2013 Philippines Pharmaceutical Market Update

This article was also published on PharmaPhorum

The Philippines’ market for pharmaceutical products is growing at its fastest pace in years, at about 13 percent annually. By 2014, experts predict that it will have a value of $4 billion. This would make the drug market in the Philippines almost as large as those of Indonesia or Taiwan.

Growth in the pharmaceutical market has come on the heels of a rapid rise in income among Filipinos. In 2012, the Filipino economy expanded faster than that of any Asian country except China, at a rate of 6.5 percent. During the same year, household consumption went up by 6 percent. As the wealth of the average Filipino rises, so does spending on healthcare. In 2000, the average Filipino spent less than $30 a year on healthcare. By 2012, that number had gone up to more than $100 per year.

Foreign pharmaceutical companies are the main players in the Philippines. In 2012, they captured three quarters of the Filipino drug market. Novartis, Sanofi and GlaxoSmithKline are among the largest foreign pharmaceutical companies doing business in the Philippines. Large domestic drug companies include United Laboratories, GV International, Pascual Laboratories and Natrapharm.

Recently, domestic drug companies have made their greatest gains in the generics market. Previously, few Filipinos trusted generics. Doctors — tempted by incentives from major drug companies — rarely prescribed non-branded drugs. But new laws have made it mandatory to use generic drugs in public hospitals. As more doctors prescribe these drugs, they are gaining acceptance among Filipinos.

The generics market is the fastest growing segment in the Philippines. This is true for foreign as well as local manufacturers. Companies like Taiwan’s Orient Europharma and Getz Pharma of Pakistan are expanding their local operations. So is Novartis’ generic arm, Sandoz. In order to compete with the generic drugs produced by these companies, many foreign pharmaceutical firms are slashing the prices of their own branded drugs by as much as 60 percent.


Compared to other Asian countries, the Philippines has some of the highest drug pricing levels when set against per capita income. The reasons for this are many. Importing pharmaceutical ingredients is costly, so local production is expensive. Filipino hospital administrators are notoriously bad at negotiating drug prices and keeping adequate drug stocks in supply. Few Filipinos have adequate health insurance. Those who do have low rates of coverage on outpatient drugs. Finally, retail markups are extremely high.

In order to get around these problems, the Filipino government has set price controls for some essential drugs. In 2008, the Universally Accessible Cheaper and Quality Medicines Act made it possible for the Filipino president and the secretary of health to establish maximum retail prices on all drugs included on the country’s Essential Drug List (EDL).

Filipino President Arroyo did this for the first time ever in August 2009. Citing the Act, she ordered that the retail prices of more than 20 molecules and their preparations be cut in half. The resulting reductions included drugs like GlaxoSmithKline’s Augmentin and Pfizer’s Norvasc. Afraid of further cuts, many foreign drug companies voluntarily reduced the prices of more than a dozen other drugs.


By 2016, the Philippines Department of Health (DOH) hopes to achieve universal healthcare coverage for all its citizens. Currently, almost 80 million of them are enrolled in PhilHealth, the country’s national health insurance program. In terms of enrollees, the program has more than doubled in size since 2008.

However, PhilHealth’s coverage is nowhere near comprehensive. Just 30 percent of healthcare related expenses are covered, almost none of them for outpatient medications. In 2013, the DOH said that it would increase coverage for drugs, medical devices and procedures, after its annual budget went up by more than 100 percent. But such changes are slow in coming, and the DOH has not yet announced its plan for increasing coverage.

The possibility of universal healthcare presents mixed opportunities for foreign drug companies. While it increases the number of Filipinos who are eligible for drug reimbursement, it also increases incentives for the government to further reduce retail drug prices.


Companies involved in the manufacture, distribution, retailing, import, export and packaging of drugs in the Philippines must have a License to Operate (LTO) before they are eligible to register pharmaceutical products with the Filipino Food and Drug Administration (FDA). LTO applications take between one and two months to gain approval.

Registering a pharmaceutical product in the Philippines requires submisssion of the following information:

  • LTOs for the manufacturer, distributor and/or importer
  • Certificates of Agreement between the manufacturer and the Filipino distributor and/or importer
  • Certificates of Analysis and Specifications for all raw materials used in drug manufacture
  • Information on drug product formulation and dosage
  • Labeling materials
  • Stability studies
  • Manufacturing process specifications, including in-process controls, production equipment, production procedures and packaging procedures
  • Product samples (labeled in English with the generic and brand names, the product registration number, the product license holder’s name, dosage, indications for use, precautions, the batch number and the date of expiration)

Pharmaceuticals with new chemical entities cost $465 each to register, and registration is valid for three years. Generic pharmaceuticals cost $170 each to register, and registration is valid for five years. After this time is up, products can be renewed for two and five years, respectively. It generally takes the FDA six months to review and approve a pharmaceutical product.

From July 1, 2013, the Philippines will adopt ASEAN’s Common Technical Dossier (CTD) and Common Technical Requirements (CTR) for registering all pharmaceutical products.


Few foreign pharmaceutical companies operating in the Philippines do their own manufacturing there. They either import and distribute their finished drug products, or they import the drug ingredients and then outsource production to local manufacturers.

The local manufacturing market is dominated by one major company, Interphil Laboratories. Interphil has contracts with three quarters of the largest foreign pharmaceutical companies in the Philippines. In 2009 alone, it handled 95 percent of Wyeth’s local pharmaceutical manufacturing and all of Pfizer’s local manufacturing. Other than Interphil, few Filipino manufacturers meet international standards. Those that do include Hizon Laboratories, Euro-Med Laboratories and Swiss Pharma.

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

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


Direct-to-consumer ads are banned for prescription drugs but are permitted for OTC drugs in the Philippines. Advertisements do not need to obtain prior approval from the FDA, but samples of promotional materials have to be filed with the FDA for reference. Submissions must include the following:

  • The drug’s brand name and generic name
  • The manufacturer’s name and address
  • Dosage quantities and forms
  • Warnings and precautions
  • Recommended storage conditions


Of the more than 525 drug traders, 690 drug importers and 5,100 drug distributors in the Philippines, three quarters of the top companies are foreign. In addition to Novartis, Sanofi and GlaxoSmithKline, they include Wyeth, Pfizer, AstraZeneca, Abbott Laboratories, Bristol Myers Squibb and Johnson & Jonson.

In contrast to most foreign pharmaceutical firms, GlaxoSmithKline does its own manufacturing in the Philippines. It uses its manufacturing facility to produce pharmaceuticals for the Philippines and for Southeast Asian markets like Indonesia and Malaysia.

Meanwhile, other foreign pharmaceutical companies have chosen the Philippines as a launching pad into the other Southeast Asian markets. Novartis, for example, set up its Southeast Asian headquarters in the Philippines in 2009. It did this, in part, so that it could conduct clinical trials there for many of its key products, especially vaccines.