BMI View: Innovative pharmaceutical companies will continue to face a challenging business environment in the Philippines. Many concerns limiting the sales of patented drugs in the country remain unaddressed, including the low levels of intellectual property protection. Furthermore, pricing pressures on innovative drugs continue to intensify as the government seeks to expand universal healthcare coverage whil e reducing government debt. However, there will be strong opportunities for multinational drugmakers with orphan drug portfolios as a result of the introduction of several initiatives brought about by the ' Rare Diseases Act ' . This places the country ahead of other emerging markets in South East Asia.
Headline Expenditure Projections
Pharmaceuticals: PHP145.05bn (USD3.28bn) in 2014, rising to PHP150.19bn (USD3.37bn) in 2015; +3.5% in local currency terms and +2.6% in US dollar terms. Unchanged from last quarter .
Healthcare: PHP564.91bn (USD12.78bn) in 2014, rising to PHP626.73bn (USD14.05bn) in 2015; +10.9% in local currency terms and +9.9% in US dollar terms. Revised downwards from last quarter.
In BMI's Risk/Reward Index, and out of the 19 pharmaceutical markets assessed in Asia Pacific, the Philippines remains in 14th place (scoring 46.1 out of 100), trailing the regional average in most metrics. In Q315, Japan is ranked as the most attractive market in the Asia Pacific region (scoring 73.3 out of 100), followed by South Korea (68.6). Compared with its peers, the Philippines' Risk/Reward Index score is dragged down by industry characteristics such as policy enforcement.
Key Trends And Developments
New taxes on tobacco and alcohol have helped the Filipino government raise much needed funds for providing healthcare services for the most vulnerable segments of the population. In December 2012, the Sin Tax Reform bill was passed. The bill increased taxes on tobacco and alcohol, helping the government to garner more than USD1.2bn within the first year and allowed provisioning of healthcare services to an additional 14mn families or about 45mn Filipinos, according to the WHO. The additional funds have enabled the government to enrol more people into Kalusugan Pangkahatan, the Philippines' universal healthcare programme, and scale-up non-communicable disease prevention services in primary care. Revenues from the 'Sin Tax' are assigned for specific purposes. Currently, 15% is earmarked towards programmes to help tobacco farmers and workers find alternative livelihoods. The remaining 85% goes to financing universal healthcare, upgrade medical facilities and train doctors and nurses.
The District Representative of Quezon, Philippines, Angelina Tan has filed House Bill 5449 which looks to institutionalise the 'no balance billing policy' in all accredited healthcare institutions in the country. The policy aims to provide maximum financial risk protection to the poorest Filipino families. Under the bill, the sponsored programme members of the Philippine Health Insurance Corporation will not be required to pay relevant fees or expenses. The bill authorises the healthcare institutions to provide the patients with appropriate accommodations such as intensive care units, isolation and recovery rooms during the absence of ward-type accommodation. The bill also mandates all medical institutions to offer a cost-effective clinical approach without compromising the quality of care.
The Philippine Society for Orphan Disorders (PSOD) is looking forward to the immediate passage of the Rare Diseases Act of 2014 (Senate Bill No 2098), reports Manila Bulletin. Upon passage, the bill is expected to provide suitable, accountable and sustainable medicine funding for rare diseases and will enable the establishment of a Rare Disease Registry. The registry will comprise data on patients and data on medicines required by afflicted patients. After the law is approved, patients will be able to access expert medical consultations, physical therapy, drugs, products, devices, social services and diagnostics. In the Philippines, a disease is considered rare when it affects one patient in every 20,000 of the population.
The Philippine Health Insurance Corporation (PhilHealth) is set to introduce additional health packages for its members when the agency launches its check up benefit package in 2015. The move will push the vision of President Benigno Aquino III in achieving universal health coverage for all Filipinos, according to PhilHealth Board's new member Riza Hontiveros. The additional check-up packages are expected to bring the examinations for 10 leading diseases into those already covered by PhilHealth, Hontiveros noted. The package will also cover laboratory tests and drugs .
BMI Economic View
We maintain our below market consensus real GDP growth forecast of 6.0% for the Philippines in 2015, reflecting the slowdown in regional economies that will weigh on the performance of exports over the coming months. Meanwhile, government efforts to continue improving the country's business environment will be a long-term positive for growth.
BMI Political View
During the past decade the Philippines has occasionally been hit by rumours of an imminent military coup, although most of these were speculative and actual mutinies were foiled or failed to attract the support of the top brass. Although the Philippines has been relatively stable under President Benigno Aquino III, we cannot preclude renewed instability after he leaves office in 2016, given deep inequalities and high levels of political corruption.