Unilab Philippines Prepared by • Elvie Grace A. Ganchero & Cristina V. Pavia

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Asia • Philippines

UNILAB’s RiteMed Initiative:
Making Medicine Accessible to the
Poor
Prepared by • Elvie Grace A. Ganchero & Cristina V. Pavia
(Philippines)
Sector • Health
Enterprise Class • Local SME (Southern MNC subsidiary)

Summary
United Laboratories, Inc. (Unilab) is the oldest pharmaceutical company in the Philippines; after starting in 1945, Unilab continues to be one of the largest. It has manufacturing, distribution and licensing arrangements in nine countries, including China. Its financial success stems from a deliberate strategy to offer high-quality and affordably priced healthcare products. Seizing an opportunity to support the Philippine government’s campaign to make lower-priced drugs available to the population, Unilab set up RiteMed in 2002, a subsidiary whose main mission was to market and distribute generic medicines. Through economies of scale, the company was able to sell generic products 20 to 75 percent cheaper than its branded counterparts, 1 profitably meeting revenue targets of US$20 million within five years. It successfully leveraged the reputation of its parent company to convince Filipinos to use generics, making quality drugs more accessible to the poor.

The Philippine Health Situation
Prevailing poverty conditions for about 40 percent of Filipinos (35 million people) 2 is evidenced by the high incidence of preventable diseases. Diseases such as tuberculosis and measles afflicted a significant number of the population, even as new threats were confronted— dengue fever, diabetes, hypertension, HIV/AIDS and others. The poor could not easily afford healthcare goods and services. The majority of Filipinos had to apportion meager resources to meet their basic needs. 3 The priorities were food, livelihood and water (in this order), with health ranking fourth.

Those who were very poor rarely saw a doctor and could not afford medicines. Tuberculosis patients in an urban slum area, for example, had one check-up with the community centre doctor to confirm their condition then proceeded to six-months’ medication by asking for free drugs from the center once a week or as frequently as it was rationed out among TB patients in the area. In the rural areas, patients were even more desperate for quality health care. The Social Security System in the Philippines, although in place, does not provide sufficient medical services to the poor. Ultimately, low-income families have to bear the cost of health services. Fifty-five percent of Filipinos health expenses were paid out of pocket, 37 percent from the government and eight percent from social programmes 4 . Dr. Jonas Policarpio explained that, given the need for personal financing for drugs, “only about two million Filipino households will be able to comfortably afford such expenditures…About 45 to 50

1

RiteMed study, “Effect of RiteMed Launch to Cost of Drugs in the Philippines.” As of July 2006 estimates. CIA World Fact Book. Available at: www.cia.gov/publicatins/factbood/geosp/rp.html.
3
National Health Survey, 1991 presented in the study, Understanding Filipino Patients’ Economic Coping Behavior, by Jonas D. Policarpio, MD, MBA, of the UERM Memorial Medical Center and RiteMED/United Laboratories

2

4

Source: 2003 Philippine Pharmaceutical Handbook

Case Study • UNILAB’s RiteMed Initiative: Making Medicine Accessible to the Poor

2

percent of patients undergoing drug therapy for chronic illnesses are having compliance problems primarily because of financial reasons.” Policarpio’s estimate was substantiated in a survey by AC Nielsen that looked at compliance attitudes of diabetic and hypertensive patients across socio-economic classes. 5 Low-income patients cited financial reasons as the most important in the failure to comply with medicine intake. The World Bank also studied the main contributors to inadequate and irrational use of medicines by the poor, illustrated in Figure 1. 6

Figure 1: Factors Leading to...
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