Healthcare policies aside, industry's primary concern about the MDRP system is that it may turn the tables on domestic firms.
Nonoy Oplas, president of the Minimal Government Thinkers, a group of professionals and small entrepreneurs, says, "Local
firms who are producing drugs under the 21 molecules will become more expensive sellers now. To remain competitive, the natural
response is for them to slash prices between 10-20%, which will reduce their profits."
He adds, "Domestic firms do not enjoy economies of scale due to high production costs. Eventually, many will be forced out
of business. Unlike multinational companies (MNCs) who can divert their attention to other markets, home-grown companies have
fewer product offerings and do not have other market avenues."
On the other hand, it appears that foreign firms are likely to grow in the long run. Although their product prices are affected
as well, the Philippine market is considerably small (about 5% of the global sales of multinational corporations) and, these
companies can afford to divert their attention to other markets. They already hold a lead in manufacturing and retail revenue,
according to 2008 PHAP figures. Foreign firms garnered total sales of PHP71.12 billion ($1.46 billion) compared to local ones
at PHP32.46 billion ($0.69 million).
Table II (Part 3): Drug products that fall under the Voluntary Price Reduction scheme as provided by Resolution 2009-001 of
the Philippine Advisory Council for Price Regulation.
Oplas believes that foreign drug manufacturers should feel encouraged to remain on Filipino soil to help develop the local
pharmaceutical industry. The majority of MNCs in the country are focused on drug discovery, which can, in turn, create opportunities
for local firms to produce generic versions when innovator-drug patents expire.
That said, there's nothing to stop foreign firms from exploring the development and manufacturing of generic drugs for the
Philippines market. Louis D. Payet, senior consultant of the healthcare division at Frost and Sullivan Asia- Pacific says,
"Several MNCs have acquired generic-drug manufacturing capabilities in recent years. If they produce and sell them in the
domestic market, local companies will lose market share and suffer reduced profitability as competition in the branded generic-drug
In light of the current situation, some MNCs such as Bristol Myers Squibb (New York) may adopt business approaches such as
engaging external sales personnel to continue un-disrupted supply to the market or out-license their products to local players
while maintaining control over profitable product lines, according to Payet.
Ultimately, patients are the losers. "We are likely to expect a fall in the number of generics companies and medicines in
the country, which in turn, limits treatment options for doctors and patients," says Oplas. "Also, it is also possible that
a black market emerges when storage, dispensation, and sale of essential medicines are no longer transparent [or competitive].
This paves the way for the entry of counterfeit drugs that are perfect substitutes for effective and expensive medicines."
Payet is trying to stay positive. "The bill has to be more expansive in the number of drugs covered. Currently, there are
more than 80 price-control candidates under review. The implementation of the price-controls system is just one aspect of
the Cheaper Medicines Bill and may not have a big impact on the market."
Jane Wan is a freelance writer based in Singapore.