Pharmaceutical Laboratories

INTRODUCTION

• The pharmaceutical industry is involved in developing,

manufacturing, and selling of drugs and non-drug products

DRUGS

• Section 9 (f) of Republic Act (RA) no. 9711, otherwise known as the “Food and Drug Administration (FDA) Act of 2009”, defines drugs as “articles intended for use

in the diagnosis, cure, mitigation, treatment or prevention of disease of man and/ or intended to affect the structure of any function of the human body, but which do not include devices or their

components, parts and accessories”.

• Non-drug products include nutritionals (health food), and infant milk preparations, baby care, cosmetics, diagnostic and other medical devices. The said pharmaceutical

products, along with well-trained and motivated health professionals, play an

important role in health care.

• The Philippines pharmaceutical industry is growing at a faster rate

making it as one of the biggest pharmaceutical markets in the

ASEAN region, next only to Indonesia and Thailand (2008 PHAP report).

• Mr. Carlito Realuyo , President of Pharmaceutical and Healthcare Association of

the Philippines (PHAP), shared the current status of the Philippine pharmaceutical industry

and stated that the Philippines now stands third, after China and India, in the Asia-Pacific region in terms of market share.

• Meanwhile, 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. • Making essential drugs and medicines more affordable especially to the

poor and underserved is one of the Millennium Development Goals (MDGs)

• The government has taken steps to control the prices of drugs so as to

make the health care affordable to the large segment of market.

REPORT PROPER

INDUSTRY PLAYERS

•The production of drugs in the country is carried out by diverse players such as drug traders while local retailers partake in the

distribution of drugs.

INDUSTRY PLAYERS

• Drug manufacturers are establishments engaged in any and

all operations involved in the production of health products.

INDUSTRY PLAYERS

• Drug traders are establishments which are registered owners of

health products and procure raw material and packing components.

• may also engage in distribution and/ or marketing of their products.

• There are more drug traders in the country than drug

manufacturers.

TOP PHARMACEUTICAL PHARMACIES

• It is worthy to mention that there were 17 drug manufacturers, 12 wholesalers and 10 retailers which made it in the Business

World’s (BW) 2012 Top 1,000 corporations in the Philippines. Table 4 lists down the top drugs and medicines manufacturers in the

country with their gross revenue, net income and as well as their gross profit revenue in 2012

• Six out of the 17 drug manufacturers in the country were owned by Filipinos while there were American owned companies, two each were German, Swiss and British-owned companies, and one each owned by Malaysian and a French.

• Drug products in the country can be categorized as ethical

products and over-the-counter (OTC) drugs.

• Ethical or prescription drugs are drug products (branded or unbranded) which are prescribed by a medical practitioner

and are only exclusively promoted ethically by drug companies via

deployment pf professional medical representatives

TAXATION OF PHARMACEUTICAL INDUSTRY

• The pharmaceutical industry, just like any ordinary business, is subject to the national taxes under RA 8424 (National Internal Revenue Code, as amended) and local taxes under RA 7160 (Local Government Code of 1991).

‘• As of December 2012, there were a total of 15,811 tax filers in the pharmaceutical industry, 97.13% (or 15,357 establishments) of which were engaged in the retail sale of pharmaceutical and medical

goods, cosmetic and toilet articles and 2.87% (or 454 establishments) are in the wholesale on a free or contract basis of chemical and pharmaceutical product, and in the manufacture of pharmaceuticals, medicinal chemicals and botanical products. From 2006-2012 the average number of tax filers reached 14,168 composed of 226 manufacturers, 102 wholesalers and 13,839 retailers.

ISSUES AND CONCERN

GENERIC MEDICINE VS BRANDED MEDICINE

• Pharmaceutical companies spend time and money on research and development of new medicines. Once they are

able to come up with one that passes government health tests and standards, the pharmaceutical company will be

given exclusive rights to manufacture and market the product globally for a period of around 20 years. This will allow them to recover their costs for R&D. After that, the

patent expires and the product can now be manufactured and be sold by other companies. And that’s when medicines

of different brands but same generic names come out.

Are generic medicines really safe?

• Yes. In the Philippines, both branded and generic medicines are required to be registered and be approved by BFAD before they can be sold on the market. But always make sure that you buy only from reputable drugstores and choose generic brands manufactured by legitimate companies.

So why are they cheaper?

• They are cheaper because manufacturers of generic medicines only need to cover its production and marketing costs. They did not invest on expensive research and development costs which the original pharmaceutical company did.

So can I always buy generic medicines?• Not quite, remember that there is a patent protection

period for newly developed medicines. During these times, you have no choice but to buy the branded product of the pharmaceutical company.

• The last question makes it important for us to know if a medicine is already available as a generic product. That will immensely help us save money, especially on maintenance medicines.

GOVERNMENT PRICING POLICY

• Compared to other Asian countries, the Philippines has some of the highest drug pricing levels when set against

per capita income. The reasons for this are many. Importing pharmaceutical ingredients is costly, so local production is expensive. Filipino hospital administrators

are notoriously bad at negotiating drug prices and keeping adequate drug stocks in supply. Few Filipinos

have adequate health insurance. And those who do have low rates of coverage on outpatient drugs. Finally, retail

markups are extremely high.

• In order to get around these problems, the Filipino government has set price controls

for some essential drugs. In 2008, the Universally Accessible Cheaper and

Quality Medicines Act made it possible for the Filipino president and the secretary of health to establish maximum retail prices

on all drugs included on the country’s Essential Drug List (EDL).

• President Arroyo did this for the first time ever in August 2009. Citing the Act, she

ordered that the retail prices of more than 20 molecules and their preparations be cut in

half. The resulting reductions included drugs like GlaxoSmithKline's Augmentin and

Pfizer's Norvasc. Afraid of further cuts, many foreign drug companies voluntarily reduced the prices of more than a dozen other drugs.

PARALLEL DRUG IMPORTATION

• The Botikang Barangay (BnB), the Botikang Bayan (BNB), as well as the P100 program, rely crucially on the parallel drug

importation (PDI). In 2000, the DOH initiated PDI as an

innovative strategy to cut costs of medicines..

• PDI involves the importation into the country of a patented drug from a third country without

the authorization of the patent holder (in a second country, usually the U.S. and

European countries where many of these drugs were researched, developed, and

patented). It is mainly used when the price in the third country is considerably lower than the price the patent holder charges in the

country concerned

• However, BnBs do not carry drugs for common diseases such as malaria and TB. These conditions are deemed more

complicated and require professional consultation; the non-inclusion in the BnB drug list implies that self-treatment is not

encouraged

PHARMACEUTICAL PRODUCT REGISTRATION

• Companies involved in the manufacture, distribution, retailing, import, export and

packaging of drugs in the Philippines must have a License to Operate (LTO) before

they are eligible to register pharmaceutical products with the Filipino Food and Drug Administration (FDA). LTO applications

take between one and two months to gain approval.

DOMESTIC MANUFACTURING AND DISTRIBUTION

• Few foreign pharmaceutical companies operating in the Philippines do their own manufacturing there. They either import

and distribute their finished drug products or they import the drug ingredients and

then outsource production to local manufacturers.

• All facilities producing drugs for the Filipino market -- whether in the Philippines or overseas -- are required to meet standards for Good Manufacturing Practice (GMP).

• Distribution generally takes place through two domestic companies -- Metro Drug and Zuellig Pharma. Together, these two companies control close to 90 percent of all drug distribution channels in the Philippines. Unlike manufacturers, distributors and wholesalers do not have to be certified for Good Distributing Practices (GDP).

FOREIGN COMPANIES IN THE PHILIPPINES

• Of the more than 525 drug traders, 690 drug importers and

5,100 drug distributors in the Philippines, three quarters of the

top companies are foreign.

• Meanwhile, other foreign pharmaceutical companies have chosen the Philippines as a launching pad into the other Southeast Asian

markets. Novartis, for example, set up its Southeast Asian headquarters in the Philippines

in 2009. It did this, in part, so that it could conduct clinical trials there for many of its key products,

especially vaccines.

PHARMACEUTICAL ADVERTISING

• Direct-to-consumer ads are banned for prescription drugs but are permitted for OTC drugs in the Philippines. Advertisements do not need to obtain prior approval from the FDA, but samples of promotional materials have to be filed with the FDA for reference. Submissions must include the following:– The drug's brand name and generic name– The manufacturer's name and address– Dosage quantities and forms– Warnings and precautions– Recommended storage conditions

IMPLICATION TO THE PHILIPPINE ECONOMY

INVESTMENT

Book value of fixed assets of pharmaceutical establishments by type (manufacturers and traders), 2006 CPBI

 

EMPLOYMENT

IMPLICATION TO THE PHILIPPINE ECONOMY

• In the profiles of pharmaceutical companies, manufacturers and traders

alike, one can see that the sector contributes significantly to the Philippine

economy not only in terms of investments but more importantly of employment

Employment in the pharmaceutical industry by sector, 2006

TAXES

• . Aside from these, the contributions are in the forms of taxes, earnings in terms of external trade, and indirect effects to the local economy.

• Pharmaceutical companies contribute to the country by paying taxes and licenses.

For instance, top manufacturers of pharmaceutical products paid P411 million

in taxes and licenses alone in 2006.

ECONOMY• 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.

• In 2009, it is estimated that close to PhP 19 billion were contributed by the foreign

companies to the domestic output. On the other hand, local companies contributed about

PhP32 billion.• In terms of compensation to workers in the

country, foreign companies paid PhP 1.37 billion while local companies paid PhP 2.34

billion.

CONCLUSION

• We therefore conclude that drugs, as defined, “is intended for use in the diagnostic, cure,

mitigation, treatment, or prevention of disease in man and/or intended to affect the structure of

any function of the human body but do not include device on their components, parts, and accessories”. The human body needs medicine,

nutritionals, and others.

• With the growing population of the Philippines, there is a huge need of medicine, nutritionals, and other health-aids.

Our government should give good tax incentives to pharmaceutical companies, so they can have good return of

investment. In return, they will produce or manufacture goods and lower prices of medicine and employ many local people. Once more people are employed, the status of the people will be improved and more likely to be able to afford

paying the taxes better.

• . • Philippines is a good place to put up a pharmaceutical

business or investment. Also, the demand for medicines is closely linked with the demographics of

the country’s population and considering that the Philippines has one of the fastest growing population

in the world, the outlook for the said industry is promising.

• .At the same time, the government is putting up tax incentives to some pharmaceutical or foreign investors.

That is why there are multi-national pharmaceutical companies that are moving or transferring their facilities in the Philippines. Some of the multi-national pharmaceutical companies that are already existing or operating here in

the Philippines are the following: Pfizer, GlaxoSmithKline, Wyeth, Abbott, Bayer, and Johnson & Johnson

SOURCES• A Profile of the Philippine Pharmaceutical Sector May 2011 by Celia M. Reyes, Rouselle Lavado,

Aubrey D. Tabuga, Ronina D. Asis, and Maria Blesila G. Datu.• Tax contribution of the Philippine pharmaceutical industry, NTRC Tax Research Journal, Volume

XXVI.2, March-April 2014 by Eva Marie T. Nejar• http://www.edistaffbuilders.com/EDIZine/2013/may/The%20State%20of%20Health%20in%20the

%20Philippines.html• http://finance.mapsofworld.com/company/pharmaceutical/philippines.html• http://www.pacificbridgemedical.com/publications/2014-philippines-pharmaceutical-market-update/• http://www.ntrc.gov.ph/files/j20140304-Tax-Contribution-of-the-Philippine-Pharmaceutical-

Industry.pdf• http://www.doh.gov.ph/node/1355.html• http://fitzvillafuerte.com/generic-medicines-a-comparative-price-study-on-generic-cholesterol-and-

other-maintenance-medicines.html