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Under Philippine laws, the patent of a drug or medicine expires in 20 years. No extensions are allowed.

That opens all patented pharmaceutical products to anybody who wants to produce them. That is the principal reason why Unilab became the largest manufacturer of drugs in the Philippines.

Many have tried but only Unilab made it after so long a time – all of 63 years.

It has the capability, the financial muscle, the organization and the vision of Jose Y. Campos, to set up its own laboratory and research and development facilities.

In an exclusive interview with Malaya Business Insight, Jose Maria A. Ochave, corporate vice president and head of business development group of United Laboratories, said the bulk of the products it continues to produce in increasing volumes are actually "copied" from expired patents.

It has grown to be the biggest manufacturer, partly because the multinationals have become importers. Their products are made in many parts of the world and exported to the Philippines.

The growth has been phenomenal. Unilab now accounts for a hefty 40 percent of total demand for over-the-counter drugs or those sold without prescriptions. The company is one among about 30 players in the industry.

Two other Filipino companies, Pascual Laboratories and Intermed Marketing, have 5 and 3 percent shares, respectively.

The three Filipino pharmaceutical companies control the OTC market to the extent of 52 percent. The seven multinationals have a smaller share of 30 percent. So-called "other" OTCs account for 18 percent.

In the ethical drugs or medicines sold only with doctor’s prescriptions, Unilab has a handsome share of about 16 percent. Natrapharm has 3 percent. In this field, the locals have a smaller share of less than 20 percent. Multinationals control the market by 44 percent.

In terms of units or number of products, the three local companies have a smaller share of 30 percent. The multinationals have a share of 53 percent.

This means that the foreign firms have more brands or products than the locals.

Other ethicals -- small companies put together -- have a combined share of 37 percent.

According to Ochave, the playing field is not level for Filipino pharmaceutical companies. There is what is what is known in the industry as "current good manufacturing practice" (CGMP) which Ochave claims Unilab religiously observes.

This involves verification of processes, documentation (labeling), dosages and ingredients, practices all related to safety.

It is almost impossible for Philippine authorities to find out whether or not the multinationals are complying with CGMP. But he admits that the submission of all products to the Food and Drug Administration is an effective check.

In a field of 30 players, most of whom are multinationals, Unilab accounts for around 20 percent of sales. This does not include the shares of two other local firms: Natrapharm in the ethical group and Pascual Laboratories and Intermed Marketing in the over-the-counter market.

Unilab started in the business in 1946 when it bought a small drug store along Sto. Cristo street in Binondo, Manila.

Before 10 years was over, it saw the need for setting up research and development facilities in the early fifties. Obviously, it was preparing for the production of drugs and medicines whose patents had expired.

Ochave said many tried but Unilab, having the management capability and financial muscle, was the only successful Filipino drug and medicine manufacturer.

Again obviously, producing drugs and medicines with expired patents and improving them with more potent raw materials is the main reason why Unilab is able to sell new products at 50 percent less than its multinational competitors.

The problems involved in "copying," according to Ochave, are not that easy. Unilab has to go through the "taste mixing process," particularly for liquid medicines for pediatric patients.

Unilab is the biggest producer of over-the-counter products such as Biogesic, Envervon C, Revicon and Solmux, among others.

The company, founded by the late Jose Y. Campos with two friends Mariano Tan and the family of Howard Dee may now be considered multinational. It has manufacturing operations in Indonesia, Thailand and Malaysia. Its presence in Singapore, Vietnam, Cambodia and Laos is at the moment limited to distribution and marketing of products made by Unilab in the Philippines.

In this sense, Unilab is reasonably similar to multinational companies operating in the Philippines. Ochave said Glaxo is the only multinational that continues to produce medicines for respiratory problems and infant formula in the Philippines.

Nearly all of the multinationals have a centralized marketing and distribution system.

Their products are sold wholesale and retail by Zuellig whose annual sales come close to hundreds of billions of pesos.

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