While BRIC (Brazil, Russia, India and China) makes the most headlines when talk turns to the potential of emerging markets, the Philippines is also very attractive for drugmakers, an analyst has told PharmaTimes World News._

Maura Musciacco, a healthcare analyst at Datamonitor, authored a report recently noting that 78% of the population in the Philippines has health insurance coverage and in 2008 the market was worth $2.1 billion. _"The prices of medicines in the country are some of the highest in the region, ranking second to Japan”, she says “but with 14% of the Filipino population living below the poverty line of $1 per day…this makes patient access a major challenge".

Ms Musciacco notes the performance of some of the big pharma players in the Philippines, saying that GlaxoSmithKline generated sales of $174 million in 2008, although sales growth has slowed in recent years, growing 3.7% in 2007–08. She told PharmaTimes World News that in March 2009 (before the government imposed price ceilings) GSK voluntarily cut the price of a number of its major drugs by 30%-50% as part of its expanded access initiative which is expected to impact sales growth in the short term.

However, the combination of its ‘health pass’ programme, which helps to subsidise insurance coverage for poor Filipinos, and the voluntary price cuts, means that GSK has “already begun reaping the benefits, with a 15–40% increase in the volume of certain reduced price brands in the first half of 2009. Ms Musciacco adds that this business model differentiates GSK from its peers “and it is expected to create considerable success and maintain its solid position in the future”.

As for Pfizer, which posted sales of $163 million in 200 in the Philippines, its acquisition of Wyeth will add considerable volume to the merged company, given that the latter generates almost three times Pfizer’s volume. However, the government-imposed price cuts on 21 essential drugs will affect several big sellers, including the cholesterol blockbuster Lipitor (atorvastatin), the blood pressure treatment Norvasc (amlodipine) and the antibiotic Zithromax (azithromycin), she says.

Despite double-digit sales growth in 2008, Pfizer has temporarily frozen hiring and lowered advertising expenses in response to the challenging operating environment in 2009, Ms Musciacco says, but notes that in July 2009, it embarked on a one-year partnership with the Government Service Insurance System, allowing government employees and pensioners to buy medicines at a 40% discount. “This is a welcome move as it will increase access to affordable medicines, a priority for the Philippine government,’ she says, and the deal is likely to boost Pfizer’s volume “as this enhances the doctor-patient relationship by ensuring patients adhere to their course of medicines, boosting compliance”. She adds that “by compromising on price, Pfizer is guaranteeing its customers come back”.

Ms Musciacco says the second round of price cuts should be finalised in a week or two as their scope and size are still being discussed. The Philippines is shifting towards a generics-based market, she notes, telling PharmaTimes World News that the country “offers great opportunities for companies selling branded generics, whether sold by branded or generic players”.

The analyst concluded by saying that “big pharma is now opting for a high-volume and low-price strategy via a tiered-pricing model to capitalise on the emerging markets”. This way, “they can compete with the unbranded generics sold in these markets (which are sold at rock-bottom prices) with the added bonus that branded generics can charge more as promising quality and authenticity”.