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Philippines Pharmaceuticals and Healthcare Report Q4 2010
Business Monitor International, Aug 2010, Pages: 99
Business Monitor International's Philippines Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Philippines' pharmaceuticals and healthcare industry.
The Philippines remains ranked 11th in our Asia Pacific Business Environment Ratings (BER) table for Q410. Globally, the country places 49th of the 83 markets now surveyed in our pharmaceutical universe, held back primarily by a range of price-control measures and the government’s lacking stance on intellectual property (IP) regulations. Nevertheless, the market is maturing and there are calls to expand the socialised healthcare system to serve the entire nation, which would boost volume consumption in particular. Generics makers are, however, expected to be the primary beneficiaries of this trend, as patent expirations also increase pressure on the research-based pharmaceutical industry.
However, the practice of lowering the cost of life-saving drugs has led to problems, including restricting the supply of inexpensive generic drugs. According to Edward Isaac of the Philippine Chamber of the Pharmaceutical Industry, generic drug companies have also had to lower their prices after former President Gloria Macapagal Arroyo’s regulations led to cuts in the prices of branded medicines. Some drug retailers have reportedly put their expansion plans on hold due to a decline in their profits. Additionally, the non-government Center for Legislative Development (CLD) conducted a study in 2009 which concluded that the enforcement of drug price cuts by 50-70% had benefited only the middle class. Over the 2009-2014 forecast period, we expect the value of the Philippines’ drug market to increase by a compound annual growth rate (CAGR) of 4.94% in local currency terms, reaching PHP151.3bn (US$3.69bn). While we expect the new administration (led by President Aquino) to continue some of the Arroyo administration’s programme to reduce prices in order to increase access to medicines, it seems market forces are also likely to play a larger role. President Aquino’s appointment of Enrique Ona as secretary of the Philippines' Department of Health has already been criticised, given Ona’s position as an advocate for the corporatisation of government hospitals and medical tourism – despite the country's healthcare system's inability to cater to all of the Philippines’ population.
Still, we have recently upgraded our 2010 real GDP growth forecast for the Philippines, from 4.4% to 4.9%, mainly on the back of firmer private consumption as well as capital formation growth. Moreover, heavy government spending due to the May 2010 general elections will also serve as a major boost in the short term. The positive outturn reaffirms our view that the Philippines economy will stage a V-shaped rebound in 2010, which should also bode well for the performance of the pharmaceutical market. However, we have also revised our 2011 economic growth forecast downwards to 4.0% (from 4.4%), due to concerns for a Chinese double-dip slowdown, which will have an impact on fiscal revenues available for public sector expenditure. In the meantime, despite substantial improvements in its investment climate in recent years, the Philippines still has a lot to do if it is to continue to attract foreign direct investment (FDI), which will play into the hands of domestic and overseas generics players.
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