gov. November 2008. 65 . 2010 at http://www. 2010 at http://www.2008. 2008.bfad.gov.census.
List of Acronyms FDA SEC FIES NSO MDG ASEAN MIMS MDRP CPBI NCR CAR ARMM ATE SSS DOH IPO GMP PITC NCPAM PNDF OTC BNB BnB Food and Drug Administration (formerly Bureau of Food and Drugs) Securities and Exchange Commission Family Income and Expenditure Survey National Statistics Office Millennium Development Goals Association of South East Asian Nations Monthly Index of Medical Specialties Maximum Drug Retail Price Census of Philippine Business and Industry National Capital Region (also known as Metro Manila) Cordillera Administrative Region Autonomous Region of Muslim Mindanao Average Total Employment Social Security System Department of Health Intellectual Property Office Good Manufacturing Practices Parallel Drug Importation Program National Center for Pharmaceutical Access and Management Philippine National Drug Formulary Over-the-counter Botika ng Bayan Botika ng Barangay 66 .
sale or distribution. ornamenting. filling. active ingredients and/or finished products from local establishments for local distribution on wholesale basis – RA 9711 67 . compounding. active ingredients and/or finished products for its own use or for wholesale distribution to other establishments or outlets. finishing and labeling with the end in view of its storage.Definition of Terms Manufacturer. if the distributor/importer/exporter sells to the general public. it shall be considered a retailer – RA 9711 Distributor/wholesaler – any establishment that procures raw materials. repacking. formulating. processing. packing. does not apply to the compounding and filling of prescriptions in drugstores and hospital pharmacies. a trader shall be categorized as a manufacturer – RA 9711 Distributor/importer/exporter – any establishment that imports or exports raw materials.an establishment engaged in any and all operations involved in the production of health products including preparation. altering.
Doctors Pharmaceuticals. Inc. Rifampicin Capsule/Penicillin (Capsule. Inc.. Tablet. Amherst Parenterals. 1 2 3 4 5 6 7 8 9 10 11 12 Name of Establishment Accord Bio Laboratories Air Liquide Phils. Atgas Traders Caloocan Gas Corporation Compact Pharmaceutical Corporation Consolidated Industrial Gases. (RDII-RVII-DM-006) Interphil Labs. Inc. Suspension. Inc. Asian Antibiotics. Inc. Tablet. Inc. Syrup & Nasal Solution)/Sterile Products (Sterile Solution for Inhalation. Granules for Suspension & Tablet) Non-Penicillin (Oral dosage forms: Tablet and Liquid. powder for suspension. Validity 4-Aug-10 21-Dec-10 8-Jul-10 8-Jul-10 3-Dec-10 24-Aug-10 29-Sep-10 3-Jul-10 24-Nov-10 18-Jun-10 1-Jun-10 25-Aug-10 Products Cephalosporin/Penicillin (Capsule & Powder for Injection)/ Non-Penicillin (Capsule.. Inc. Inc. Inc. Tablet Syrup). Suspension & Syrup) Medical Oxygen Non-penicillin non-sterile (tablets. Suspension.. (Pampanga Branch) D. Ophthalmic & Otic Solution)/Cephalosporin (Hard Gel Capsule. Inc... Gruppo Medica. Libunao Gas Manufacturing Corp. (RDII-RIV-DM40) 18-Dec-10 14-Dec-10 22-Oct-10 18-Jun-10 12-Aug-10 7-Dec-10 18-Dec-09 14-Dec-09 22-Oct-09 18-Jun-09 12-Aug-09 7-Dec-09 68 . Powders/Granules for Suspension & Drops for Suspension) Medical Oxygen Medical Grade Oxygen Non-penicillin (Capsule. Diamond Labs. IV Fluids & External Preparations) medicated ointment and medicated oil Non-penicillin (Capsule. Inc. International Pharmaceuticals. plain & coated tablets. Mandaluyong City Greenstone Pharmaceutical H. Amherst Laboratories. Euro-Med Laboratories Phil.Appendix 1. Inc. Suspension & Syrup)/Penicillin & Cefalexin (Capsule & Powder for Suspension) Non-Penicillin (capsules. Ointments & Tablets) Medical Grade Oxygen Medical Grade Oxygen Non-penicillin (Capsule. Syrup & Topical Solution) Galenicals Cephalosporin/Penicillin (Capsules and Powders for Suspension) Date Issued 4-Aug-09 21-Dec-09 8-Jul-09 8-Jul-09 3-Dec-09 24-Aug-09 29-Oct-09 3-Jul-09 24-Nov-09 18-Jun-09 1-Jun-09 25-Aug-09 13 14 15 16 17 18 EL Laboratories.K. Granules/Powder for Suspension)/Steroids (Creams. capsules. Inc. syrups & liquid suspension) Non-Penicillin (Hard Gel Capsule. ointments and creams) Small volume parenterals & Large volume parenterals Cephalosporin/Penicillin (Capsule. List of establishments with Good Manufacturing Practices (GMP) as of May 2010 No.
Herbal Tablets & Capsules. creams and ointments. Powders. Syrups. Syrups. Syrup & Suspension)/ Penicillin (Capsule & Powder for Suspension) Non-penicillin (Capsule. (DRUG REPACKER) Manufacturing Services & Trade Corporation Medi-RX. 7-Oct-10 13-Sep-10 16-Nov-10 13-Oct-10 25-Sep-10 3-Dec-10 7-Oct-09 13-Sep-09 16-Nov-09 13-Oct-09 25-Sep-09 3-Dec-09 31 32 Pascual Laboratories. Validity 20-Aug-10 26-Aug-10 20-Aug-10 31-Jul-10 25-Nov-10 Products Ethanol for Disinfection.. Powder for Suspension & Tablet)/Penicillin (Capsule & Powder for Suspension) Non-Penicillin (Capsule. Inc. Ethanol for Disinfection with isopropanol. Liquid. Plain & Coated Tablets.Appendix 1. Capsules. Inc. Tablets. Inc. Eye Ointment & Small Volume Parenterals) Medical Grade Oxygen Cephalosporin (Capsules and Powders/Granules for Suspension)/Non-Penicillin (Capsules. tablets. Inc. Tablet & Liquid Dosage Forms-Syrup and Suspension) Non-penicillin (syrups. Ethyl Alcohol 70% Solution & Ethyl Alcohol 75% Solution Cephalosporin (Capsules & Powders for Suspension)/Non-Penicillin (Capsules. powders & granules for suspension) Non-penicillin (Tablets. Pentagon Gas Corporation 15-Dec-10 23-Dec-10 15-Dec-09 23-Dec-09 33 Scheele Laboratories Phil. Syrups & Suspension)/Penicillin & Cephalosporin (Capsules. Powder in Sachet & Herbal Tea) Non-penicillin (Capsules. Solutions. creams & ointments & except dry powder inhalation)/Cephalosporin (Powders & granules for suspension. Lejal Laboratories. Liquid & Tablet)/ Penicillin (Capsule & Powder for Suspension) Non-penicillin (Capsule. Inc. Inc. Powders. Tablet)/Penicillin & Cephalosporin (Capsules) Medicated Soap Non-penicillin (Capsule. Syrups. Powders for Suspension. Inc. Syrup. La Croesus Pharma Inc. capsules & tablets)/Penicillin (capsules. 19 20 21 22 23 Name of Establishment International Pharmaceuticals. Tablet. Inc. Softgel Capsule.. Powders/Granules for Suspension & Oral Drops)/Penicillin and its Derivatives (Capsules and Powders/Granules for Suspension) Date Issued 12-Aug-09 26-Aug-09 20-Aug-09 31-Jul-09 25-Nov-09 24 Lloyd Labs. suspensions. tablets. Inc. New Myrex Labs. Powder for Suspension & Powder for Oral Drops) Cephalosporin (Capsules & Powder for Suspension)/Non-Penicillin (Capsule. (RDII-RVII-DM-033) J. Plain and Coated Tablets. Capsule. Suspension. Inc. plain & coated tablets.. powder for suspension). 19-Nov-10 19-Nov-09 69 . Northfield Laboratories. Syrup. Suspension & Oral Drops)/Penicillin/Cephalosporin (Capsule. 9-Sep-10 9-Sep-09 25 26 27 28 29 30 Lumar Pharmaceutical Laboratory Macro Asia Pharma Corp. capsules.M. Creams and Ointments)Sterile Products (Eye/Ear Drops. Tolmann Laboratories. Granules for Suspension & Granules for Oral Drops) Non-Penicillin (Capsule. (steroid liquid. List of establishments with Good Manufacturing Practices (GMP) as of May 2010 No. & Suspension) Non-penicillin (Tablet. JB Orchid Pharmaceuticals. Suspensions.
Inc. (Bago City) Splash Corporation Swiss Pharma Research Laboratories. Inc. Inc. Gases Phils. Gases Phils. Inc. 3 Cephalosporin & its derivatives (Capsule & Powder for Oral Drops/Suspension)/Non-Penicillin (Tablet. Inc. (Misamis Oriental) Validity 13-Oct-10 7-Oct-10 28-Dec-10 3-Jul-10 7-Oct-10 28-Dec-10 7-Jul-10 4-Dec-10 28-Dec-10 25-Jan-11 14-Jan-11 8-Feb-11 9-Feb-11 Medical Oxygen Medical Oxygen Medical Oxygen Medicated Astringents/ Exfoliants No. 34 35 36 37 38 39 40 41 42 43 44 45 46 Name of Establishment Southern Ind'l. (Laguna) Southern Industrial Gases Phils. Metrolab Industries. Singapore Pharmawealth Lifesciences.. Consolidated Industrial Gases. Antiseptic Feminine Wash & Suppositories) Galenical Preparations Non-sterile non-penicillin (capsule. 1. syrup. tablet. Telstar Manufacturing Corporation United Laboratories. (Cavite Plant) Medic-Pro Corporation (MEDICAL DEVICE MANUFACTURER) 10-Feb-11 18-Feb-11 25-Mar-11 8-Mar-11 10-Feb-10 18-Feb-10 25-Mar-10 8-Mar-10 70 . non-steroidal products) in blister & strip foil packs/Other antibiotics (capsule form in blister pack & granules for suspension in amber bottles)/Penicillin (Capsule form in strip seal & blister pack & granules for suspension in amber bottles) Medicated Soap Sterile Products (Small & Large Volume Parental Solutions. powder & powder for suspension) Sterile Penicillin Powders for Injection (Human & Veterinary) Galenical Preparations Large Volume Parenteral Solutions. Euro-Med Laboratories Phil.. Tablets (Steroid. Peritoneal Dialysis Solutions & Hemodialysis Concentrates Penicillin (Capsules. Inc. Capsule form in soft & hard gelatin capsules in strips seal/blister packs. Suspension. Inc. Inc. Davao City Southern Ind'l.Appendix 1. YSS Laboratories Company. 2. Coated Tablet. Inc. Inc. Inc. Inc. Inc. List of establishments with Good Manufacturing Practices (GMP) as of May 2010 No. Ormoc City Southern Industrial Gases Phils. Ophtalmic Solutions in a blow fill seal technology Disposable Syringes Products Date Issued 13-Oct-09 7-Oct-09 28-Dec-09 3-Jul-09 7-Oct-09 28-Dec-09 7-Jul-09 4-Dec-09 28-Dec-09 25-Jan-10 14-Jan-10 8-Feb-10 9-Feb-10 47 48 49 50 Drugmakers's Laboratories. Sterile-Powder for Injection & Anesthesia only) Compressed Medical Air & Medical Grade Oxygen Medical Grade Oxygen Cephalosporin (capsule form in strip seal & blister pack and Granules for suspension in amber bottles)/Non-penicillin (Liquid-Suspension & Syrup form). Telstar Manufacturing Corporation Baxter Healthcare Philippines. Liquid.
Plant .Appendix 1. San Fernando. List of establishments with Good Manufacturing Practices (GMP) as of May 2010 No.. Reyes Laboratory. powder for suspension & tablet). Ointment. 51 52 53 54 55 56 57 58 59 Name of Establishment Lorenzo C. Inc. Inc. (Rizal) Validity 31-Mar-11 31-Mar-11 6-Apr-11 19-Apr-11 19-Apr-11 21-Apr-11 30-Apr-11 25-May-11 17-May-11 Medicated Ointment & Medicated Soap Medical Grade Oxygen Medical Oxygen Medical Oxygen Non-Penicillin (Tablets. Inc. Inc. Tablet. Ingasco Incorporated Hizon Laboratories.Cebu) Medgen Laboratories. Inc. Cream. Balangcas Industrial Gases Oro Oxygen Corporation Southern Industrial Gases Phils. Nonpenicillin-liquid (suspension & syrup) Products Date Issued 31-Mar-10 31-Mar-10 6-Apr-10 19-Apr-10 19-Apr-10 21-Apr-10 30-Apr-10 25-May-10 17-May-10 Source: Food and Drugs Administration (FDA) 71 . Smithkline Beecham Pharmatechnica Laboratory. Syrup and Tablet) Non-penicillin (Capsule. Capsules. Syrups & Suspension/Penicillin (Capsules & Powders for Suspension) Non-Penicillin (Capusle. Suspension. Suspension & Syrup)/P Medical Oxygen Non-Sterile Products only (Non-penicillin-oral (capsule.
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