Demand for medicines to reach P222B by 2015

By Cai U. Ordinario, Business Mirror

Posted at Aug 01 2011 07:07 AM | Updated as of Aug 01 2011 09:59 PM

MANILA, Philippines - The demand for medicines in the country is expected to increase 17% a year such that by 2015 the total demand will reach P222 billion from around P111.15 billion this year, a study released recently by the state-owned think tank Philippine Institute for Development Studies (PIDS) showed.

The bulk of this demand will be met through out-of-pocket expenses, rather than government funding or subsidies, it added.

With less than five years to go before the deadline of the Millennium Development Goals (MDGs) 2015, the study showed the Philippines lagging behind in achievement, in particular, in making medicines more affordable to the poor and underserved.

The study is titled “A Profile of the Philippine Pharmaceutical Sector” and is authored by Celia M. Reyes, a senior research fellow at the PIDS.

“Drugs and medicines account for 46% of the total medical out-of-pocket expenses of Philippine households. For poorer people, this percentage goes up to 55%. Making essential drugs and medicines more affordable, especially to the poor and underserved is one of the MDGs,” the study said.

The paper estimated that this year, out-of-pocket expenses for medicines will reach P109.38 billion, while government-funded medical expenses will reach only P1.77 billion.

By 2015, with a steady population growth of 2.04% every year, out-of-pocket expenditures for medicines will reach P219.94 billion, while government expenditures will reach only P2.1 billion.

While there are no aggregate data for national spending for drugs and medicines, the PIDS said the data came from local government units.

Most of these expenses are made for the pharmaceutical purchases of provincial hospitals, drugs given for free during medical missions, and bulk purchases of provincial health center for distribution to health centers.

“The figure goes up by about P1.4 billion in 2015 when expenditures for medical supplies are added. Medical supplies normally consist of oxygen tanks, syringes, gauze, and others,” the study added.

Meanwhile, the PIDS said the pharmaceutical industry is one of the fastest growing in the country. In 2008 its value was roughly estimated at P318 billion.

This also makes the industry one of the biggest taxpayers in the country. The PIDS said top manufacturers of pharmaceutical products paid P411 million in taxes and licenses in 2006.

The PIDS said local pharmaceutical corporations paid an average of P8.6 million in taxes and licenses in 2008, while foreign corporations paid around P16.6 million.

The Philippines is one of the biggest pharmaceutical markets in Asean, next only to Indonesia and Thailand. “It is a lifeline to thousands of Filipino workers and a significant contributor in terms of value of output. This industry is one of the fastest growing industries in the country,” the paper said.

United Laboratories topped the list of taxpayers. Foreign corporations Boehringer Ingelheim Phils. Inc. came in second, followed by Wyeth and GlaxoSmithKline Phils.

The PIDS said 15 of the top 20 local corporations paid a total of P128.5 million. Seventeen of the top 20 foreign companies paid P282.2 million.

But the PIDS said despite paying less in taxes and licenses, local pharmaceutical corporations have a greater contribution to the Philippine economy because a larger proportion of their sales is produced domestically.

This means that there are more jobs generated through local pharmaceutical firms. In 2009 PIDS estimated that local pharmaceutical companies contributed P32 billion to the economy as opposed to foreign firms’ P19 billion.

In terms of compensation to workers in the country, PIDS said foreign companies paid P1.37 billion, while local companies paid almost double at P2.34 billion.