Merger of Pharma Firms in the Philippines

The merger mania may soon affect the pharmaceutical industry.

After the merger of financial institutions and other business enterprises, pharmaceutical firms are expected to follow suit with the government set to implement new policies promoting mergers among small drug manufacturers.

Health Secretary Alberto Romualdez said the government is set to impose stricter guidelines on drug procurement to encourage small firms to merge with qualified pharmaceutical firms as well as to weed out the incompetent ones.

“The idea behind the new guideline is to gradually encourage companies to either get out of the business or form groups or mergers with other companies, so that we will be dealing with fewer, bigger and more qualified organizations,” he pointed out.

Romualdez said the new policy will be imposed as part of the efforts of the Department of Health (DOH) efforts to provide Filipinos, particularly the poor with sufficient and quality drugs.

“The move is in response to observations that much of the low quality reputation of generic products is due to DOH procurement policies allowing companies that cannot assure quality drugs,” Romualdez explained.

The DOH started implementing stricter regulations for drug suppliers since 1998 as part of the administration’s efforts to curb graft and corruption in the department.

In fact, the number of DOH-accredited drug suppliers dropped from 250 to only 57 following implementation of the revised drug procurement requirement imposed by Romualdez immediately upon his assumption to office.

But Romualdez said the DOH will still be improving the guidelines and will make it stricter by imposing higher qualification standards and stringent inspections.

Among the initial requirement will be capital investment of P10 million or double the previous required capital, a good track record and an efficient quality control laboratory.

The principle in implementing such stringent requirements Romualdez said, is to prevent unqualified companies from engaging in the sensitive and critical drug business if they do not have sufficient capital to maintain producing quality drugs business if they do not have sufficient capital to maintain producing quality drugs.

New drug procurement policies, Romualdez said, will be carried out with the help of a “third party” to be formed with the help of the University of the Philippines College of Pharmacy.

The health chief added that the third party will help the government in implementing the new guidelines and in re-inspecting drug companies already checked by the Bureau of Food and Drugs (BFAD).

Implementation of the new requirement will cover even the current 57 accredited DOH drug suppliers. “Their accreditation will be valid but they have to undergo re-accreditation as soon as their accreditation have lapsed,” he said.

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