Summary
The Philippines pharmaceutical market has posted steady but unspectacular growth in recent years. While an improving economic performance will help the drug industry continue to develop, the value of the pharmaceutical market will suffer from various government initiatives designed to encourage the use of low-cost medicines. These include the encouragement of parallel imports from India and more recently Pakistan, the facilitation of generics entry onto the market and the pending introduction of compulsory licensing for public health emergencies. Overall, the market is likely to reach US$3.21bn in 2011, up from an estimated US$2.14bn in 2006.
In terms of market segmentation, generics remain underrepresented, at only around 3% of the total by value, due to widespread counterfeit activity and the lack of compliance with and enforcement of generic regulations. While branded medicines remain preferred by the segment of the population able to afford them, the government is making a concerted effort to bring prices down, with austerities viewed as inevitable by almost all market watchers. The latest plans include expanding the low-cost drug programme from state procurement agency the Philippine International Trading Corporation (PITC).
BMI's adjusted Business Environment Rankings for Asia reveal that the Philippines is in 12th place, ahead only of Vietnam and Pakistan. The country has received this score primarily due to its poor regulatory system, which does not provide effective patent 'linkage' and fails to take adequate action against counterfeit drugs. In addition, the country is rife with corruption, which will continue to hamper efforts to achieve better business operating environment in the Philippines.
Multinational drugmakers, which dominate the market, have fiercely opposed government costcontainment measures, claiming that it discourages investment by innovator companies. Foreign drugmakers are also critical of widely acknowledged government protection of the indigenous industry and underfunding of regulatory agencies. Nevertheless, the government relies on domestic producers and products to support the healthcare system, and is therefore unlikely to introduce legislation that threatens the stability of this supply line. ASEAN harmonisation and gradual alignment with international norms, however, should improve market conditions in the longer term. Fake drugs are a severe problem, with much of the large low-income population tempted to buy illegal products due to relatively high branded medicine prices.
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