UNILAB's RiteMed Initiative: Making Medicine Accessible to the Poor

Asia • PhilippinesUNILAB’s RiteMed Initiative:Making Medicine Accessible to thePoorPrepared by • Elvie Grace A. Ganchero & Cristina V. Pavia(Philippines)Sector • HealthEnterprise Class • Local SME (Southern MNC subsidiary)

SummaryUnited 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 financialsuccess stems from a deliberate strategy to offer high-quality and affordably priced healthcareproducts. Seizing an opportunity to support the Philippine government’s campaign to makelower-priced drugs available to the population, Unilab set up RiteMed in 2002, a subsidiarywhose main mission was to market and distribute generic medicines. Through economies ofscale, the company was able to sell generic products 20 to 75 percent cheaper than its brandedcounterparts, 1 profitably meeting revenue targets of US$20 million within five years. Itsuccessfully leveraged the reputation of its parent company to convince Filipinos to usegenerics, making quality drugs more accessible to the poor.Positive Outcomes for the PoorAccess to quality medicines for chronic illnesses (e.g. diabetes, hypertension) and lifethreatening diseases (e.g. tuberculosis, heart ailments) that were otherwise unaffordablefor the poorThe company’s health education campaign helped RiteMed earn public trust of genericdrugs and, at the same time, empowered the public to have more options, including lowercost genericsKey BarriersPerception that cheaper drugs (especially generic drugs) were not effectiveThe marketing practices of branded pharmaceutical products encouraged doctors andpharmacists to prefer branded drugs over generic drugs, even though generic productswere more affordable and of equal qualityKey InnovationsUnilab’s decision to lower its profit margin and thus decrease the price of drugs; thecompany found a robust and considerably large customer base in low-income familiesLeveraging the company’s reputation in the pharmaceutical industry helped RiteMedtransform the negative public perception about the efficacy of low-cost generic drugsSupporting the Government’s initiative to reduce prices by fifty percent provided astaging point for the company to reach the poor through the network of the Government’spublic health mechanism as part of its distribution system1 RiteMed study, “Effect of RiteMed Launch to Cost of Drugs in the Philippines.”Case Study • UNILAB’s RiteMed Initiative: Making Medicine Accessible to the Poor 2

Opportunities & ChallengesRiteMed will continue to advocate for the use of quality generics and expand its portfolioof products in response to the unmet need for quality, affordable medicines and healthcarefor the poor.RiteMed is eyeing opportunities to embed the community in its core business operationsby learning from Unilab’s experience in forging a partnership with communitiessurrounding its plants to repackage certain medicines. The company provides training onhandling and sanitation and offers apprenticeships in working stations in the community.This initiative has provided permanent and long-term livelihoods for the community forover ten years. The programme has also tapped the services of people with disabilitiesthrough Tahanang Walang Hagdan, a foundation for the handicapped persons thatparticipate in the packaging processes of medicines. RiteMed is looking into the possiblereplication of this model to provide added value to the community.Unilab is also studying how to replicate the RiteMed model in other countries where ithas operations. Emerging markets such as Cambodia and Vietnam, where povertyremains a problem and basic health services are not as effective and efficient as comparedto other Southeast Asian countries, would benefit tremendously; Replication would alsooffer an opportunity for Unilab to grow.The company will continue to foster its relationship with the Government as one of itsvital partners, as well as their commercial partnership with leading drug stores in thecountry.Case Study • UNILAB’s RiteMed Initiative: Making Medicine Accessible to the Poor 3