It's complicated. Most things are, right? Some first thoughts.
Only a few drugs are produced locally, because the Philippines doesn't have much of a local chemical industry. (Which is an interesting issue right there. I'm not sure if the proper question is "well, why doesn't it?" or "well, why should it?" but anyway, it doesn't. And while there is the technical know-how and human capacity to run a pharmaceuticals plant, there was never much investment money for capital-intensive greenfield projects wandering around the Philippines. And there's even less today. So. ) There isn't the capacity to produce a lot of APIs, Active Pharmaceutical indegredients. Or at least not in an economically effective way.
There are exceptions, of course. Apparently there are some APIs that don't require much underlying industry, and that you can more or less whip up in a basement. These include some obvious ones like aspirin and antiseptics, and also paracetamol, drugs that end in "cillin", and -- who knew? -- oxytocin. Those are made here from scratch. But most other stuff, not.
That said, there is a pharmaceuticals industry! They're just not producing stuff from scratch. Instead, they're importing APIs and other raw materials -- salts, esters, binders and such -- doing some processing, turning them into pills and ampules, and then packaging and labelling them. Turns out that pharmaceuticals is another one of those industries where different parts of the production chain can be sourced in different countries, and usually are.
Local production is divided between branded stuff and generics. (That's not a hard and fast distinction, BTW, but leave it be.) The biggest local producer is InterPhil, which has two big plants, and which produces branded stuff for the big multinationals. They have about a third of the market. Second biggest is Unilab, which has about another third. Then there are over 200 small producers -- some of which, I swear, really must be running out of someone's basement.
Unilab, BTW, is a fascinating story. It would get a post of its own, except the good stuff is either legally actionable or inappropriate. Still, here's the short version: owned by a Chinese-Filipino, rose to influence under Marcos. (Unilab helped bankroll his first presidential campaign, way back when.) And all through his long rule, they had a privileged position; Unilab executives rotated in and out of his cabinets, and Unilab salesmen inked some very cozy deals with public hospitals.
Then in 1986, Unilab was one of the first big companies to publicly turn on Marcos, including handing over a chunk of wealth he'd tried to hide with them to the new government. So they ended up doing just fine. They're still hugely influential, and they have an immense facility in Pasig City, right in the middle of Manila. Local rumor says nobody gets appointed Secretary of Health or director of BFAD, the Bureau of Food and Drugs, without Unilab's okay. Take it with a grain of salt. I'm just sayin'.
Anyway. In addition to local production, there are also imports. Lots of imports -- the Republic of the Philippines is, for its income level, a surprisingly voracious consumer of expensive imported pharmaceuticals. This is not unconnected to the country's high Gini coefficient: there are 80 million Filipinos who are poor, but there are a couple of million who are Beverly Hills rich! And they like their Lipitor and Norvasc!
A super-simplified drug supply chain would look something like this:
Producers + Importers --> Distributors --> hospitals, dispensing doctors, & retail pharmacies
This is about as accurate as a nine-word description of the Krebs cycle, but let it bide. Here are a few interesting factoids.
- Local production consists of two big producers, InterPhil and Unilab, who have about 1/3 of the market each; another half dozen or so medium-sized producers, who have about 15-20% more; and 200+ small producers splitting the rest. Local production includes both branded pharmaceuticals, under license from the multinationals, and lots of generics.
- Imports are significant: roughly half the market in volume terms, more than half in cash. The import business is very fragmented, since there are about a dozen multinationals with local subsidiaries, and each does its own importing. There are also a number of independent importers, most of them acting as local agents for multis who don't have a large enough presence here to have a subsidiary. There is some importing of generics, but not much. There is some parallel importing, but so far it's less than 1% of the market.
- Distribution consists of two big distributors, Zuellig and Metro, who have about 1/3 each, and a lot of smaller distributors who split the remaining 1/3. Zuellig owns Metro, BTW -- bought it a few years back.
- Retail pharma consists of one giant, Mercury Drugs, that owns between 45% and 60% of the market depending on how you calculate it. (Like, prescription only or over-the-counter stuff too? volume sold, or cash value? Mercury sells a lot of the pricey top-end stuff, so in cash terms they're well over 50%.) Then there are five or six smaller chains that divide another 20-25%. Then a couple of thousand Mom & Pop stores and some small chains divvying up the rest.
- There is also some vertical integration. Most notably, Zuellig owns InterPhil, while Unilab has a "harem" of small distributors serving them exclusively, and also owns a couple of the smaller drugstore chains.
At this point I should probably pause and note that there is no antitrust law in the Philippines -- zero, zip. Somehow they just never got around to it. Some cynics note that Philippine political elites and business elites are basically the same people -- almost every member of the Senate either has a business empire or is closely related to one by blood or marriage -- but that would take us outside the scope of this discussion. Let us just note the fact and move on.
So. Given the foregoing, what else might we infer about the country's pharmaceutical market?
Whoops, must run. More in a bit.