“Generics Avenue.” The road to growth

THE "UNIVERSALLY ACCESSIBLE Cheaper and Quality Medicines Act of 2008” signed into law by Pres. Gloria Arroyo in June 2008, is apparently encouraging more pharmaceutical companies to travel a generics market road that remained largely ignored for the past two decades.

Traveling along “Generics Avenue” seems to be opening new shortcuts to additional revenues for pharma companies, while helping ensure the flow of low-priced generic medicine to the poor, the latter being the intent of the “Cheaper Medicines Law” or Republic Act 9502.

The law gives Filipinos access to inexpensive generics through the parallel importation of patented drugs from other countries, where these are less expensive.

Estimates of the value of the Philippine pharmaceutical market vary and were placed at $2.6 billion in 2007 by a foreign research firm, and at P120 billion by a local source. The value of the pharmaceutical market is forecast at $4.1 billion in 2012.

The market is growing by some eight to 10 percent per year through price or volume increases. It is comparable in overall size to Thailand and Pakistan, and in per capita terms to China and Iran.

Generics account for just 10 to 20 percent of the Philippine pharmaceutical market.

In contrast, generics comprise over 80 percent of drug sales in the United States and Poland and over 60 percent in the United Kingdom and Germany.

Last year, Pres. Arroyo noted that 90 percent of all medicines are now off patent but that 90 percent of all medicines sold remain branded.

Growth medicine
Fueling generics’ growth is the Cheaper Medicines Law, whose Implementing Rules and Regulations (IRR) came into force on Nov. 21, 2008.

Secretary of Health Francisco Duque said that with the IRR in place, the public could expect lower medicine prices. He noted the Department of Health (DOH) now also regulates the maximum retail prices of drugs.

"With the IRR, we can now regulate prices. Presently, we are already in the process of coming up with policies and the drugs and medicines to be regulated. However, we have to be patient because we have to follow the normal government procedures and process to go through this," Duque told media.

Duque believes the IRR will also pave way for quality and affordable generic drugs, and rationalize the behavior of medical professionals and government health workers because of the amendment to the Generic Drug Act of 1986. The Philippines is the first Asian country to enact a generics drug law.

The IRR also allows over-the-counter drugs and medicines to be readily available in non-traditional outlets like supermarkets.

The Generic Drug Act of 1986 allows production of unbranded drugs using the same active ingredients and processes as those used in branded drugs, thereby sidestepping the patent system.

The weak enforcement of the law, however, has been repeatedly criticized for failing to boost consumer acceptance of generics and bring down the prices of branded products, hence the need for Republic Act 9502. The government has also been censured for not doing enough to promote generics.

On the verge of a surge
With the generics market on the verge of a surge as a result of Republic Act 9502, several multinational pharma firms are focusing more resources on their generic offerings.

In 2008, Sanofi-Aventis launched its generics arm, Winthrop Pharmaceuticals Philippines, Inc. Carlito Realuyo, Sanofi-Aventis president and general manager, said the company was “ . . . driven by a commitment to ensure access to medicine and contribute to the reduction of healthcare cost.”

He said Winthrop observes the highest standards of quality in terms of product efficacy, safety and strict manufacturing quality control. This, he added, gives consumers the best pharmaceutical products at a significantly lower price.

Winthrop initially introduced three products: Winthrop glimepiride for type 2 diabetes; Winthrop clopidogrel, an anti-platelet drug that helps prevent a second stroke and Winthrop amlodipine, an anti-hypertension drug.

Generics from multinationals could also ease consumer anxiety over the perceived lack of quality among generics.

Former Philippine International Trading Corporation (PITC) president Roberto Pagdanganan said generics are as safe as branded medicines. PITC is the sole entity authorized by the DOH to conduct parallel importation of generics and other drugs.

“People feel that ‘cheap’ generic medication is not going to do them any good so either they buy the expensive stuff or don’t bother to take medication at all,” Pagdanganan said.

Bioequivalence (BE) tests also ensure generics have the same premium quality as their branded originals.

Xeno Pharmaceutical Philippines, Inc. said BE tests of its generics ensure identical composition, safety and strength to those of branded originals.

Amado Tadena, Xeno chairman and CEO, said Xeno products are tested for BE at world-class scientific laboratories.

Tadena also said Xeno generics are made at facilities approved by the U.S. Food and Drug Administration; the United Kingdom’s Medicines and Healthcare Products Regulatory Agency (an executive agency of the UK Department of Health) and the World Health Organization’s (WHO) Good Manufacturing Practice that assures manufacturing facilities practice quality standard control and products.

United Laboratories, Inc. (Unilab), the largest Filipino pharmaceutical and generics maker, expects tougher competition this year as multinational competitors cut prices to compete with generics.

Unilab corporate vice-president for business development Jose Ma. Ochave said although competition has become more intense, Unilab still expects its business to grow further in 2009.

"The challenge is really how to differentiate ourselves from multinationals because (products are of) the same quality while the difference between our prices have narrowed," he pointed out.

Further downward pressure on the prices of branded drugs is also being exerted by the government’s “Botika ng Barangay” drugstores that sell generics to 25 million Filipinos, and the private sector-run “Botika ng Bayan.”

The government has invested P500 million to buy generics and other drugs for its 11,000 Botika ng Barangay drugstores.

GlaxoSmithKline (GSK) Philippines, the country’s largest multinational pharmaceutical and healthcare company, recently cut the prices of some of its branded drugs by as much as 50 percent under a worldwide company program that targets 50 least developed countries.

Prices slashed were those for GSK products used in acute diseases such as pneumonia and other bacterial infections, ulcer, bronchitis, hospital-acquired infection, nausea and vomiting, and drugs used to manage chronic diseases such as hypertension, type-2 diabetes, asthma and chronic obstructive pulmonary disease (COPD), bipolar disorder and chronic hepatitis B infection.

“The price reduction is one of GSK’s biggest and boldest steps to make its branded and patented drug products affordable to more Filipinos. We believe that as a global pharmaceutical company, we have an obligation to help the poor get treatment,” said Roberto Taboada, GSK Philippines president and managing director.

Taboada explained the price cut is the company’s long-term commitment to Filipino patients.

Taking Generics Avenue also makes sound economic sense considering the poor worldwide, or “the bottom of the pyramid group,” spend more than $30 billion on medicine. According to the World Bank, this total is expected to double in 2015 and opens the door to further opportunities to improve healthcare.