PHILIPPINES2013 March 2014 2

HEALTHCARE LIFE SCIENCES & REVIEW

PHARMACEUTICALS: CARVING INTERVIEW OUT A MEDICAL WITH : CONVERGENCE IN ACTION: SHAKING UP THE SYSTEM RAULDEVICE MANLAPIG, MARKET CASE STUDY: SILANES FOCUSINTERVIEW ON DIABETES WITH: LIFESTYLE MATTERS:PAGE 21 PRINCIPAL MANAGINGPAGE 56 FOCUSPAGE 70 ON: DR. ENRIQUEPAGE T. ONA,82 DIABETES & ONCOLOGY DIRECTOR, ARUP A BOOM IN BPO SECRETARY OF HEALTH PAGE 12 PAGE 30 PAGE 20 PAGE 34 MEXICO 2013

COFEPRIS Revamped

Mikel Arriola, the man who changed an institution and an industry PAGE 18 published in association with PHILHEALTH: A PRIORITY FOR THE AQUINO ADMINISTATION. PAGE 7

PHILIPPINES2013 March 2014 2

In a world of constant change, we stretch beyond the limits

The healthcare information management (HIM) industry is changing rapidly. From new technologies that open up possibilities for bringing services closer to people to a complete overhaul of how health issues are reported and diagnosed, the old ways of providing healthcare are quickly becoming obsolete.

Pointwest backs up its long experience in HIM with its highly-skilled and agile IT staff to make sure you keep up with the changes, especially as the industry gets a major overhaul with the shift to ICD 10 and its effect on the IT infrastructure of HIM providers.

The shape of healthcare is changing. With Pointwest as your HIM partner, you’ll be assured that you will stay fit, no matter what shape the industry becomes.

Head Office 12th Floor Citibank Center 8741 Paseo de Roxas Contact Person: Makati City 1226, Philippines Renato B. Quizon Executive Director Business Development Website: www.pointwest.com.ph [email protected] Facebook: www.facebook.com/Pointwest.PH Mobile: +63917 861 0345 Twitter:PHILIPPINES @PointwestPH MARCH. 2014 Phone: +632 814 1102 3 Acknowledgements Pharmaboardroom would like to thank Dr. Enrique T. Ona, Secretary of Health, Mr. Alexander Padilla, President and CEO of PhilHealth, Mr. Kenneth Hartigan-Go, acting Director FDA Philippines, Teodoro B. Padilla, Executive Director and Reiner W. Gloor, Adviser, Pharmaceutical and Healthcare Association of the In a world of constant change, Philippines (PHAP) and Thelma Tobias–Go, we stretch beyond the limits President, The Philippine Chamber of the Pharmaceutical Industry (PCPI) for their The healthcare information management (HIM) industry is changing rapidly. From new contributions to this report. technologies that open up possibilities for bringing services closer to people to a complete overhaul of how health issues are reported and diagnosed, the old ways of providing healthcare are quickly becoming obsolete.

The shape of healthcare is changing. With Pointwest as your HIM partner, you’ll be assured that you will stay fit, no matter what shape the industry becomes.

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

INTERVIEWS 24 Interview with: Gregorio Navarro, Managing Partner & Ceo, Deloitte Philippines 27 Interview with: Maria Cristina G. ‘Beng’ Coronel, President, Pointwest Technologies 30 Interview with: Raul Manlapig, Principal Managing Director, Arup, Philippines 32 Interview with: Jason Carroll, General Manager, Janssen (Philippines) 34 Interview with: Dr. Enrique T. Ona, Secretary Of Health, Department Of Health 36 Interview with: Alexander A. Padilla, President & Ceo, Philhealth 38 Interview with: Dr. Kenneth Y Hartigan-Go, General Director, Fda 40 Interview with: Teodoro B. Padilla & Reiner W. Gloor, Executive Director & Advisor, Phap 41 Interview with: Thelma Tobias-Go And Ed Ocampo, President Of Pcpi & Vp Of Scheele Laboratories 42 Interview with: Thomas Weigold, Country President And Managing Director, Novartis 44 Interview with: Juanito Luna, Founding President And Ceo, Prosel 46 Interview with: A.A. Santillana, Group Chairman & Ceo, Sv More, Philippines

This report was prepared by Pharmaboardroom.com Project Director: Koen Liekens Project Coordinators: Alina Manac, Ibtissam Sadouni Project Publishers: Julie Avena Contributors: Teddy Lamazere Graphic Assistance: Omar Rahli, Nisha Albuquerque

Copyright All rights reserved. No part of this publication maybe reproduced in any form or by any means, whether electronic, mechanical or otherwise including photocopying, recording or any information storage or retrieval system without prior written consent of Focus Reports. While every attempt is made to ensure the accuracy of the information contained in this report, neither Focus Reports nor the authors accept any liabilities for errors and omissions. Opinions expressed in this report are not necessarily those of the authors. PHILIPPINES MARCH. 2014 6

PHILIPPINES MARCH. 2014

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Harvest, by Adrian Morales. Credit Julita Geronimo, Globo PhiliPhiliPPPPines:ines: Asiatico Enterprises Inc. Connecting the Dots

he inclusion of healthcare as a priority on the This sponsored supplement presidential agenda has led to knock-on conse- was produced by Focus Reports. quences that are being felt across the healthcare Project Director: Koen Liekens value chain in the Philippines. Universal health- Project Coordinators: Alina Manac, T Ibtissam Sadouni care coverage (UHC) has been cemented, which has Project Publishers: Julie Avena led to a shift from branded medicines to generics, Contributors: Teddy Lamazere leading many players to a strategic repositioning. The Graphic Assistance: Omar Rahli, most successful players have been those who focused Nisha Albuquerque on a strategy that was inclusive of all stakeholders For exclusive interviews and more info, please and aligned with the presidential agenda of affordable log onto www.pharmaboardroom.com and accessible healthcare. or write to [email protected]

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“When the new administration took rolled 83 percent of the population. “The over in 2010, our mantra was to include the enrolment rate means that these are people previously overlooked poorest segment of that have come under the health insurance the population,” says Enrique Ona, secre- program at one point or another. Whether tary of health of the Philippines. “Through they can avail of benefi ts is what our cov- our Department of Social Welfare, we had erage rate focuses on. Our covered rate is identifi ed 5.2 million households -which really around 73 to 74 percent,” explains could include four to fi ve family mem- Alexander Padilla, president and CEO of bers- as part of the poor layer of society. In From left: Dr. Enrique T. Ona, secretary of PhilHealth. “Our key priorities remain terms of people, that number comes down health; Alexander Padilla, president and membership and benefi ts. In line with the CEO of PhilHealth to roughly 25 million, or a quarter of the country’s population,” said Ona. Now, the challenge of the Department of Health (DOH) is to address the next layer of society, the so-called ‘near poor’ that are not yet en- Quantifying the market rolled in the PhilHealth scheme. “The projected number of families from this layer is 14.7 million, essentially 58.8 million Filipi- In IMS Health vocabulary, the Philippines would count as a ‘Frontier Market’. Along with Malaysia and nos, that should be enrolled by the end of 2014,” Ona explains. Bangladesh, these markets are expected to each Since 2010, the Aquino administration has reached a num- have a sales increase of USD 2.7 billion by 2017. ber of major achievements on the healthcare front. The amend- For the Philippines, this would mean an approximate ment to the National Health Insurance Act, offi cially called doubling in value. Nonetheless, the Philippines ben- Republic Act 10606, was essential in the sense that it made it efi ts from the strong momentum of the many mar- mandatory for all Filipinos to be covered through the national kets in the Asia-Pacifi c region, driven in large part insurance body PhilHealth. Offi cially, PhilHealth now has en- by macroeconomic growth, rising healthcare spend, and urbanization. Based on the IMS market progno- sis, the CAGR of the Philippines will average around 3.8 percent to 4 percent through 2017, up from the current three percent. Among the factors that are expected to fuel this growth are improvements in healthcare facilities across the country, the continued push for generic medicines and for generics- only pharmacies, and the eventual implementation of UHC, according to IMS Health.

Philippines Total Annual Sales Value (ExMNF USD) US$ Bn 3,500 Branded Generics Unbranded Generics Originator Generics Other 3,000 2,703 2,585 2,449 2,515 2,500 2,212 2,019 51.2% 2,000 47.8% 49.3% 49.9% 46.8% 1,500 45.8% 1,000 41.2% 38.4% 37% 35.9% 43.8% 42.6% 500

0 2006 2007 2008 2009 2010 2011(f) Source: IMS MIDAS Data, QTR 1 2011, forecast from Market Program 2011-2015

Pharmaceutical sales, USD Bn 2.911 Pharmaceutical sales, USD per capita 31 Pharmaceutical sales, % of health expenditure 34.50 Pharmaceutical exports, USD Mn 43.4 Pharmaceutical imports, USD Mn 777.1 Source: IFPMA, 2012; Business Monitor International

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President’s desire, we will have each and every Filipino registered Price (MDRP) scheme. The MDRP called for a 50 percent as part of PhilHealth. When it comes to health, the political will price reduction on 21 molecules, and introduced some system- is certainly there”. atization to drug pricing in the country. It led many multinational corporations (MNCs) into a period of negative growth, but those with the right portfolios continued to grow. HigH StakeS for New StakeHolderS The requirement for the industry to deliver relevant products is a question of alignment with the needs of the patients, To make healthcare affordable, in 2008, the government implemented the Universally Accessible Cheaper and Qual- FACT SHEET PHILIPPINES ity Medicines Act, which included the Maximum Drug Retail Per capita total expenditure on health (PPP int. $) 142 Per capita government expenditure on health (PPP int. $) 50 Total expenditure on health as a percentage of gross 3.61 domestic product General government expenditure on health as a 35.34 Mature Neighbor Down Under percentage of total expenditure on health Private expenditure on health as a percentage of total 64.66 It may seem natural for execu- expenditure on health tives to move from one Southeast General government expenditure on health as a 7.55 Asian market to the other, be it percentage of total government expenditure Indonesia, Vietnam, Malaysia or Social security expenditure on health as a percentage 29.67 the Philippines: these emerging of general government expenditure on health economies share trends, such External resources for health as a percentage of total 1.35 as moves towards UHC or an in- expenditure on health Out-of –pocket expenditure as a percentage of private creased use of generics. In the 83.57 long run, IMS Health expects expenditure on health them to follow the ‘developed’ Patrick Tete, Source: IFPMA, 2012; WHO managing director, markets, some of which –such as Servier Taiwan and Australia— are only a stone’s throw away. The French MNC Servier saw its senior executive Patrick Tete move into a position Life through Discovery as managing director of Servier Philippines in early 2013, having previously served as CEO of Servier Australia for over eight years. In an attempt to better understand the road ahead for the Philippines, Philippines: The 3rd largest market for Servier in Asia PharmaBoardroom asked Tete for a comparison. Apart from quality issues, counterfeit medicines Servier Philippines: Over 30 years of dedicated and corruption, Tete points out that the most strik- ing change was the combination of a low-income service and commitment to healthcare market with the absence of reimbursement. “Two thirds of healthcare expenditures in the Philippines Servier Foundation is committed to are private, while more than 50 percent is out-of- pocket. Filipino households consider medical care re-invest all profit into R&D as a low priority and close to 45 percent of the average monthly family expenditure goes on food. The majority of Filipinos also barely have any access to health services. Another major difference with Aus- Every Script for a Servier product tralia is the fact that we do not see the same types of patients here. In the Philippines, it is all about is an Investment to treating very sick patients. A survey conducted on hypertensive patients indicated that half of those Medical Research and Education. patients already suffered end organ damage, which usually refers to damage occurring in major organs SERVIER PHILIPPINES, INC. fed by the circulatory system (heart, kidneys, brain, #2 Orion corner Mercedes Streets, Bel-Air Village, Makati City Philippines eyes). Filipinos consult doctors, but do so very late,” Tel. Nos. 897-8990 to 97 Tete says. Fax No. 897-9027 Website: www.servier.com

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Healthcare Philippines, the third largest MNC in the them out of the hospitals. We have to make sure that UHC turned the government from a mere stakeholder into Philippines today. “The Philippines has a high unmet the impact on patients improves”, Tamesis concludes. an increasingly important customer, which was particularly medical need in many different therapeutic areas. beneficial to local manufacturers. “We also have the feeling that But looking at the most relevant ones, hypertension, the industry has changed,” explains Thelma Tobias-Go, presi- corporate calliNg respiratory, diabetes kill many patients in the Philip- dent of the Philippine Chamber of the Pharmaceutical Industry pines, while we have innovative and quality afford- When AstraZeneca’s CEO Pascal Soriot took of- (PCPI), the leading industry association for Filipino-owned, able medicines to manage and control the diseases! fice late 2012, he set out a strategy relying heavily on mostly generic, manufacturers. “President Aquino has pledged In addition several specialty solutions like transplant, emerging markets. He now looks at the Philippines as to improve healthcare in the country and the Department of cancer treatments or neurological medicines are Dr. Beaver R. a source of cautious growth. “In spite of a number of From left: Teodoro ‘Ted’ Padilla, executive director, PHAP; Reiner Health now has one of the largest budgets in the government. needed urgently as well,” says Weigold. Tamesis, president headwinds, we look at the Philippines as a country of Gloor, advisor, PHAP; Thomas Weigold, president and managing The local industry has faith in President Aquino and wants to & managing director, Novartis “The innovators have to ask themselves: ‘What are large opportunity. There is a large population and a try to work with the government as a new customer.” director, MSD we doing to play actively in a relevant space?’” says high unmet medical need. And even though economic the government and the country at large. “We have observed a UHC was a particular attempt to reduce out-of-pocket ex- Beaver Tamesis, president and managing director of MSD Phil- growth may have been deceiving in the past, the economy has shift with many of the industry’s stakeholders, including sever- penditures in the Philippines, which accounted for 54 percent of ippines, a company growing in high single digits despite a flat been growing rapidly for six consecutive quarters now,” says Ga- al NGOs, now taking a more holistic view beyond drug prices. total healthcare spending in 2010, according to a World Bank market for MNCs. MSD followed the demographic shift in dis- gan Singh, country president, AstraZeneca Philippines. The sector is now taking a joint approach to define a sustain- report published in 2012. ease profiles from predominantly infectious diseases to non-com- “We have decided to stay focused on the innovative brands in able future for the healthcare system as a whole,” says Reiner municable diseases. Apart from diabetes, coronary heart disease the market and are constantly seeking for new launch opportuni- Gloor, advisor to the Pharmaceutical and Healthcare Associa- relevaNce: to be or Not to be? and hypertension, vaccines for rotavirus and HPV are high on ties both from our HQ as well as in-licensing opportunities. We tion of the Philippines (PHAP), an industry association largely the agenda. “Even contraception has seen explosive growth of 38 have strategized ourselves in such a way that enables us to keep composed of MNCs. “Now, we have reached a point where Survival for most MNCs in the post-MDRP period meant a re- to 40 percent since the controversial Reproductive Health and the patient at the center of everything we do. At the same time, we have gained the trust of groups that were traditionally op- focusing on a few therapeutic areas of the highest unmet medi- Responsible Parenthood Act came through,” explains Tamesis. we are also looking at knowledge partnerships with physicians, posed to ‘big pharma’,” explains PHAP’s executive director cal need. “This means knowing and understanding where your But he also finds relevance beyond portfolios. “We are spending a developing future therapy areas and market needs, as well as Teodoro ‘Ted’ Padilla. “Apart from the NGOs, this includes strengths as an organization lie, and what limitations exist due lot of efforts on patient compliance programs. We have to be seen clinical trials tailored to these market needs,” Singh adds. “Over- institutions such as the Department of Health, the local FDA to the local healthcare system at a specific point of time,” says as partners that are relevant in reducing patient risk and keeping all, we are buoyant about the space we are playing in. We know and PhilHealth.” Thomas Weigold, president and managing director of Novartis

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

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that our future will be distinctly different aggressive move. “The Philippines is a bility to prolong the lifecycle of selected from the past, but it will be equally glori- market where brand equity is flourish- innovator products and a robust pipe- ous as our past has been,” he concludes. ing even as branded generics make their line of quality and affordable medicines Stephen Saad and Gus Attridge, the mark in the local pharmaceutical indus- that we can bring into this market in executives that run South Africa-based try,” says Marcelina ‘Ace’ Itchon, presi- due time.” The audacity of Aspen’s top MNC Aspen, Africa’s largest pharma- dent and CEO of Aspen Philippines. management to invest in the Philippines ceutical company, set up a subsidiary “Both scenarios are opportunities that as its first foot in Southeast Asian soil in Metro Manila in 2011, a bold and Aspen can build on. We have the capa- has paid off: in just two years, the Phil-

Lifestyle Matters DIABETES 4.3 million Filipinos suf- a local company that merged into present-day Hospira. fer from diabetes and another 6.6 When I tried to find suppliers that could deliver our million have pre-diabetes, accord- oncology products, I realized that this market needed ing to the estimates of the Inter- a new player that could deliver oncology products more national Diabetes Federation. “The rapidly and in smaller volumes,” Geronimo explains. main problem is that most people The supply gap became the raison d’être for Globo with diabetes do not control their Asiatico, where Geronimo is still president and CEO. blood sugar very well. Poorly con- “The importance of the oncology area has changed. trolled diabetes is the leading cause Because of the shift in dispensing from doctors to of kidney failure and blindness and Christine Marie hospitals and an increased derived demand through D. Rosal, country the second leading cause of ampu- manager, Novo new cancer centers, the share of oncology products tations after traffic accidents. It is Nordisk is on the rise. In the past, for instance, 90 percent of also associated with increased risk oncology products were being dispensed by doctors, of heart attacks, strokes, dementia and impotence in with hospitals only accounting for 10 percent. Today, men,” explains Christine Rosal, country manager Philip- we see a 50-50 balance between the two,” reveals pines for Novo Nordisk, a diabetes focused MNC with Geronimo. its headquarters in Denmark. “More than 10,000 people each year in the Philippines get end-stage renal disease and each year more than 60,000 people die because of diabetes.” DOCTOR’S EYE: Increasingly, diabetes patients have been flooding the National Kidney and Transplant Insti- tute (NKTI), the leading transplant institute in Southeast Asia, primarily in kidney transplants. “Whether the kidney failure primarily came from diabetes or from something else has become harder to pinpoint. But the number one cause of end-stage renal disease in the Philippines and this hospital is diabetes,” says Jose Dante Dator, executive director of the NKTI.

ONCOLOGY An estimated three out of every 100 Fili- pino women are expected to contract breast cancer be- Management team, Globo Asiatico fore age 75, the highest incidence rate in Asia. Further 2008 data of the Philippine Cancer Society indicated DOCTOR’S EYE: The Philippine Cancer Society that 13 out of 100 males and 12 out of 100 females in pinpoints breast and lung cancer as the two leading the Philippines would have had some form of cancer if cancer types in the Philippines today, and their preva- they would have lived up to age 75. lence is on the rise. “The chief factor for this growth PharmaBoardroom asked Julie Geronimo about her rate is lifestyle. In cancer, 80 percent is lifestyle and take on the changing oncology landscape, ever since the other 20 percent is genetic. Nutrition, exercise, she set up a niche distribution company, focused on stress can all affect the development of cancer in a oncology products, roughly two decades ago. “In the person,” said Antonio Villalon, medical oncologist at the 1980s, oncology as a niche area did not yet have the St. Luke’s Medical Center, a prestigious tertiary hospi- exposure it has today. I started working in this area at tal in Metro Manila.

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Mabuhay! Namaste!

At an October 2013 Summit marking the ted us Indians,” he continues. Currently, 25th anniversary of the 1988 Generics Act, Torrent is growing at annual rates of up to Health Undersecretary Madeleine Herrera 45 percent in the Philippines, a clear sign said that five to six out of ten Filipinos now take generic that the country has entered the ‘generics era.’ medicine. Traditionally, the majority of these generics has In spite of extensive experience in a domestic market been supplied by Filipino manufacturers. The growing use of four times the size of the Philippines’, the Indians are still generics in a prescription-driven market like the Philippines, riding the learning curve as the Philippine pharmaceuti- however, has brought in a number of big names from abroad. cal market matures. Though perceptions are changing, Quite frankly, it was an open invite to the much more expe- some of the most prestigious Philippine hospitals contin- rienced branded generics players from the world’s generic ue to blacklist products manufactured in India. As more powerhouse next door: India. and more entrants cement their foothold in the market, “Indirectly, the government policy has worked in favor a thought-provoking development to follow will be the of the Indian companies,” says Sanjay Singh, general partnering opportunities. “Looking at the current pace manager in the Philippines for Torrent, one of India’s larg- of entry of branded generics players in this market, it is est pharmaceutical companies. “As prices were lowered time to pick up on cooperation as part of our strategy. with the MDRP, it was made clear that even though prices We are now doing the groundwork to establish in-licens- would go down, quality would be maintained. The MDRP ing alliances in this market,” says Singh. For European, helped to eliminate the dilution in the relationship be- US and Japanese companies with limited portfolios, in tween price and quality. Since most Indian companies particular, the marketing muscle, experience and growing used to face the prejudice of bringing in low quality prod- foothold of Indian players can be an attractive proposi- ucts, the perception change due to MDRP mostly benefit- tion to enter the Philippines.

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ippine subsidiary has grown to 111 employees “We moved all of RiteMED’s medical repre- and counting, and the Philippines is now re- sentatives to United Laboratories and used the ferred to as the “launch pad” to Asia within savings generated in three ways: bringing prices the Aspen Group. down further, a trimedia campaign for brand- ing, and providing additional discounts to drug- wHat’S rite iN a Name stores. Instead of pushing the drugstores or the doctors to give our medicines to the patients, we The MDRP did not only leave the MNCs cor- targeted the patients directly,” explains Ochave. nered in 2008: United Laboratories, the larg- Brand loyalty, as several reports of the market est pharmaceutical company in the Philippines research firm Nielsen indicate, is particularly and generics manufacturer, was also affected. high in the Philippines and, combined with the But desperate times call for desperate mea- limited disposable incomes of the population, sures, and United Laboratories was forced to Romeo B. Carbonel Jr, president, means opportunities for branded generics. experiment with new business models. & Minerva A. Carbonel, chief of operations, RBC-MDC Initially, RiteMED, one of United’s sub- SaleS 2 maNufacturiNg sidiaries, followed the same model as any branded generics organization, pricing its products 20 to 70 percent lower Before the introduction of UHC, most major private hospitals than their innovative equivalents, and marketing aggressively in the Philippines had to rely on imported products. With the through an extensive field force. The 2008 price cut, however, MNCs showing only limited interest in small volumes, all too forced the company to follow the MNCs and lower its prices often certain products would never actually make their way to too. The subsidiary soon started losing money. “It was clear market. It was a situation that skewed market prices upwards, that we had to make a drastic turnaround,” admits Jose Ma- with several critical ria ‘Joey’ Ochave, senior vice president business development care companies mar- group for United Laboratories. keting their products at premium prices. “We identified a MEETING THE GAPS IN CRITICAL CARE gap in the products • Premier Filipino-owned hospital products company in the that were not avail- Philippines able or approved by • Best partner in the hospital critical care area the FDA and only oc- cupied a small mar- From left: Ace Itchon, president and CEO, ket, and those that Aspen Philippines; J. De Ruyter ‘Toto’ Oroceo, president and general manager, were being exclusive- Delex Pharma International ly marketed by large companies, where the level of competition was low and the prices augmented. We could bring down prices in such niche markets and compete head on with existing large players,” explains J. De Ruyter ‘Toto’ Oroceo, president and general manager of Delex Pharma International (DPI), a Filipino hospital products company. “At the end of the day, we contribute directly to the vision of the president, the Department of Health, the FDA and our current administration to make pharmaceutical products in the Philippines more affordable, so that also the poor layers of society can be reached.” Since its incorporation in mid-2009, DPI has already grown to a staff of close to 100. “In three to five years, DELEX PHARMA INTERNATIONAL, INC. DPI will achieve PHP 1 billion (USD 22.5 million) sales revenue LJP Suites, 189 Mindanao Avenue and will have its own manufacturing facility,” hopes Oroceo. Barangay Bahay Toro, Quezon City, Philippines Traditionally, pharmaceutical marketing organizations in Tel. No: (632) 426-0150, (632) 426-0270, (0632) 426-0271, the Philippines have partnered with toll manufacturers for their Fax No: (632) 376-2885 production needs. But many, especially those in rapidly growing [email protected], www.delexpharma.com niche areas, quietly dream of major investments such as their own manufacturing plant.

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From left: Jean Paul D. Santillana, vice president - Overall Marketing Office, S.V. More Group of Companies; Alberto Santillana, president & CEO, SV More Group; Albert-Jan Santillana, senior vice president for Real Property Administration, S.V. More Group of Companies Team photo, Delex Pharma International On the vitamins and supplements side, for instance, the SV More Group has grown primarily on the back of its B Complex Today, after 25 years, Santillana is part of the group of solutions, while it selectively outsourced its manufacturing. Filipino entrepreneurs ready to invest in manufacturing. “For “First of all, we have to be careful in choosing who we manu- these first 25 years, we did not want to take up big loans facture through,” says Alberto Santillana, group chairman to fund an investment for manufacturing, which is why we and CEO. “Hizon Laboratories and Lloyd Laboratories, both have waited till the point where we have sufficient resources leading Philippine toll manufacturers, are world-class players. to build our own facilities. Now we have reached the point If you work with foreign manufacturers, you have to carefully where we can afford manufacturing without external funding. select to ensure that they work according to quality standards. Self-sufficiency is very important to ensure that the operating In India, for example, there are bad manufacturers in the re- cash remains unaffected. In three to five years, we should have gion but also many very good ones. We are prepared to take on completed our first manufacturing facility in collaboration South Korean manufacturers, which can be among the best.” with our Philippine-based manufacturers,” adds Santillana.

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9.magentablackcyanyellow RBC-MDC HP APPRIOVED 2A FINAL_1-1.pgs 01.14.2014 03:03 ADVANSTAR_PDF/X-1a PHILIPPINES MARCH. 2014 FeBrUarY 2014 FOCUS REPORTS S10 16pharmaboardroom.com Special SponSored Section philippines report

Top 20 leading philippine pharmaceutical companies based on Value Top 20 leading philippine pharmaceutical companies based on Counting (less V06, V07, A13 & K01)* as of MAT December 2011 Units (less V06, V07, A13 & K01)* as of MAT December 2011 Rank Company % CAGR 4–Years Rank Company % CAGR 4–Years TOTAL PHARMA MARKET 3.06 TOTAL PHARMA MARKET 3.16 1 UNITED LAB 5.40 1 UNITED LAB 3.29 2 PFIZER INC. –3.21 2 GLAXOSMITHKLINE –6.92 3 GLAXOSMITHKLINE –2.41 3 PFIZER INC –3.46 4 NOVARTIS 11.18 4 PASCUAL LABS 8.73 5 MSD 6.33 5 SANOFI-AVENTIS 0.98 6 SANOFI-AVENTIS –4.25 6 ABBOTT LAB 6.81 7 ASTRAZENECA –1.07 7 JOHNSON 1.26 8 BOEHRINGER INGELHEIM 2.30 8 INTERMED MKTG 2.53 9 JOHNSON 3.08 9 TAI SHO PHARM 1.52 10 PASCUAL LABS 8.92 10 INTERNATIONAL PHAR 16.71 11 ROCHE PHILIPPINES –2.55 11 BOEHRINGER INGELHEIM –6.55 12 NATRAPHARM 9.58 12 GX INTERNATIONAL –6.07 13 ABBOTT LAB –6.50 13 NOVARTIS 10.10 14 BAYER PHARM –2.04 14 CNN GENERICS 999.00 15 SERVIER PHILS 1.83 15 MUNDIPHARMA GMBH –0.46 16 CATHAY DRUG CO 42.90 16 PONDS CHEMICAL –7.66 17 MERCK INC 5.72 17 AM-EUROPHARMA CORP 7.90 18 INVIDA 1.56 18 NATRAPHARM 10.17 19 GETZ PHARMA 26.87 19 RHEA –2.37 20 GX INTERNATIONAL –4.32 20 MSD –3.52 Source: IMS Health Philippines, Inc. IMSPlus – Combined using Dec 2011 Database. Above excludes sales of V06 – General Nutrients, V07 – Other non-therapeutics, K01 – Intravenous solutions, A13 – Tonics

The investments of local pharma companies shows their level class. Our site exports to many neighboring countries and we of confidence in the Philippine economy. “In the last three years, certainly look forward to more of that in the future, on top of ca- only about 40 percent of investments were from foreign inves- tering to the increasing demand in the local market,” says del Val. tors. This was not the case before, when most Filipinos were investing their money abroad. The changing dynamics imply eN priSe! that the Filipinos have regained confidence in the country, its leadership and its economy,” says Gregorio Navarro, managing In chess, a piece is considered ‘en prise’ if it is unprotected and partner and CEO of Deloitte Philippines, Navarro Amper & Co. can be captured. In the Philippines, just like in chess, it is impos- From an MNC perspective, the Philippines is now indeed sible to understand the moves of the game in a single snapshot. solely considered for marketing and sales activity. There is, how- To really understand what is shaking, and where the growth sits, ever, one remaining MNC manufacturing in the country. “Our one needs to become part of the game. facility in Cainta (a municipality in the Rizal province, just next “The IMS Health figures show around three to four percent to Metro Manila) is a mid size manufacturing facility that has growth in the marketplace, but we are now at a point in time about 100 to 120 employees,” says Francis del Val, president and where the business models in this market are changing. The rise managing director of GSK Philippines. “It manufactures prod- of generics and increasing government intervention through price ucts for both our pharmaceutical and consumer divisions and controls have introduced a certain level of complexity. Below this goes back a while: we recently celebrated our 50 years of manu- complexity, however, there are many positive signs, ” remarks facturing in the Philippines.” Raymund Azurin, chief executive of Zuellig Pharma Philippines. Divesting is not in the plans of GSK either, as the company to Distributors can be considered centerpieces on the chessboard. continue to manufacture in the Philippines. “We are very proud But how many centerpieces can the market handle? The Zuel- of this manufacturing facility because it serves as a testimony to lig Corporation and its subsidiary Metro Drug already occupy GSK’s commitment to be a partner in Filipino nation building. It more than 80 percent of the distribution market, but a number also shows that Philippine manufactured products can be world of niche distributors successfully made inroads too.

PHILIPPINES MARCH. 2014 S11 FOCUS REPORTS FeBrUarY 2014 pharmaboardroom.com Special SponSored Section p17harmaboardroom.com Special SponSored Section philippines reporttaiwan report

“In 2000, there was a significant op- money, which generally will also dispense Development Fund (NDF), says portunity to enter the growing dispensing the medicines themselves. Today, there that the Ministry of Economic business,” says Romeo ‘Romi’ Carbonel, Biotechnology Industryare roughly Market four Capitalization, to five active distribu 2007–2013- Affairs recognized the waning president and CEO of niche distributor tion companies that cater to the dispensing opportunities in Taiwan’s prize Total number of listed and OTC biotech companies in 2012: 71 (up from 13 in 2011) RBC-MDC. A former vice president of As- market. Within this market, the oncology industry, and looked toward in- Total revenues of companies in 2012: USD 3.31 billion (up 27% from 2011) traZeneca Philippines, at that time known area is one of the first focal areas, as on- cubation. “For the past thirty Total market capitalization of companies in 2012: USD 13.86 billion as Astra, Carbonel set up RBC-MDC 13 cologists prefer to dispense the medicines years, this country has been very Total market capitalization of companies in April 2013: USD 15.7 billion years ago to serve the dispensing market. themselves.” says the COO. successful in semiconductors,” Market cap growth, January 2009 – April 2013: 520% “Around 1997-1998, we started recog- From left: Francis del Val, president & he reports. “But increasingly, nizing that there was a growing number managing director, GSK; Raymund16.00 T. tHe re-tale: a Story of geNericS 200 the profit marginsAzurin, in this chief field executive, Zuellig Pharma of doctors with the desire to increase the Total revenue 13.86 are shrinking. Meanwhile,Philippines in the 14.00 financial side of their profession, by han- Total Themarket policy value shifts in favor of generic 160 year 2000, the human genome dling their diagnosis and ‘business of dispenses products’ under medicines12.00 wereNo. coupled of listed companieswith the proliferation of retail was sequenced—and like many one roof. Because the top distributor would not handle Astra’s chains that heavily advertised the availability of lower other countries, Taiwan became 10.00 120 dispensing business at that time, RBC took on Astra as my its priced generic alternatives. Indeed, the biggest success sto- very excited about the future of first principal,” explains Carbonel. Today, the company can ries 8.00as a result of these policy shifts are the retail chains biotech. The sector was chosen 80 celebrate39 companies as principals during its 13th anniversary GenerikaBillion USD and The Generics Pharmacy: with around 450 71 as an important driver in the 6.00 since incorporation “Now, we are investing into a new ware- and 1,500 outlets mushrooming across the Philippine terri- No. of companies diversification of our economy 3.51 house that will double our existing capacity. Our volumes are in- tory4.00 respectively, access to affordable generics has changed3.31 away from high tech.” 40 creasing and our organic growth is tremendous,” Carbonel adds. dramatically. Their37 rising power changed the interface be- Reflecting on his place in the 2.00 1.43 “In general, the Philippines differentiates itself because of its tween healthcare suppliers, patients and modern retail, es- ecosystem, Su says, “the reason strong dispensing market,” says Minerva ‘Mini’ Carbonel, COO pecially0.00 as the healthcare industry is not necessarily used to 0 the government created this 2007 2008 2009 2010 2011 2012 of the family-owned RBC-MDC. “Before going to a hospital, modern retail practices, such as the strong focus on above- fund is to help build new indus- most patients will see a family doctor for a small amount ofSource: the-line Market Observationmarketing Post activities. System, Taiwan Stock Exchange, April 2013 tries from the ground up, when there is not yet much guaran- tee of success. In this way, the private sector can build confidence.” The NDF must “set the fire—then others will join in by throwing more kindling!” Among the private sector, the fire is now raging. According to the Market Post Observation System of the Taiwan Stock Exchange, the market capitalization of listed and over-the- counter (OTC) biotech companies in Taiwan has grown an astounding 520% in the last four years alone, from USD 2.5 billion in January 2009 to USD 15.7 billion in March 2013. Of course, biotech tends to be a much longer-term play than high tech. Investors have had to taper their expectations. Be- fore the mentality shifted, many of the early-mover companies had to demonstrate steady revenues before they could get into the larger rounds of financing. But increasingly, companies are able to sell the dream: “Some time ago,” reports Lee-Chen Liu, president and CEO of the startup EirGenix, “investors in Taiwan would always ask if they could see a return within two or three years. Now, they ask about the product, and the potential. Now, they seem willing to wait.” EirGenix recently bought DCB’s biopharmaceutical pilot plant facility, with an eye toward providing contract development and manufacturing services (CDMO) to the world. “Our experience was quite remarkable,” Liu says. “We raised USD 18 million in just two months. Our investors include active pharmaceutical ingredient (API) producer Formosa Laboratories—which owns 20 percent of the company—venture capital firms, and banks. I have never seen a fundraising round go this fast in the US.” magentacyanyellow 6. GSK HP APPROVED_1-1.pgs 01.14.2014 03:03 ADVANSTAR_PDF/X-1a black CR Taiwan Ad-GBC - QP_1-1.pgs 10.10.2013magentablackcyanyellow 01:33 ADVANSTAR_PDF/X-1a FeBrUarY 2014 FOCUS REPORTS S12 PHILIPPINES MARCH. noVe 2014MBer 2013 FOCUS REPORTS S12 pharmaboardroom.com 18 Special SponSored Section philippines report

“When you would go to a pharmacy in the Philippines ten years ago, you would not be able to find or buy generic medicines. We recognized the opportunity to create a project of our own that would give access to quality affordable generic medicines to as many communities as possible. This project would primarily be a business enterprise but it would have a strong social side – this is Generika,” says Julien Bello, vice president of the company. “Generika is organized to make a meaningful social impact on communities all over the coun- From left: Julien B. Bello, vice president, Generika; Teodoro L. try. Educating people and giving them access to quality af- Ferrer, president, Generika; Kenneth Hartigan-Go, acting director, FDA Philippines fordable medicines is the primary objective, as this goes a long way towards preserving their overall health at the lowest cost,” adds Teodoro Ferrer, president of Generika. more goverNmeNt, more private Today, even Mercury drug the country’s dominant retail chain, is changing. From a traditional basket of premium- Looking back, the ambitions of President Aquino to steer the priced branded medicines, its outlets now also carry generic healthcare industry in a direction of affordability and accessibili- medicines. “In terms of prices, the cost of medicine has gone ty has paid off. PhilHealth took off, prices dropped, patients saw down tremendously in the country. Generic medicines are their choices widened and both local and international compa- already 50 to 70 percent cheaper than their branded coun- nies found ways to grow through relevance and niche strategies. terparts, while prices are pushed down even more because However, much work remains to be done. “The inclusion of the competition in the market. This, together with the of UHC on the presidential agenda has been a giant leap for- Cheaper Medicines Act (MDRP) of 2008, has been very ben- ward. Now, the political promise should follow – or come in eficial to the patients,” explains Bello. parallel with – an upgrading of the country’s health systems,” believes Kenneth Hartigan-Go, acting director general of the Food and Drug Administration (FDA) of the Philippines. “We should also require operational managers to support the six building blocks for health systems as articulated by the World Health Organization (WHO) in 2007: health awareness, health financing, information & communication technology applications in health, human resource management in health, clinical service delivery between clinical and public health, and access to products,” says Hartigan-Go. In the next phase, the Philippines will need to find more way to improve the overall quality of healthcare in the Philip- pines. “A great avenue forward, which still remains largely unexplored when it comes to healthcare facilities, would be privatization,” remarks Ramonito ‘Monching’ Tampos, president and managing director of the German-headquartered MNC Merck. Already, real estate mammoths such as Ayala Land, Greenfield Development Corporation (part of United Laboratories) and Metro Pacific Investment Corporation are seeking control of private hospitals across the country. Furthermore, there will need to be a change as to how healthcare is funded in the Philippines, in order to move away from the out-of-pocket model. “Statistics show that only 30 percent of the population can afford to buy medicine,” says Tampos. “Another question is then to find out how this percentage will evolve with the implementation of PhilHealth and universal healthcare.” All eyes are now turned towards 2016, when presidential elections will select the successor to current President Benigno ‘Noynoy’ Aquino III who will have the difficult task of setting the future direction of the healthcare sector in the Philippines.

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

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FOCUS ON: A boom in BPO

Although outsourcing has arguably been This is a belief shared by many others in the around since the time of the Industrial sector. Cognizant, specialized in IT services Revolution, the concept of hiring a third and putting its technological capabilities at party to perform a certain amount of the service of the healthcare sector, claims activities including HR, finance, adminis- through the voice of its Assistant Vice Presi- tration, customer service, and many others dent Jeffrey Williams: “Within the BPO has been a game changer for businesses industry, the HIM sector has continuously around the world since the late 1980s and been the fastest growing sector in recent early 1990s. Although countries such as years.” India established themselves early in the Companies like TTSI have specialized in business process outsourcing (BPO) mar- medical transcriptions and are capable of ket, in recent years, there has been a shift great accomplishments. Managing Director towards more diverse locations in recent Margarita Paz states: “On average, we are able years, including South America, Eastern to produce around 50,000 to 60,000 lines of Europe and Asia Pacific. transcription per day, or about 1.2 million The Philippines has been a huge recipient lines per month.” The company is also looking of this geographical shift, and according to to move beyond transcription services and the Business Process Association of the Phil- find new ways to service the healthcare sec- ippines (BPAP), one of the biggest areas of tor: “We also offer mobile solutions for health growth has been in BPO for the healthcare data reporting and social progress monitor- sector: healthcare information management ing through Unstructured Supplementary (HIM) services grew by 172 percent in 2011. Service Data (USSD), which works like an HIM encompasses electronic medical records, SMS and equips remote areas where internet medical claims recovery, patient education, connection is scarce allowing them to submit clinical data management, insurance pro- required data in a timely manner,” she cessing, and other services. explains. Pointwest, a local Filipino BPO, provides Many companies in the Philippines under- outsourced pharmacy benefit management stood early on the relevance of the BPO mar- (PBM) to the US, the processing and paying ket, mainly fueled by demand from the US of prescription drug claims. With an army of market, and the sector grew at a faster pace pharmacists, as well as registered nurses and than the government realized. “Since many data analysts, Pointwest wishes to expand of the local companies were getting contracts further into this area, capitalizing on its IT from major US contractors back in the early capabilities. “We recognize that the health- 2000s, the government at first did not even care sector is a sector of growing importance know how many of these companies flooded to the BPO industry,” says Marina Cristina the market,” explains Monchito Ibrahim, G. Beng Coronel, the company’s president. deputy executive director at the Department

Focus on: a boom in BPO

PHILIPPINES MARCH. 2014 21

of Science and Technology. According it comes to recruitment, we now go to BPAP, today the Philippines is the to the colleges and universities. We second largest market for BPO services reach out to these institutions to in the world, just after India. The asso- market the BPO industry as an ciation’s BPO roadmap predicts a 25 alternative career for pharmacists.” percent yearly increase in activity Both industry and government have between 2011 and 2016. aligned on a series of priorities with In contrast to Western markets, the the introduction of industry-recog- workforce in the Philippines is only set Jeffrey Williams, Assistant nized standards and accreditations, to grow. Many Filipino BPO companies Vice President, Cognizant Philippines or scaling key talent initiatives. In have drastically invested in talent in fact both are crucial as the Philip- order to support US shortage. Beng of pines needs to adapt to the always Pointwest clarifies: “As the US work- more demanding requirements of force was getting older, the pressure other countries, especially the US. on finding talent for the healthcare Here, Beng adds: “US companies are sector became increasingly high. This facing a deadline on October 1, 2014 gap in supply and demand created the to switch from ICD-9 to ICD-10 push for outsourcing in the healthcare when it comes to their coding needs. sector, one of the outsourcing indus- Ibrahim Monchito, Deputy Ex- Our company has also prepared a ecutive Director, Department try’s last frontiers.” of Science and Technology solution to help companies cope with “There is not a single country that (DOST) this mandatory change.” It is clear has the talent pool that the Philippines that only companies with the capac- has when it comes to servicing inter- ity to react and adapt can survive in national healthcare clients,” says Wil- this very competitive environment, liams of Cognizant. Ibrahim backs this already pressured on costs. This cost up: “If we manage to raise the number situation is well defined by Ibrahim: of certified Filipinos in the industry, “Imagine a price per sheet going other nations will witness the compe- from one dollar to five cents and you tence of our locals and generate more understand the extent of fierce com- dynamism and enthusiasm for this Margarita M. Paz, Managing petition and price war the industry industry. Through training we knew Director, Total Transcript was coping with.” these companies would reach higher Solutions (TTSI) value services in medical coding for instance, one of the new upcoming and promising niches for HIM services.” Of course, training and talent pool is a result of a public and private effort. “It helps greatly that the Philippine government is supportive of the BPO

industry,” says Beng. “When we first Maria Cristina G. “Beng” started in 2003, BPO was a very new Coronel, president, Pointwest factor in the healthcare sector. When Technologies.

Focus on: a boom in BPO

PHILIPPINES MARCH. 2014 22 Philippines IT-BPO and GIC Industry Revenue Targets for 2016

US$ Billions IPPP CAGR: 19% 25.0

20.0

CAGR: 29% 13.4 11.0 8.9 7.1 CAGR: CAGR: CAGR: 3.2 22% 11% 17%

2006 2009 2010 2011 2012e Base Accelerated Case 2016 Case 2016

% of GDP 2.6% 4.2% 4.5% 4.9% 5.6% 6.2% 7.8%

Direct employment 240K 423K 525K 638K 772K 900K 1.3M

Indirect employment 600K 1.1M 1.3M 1.6M 2.0M 2.3M 3.2M

Source: BPAP

PHILIPPINES MARCH. 2014 24 Interview with: Gregorio Navarro, Managing Partner & CEO, Deloitte Philippines

INTERVIEW WITH: Gregorio Navarro, Managing Partner & CEO, Deloitte Philippines

Focus Reports: In your whitepaper ‘What’s the overseas remittances. The reality, how- next for the Chosen Land?’ you linked the ever, is that the remittances increased over country’s strong economic growth to Pres- the years and is still expected to continue ident Aquino’s good governance. At the growing. Now, we need to find a model to same time, you warned for possible changes translate and mobilize this influx into more after the 2016 presidential elections. How jobs and opportunities to our people. sustainable is the growth model for the Philippines today? FR: What type of inclusive measures do you GREGORIO NAVARRO: The challenge for the feel should be taken by the government to government and the country is to be able ensure sustainable economic growth? to sustain our growth. What we need to GREGORIO NAVARRO: The Philippine pharma- talk about is how to achieve ‘inclusive ceutical industry today is valued at slightly growth.’ Over the past three years of the over USD 3 billion with a growth rate of Aquino administration, we have experi- roughly three percent. The forecast for the enced a mostly jobless growth, because 70 coming years is roughly 4.6 percent annual percent of the economy is based on con- growth. The healthcare sector is valued at sumer spending. roughly USD 10 billion, about 65 percent The largest industry we have is the busi- of which is privately funded. Private insur- ness process outsourcing (BPO) sector, which ance coverage is also low, and only covers already employs roughly 1 million people in around 8.5 percent of the market. the country. Most of these employees are Moreover, roughly 30 percent of the pop- young people with disposable incomes. The ulation of the Philippines is poor. They live second driver of expenditure comes from the on less than USD 2 per day. In terms of abso- eight to ten million Filipinos that work over- lute numbers, this translates to roughly 30 seas. They regularly remit money back home, million people living below the poverty line. which on an annual basis amounts to an Our economy produces one million jobs per influx into our economy of approximately year, but every year more than that number USD 20 billion. We are second or third to enter the working age. Fifty percent of the Mexico and India in this regard. population is below 24 years old, while two The question is where all these remit- thirds of the population is below 34 years old. tances should go. Inflation is around 3.2 per- Every year, we have roughly 400,000 to cent and interest rates offered by banks are 500,000 new graduates. As a result, many of extremely low at less than one or two percent, these jobseekers look for opportunities although they lend money at six to eight per- abroad, something which also translates into cent. In the past, there have been concerns a significant human resources challenge for that the global financial crisis would reduce accounting and advisory firms like ours.

Gregorio Navarro, MANAGING PARTNER & CEO, DELOITTE PHILIPPINES

PHILIPPINES MARCH. 2014 25

Across the profession, the average attrition rate The changing dynamics imply that sits at around 33 percent. Almost all depart for better opportunities abroad, rather than com- the Filipinos have regained petitor firms or private industry within the Philippines. confidence in the country, its To achieve inclusive growth we need two leadership and its economy. things: jobs and a focus on core industries – agriculture tops that list. Today, the agricultural local companies and other local investors. In the sector represents only 19 percent of our econ- last three years, only about 40 percent of invest- omy, while close to 40 percent of the population ments were from foreign investors. The biggest works on land. We still import many food items. investments were actually made by Filipinos. It is only until recently that we again became a This was not the case before, when most Filipi- net exporter of rice products. nos were investing their money abroad. The Another area of the economy that could lead changing dynamics imply that the Filipinos to a more sustainable growth is manufacturing. have regained confidence in the country, its Even though many foreign companies have leadership and its economy. More than 60 per- moved to China, we are seeing now some cent of our stock market now also consists of renewed interest in the country. The recent investments by local investors. To me, there is political turmoil between China and other no better indication of confidence in the econ- neighboring countries, the natural calamities omy than when you see Filipinos themselves in Japan and Thailand, etc. have caused foreign investing and expanding their operations in the businesses to take another look at the Philip- country. pines. In order to encourage foreign direct investments, we also need to continue investing in the energy sector to make our energy costs Private consumption continued to drive overall growth more affordable. The increasing cost of labor is Demand side: contribution to GDP growth another aspect that needs to be contained. Private consumption Govt consumption 12 Capital formation Discrepancy FR: Foreign investors need to find answers to Net exports GDP growth the questions they have when entering a mar- 10 ket. How would you assess the current state 8 of FDI in the Philippines? GREGORIO NAVARRO: For the first half of 2013, 6 FDI in the Philippines sat at around USD 2.2 4 billion, compared to USD 1.9 billion for the Percent

same time last year. It is a positive develop- 2 ment but in absolute numbers this still does not compare to the USD 20 billion in Indo- 0

nesia or even the amount Vietnam gets. -2 Compared to the region, our FDI is still very -4 small. 2008 2009 2010 2011 2012 However, it is very encouraging to see the Source: National Statistical Coordination Board (NSCB) increasing level of investment coming from

Gregorio Navarro, MANAGING PARTNER & CEO, DELOITTE PHILIPPINES

PHILIPPINES MARCH. 2014 26 Interview with: Gregorio Navarro, Managing Partner & CEO, Deloitte Philippines

Philippines growth in 2012 was amongst the highest in the region Regional GDP growth rates

2010 2011 2012 12

6 Percent

0 Vietnam Malaysia Indonesia Thailand Philippines China

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

Philippines: Economic indicators, 2008-2012

Economic indicator 2008 2009 2010 2011 2012 Per capita GNI, Atlas method ($) 1770 1870 2060 2210 ...

GDP growth (% change per year) 4.2 1.1 7.6 3.9 6.6

CPI (% change per year) 8.3 4.1 3.9 4.6 3.2

Unemployment rate (%) 7.4 7.5 7.3 7.0 7.0

Fiscal balance (% of GDP) (0.9) (3.7) (3.5) (2.0) (2.3)

Export growth (% change per year) (2.5) (22.1) 34.9 (6.3) 8.5

Import growth (% change per year) 5.6 (24.0) 32.9 2.4 5.1

Current account balance (% of GDP) 2.1 5.6 4.5 3.2 2.9

External debt (% of GNI) 34.1 32.0 31.2 28.8 ...

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

Gregorio Navarro, MANAGING PARTNER & CEO, DELOITTE PHILIPPINES

PHILIPPINES MARCH. 2014 Interview with: Maria Cristina G. ‘Beng’ Coronel, President, Pointwest 27 Technologies

INTERVIEW WITH: Maria Cristina G. ‘Beng’ Coronel, President, Pointwest Technologies

Focus Reports: How do you compare yourself recognize the importance of healthcare in to big players such as SPi Global and Cogni- both the US and developed countries in gen- zant, when it comes to healthcare expertise? eral, where changing legislation is increasing BENG: Since we are both an IT and BPO com- demand for IT and BPM services. pany, Pointwest Technologies has an edge over companies that focus on BPO alone. FR: When we speak of an increased use of Our IT expertise serves as an enabler to our mobile devices and tablets, there must be a BPO solutions. significant difference between mature mar- RHEA: Here in the Philippines, our industry kets such as the US versus developing mar- is transitioning from BPO into Business Pro- kets such as the Philippines. How do you cess Management (BPM). This is a reflection adapt your business development approach of the convergence between IT and BPO ser- accordingly? vices. As companies focus on integrated end- RHEA: In the Philippines, for example, the to-end solutions, there is a need to be able adoption rate of electronic medical records to support the IT systems that serve as the (EMRs) is very low compared to markets underlying foundation for BPO solutions. such as the US and Australia. We try to learn There is also a growing demand from from markets such as the US, to better local companies in the Philippines for BPM understand what technologies can be used services. We expect local companies to par- and deployed. ticipate in the move to cloud services. Point- BENG: There are providers in the Philippines west is ideally situated to provide the exper- that are already offering telehealth services, tise, talent and solutions in this area. for example in the area of radiology. This BETH: Most BPO companies in the Philip- trend has already taken off in markets such pines started as call centers. Now, many are as Sri Lanka and India. trying to reposition their voice services to Our experience in reaching those Filipi- address the needs of the healthcare market. nos that do not have access to hospitals For its part, Pointwest Technologies decided comes from the banking sector. We are ser- to move into pharmacy benefit management vicing the ‘unbanked segment’ through a (PBM). mobile system that gives them access to PBM is a unique feature of mature mar- banking facilities, in the same manner that kets or developed economies like the US. For health can be brought to the people. We feel most of the European economies, the state this model can also be applied to the field of provides healthcare services. In the US, how- healthcare, so that segments of the popula- ever, the private sector can opt to sign up for tion who have no access to hospitals can, prescription drug coverage for their employ- through mobile phones, tablets, and other ees, in addition to their health plans. technologies, obtain healthcare services. We are now active in this segment, and

Gregorio Navarro, MANAGING PARTNER & CEO, DELOITTE PHILIPPINES Maria Cristina G. ‘Beng’ Coronel, PRESIDENT, POINTWEST TECHNOLOGIES

PHILIPPINES MARCH. 2014 29

Creating caring environments to meet tomorrow’s needs

With our broad understanding of the healthcare environment, Arup has the expertise to ensure patients, clinicians and administrators benefit from well-designed facilities that are cost-effective, energy- efficient, appropriate to their context and flexible for future development.

1 Photography Charlotte Wood ©Andrew Watson Photography Watson ©Andrew 2 3 ©Arup Associates 5 Photography/Anshen + Allen ©David Wakely

4 ©Kalson Ho

Images 1 Ysbyty Aneurin Bevan, Blaenau Gwent, United Kingdom 2 Cairns Base Hospital, Queensland, Australia 3 Women’s and Children’s Hospital in China 4 Maggie’s Cancer Caring Centre, Hong Kong, China 5 Laguna Honda Hospital, San Francisco, USA 6 East Asia Hospital, Ho Chi Minh City, Vietnam 7 Moorfields Eye Hospital, London, United Kingdom 7 Sternberg ©Morley Von

PHILIPPINES MARCH. 2014 30 Interview with: Raul Manlapig, Principal Managing Director, Arup, Philippines

INTERVIEW WITH: Raul Manlapig, Principal Managing Director, Arup, Philippines

Focus Reports: The Philippine economy is real property development, etc. growing at a rapid pace, making it attrac- Rapid urbanization in Metro Manila, for tive for foreign investors. Yet, to what example, with an estimated population of 12 extent have you seen the country’s growth million, has put a strain on its public infra- reflecting in more investment in infrastruc- structure systems such as connectivity, ture? energy, water, waste disposal, sanitation, RAUL MANLAPIG: The growth of the Philip- drainage, hospitals and so on. The govern- pine economy is being fueled by strong ment will need to address this swiftly, and key domestic consumption and an increase in to this is being able to attract private sector investments. Large business groups such interest in partnering with them. as Ayala, San Miguel, Metro Pacific, The Lopez Group, Aboitiz, SM Holdings, the FR: How does this reflect on Arup’s global Gokongwei group to name a few have diver- and local set of capabilities in the healthcare sified into other sectors such as power, sector? infrastructure communication, mining, RAUL MANLAPIG: Arup has more than 40 water and healthcare. These moves towards years’ experience in the healthcare industry diversification have increased their invest- and has completed 2,500 healthcare projects ments over the past couple of years. under its name. This has provided us with Also, a recent World Bank economic update an in-depth understanding of the challenges indicated that public spending grew to an confronted by the industry such as continu- equivalent of 16.8 percent of GDP with infra- ally improving quality of care, patient expe- structure showing the highest increase. How- rience and financial performance. Arup’s ever, despite the increased public spending global skills draw on an unparalleled range infrastructure spending only accounted for of services across planning, design, engi- 2.5 percent of GDP, which is below the SE Asia neering and business consultancy to develop average of about 5 percent of GDP. There integrated solutions across healthcare seems to be a lack of foreign direct invest- estates, workforce and operations. ments due to unattractive terms compared to We combine our global and local skills set other SE Asia nations. The lack of FDI is a big to offer the most cost-effective service pos- challenge to the government in successfully sible. The Philippines’ healthcare sector is a implementing strategic infrastructure proj- high potential market, as the demands for ects and is seen to weaken our economic com- adequate hospitals and access of the poor to petitiveness. better healthcare services and facilities are It is obvious that we are not seeing the high in the country. With our experience we same pace of growth in infrastructure invest- can help clients achieve end-to-end provi- ment compared to investments in private led sions of world class healthcare services effi- projects in manufacturing, power generation, ciently and sustainably.

Raul Manlapig, PRINCIPAL MANAGING DIRECTOR, ARUP, PHILIPPINES

PHILIPPINES MARCH. 2014 31

FR: During a recent speech, British Ambassa- patient-oriented solution can be delivered. dor to the Philippines Stephen Lillie spoke of remove from here ‘huge opportunities for British companies’ due to an improved business environment in FR: How do you want to shape the future of the country. Health undersecretary Teodoro the Philippines? Herbosa said in the same event that several RAUL MANLAPIG: The Philippines is an emerg- opportunities are likewise available as the ing nation and needs change in many differ- government is looking to modernize hospitals ent areas. For example, we are experiencing to provide healthcare. What is your message the effects of urbanization in the same way to the government on Arup’s readiness and that China, Brazil, Indonesia and others are willingness to take on such healthcare proj- undergoing. With the increasing population ects? of Metro Manila and other urban areas there RAUL MANLAPIG: The Philippines is grappling is a need for us to look at urbanization issues with the challenges of drastically improving and be able to transform our growing cities the quality of healthcare and patient experi- into smart and green cities. We will have to ence while at the same time achieving the deal with issues such as urban mobility, more financial performance. Healthcare is very efficient use of energy and sustainable build- expensive and at least 60 percent of our pop- ings. Increased use of vehicles presents a gen- ulation is without proper healthcare services uine threat to economic security for many and facilities. Our unique trust ownership nations, including the Philippines, due to the fosters a distinctive culture and an intellec- need to import fuel. Investment in urban tual independence, which enable us to invest transport and communications infrastruc- in R&D and develop our experts to become ture is critical for the enhancement of eco- leaders in their fields. Our global reach gives nomic potential in urbanized areas. There us the advantage of bringing in relevant should be targeted investment to drive sig- resources in dealing with the myriad of issues nificant growth and economic development. those healthcare industries around the world Hong Kong and Singapore for example, have face. We are able to apply our learnings from invested heavily on rail systems, as we can various projects to suit local challenges that see their growth has been sustained for many have been encountered before by other coun- years and will likely to be sustained for many tries. Our approach to healthcare is based on years more as they continue to spend in understanding and bringing together estates, improving their systems alongside the leadership, workforce and operations. We growth of their economies. Our government believe that it is only through an in-depth needs to act fast enough to address this need understanding in each of these areas, and the to facilitate our growth, for example, solicit- links between them that truly sustainable, ing private investors to invest in PPP.

Raul Manlapig, PRINCIPAL MANAGING DIRECTOR, ARUP, PHILIPPINES

PHILIPPINES MARCH. 2014 32 Interview with: Jason Carroll, General Manager, Janssen Pharmaceutical Companies, a division of Johnson & Johnson (Philippines.) Inc.

INTERVIEW WITH: Jason Carroll, General Manager, Janssen (Philippines)

Focus Reports: Mr. Carroll, how would you your tasks to enhancing this awareness introduce Janssen Philippines? level? JASON CARROLL: It is hard to discuss Jans- JASON CARROLL: We have made a number sen without first talking about the com- of decisions in recent times to lift our pany’s founder, Dr Paul Janssen. In the visibility in the Philippines. The first years before his death in 2003, he filed was to build a new, sustainable office to over 100 patents, authored 700 scientific provide our loyal team an enjoyable place Publications and had oversight on the to work as well as to attract new talent formulation and synthesis of 80 New into the organization. We have also Chemical Entities with the scientists at invested in the development of an indus- Janssen. try leading training & development cen- Dr Paul Janssen is globally recog- ter to ensure our customer facing team nized as one of the greatest formulation members are highly skilled in their inter- scientists in history. He built the com- actions with customers. We wish to focus pany that would become Janssen Phar- on the science behind our products in maceutica in 1956 and Janssen has been order to differentiate our products part of the Johnson & Johnson Family within the industry. We believe that we of Companies since 1961. have the current and future products to Janssen, now one of the most innova- back up our confidence to do so. tive companies in the world, was first Another core priority is to ensure that introduced into the Philippines in 1982. we have the best technology available in Janssen Philippines specializes not only the industry. Just two years ago, many in innovative medicines in oncology and of our representatives did not even have immunology, but also has-over the coun- access to laptops. In just 18 months, lap- ter (OTC) and pain treatments that serve tops, smartphones, iPads and the indus- many thousands of patients. As a com- try leading electronic territory manage- pany, our vision is to ensure that in the ment system is the norm for our team. eyes of our employees, our customers We have come a long way to understand- and our competitors, we are seen as the ing the value of sales force effectiveness most reputable pharmaceutical company and interactive learning. in the Pharmaceutical industry. . As well as these things, , our customer facing team proudly wear a Janssen uni- FR: It seems that everything is in place, form, which is quite unique for the but there is still work to be done on rais- industry. We are so immensely proud of ing the awareness on the reputation and the Janssen heritage and wish to show- values that Janssen Philippines stands case the organization that we represent. for in this market. What do you see as In terms of people, we search for tal-

Jason Carroll, GENERAL MANAGER, JANSSEN PHARMACEUTICAL COMPANIES OF JOHNSON & JOHNSON, A DIVISION OF JOHNSON & JOHNSON (PHILIPPINES.) INC.

PHILIPPINES MARCH. 2014 33

ent with a thirst for knowledge, confidence, With a population approaching 100 persistence and the ability to listen. Jans- sen is an equal opportunity employer. We million, the Philippines has wish to be seen as an organization that tremendous potential to be a strong looks after its people, provides them with tremendous benefits and challenges them growth driver for healthcare in on a daily basis. I want our employees to be convinced that they do not want to work Southeast Asia over the next two anywhere else – just continue to grow with decades. That said, I believe it will Janssen. Already today, I feel that we are close to reaching this mindset with our lat- still take considerable time to build est internal survey suggesting that 90% of momentum. our people feel strongly about remaining with Janssen through the next 12 months. Oncology, Infections Diseases (HIV, Hepati- FR: Do you see think that the Philippines has tis-C, Multidrug resistant TB) and Diabetes the potential to become a major growth driver for Janssen in Southeast Asia? FR: In 2013, Janssen Pharmaceuticals JASON CARROLL: With a population approach- received the FDA approval for INVOKANA ing 100 million, the Philippines has tremen- for type 2 diabetes. Will this be an important dous potential to be a strong growth driver growth area? for healthcare in Southeast Asia over the JASON CARROLL: Diabetes is a significant next two decades. That said, I believe it will health issue in the Philippines, with 8 per still take considerable time to build momen- cent of Filipinos currently diagnosed with tum. The average age of the population is Type-2 Diabetes and the reality is that the significantly lower when compared to typi- impacted population is expected to double cal western countries. One also needs to within the next decade. Certainly Type-2 consider the fact that the average spend on Diabetes is a disease in need of treatment healthcare is only USD 97 per year at the options... We are awaiting approval of present time. Out of pocket spend is the INVOKANA in the Philippines and we hope norm and reimbursement remains rare. If to bring this product to the Filipino popula- GDP continues to grow in high single digits tion in 2015.. (as it has over the last few years), then the Philippines will certainly be a major eco- FR: What is the type of legacy you want to nomic force in many industries including build in the Philippines? healthcare in 10 – 20 years from now. The JASON CARROLL: In the next two years, I country has a young population with great would like to build a path toward long-term ambitions. Once these younger generations sustainable growth for our Philippine oper- reach their peak in a few years from now, ations. I would also hope that Janssen can the Philippines will be unstoppable. become an employer of choice within the Janssen Philippines has a number of Philippines through our excellent people, promising new compounds approaching. outstanding products and ethical reputa- These compounds will be in areas such as tion.

Jason Carroll, GENERAL MANAGER, JANSSEN PHARMACEUTICAL COMPANIES OF JOHNSON & JOHNSON, A DIVISION OF JOHNSON & JOHNSON (PHILIPPINES.) INC.

PHILIPPINES MARCH. 2014 34 Interview with: Secretary of Health, Dr. Enrique T. Ona

INTERVIEW WITH: Dr. Enrique T. Ona, Secretary of Health, Department of Health

Focus Reports: President Aquino has recently governments were unable to afford their stated that the Philippine Health Insurance share in the program. As a result, many of Corporation, PhilHealth, now covers 81 per- the poor were not enrolled. cent of the population of the Philippines, as When the new administration took over part of the government’s universal health- in 2010, our mantra was to include the pre- care plan. So far, what has universal health- viously overlooked poorest segment of the care brought to the country? population. Through our Department of DR. ENRIQUE T. ONA: The most important Social Welfare, we had identified 5.2 mil- reform, or change, was the inclusion of lion households as part of the poor layer of health as a growth driver of the Philip- society. Note that we spoke of households, pines. Essentially, our ambition was to which could include four to five family make sure that all Filipinos, especially the members. In terms of people, that number poor, were to be included in our national comes down to roughly 25 million, or a health insurance program. quarter of the country’s population. In fact, the country already had health insurance, so-called Medicare, since 1969. FR: What are your priorities in terms of This system only covered the formal sector: investments in the healthcare infrastruc- those employed. The poor were presumed ture in the Philippines? to be taken care of through our govern- DR. ENRIQUE T. ONA: The allocated investment hospitals and had no official insur- ments to improve our local government ance system. health facilities as well as our national gov- In 1995, the first Law on PhilHealth was ernment hospitals have significantly gone passed. This Law stated that in 15 years, all up in the last two years. We have a program Filipinos should be enrolled or covered called the Health Facility Enhancement through national health insurance. By Program (HFEP), which sets targets for 2010, however, only 54 per cent of the pop- budget allocation to improve our health ulation was covered, essentially the formal care facilities through 2016. sector. For instance, for the improvement of PhilHealth mandated that every Fili- our smallest political units covering three pino, meaning both the formal and infor- to five thousand people or 500 families on mal sector, would be enrolled through a average, so-called barangays, these areas single insurance wherein the poor would would normally have small health units be enrolled through a premium paid for and with one midwife, one barangay health shared by the national and local govern- worker, etc., usually volunteers. Their main ments. In practice, the majority of the local task is to provide local families with infor-

Secretary of Health, DR. ENRIQUE T. ONA

PHILIPPINES MARCH. 2014 35

mation on health care, as well as the basic been able to pass a major law on the funding primary care or preventive measures. of health care in the Philippines, through increased taxes on alcohol and tobacco prod- FR: What are some of the main illnesses you ucts. prioritize on your agenda over the next few Second is the passage of our reproductive years? health and responsible parenthood Act, which DR. ENRIQUE T. ONA: In the next three to five will soon make it possible for us to aggres- years we should also be tackling the neglected sively address the problem of maternal and tropical diseases, such as dengue and lepto- infant mortality, especially for the poor and spirosis, which you still find in the Philip- near poor. pines today. We have doubled our budget to The third achievement is the amendment detect and treat these diseases. At present, to our national health insurance Act that we have 27 out of 82 malaria-free provinces clearly states that all civilians should be cov- in the Philippines. By definition, this implies ered through our national insurance, Phil- that the province cannot have a single malaria Health, with particular emphasis on the poor patient in five years. By 2016, we aim to have and near poor. It is now mandatory, rather 40 provinces malaria-free. Overall, we aim to than a choice, to be enrolled. eliminate these diseases from being a public threat. Rabies is also still a problem in our FR: What potential do you see to turn the Phil- rural areas. Though we have programs to ippines into a medical tourism destination? tackle diseases like rabies, the laws are not DR. ENRIQUE T. ONA: The Department of Tourism being properly implemented. is very active in making the Philippines a pri- HIV, too, is an increasing problem in the ority destination, and it is a program that we Philippines. From 1983 up to 2013, the total too should strategically encourage. However, number of HIV cases sat at around 12,000, we leave the implementation to the private representing less than 0.5 per cent of the pop- sector, as all our attention is currently ulation. We expect a substantial, almost geo- required to reach universal healthcare and metric, increase in HIV cases in the Philip- help the poor. We are pleased to note that we pines. We have already proposed amendments have at least half a dozen hospitals that have to our HIV laws and are becoming more received international and ISO accredita- aggressive in our public education efforts for tions. the young. Believe it or not, but 80 percent of It is also worth noting that the Philippines the new cases is the result of unprotected has partnered with the United Nations Eco- homosexual or bisexual contact. Now, we are nomic Commission for Europe (UNECE) to proposing certain amendments to the HIV turn Manila, and the Philippines, into the law to ensure better reporting and prevention center for public private partnerships (PPP). of its prevalence. The modernization of our DOH hospital is for instance open to PPP investments. We are FR: What have been some of the major suc- also about to start our first major PPP for the cesses thus far? Philippine orthopedic center, and, we have DR. ENRIQUE T. ONA: We have reached a number around 25 other major government hospitals of major achievements with this government open to this strategy. on the healthcare front. First of all, we have

Secretary of Health, DR. ENRIQUE T. ONA

PHILIPPINES MARCH. 2014 36 Interview with: Alexander A. Padilla, President & Ceo, Philhealth

INTERVIEW WITH: Alexander A. Padilla, President & Ceo, Philhealth

Focus Reports: 2013 was the year in which (LGUs). The primary role of PhilHealth the National Health Insurance Act took and the LGUs was to enroll the poor. The effect. What are the implications of this national government is taking over enroll- law for PhilHealth and the healthcare sys- ment, whereas the proportion of the poor tem in the Philippines? are now identified by one government ALEXANDER A. PADILLA: The implications are agency: The Department of Social Welfare significant. Officially called Republic Act under the National Household Targeting 10606, this new law will be governing the System Poverty Reduction Scheme. They Philippine Health Insurance Corporation. provide a list of people which PhilHealth It brings a number of innovations. merely adopts. The LGUs in turn will to The most important novelty exists in sponsor those doing business with them, the subsidy given by the national govern- as well as the other workers in the infor- ment. We used to have partial subsidies mal sector, such as the barangay workers. between the national and the local gov- In this way, I also see us increasing our ernments, in order to pay for the premi- enrolment in a qualitative manner. ums of the poor. For the first time around, Other effects of the new law sit on the the national government has now allotted preventive side, which will go beyond the PHP 35 billion for the poor. This repre- usual examinations, blood counts, and so sents a threefold increase from last year’s forth. By next year, we will be using the support program, set to cover a total of ‘Point of Care Benefit Package 2’ or PCB 2. 14.7 million families, which translates For the first time, the rural health units into 53 to 54 million individuals, for an will be providing medicines for at least annual premium of up to PHP 2,400 per two of the most common non-communi- year. In other words, we are talking about cable diseases: diabetes and hypertension. half of the Philippine population now cov- The new law also gives us a particular ered by the national government. Our role bias towards the poor. In this way, we have as PhilHealth is to ensure that all of these embarked on a ‘no-balance billing’, par- premiums are being translated into actual ticularly for the medical care provided to names and addresses. We will need to them. This system implies that the poor assign these people to particular rural should not be paying a single cent for their health units, where they are supposed to medicines, for their room, and even for receive their preventive and curative ben- the professional fee, though the latter is efits. harder to implement. Another new aspect is that the fact that Aside from that, we will also be intro- we will be embarking on a new relation- ducing the ‘point of care enrolment’. Even ship with the local government units though we have planned to enroll the

Alexander A. Padilla, PRESIDENT & CEO, PHILHEALTH

PHILIPPINES MARCH. 2014 37

aforementioned 14.7 million families, we understand that some leakages may occur. If we implement this well, we With this we refer to other members of the could safely say that all of the poor, who are not enrolled in PhilHealth nor are they sponsored by local governments or poor –regardless where they come any other groups. When they will now get from- will be 100 per cent sick, they can be enrolled by the local hospitals to become part of the poor paying the covered in two years from now. annual premium of PHP 2,400. To such people, our services are being made immediately as dengue at PHP 8,000 for instance, we pay available, without a waiting period. that amount once the procedure has been If we implement this well, we could safely done. This payment is being made regardless say that all of the poor –regardless where of the medicines that were actually used. they come from- will be 100 per cent covered These could have been branded, generic, or in two years from now. even in violation of the Philippine National Drug Formulary (PNDF). FR: At the State of the Nation address this While we still reimburse the same amount year, President Aquino stated that 81 per in such cases, if we find violations of these cent of the population is now covered by Phil- rules in our post audit, we will deduct the Health. Many decision-makers among the violated amount from future reimburse- medical and business community doubt its ments. This is a post audit or monitoring sys- accuracy. Can you clarify this discrepancy? tem as far as PhilHealth is concerned. ALEXANDER A. PADILLA: The 81 per cent, which is now 83 per cent already, is our rate of FR: Lastly, what is your take on the political enrolment. The enrolment rate means that will towards improving healthcare in the these are people that have come under the Philippines? health insurance program at one point or ALEXANDER A. PADILLA: President Aquino’s another. Whether they can avail of benefits, commitment to PhilHealth reflects in our is what our coverage rate focuses on. Our own programs. He has a particular bias to covered rate is really around 73 to 74 per the poor and in line with his ambitions, cent. We thus speak of a discrepancy between already half of the population now falls the enrolment and covered rate. under national coverage. When it comes to health, the political will is certainly there. FR: Budget pressures require you to focus on In a matter of two years, the budget of the generic medicines. However, what do you Department of Health has increased from consider as a healthy balance to ensure a cer- roughly PHP 35 billion to PHP 80 billion. tain degree of quality and innovation? With the approval of the Sin Tax Reform, ALEXANDER A. PADILLA: When I was at the the Responsible Parenthood Act and with Department of Health, the struggle between the new PhilHealth Law all done in less than generic and innovative medicines was criti- three years, we see a clear political commit- cal. At PhilHealth, however, this struggle ment and a presidential bias towards health. assumes a less important role. When we offer a case rate amount, such

Alexander A. Padilla, PRESIDENT & CEO, PHILHEALTH

PHILIPPINES MARCH. 2014 38 Interview with: Dr. Kenneth Y Hartigan-Go, General Director, Fda

INTERVIEW WITH: Dr. Kenneth Y Hartigan-Go, General Director, Fda

Focus Reports: One of the FDA’s main con- FR: What strategies have you implemented cerns is to protect the quality of medicines to address these issues? in the market. Both the MNCs and the local DR. KENNETH Y HARTIGAN-GO: The first step is Philippine manufacturers are required to the application of the ASEAN common adhere to very strict standards in this technical document (ACTD). Up until regard. Many of them, however, have recently, if companies could not comply expressed their concerns over the quality of with the document, we would create a imported products. From an FDA perspec- national simplified regulatory route within tive, do you see this as a challenge? If so, the country. As from August 1, 2013, this how can this challenge be addressed? ACTD process has been adopted. DR. KENNETH Y HARTIGAN-GO: We are con- Second, the Philippine FDA now requires cerned over the quality of many generic its inspectors to inspect the overseas manu- medicines that are currently being mar- facturing facilities of companies that export keted and sold in the Philippines. A 2006 finished products to the Philippines. survey indicated that only 20 out of 70 local Our third strategy is for generic products pharmaceutical manufacturers surveyed – especially those belonging to category four were following cGMP guidelines. Since (indicating low permeability and low solubil- then, the number has improved. In one way ity) – to undergo bioequivalent testing as a or the other, all companies are now compli- mandatory requirement for license renewals. ant with good manufacturing practices. Anything new would also require bioequiva- However, our audits remain nothing but a lence data from now on. At the moment, we snapshot of the company. There are limited only have three bioequivalence testing centers guarantees to the robustness of the quality in the country. They were charging PHP 1 mil- and methods according to which these lion (USD 25,000) per product to be tested. manufacturers operate. We have been Because these are private industry centers, we assured that more than 60 local companies as the regulatory body have no legal ground are cGMP compliant. However, this does to gain access to their data. Although the gov- not mean that the quality of their products ernment has accredited these three centers, is good. we had never thought of imposing data trans- For the overseas importers of finished parency. This will now change. In fairness, we products we will soon inspect their cGMP sup- also need to bring down the prices of bio- plier’s compliance. At the moment, registra- equivalence testing. As part of our strategy, tion for those companies is based on paper we also intend to create more bioequivalence certificates. As a regulatory agency, we vali- testing centers around the country. date these documents. The fourth strategy is the imposition of product stewardship by the industry. Unlike

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

PHILIPPINES MARCH. 2014 39

big pharma, generics companies rarely engage in post-marketing surveillance of their own Universal healthcare coverage is a products. This will also change as we will start political promise that should follow implementing Risk Management Planning (RMP). RMP is enshrined in Law RA9502, which or come in parallel with an is a law from 2008 requiring companies to invest upgrading of the country’s health in product monitoring. Though signed in 2008, this law has not yet been implemented. As an systems. operational manager, it is my task to implement this law. FR: From an FDA perspective, what is your To further level the playing field, a fifth strat- take on what universal healthcare will do to egy is the application of a 2010 document called this market? the ‘APEC (Asia Pacific Economic Cooperation) DR. KENNETH Y HARTIGAN-GO: Universal health- Declaration of Ethical Marketing Practices for care coverage is a political promise that Biopharmaceuticals.’ This document was signed should follow or come in parallel with an by APEC member countries in Hawaii but never upgrading of the country’s health systems. It implemented in the Philippines yet. Just six is a step forward for the country, but should weeks ago, we at the FDA created a marketing also require operational managers to support communications unit to prepare an FDA guide- the six building blocks for health systems as line on what is ethical or unethical in terms of articulated by the World Health Organization marketing practices. The Philippine Pharmaceu- (WHO) in 2007: health governance, health tical and Healthcare Association of the Philip- financing, information & communication pines (PHAP) has pushed through an ethical technology applications in health, human code of practice for the MNCs in the Philippines resource management in health, health ser- that is aligned with the IFPMA guidelines. Local vice delivery between clinical and public companies, however, have not yet adopted such health, and access to products. guidelines on a voluntary basis. To address this At present, our approach to achieving the disparity, FDA will in time implement APEC WHO building blocks is still very fragmented guidelines for all players in the market. and inefficient. Without the support of these building blocks, our country will never achieve FR: We took note of the FDA’s intentions to universal health care coverage. More than raise registration fees. Can you elaborate? financing alone, universal healthcare coverage DR. KENNETH Y HARTIGAN-GO: In our view, we feel is about having the right services ready, clear that no Filipino taxpayer should be subsidiz- and consistent regulations, good corporate gov- ing product registrations of individual com- ernance, communication flow between local and panies. At PHP 20,000 (USD 500) our fees for national governments, and so forth. three to five years of registration are still very low, especially taking into account that other countries charge up to PHP 480,000 (USD 12,000). In principle, we do not view this as raising fees but as correcting and restructur- ing fees.

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

PHILIPPINES MARCH. 2014 40 Interview with: Teodoro B. Padilla & Reiner W. Gloor, Executive Director & Advisor, Phap

INTERVIEW WITH: Teodoro B. Padilla & Reiner W. Gloor, Executive Director & Advisor, Phap

Focus Reports: In 2010, the Aquino govern- growth in volume, however, is almost ment pledge to make universal healthcare entirely accounted for by the expansion of coverage a priority. Three years later, where generics. Many of these generics are in fact do the MNCs stand within this changing not related to the compounds that recently landscape? became price-controlled, such as REINER W. GLOOR: Healthcare should be more Paracetamol. In my own opinion, I think than a game of prices alone. We have that the MNCs currently touch around 15 observed a shift with many of the industry’s out of 100 million people in the Philippines. stakeholders –including several NGOs– now For the years ahead, I would expect to see taking a more holistic view beyond drug between 3 to 5 percent growth in value and prices. The sector is now taking a joint up to 5 or 6 percent in volume growth. approach to define a sustainable future for the healthcare system as a whole. FR: What is your advice on the Philippines TEODORO B. PADILLA: For many years now, to MNCs? PHAP –under the guidance of Reiner Gloor– REINER W. GLOOR: A CEO here needs to be has been building its relationship with the patient. To pursue his goals, he needs to various stakeholders of the sector. Now, we remain flexible and adapt to the market have reached a point where we have gained needs. In the long run the outlook is cer- the trust of groups that were traditionally tainly positive, albeit at lower growth rates. opposed to big pharma. As a result, we are I do believe that we need to be satisfied now acting as partners with one goal in com- with somewhat lower returns. mon: to increase the access to healthcare in TEODORO B. PADILLA: Apart from remaining the Philippines. Apart from the NGOs, this patient, it is important to continuously includes institutions such as the Depart- engage with the different industry stake- ment of Health, the local FDA and the Phil- holders, most particularly the legislators ippine Health Insurance Corporation (Phil- and the Department of Health. At the end Health). of the day, these people have the desire to better understand the sector and its chal- FR: The Philippines’ pharmaceutical market lenges but most importantly to deliver the has a CAGR of around 3% now. What are best health service possible. your observations and expectations about the growth in this market? REINER W. GLOOR: The Philippines is a market with a big population that –unofficially– Healthcare should be should now exceed the 100 million people. more than a game of Growth in value sits at around 3% now, while growth in volume is around 8%. The prices alone

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

PHILIPPINES MARCH. 2014 Interview with: Thelma Tobias-Go And Ed Ocampo, President Of Pcpi & 41 Vp Of Scheele Laboratories

INTERVIEW WITH: Thelma Tobias-Go And Ed Ocampo, President Of Pcpi & Vp Of Scheele Laboratories Focus Reports: Generic drugs, which are More than promotional now on the rise, quickly become a commod- ity. Can you elaborate on how local gener- efforts, the industry is ics manufacturers can build a competitive also increasingly edge and differentiate themselves? THELMA TOBIAS-GO AND ED OCAMPO: The basic looking into principle still comes down to differentia- partnerships. The tion through marketing efforts in terms government has of packaging, product placement, and so forth. More than promotional efforts, the already opened its industry is also increasingly looking into doors for public-private partnerships. The government has already opened its doors for public-private part- partnerships (PPP) nerships (PPP). While it is being said that a real PPP FR: Roughly a decade ago, there were roughly has not yet been created, I personally 200 Filipino pharmaceutical manufacturers believe that we now have a number of in the market. In 2010, this number had informal PPPs. A first case can be seen in already come down to 130. What is the situ- the computerization of the local FDA. ation today? Is there also room and willing- Let’s consider the following specific ness to consolidate? example. To reduce costs, the government THELMA TOBIAS-GO AND ED OCAMPO: At present, has a ‘procurement services’ unit in its there are roughly 65 pharmaceutical manu- Department of Budget and Management. facturers in the Philippines. In terms of All the different government offices pro- consolidation, many of these businesses are curing anything –like office supplies for still family-owned, which has perhaps instance– are stockpiling under the refrained the industry from consolidating PSTDM. The idea is to have a certain gov- over time. Alternatively however, we are ernment entity like PIPC –a government now working together on other capabilities. operated and controlled corporation– Part of our business model is to look at under the Department of Health to stock- joint-ventures, partnerships, mergers and pile common molecules –like acquisitions. Mergers are of course a far- paracetamol– and push other depart- fetched idea for most of these family-owned ments in the government, like the structures but partnerships, often with off- Department of Justice. This can really shore companies, are becoming a trend. push the local industry.

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

PHILIPPINES MARCH. 2014 42 Interview with: Thomas Weigold, Country President And Managing Director, Novartis

INTERVIEW WITH: Thomas Weigold, Country President And Managing Director, Novartis

Focus Reports: The role of generics is on years and where do you see room for the rise in the Philippines, much like in improvement? many other markets. While Novartis has THOMAS WEIGOLD: It was part of the strat- its generics arm through Sandoz, this is egy to prioritize our portfolio. The Phil- not (yet) the case for every MNC. From ippines has a high unmet medical need a broader perspective, what do you see in many different therapeutic areas. As as a suitable survival strategy for inno- a company, it is very easy to expand into vative products in the Philippines? painkillers, anti-infectives, and so forth. THOMAS WEIGOLD: The dynamics of the However, we have chosen to pick the big MNCs are very different nowadays. right offer and only address a number of Companies that strongly believe in selected therapeutic areas. Our organiza- research will keep bringing new mole- tion has been aligned according to this cules to the different markets. More strategy. We have been working on our than new molecules alone, MNCs are capabilities in these areas and have vig- also bringing new combinations. At orously trained our people to thoroughly Novartis, for instance, we have a unique understand and specialize in these areas. offering: a triple combination in anti- We have turned them into experts on hypertension treatment. Combinations these diseases. Now, we are on the way are not only more cost-effective for to launching a range of new products in patients, it also makes them stick to areas such as respiratory. In hyperten- their necessary treatments. sion and diabetes we are already present. There is a much bigger volume business in generics at the moment, because FR: Some of the country managers of a large part of the Filipino population MNCs here in the Philippines have still cannot afford more innovative med- described the Philippines as a ‘prototype icines. We have to accept this trend and market’, mainly because it is possible to play our role in our segment of the mar- launch new products very rapidly here. Do ket. With the right strategy, companies you look at this market in a similar man- like Novartis can do good business here. ner? THOMAS WEIGOLD: The approach of the FR: When you first arrived in the Philip- FDA Philippines is quite straightforward, pines two years ago, you made a public so I would agree with that statement. announcement on the intention to focus What we try to do as an organization is on a few therapeutic areas. Apart from to provide the FDA with all the necessary hypertension, these included asthma, documents and quality information. diabetes and specialty areas. How much When we submit our dossiers, we already progress have you made in these two provide all the necessary data so that our

Thomas Weigold, COUNTRY PRESIDENT AND MANAGING DIRECTOR, NOVARTIS

PHILIPPINES MARCH. 2014 43

application is complete. Data quality and FR: Where do you hope to see Novartis Philip- transparency are key in this process. pines in three to five years from now? THOMAS WEIGOLD: The pipeline of products we FR: A topic worth addressing is clinical tri- can potentially launch in the next five years als, particularly if we look at the 100 mil- in the Philippines is very big. Regardless of lion population of diverse ethnical back- any promotional muscle, which is a market- grounds. What footprint do you want to ing technique from the past, it is about leave behind in the Philippines in this matching medicines with medical needs. regard? Programs like PhilHealth are also likely to THOMAS WEIGOLD: Clinical research is a very provide additional avenues to achieve important part of our strategy. As a com- greater access to health care. I think that we pany we are convinced that we need to can become an even bigger player in the drive business by data. We need to be able future. to tell the story ‘behind the white pill’. As an industry, I hope we continue to After Toyota, we are the biggest MNC glob- approach doctors in a professional manner. ally that invests into R&D. The story We should always continue to work on the ‘behind the white pill’ has to be transpar- image and reputation that we have as an ent, evidence or fact-based, and has to be industry. told to the right people – often payers, Apart from GDP growth, there are many sometimes the government and, to a large ongoing positive developments in the Phil- extent, the doctors. ippines. I think that Novartis will probably We can produce a lot of data in Europe be one of the most preferred partners in the or the US, which is a good thing in itself. Philippines vis à vis the other stakeholders However, there are different genetic pre- of the sector. I am quite convinced that we conditions in different ethnic groups. will be an even stronger player in the future. Therefore, even once we have a product Going forward, it will be very interesting registered we feel that we should continue to observe how the implementation of the to do research to provide more data at a ASEAN harmonization process will play out local level. This cannot be done every- in the future. In five years from now, we will where, but in a large population of 100 be able to gradually assess the impact of million people like the Philippines, this what will happen on this front. Some of the can be an asset. Today, we already are the concerns we have raised already is quality number one company engaged in research verification. In countries like Indonesia and in the Philippines. The Philippines has Philippines, counterfeit drugs are still a many well-trained doctors, partly overseas major issue. Now how are we going to control and partly here. The education system and the illegal trafficking of counterfeit drugs if research facilities are there too, and we the borders of these geographically complex have programs to work together with dif- archipelagos open up? We will also need to ferent universities and hospitals to estab- look at price levels between different coun- lish clinical research sites. Again, the fact tries, as it would perhaps become easier and that English is an official language is a cheaper to import Novartis products from major asset now that all clinical studies another market. This is food for thought for are being conducted in English. the future.

Thomas Weigold, COUNTRY PRESIDENT AND MANAGING DIRECTOR, NOVARTIS

PHILIPPINES MARCH. 2014 44 Interview with: Juanito Luna, Founding President and CEO, PROSEL

INTERVIEW WITH: Juanito Luna, Founding President and CEO, PROSEL

Focus Reports: What was your initial vision JUANITO LUNA: For 17 years long, we were when you started PROSEL in that garage 30 known to be the Prednisone company in years ago? the market. The name Prednisone –or Pred- JUANITO LUNA: I had not finished college and would mean PROSEL and vice versa, to an saw my chances to climb the MNC echelons extent were both names became inter- as very low back then. In my view, the only changeable. This is how popular our prod- opportunity to get into product manage- ucts became. ment and research, was to start on my own. With the earnings of this first line of I was not born to be in corporate manage- products, we were able to invest in new ment; I was born to be an entrepreneur. areas. The fact that we launched our prod- My vision was to make new products, or ucts at the request of the doctors was a variants of existing products, available to blessing. The Food and Drug Administra- the patients. More than once, it were the tion (FDA) of the Philippines would release doctors themselves asking for new alterna- two to three of our products per year, while tives to the MNCs’ products. Though the other companies were struggling to obtain local industry may be strong today, it is approvals. worth mentioning that three decades ago the entire Philippine pharmaceutical FR: Now that you are celebrating PROSEL’s industry was controlled by the MNCs. 30th birthday, what do you consider to be The fact that, as a family-owned com- the company’s main accomplishments? pany, we do not report to any investors, JUANITO LUNA: The fact that we were able to gave the flexibility to hire as many employ- provide the medical field with products ees as we felt necessary. While there are that were not available in the market is an companies that are integrated new tech- accomplishment in itself. When we nologies to reduce their workforce, we were launched some of our first products, it was the only company recruiting 108 under- the medical community thanking us to graduates at once. From a personal perspec- come out with the right products at the tive, I was an undergraduate too. Now, I right price. At that time, products were still want them to have the opportunity to being imported from abroad and marketed work. Today, PROSEL employs 256 people, in the Philippines at premium prices. Yet, which is a relatively high number compared just like for any MNC, these suppliers to a turnover of less than PHP 200 million would not have the flexibility to really (roughly USD 4.5 million). adjust their products to local market needs. For me, the doctors were the guides to FR: Looking at your therapeutic focus, where the creation of our product portfolio. do you see most growth coming from in the Today, all of our products have been intro- future? duced at their request. This approach alone

Juanito Luna, FOUNDING PRESIDENT AND CEO, PROSEL

PHILIPPINES MARCH. 2014 45

makes our products unique in the world. Our promise is one of a better sense of well-being. “When we launched some of our PROSEL is the owner of Pred Lines, the only first products, it was the medical company with the widest range of dosage strength of the steroid, Prednisone. Pred, as community thanking us to come the product is called, is the most commonly out with the right products at the used glucocorticoid for the treatment of several auto-immune diseases such as collagen right price.” diseases, vasculitis syndromes, gastrointes- tinal inflammatory diseases and renal auto- start changing our marketing materials to immune disease. The patients that use our efficiently and effectively approach the doc- products suffer from diseases such as cancer tors. We will be highlighting our products and asthma, and need a wide array of dosages with longer usage and make clearer distinc- to satisfy their needs. tions between our product lines. PROSEL has been the only company in the We will also become less dependent on Philippines that decided to put the price of Prednisone as our key brand. Internally, for the products on the trade boxes, a move that instance, we already do not set sales targets was not well received by the drugstores at for our staff for this product anymore. Simply first. Upon consultation with the drugstores, put, each annual quota equals the sales of the however, we adjusted the prices to take into previous year. Because of our prior focus on account their margins. We realized that we Prednisone we have lost the opportunity to needed to put a cap on our prices to ensure capitalize on our other products. We need to that the end user, the patient, would receive diversify our organization and reduce this a low price. dependence. As from next year, we will start as a new FR: What else is in the cards for the future of company! We will also isolate the vitamins PROSEL: manufacturing, an acquisition, … ? business and create a so-called PROSEL net- JUANITO LUNA: It certainly is not my desire to working business. Rather than a pyramid invest in manufacturing facilities. Manufac- marketing scheme, however, we have turing activities are vulnerable and would designed our own scheme called the Preferred increase the risk exposure of our organiza- Entrepreneur Representative and Associate tion. Program (PERAP). Through PERAP, we aim We already received an offer out of India to increase the entrepreneurial capabilities to buy out our company. However, it was my of the Filipinos. understanding that these investors were mainly interested in one of our products, rather than our entire company. If they only have an interest in one product that accounts for 70 per cent of our revenues, what will happen to the rest of the staff? Instead, we are now looking at converting the company into a foundation. This will be our next big move. As from next year, we will

Juanito Luna, FOUNDING PRESIDENT AND CEO, PROSEL

PHILIPPINES MARCH. 2014 46 Interview with: A.A. Santillana, Group Chairman & CEO, SV More, Philippines

INTERVIEW WITH: A.A. Santillana, Group Chairman & CEO, SV More, Philippines

Focus Reports: What motivated you to We have provided them with grants. We become the founder of SV More in the played a role in the financial and eco- 1980s? nomic support of these doctors, among A.A. SANTILLANA: I first joined the pharma- other initiatives we have undertaken. ceutical industry in 1971. For seven years, I worked in a multinational company as a FR: SV More Group of Companies has marketing representative, up till the grown rapidly in just 25 years. Can you highest position in that company. I left in elaborate on today’s structure of the 1978 and moved into entrepreneurship. group? Many of my previous colleagues A.A. SANTILLANA: We started with one com- enjoyed their stay with an MNC but when pany only, and put up another two years they finally retired, they started to real- later. These three main companies have ize that they had merely been employees their own subsidiaries. The main purpose rather than owners. It came to my mind of such structure is to decentralize con- that I would have to put up my own com- trol from Metro Manila to the provinces. pany, which led to the birth of SV More We find it very effective to transform, or in 1986. convert, our key people into actual share- Since 1986, we have grown from 11 holders of these companies. people to close to 400 today. Having fin- Thirty percent of the equity has been ished our first journey of 25 years, we transferred to our staff. For every ten mil- have started looking into the rapid lion pesos the subsidiary owns, they thus changes we need to make to enter our receive three million pesos. As a result, next quarter of a century of existence. We they will retire as owners rather than are preparing for the next journey, where employees. We implemented that system my two sons along with the Company’s after roughly five years of operations. We senior managers, will be taking over the had to put this system in place to reward management of the company in two to deserving employees too, and to ensure three years from now. that they would stay with us in the future. You have to take good care of them. FR: What makes you the most proud of This system has helped us send some these first 25 years? of the children of our very poor employ- A.A. SANTILLANA: We have been helping ees to school. Our driver, for example, has young and intelligent Filipinos in realiz- a daughter who is a pharmacist now. He ing their dreams of becoming a doctor. would not have been able to do this with- Already, we have supported 33 doctors in out our support. Our love for our people a combination of full-time scholars and makes us one of the proudest and success- those who subspecialize in specific fields. ful companies in the industry.

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

PHILIPPINES MARCH. 2014 47

We are one of the few companies that decided to have its own buildings nation- wide. We now have one in Davao and two in the Visayas aside from our main headquarters in Metro Manila.

FR: The Philippines is a pharmaceutical mar- Albert-Jan Santillana, senior Jean Paul D. Santillana, ket where you can find medicines of both high vice president vice president - Overall quality and very poor quality. As for local Marketing for Real Property Adminis- manufacturers, how do you look at quality? tration, S.V. More Group of Office, S.V. More Group of Companies Companies A.A. SANTILLANA: First of all, we have to be careful in choosing who we work with. Hizon Laboratories and Lloyd Laboratories are world-class manufacturers. If you work with foreign manufacturers, you have to carefully select to ensure that they work according to quality standards. In India, for example, there are bad manufacturers in the region but also many very good ones. We are Angel Paguia - Vice- Gemma Dela Cruz - President - Personnel Vice-President and prepared to take on South Korean manufac- Administration Comptroller turers, which can be among the best.

FR: Why, after all these years, have you not decided to manufacture yourself? A.A. SANTILLANA: We are now in the process of entering that stage of our company’s lifecycle. For these first 25 years, we did not want to take up big loans to fund such Milette Hojilla - Senior Maxima Cabatic Executive investment, which is why we have waited Vice-President - Ma- - Vice-President and Chief till the point where we have sufficient terials Management & Comptroller resources to build our own facilities. Also, Procurement Office when we constructed our buildings in Min- How difficult was it for you to establish your danao and the Visayas, we did not loan a name in the market? single cent. A.A. SANTILLANA: We had to develop the Now we have reached the point where we demand for our products. Apart from that, can afford manufacturing without external we needed the right people to represent us funding. Self-sufficiency is very important as our ambassadors in the market place. If to ensure that the operating cash remains we are properly represented, market the unaffected. In three to five years, we should right products and have the right price and have completed our first manufacturing positioning, the rest follows. facility in collaboration with our Philippine- In addition to that, we need to focus on based manufacturers. continuously improving the quality of our products as well as their packaging.

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

PHILIPPINES MARCH. 2014 48

PHILIPPINES MARCH. 2014

85 Pharma.indd 85 20/05/2013 14:51 49 Company index

Arup ...... 30, 31 Novo Nordisk...... 12

Aspen ...... 12, 14 Pharmaceutical And Healthcare Astrazeneca ...... 11, 16 Association Of The Philippines (PHAP)...... 10, 39, 40 Cognizant ...... 20, 21

Delex Pharma International (DPI)...... 14 Philippine Chamber Of The Pharmaceutical Industry (Pcpi)...... 10, 41 Department of Science and Technology21.

Deloitte ...... 16, 24 Philhealth ...... 8, 9, 10, 18, 34, 36, 37, 43

Fda...... 10, 14, 18, 33, 38, 39 40, 41, 42, 44 Pointwest...... 20, 21, 27

Generika ...... 17, 18 Prosel ...... 44

Globo Asiatico ...... 12 RBC MDC ...... 17 Gsk ...... 16 Secretary Of Health ...... 8, 34, 35 Hizon ...... 15 Servier ...... 9 Ims ...... 16 St. Luke’s Medical Center...... 12 Janssen ...... 32, 33

Lloyd...... 15, 19 Sv More Group ...... 15, 46, 47

Merck ...... 18 Torrent ...... 13

MSD ...... 11, 16 TTSI ...... 20, 21 National Kidney And Transplant Institute (NKTI) ...... 12 United Laboratories ...... 14

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

PHILIPPINES MARCH. 2014

85 Pharma.indd 85 20/05/2013 14:51 50

PHILIPPINES MARCH. 2014