Monthly Archives: November 2013

Books to finish before 2013 ends

Everyone in the office was treated to any book or reading material of his or her choice in a company-wide bookstore trip to Bestsellers two weeks ago. We thought we share with our colleagues some of the books we are trying to clear before 2013 ends next month:


We only have one digital book to clear: The Emperor of Maladies by Siddhartha Mukherjee


Steve Blank: to solve the problems of the world

We were just congratulating start-up thinker (is that a better term Steve than guru?) and global problem solver (too grand a term maybe?) Steve Blank for the latest post he put up on his site about how “When Product Features Disappear” from our gadgets because companies like Apple or Amazon or Tesla decided to change the features or rules of the game, or due to some legal, technical, or even deadline issues. We were a great fan of Amazon, in spite of our great love for traditional physical books, but we now vow not to buy anything digital, or at least avoid it unless absolutely urgent. The last ebook we bought, incidentally, was “Holding A Cat By The Tail,” by Steve Blank. We just checked now, and we got billed for the book November 15, 2013. Just two days after we got a reply from Raghavender Sandan, described as Executive Customer Relations of, acknowledging the email we sent to Jeff Bezos. The issue we had with Amazon was that, once the free trial of the Prime subscription ended for our Kindle Fire, our magazines, that we had already paid for (Bloomberg, Philosophy Now, DotMed, India Today, Harvard Business Review, MIT Technology Review), disappeared. Or at least the old issues disappeared. This is because you are only allowed 7 magazines to be in your device, and according Sheila D. of Amazon customer service, 14 will be allowed in your Amazon cloud. Wow, we did not know that when we subscribed to those magazines: and we wasted a lot of time trying to get the transfer from our account to Cloud, but could only get 7 so far not 14, but we do have the 7 in our device, when we used to have maybe 20 or 30 or maybe even more. Whatever it is, we like to have our magazines, like our physical and digital books, easily accessible as reference, entertainment, inspiration, or security blanket. We cancelled all our subscriptions, except for DotMed, which is not readily available here in Manila. We are going back to hard, tactile, materially existent magazines.

Not having any propensity to writing fan mail, we found ourselves congratulating Steve for his post, which for us was very perceptive, and timely: he is not only a great educator and inspiration for start-up entrepreneurs, but he is a great advocate for consumers, both requiring different sets of radar systems to detect important Unidentified Flying Objects. Proof of our admiration for Steve is we bought his ebook (no hard copies for this compilation of blog entries) in spite of our issues with Amazon.

Steve Blank: photo from Wikipedia

Steve Blank: photo from Wikipedia

It just dawned on us that Steve might just visit our blog and find out that we did not include him in our list of important books on business and organizations. Imagine how embarrassing that is after gushing about being his biggest fan. He can actually be number 1 in our list if we were to do a list in order of importance. Why is he not there?

The answer is simple: we don’t associate Steve with a book, the way we associate Drucker with say “People and Performance;” or Ram Charam with “Execution.” We associate Steve Blank with some of the most visual, effective, and realistic words, ideas, challenges, and mental pictures of what it means to be a start-up and an entrepreneur, to scale, to pivot (with his student Eric Ries for the word pivot, of course). You find him in his books, youtube, workshops, seminars, quotes from other gurus and former students, interviews (like David Kidder’s “The Start-Up Playbook”). One of our partners, anti-capitalist and a published fiction writer, was convinced to help us build Sunfu by reading and listening to Steve, on start-ups as works of art by artists, as problem solving engines to some of the most pressing health issues, start-ups being essentially out there to discover and solve the needs of the world, not just “the customer.”

Our ultimate tribute to Steve Blank is we mention him in our company meetings, we share his ideas, and we quote him often, maybe too often, and perhaps he is the only management/business “expert” we have been consistently quoting. So we end this post with a quote from his book, his collection of blog entries, “Holding A Cat By The Tail,” which we read out loud just last Monday to our team in our company-wide meeting, and after reading the passage, re-read it in Filipino, just for emphasis. Here it goes (Chris our youngest colleague said the quote answered many of his questions about start-ups):”If you can’t manage chaos and uncertainty, if you can’t bias yourself for action and if you wait around for someone else to tell you what to do, then your investors and competitors will make your decisions for you and you will run out of money and your company will die. Therefore the best way to keep alive is to instill in every employee a decisive mindset that can quickly separate the crucial from the irrelevant, synthesize the output, and use this intelligence to create islands of order in the all-out chaos of a startup.”

Our favorite quote though comes from another page of the book: “Both founders and entrepreneurial employees prefer to build something from the ground up rather than join an existing company. Like jazz musicians or improv actors, they prefer to operate in a chaotic environment with multiple unknowns. They sense the general direction they’re headed in, okay with uncertainty and surprises, using the tools at hand, along with the instinct to achieve their vision. These types of people are rare, unique, and crazy. They’re artists.”

The management mantra in our company for its leadership is: “get out of the building,” to learn about the world and its needs and problems: “get out of the building” comes from Steve Blank. We practice what Steve has experienced by “getting out of the building,” and he has shared the lessons by being out there. If you want to solve the problems of the world as an entrepreneur, employee, scientist, revolutionary, artist, writer, teacher, or student, read him.

PHA Convention: lessons, competition, the rise of China and US innovation


It was a wonderful experience and as usual there was plenty of learning for us in the recently concluded Philippine Hospital Association (PHA) convention in the SMX. Some lessons and observations:

1. There was very good response and interest to the Varian Digital Radiography system. We are very proud to be associated with a company mentioned in many circles as one of the most innovative companies on earth.

Here is something from their website:

Varian’s PaxScan® line of ultra-fast flat-panel digital X-ray image detectors are used to capture X-ray images and instantly display them on computer screens, eliminating the need for film and film processing. Varian’s panels can capture up to 60 images per second, which is fast enough to produce a moving image of a heart beating.
PaxScan Products
Imaging panels are available for medical and industrial applications, including: medical diagnostics, veterinary care, dental imaging, industrial inspection, and security.
PaxScan CBCT Software Tools
Varian Medical Systems’ commitment to Cone Beam CT applications spans more than 20 years. In addition to CBCT-enabling flat panel detectors and X-ray tubes, Varian is now providing CBCT reconstruction and processing algorithms in the form of an easy to use software toolkit: CBCT Software Tools, or CST for short. CST is designed for use with all Varian X-Ray fluoroscopic flat panel detectors. It comprises a suite of Windows-based software libraries which allow an OEM to quickly develop software that produces high quality CBCT images for medical, dental, or industrial applications.
Varian’s amorphous-silicon flat-panel image detectors for digital radiography work by converting the X rays that strike its surface into light, and then turning the light into electronic data that a computer can display as a high-quality digital image.

2. Clients and partners served well passed-by and stayed in our booths as if they found long-lost family in the mad and maddening market place of salesmen, wizards, doctors, engineers, and shamans. We know that sounds like a marketing tagline, but because medical equipment are so important to the flow and health of the community, hospitals, and businesses, “partnership” is a term hardly used, but is expected by most doctors and health organizations. Sunfu is serious about this, very serious.

3. China is really rising as an equipment manufacturer hub, and it is only a matter of time that innovation will become part of their process, as it has been part of countries that manufacture medical solutions and pharmaceuticals, like the United States and tiny Singapore. But many of the good manufacturers from China are also being punished by the market as hardly any China manufacturing company is loyal to any local distributor here. It is striking that some of the biggest China names are missing in this important convention, because dealers, customers, doctors, technicians know that this lack of loyalty eventually results in inefficiency of distribution, service, local technical capacity, and eventually relationships suffer all the way to the patients. All these local servicing take skills, knowledge, investments, courage, patience, ethics, and loyalty: partnership is a very difficult word for manufacturers, especially China manufacturers, all the more if their goal is to list in the Shanghai Stock Exchange, or worse, the the New York Stock Exchange. Then it becomes short-term planning, short-term relationships, and no local capacity building. The stock market, in the end, is not very helpful to service and innovation, although of course it is quite phenomenal in capital mobilization to be part of the global sweepstakes.

4. There seems to be two types of competitors: those who see you as enemy number 1, and everything associated with you or your company is to be avoided or condemned. And those who know this is intense, but it is also a game. We think either one can be great winners, but the latter has the best chance of improving and also enjoying, as the ultimate competition, and the ultimate cliche, is that in order to improve, one competes with oneself. Sunfu improves year-to-year, because we compete with our track record, which is certainly not perfect, but we are willing to look at ourselves truthfully and assess how we can serve our colleagues and partnerships inside and outside the company to the best of our abilities. We are harder on ourselves when we look at our failures, rather than hard on ourselves when we look at our competitors for their successes. The industry is big (even if we regularly hear of many Philippine medical equipment companies putting up the white flag due to the intensity of the competition and the incredible complexity of the market), the world even bigger: there is room for everyone.

Interview: Samuel Ang, MD (Surgeon and Surgical Oncologist)

Dr. Samuel Ang from the Tzu Chi website

Dr. Samuel Ang from the Tzu Chi website

Samuel D. Ang is a top general surgeon and surgical oncologist in the Philippines. What is amazing in observing his practice is not the overflow of patients in the waiting room, but the diversity of patients, representing various sections of the Philippine economic pyramid.

Sunfu: Thank you for allowing us to have you as our first medical doctor to appear in our blog. Dr. Ang how long have you been practicing medicine?

Dr. Ang: I have been practicing for 30 years already.

Sunfu: What surprises you still about medicine?

Dr. Ang: The truth is I am surprised by how insignificant we are as doctors to saving a life. Sometimes you have done your best, you think you have been instrumental in curing a patient, and then you find out, you did not cure the patient after all. The older I get, the more I feel there is a greater Being, and I am humbled by this experience.

Sunfu: Are you saying your profession has made you more religious?

Dr. Ang: Yes, definitely. I can give you an example: I have two 90-year-old patients right now. The surgical operation I had with them is actually very simple. But I know for 90-year-old bodies, with all the technology and advances in science, so many things can go wrong. As a doctor, I am not so egotistical as when I was young when I thought the doctor could do this without anything going wrong. At the same time, I am also not so hard on myself when something does go wrong. Before, if something goes wrong, I blame myself. Now, I just do my best, but God takes care of the rest. When people congratulate me that I am so good for supposedly curing a patient, it doesn’t affect me. I know where I stand in the scheme of things. I am just an instrument.

Sunfu: What is the state of the Philippine health care capability in terms of cancer? People want to go to the United States, saying the protocols there will be different, in fact superior.

Dr. Ang: I think Filipino patients who go to the US have a shift in perspective when they go to the US. In the US, there is a more impersonal care, and the patient usually is not able to negotiate with the doctor. So in a sense, the expectation is also heightened because some believe the quality of care will be better. I happen to disagree. Of course the amounts of money spent when in the US are staggering, so there is also a tendency to want to justify, or to rationalize, the expense.

Sunfu: But wouldn’t they have better machines?

Dr. Ang: Yes, no question about it. If you are talking about radiologic oncology, yes. But if you are talking about chemo therapy or surgery, I don’t think there is a difference. They have the money to invest on very expensive machines because their patients can pay for them. We hardly have any users among our patients for these very high-end machines because Filipinos cannot afford them. Yet for those who can afford, many go to the United States directly, so hospitals here do not want to invest in them. We are talking about, in US dollar terms, a difference of going through machine diagnosis and paying $40,0000 versus going for the same machine diagnosis here and paying only $2,000. The insurance takes care of it there in the United States. The US hospitals have the money to invest in the latest and most expensive machines. In molecular pathology, we are definitely behind. A genetic test will cost around $5000 US dollars. How many people can afford that here? Not many. There is also an advantage, maybe, of going to places like Harvard, where they are doing clinical trials on the latest drugs.

For the usual cancer, the more common cancer, I have no doubt our quality of care is equal the US and Europe.

Sunfu: What are your criteria for you to call someone a good doctor?

Dr. Ang: First, compassion is the most important for me. The desire to learn new things is also important, because if you stand still, you are already behind, especially in oncology. The progress is simply too fast. Pacifico Yap is a great doctor who I admire because he is already in his eighties in age, yet he is still studying and trying to learn.

What I don’t like is doctors who complain because, for example, a phone call from a patient is a nuisance for them. For me if you don’t have that compassion, if you don’t enjoy seeing patients, you should not have gone into medicine in the first place. A great majority of people go into medicine because they want to serve and they have good hearts, so it is rare to find a doctor who doesn’t like seeing patients.

Medicine is a vocation. If you don’t enjoy it, get out.

Sunfu: How about doctor-teachers, who have been important to you?

Dr. Ang: Dr. Abes, Cresensio Abes is a great surgeon. I admire him. Dr. Augusto Sarmiento I admire for his very sharp mind. Dr. Ernesto Domingo was never my teacher, but I have great admiration for him. Of course in the category of friends, Dr. Patricia Tan and Dr. Fernando Chua, they are friends but I also admire them. Dr. Conrado Cajucom, among the young guys, I admire. I admire all these young bright minds, these high IQ people. Maybe because I consider myself a regular guy who has to work doubly hard, when I meet bright people like my classmate Dr. Richard Yap, I admire them.

Sunfu: What excites you about your field today?

Dr. Ang: Oncology? A lot. I think Atul Gawande is correct: the surgeon as God, as superstar, as hero, that time is over. Teamwork excites me. Team work is the best. You cannot carry the burden of the world. When I was a student, the surgeon is the only guy who mattered in the surgery room. From the macro part, radiation oncology, the surgeons, to the micro part, the development of the patient, they all excite me. In the early days, the concentration was simply the disease, but now it is more than that. This is the reason why alternative medicine became too popular, and Steve Jobs is a good example, a bright guy who thought fruits and vegetables and lifestyle changes would cure him of cancer. Before we just took out the tumor and passed the patient to chemo, and if the patient was not killed by chemo, he went to radiology that would have burned him. Many doctors then were not compassionate, but were too disease centered, and their actions pushed the popularity of alternative medicine to the detriment of the patient.

Sunfu: You have four kids and all of them are now doctors. What do you tell them?

Dr. Ang: I tell them they do not have to be very bright, but as doctors, they have to have the heart, the heart to help people. Money is not the priority if you are a doctor. Or else, you will just be frustrated.

Sunfu: Where did you get this sense of compassion?

Dr. Ang: I guess my mother. I come from a poor family, a very poor family, but money was never a subject of discussion. We had a small sari-sari store in Davao City, and our relatives from the outskirts of Davao, we open our doors to them and we always had guests, and we cook for them and we welcome them. My mother was very hard working, and my parents were willing to always share what they had. I guess I got it from that upbringing, from that very open environment.

Sunfu: I know you are a big reader of books. Please give us a few names of authors you would like to share to our readers.

Dr. Ang: Atul Gawande’s Checklist Manifesto and his book Complications. Siddhartha Mukherjee’s Emperor of Maladies is a beautiful book, a book on the history of cancer. Eugene O’Kelly’s Chasing Daylight: How My Forthcoming Death Transformed My Life. This is a book about a former KPMG CEO who was about to die. Fiction I really liked Jhumpa Lahiri’s Namesake.

Filipino Politicians and Healthcare

Below is an excerpt from a note we wrote after a discussion with a fast rising local government executive, sincere in his desire to serve his constituency, and aware of the problems happening in many local government hospitals. There is a lot to learn from public hospitals in the Philippines that are run well in the service side and the finance side, and we have to accept that the two cannot be separated:

We got to reflect about our exchange of concerns on government hospitals. We try very hard to be frank, as it is one way for us to help our local government partners succeed. It is no exaggeration that success in health care governance in any part of the country is good for us, Sunfu Solutions.

Many politicians, great, or good, or just plain bad, think of the poor, the poorest, and instinctively, they want to give them health care for free. What can be more gratifying and popular? I agree 100 percent although our General Manager’s former classmate in PGH, now head of finance in PGH (a very bright eye specialist) would say that her biggest frustration is many politicians have spoiled us Filipinos so much, people are not willing to shell out even P100.00 for the P100,000.00 service and medicine they got. People do not realize that good health care systems in the world rely heavily on its capacity to gather funds from patients so that the system could renew itself, without exploiting or over charging patients. To be able to communicate this to the community is the biggest challenge.

Outside the physical office of any local executive are some of the most trusted civil servants of any given local government executive. Is the policy for these city hall employees “free everything” or “they will get their Philhealth, some discounts, but will have to pay something within their bracket, even salary deductions spread out for the year.” Actually, the biggest consumers or users of local government hospitals are city hall employees, and in two cities we studied closely, we have seen that eventually these city hall employees in these two particular cities had relatives, distant relatives, uncles, cousins, in-laws, in-laws of their in-laws, even those who are not residents of the city, using all the hospital facilities for free. We have seen city parking attendants ask their relatives to come to Manila from far-away provinces for CT scans, said to be great diagnostic machines that must be taken advantage of, even if not needed. As we had suggested to a local official trying to serve well, that he and his family should use the facility the government built for something like their executive check-up, and to make sure they pay the fees, just to get the message across that this is cheap, good, even great service, but it is not absolutely free.

In two cities we had observed and we love to cite as examples, they made an “ADMIT ALL” policy of allowing anyone who comes in to be served for free, especially if they drop the right names. The hospital cashiers always ask for the minimal payments for services rendered, but many people are already “trained” that just dropping the right names is enough. “I am the nephew of the barangay captain, and he said I should not pay.” But this will bleed the city, when hospitals can now actually earn money. The simple point is Philhealth can be a great opportunity for hospitals and patients, but a hospital and patients need more than that, as public hospitals need to educate the communities about their responsibilities as well, as patients want a sustained and sustainable public health system.

The next challenge is to find and retain good doctors, not just a good medical director. To have a pool of good doctors, retain them, or even have them give up their private practice, needs a dynamic earning ability of the hospital, and a good working and serving atmosphere. With the Bureau of Internal Revenue harassing medical doctors, not realizing this is one of the few countries in the world where doctors become nurses in order to work abroad (not everyone has a practice, and business, like dermatologist for the stars Vicky Belo), there are genuine possibilities of attracting great doctors to serve full-time in government hospitals.

In the end we believe a hospital can and must earn, while serving well all its various constituencies, especially the poorest of the poor. But if we start with “ADMIT ALL,” and “Free for ALL,” we don’t believe any hospital can survive and unfortunately, once these very generous and flawed policies are in place, they are difficult to reverse.

Interesting take on the drug Herceptin

Time for Another Revolution in Medicines Access The ‘Test Case’ of Herceptin

(From the website Newsclick: )

Amit Sengupta

The last fifty years is witness to a virtual explosion in the creation of new knowledge. Capitalism has used this characteristic of modern science and technology to constantly create products and tools to constantly revolutionize the productive forces.

This dual nature of capitalism in the arena of knowledge creation – knowledge creation and its control are both embedded in the nature of capitalism. Without new knowledge and the creation of new products, capitalism is unable to survive. At the same time, it cannot allow the free use of such knowledge, as this jeopardizes the very basis of capitalist accumulation based on hegemony over the process of production. This inherent contradiction is starting to express itself in a new dilemma – control over knowledge production is now a fetter on creation of new knowledge.

TRIPS – a cruel agreement

This dilemma s being played out in the field of innovations that leads to discovery of new medical products. It is being played out in two very important ways. The 1980s and 1990s were a period of intense struggle, waged by developed capitalist countries, to put in place a global system that would legalise its hegemonistic control over knowledge. The result was the signing of the TRIPS (Trade Related Intellectual Property Rights) agreement in 2004. The TRIPS agreement legitimized the control over knowledge through a strengthened patent regime that was to be applicable to all countries in the world (with some limited waivers in the form of transition periods for developing and least developed countries).

The TRIPS agreement is a cruel agreement – what it basically says is that access to knowledge that can save lives would be limited to those who can pay (as individuals or through their governments). The decade of the 1990s saw the unfolding of one of the worst man-made tragedies ever, in the form of the HIV AIDS epidemic. Nominally, the disease is caused by a virus, but the conditions for the devastation it caused (and is still causing) was a human creation. In less than a decade after HIV infection was first detected in humans, the first drugs to effectively treat it were being rolled out. Yet it raged across the poorest countries of the world, especially in sub-Saharan Africa, decimating huge swathes of the population. Almost a whole generation succumbed to the disease in the region. Not because remedies were not available. Not because we did not understand how the spread of the disease could be stopped. But because these remedies were not allowed to reach those who needed them the most. They were not allowed to be used because a handful of CEOs of giant pharmaceutical companies priced these drugs way out of the reach of people who needed these drugs in poor countries. Sub-Saharan Africa was already reeling under massive debt burdens foisted on them by policies promoted by the IMF and World Bank. They were now asked to shell out money to buy drugs that would save their people – money that amounted to, in some cases, over 50% of the entire GDP of the country.

In 2001, and Indian company – Cipla – entered the fray. It announced that it would supply drugs to treat HIV AIDS at 1/40th (that is just 2.5%) of the price charged by multinational corporations. Drug prices of anti-retrovirals (those that treated HIV AIDS) fell from the earlier $12,000 per patient/per year to $300. Since then the prices of these early anti-retrovirals have fallen to less than $100 for a year’s treatment.

Biologics – the new frontier of disease control

The above story, known to many, merits repeating because it is now being played out in another area of medicinal products. The next new-frontier of disease control lies in finding remedies that can effectively cure and control cancers and several degenerative diseases. Cancers of different kinds are a cause for over 8 million deaths every year (i.e. almost 15% of all deaths) and 70% of these deaths occur in low and middle income countries. Even 3 decades back most cancers were considered a death sentence. No more so. Over the past decades new treatments and products are starting to win significant victories over a number of types of cancers. New products are being developed and many are already in use – many of which are a significant advance over existing treatments. As such opportunities open up, they are also opening up opportunities for pharmaceutical companies to reap super-profits at the expense of human misery. While the basic research for virtually all cancer treatments are done in public funded institutions, the ultimate products are controlled by a handful of companies.

Simultaneously we are seeing another development taking shape. Fewer and fewer new drugs that are significant advances over current treatments are being researched. Partly this is a consequence also of what we have noted earlier – the patents system, by controlling access to knowledge, finally also acts as a fetter to the creation of new knowledge. Most patents registered today do not protect an invention, they actually are designed to prevent others from doing research. Known as ‘patent thickets’ these patents prevent transmission of knowledge, and its further development. In India less than a handful of new medicines are introduced every year, yet several thousand patents are granted. This is a global phenomenon not restricted just to India. While the number of patents is growing, the number of new drugs that are being researched continue to fall alarmingly.

There is, however, and exception to this trend. The field of biotechnology is starting to live up to its earlier promise and is delivering entirely new forms of treatment. Thus while we have fewer drugs of promise that are being developed through the earlier route of chemical synthesis, exciting new treatment avenues are being opened up by research using the biotechnology route for drug development.

Drugs developed using biotechnology are different because they are produced in living cells. The molecules which make up these drugs are larger in size and more complex than the ‘small molecule’ drugs manufactured using the chemical synthesis method. The manufacturing systems used to produce these drugs need to be monitored differently. These drugs – termed as biologics – have several potential advantages. They can, theoretically, be tailored to hit specific ‘targets’ in the human body. This is of particular interest in diseases which are caused by altered or aberrant functioning of specific genes – such as in the case of several types of cancers. Traditional cancer drugs are called ‘cytotoxic’ drugs, i.e. they are poisonous to cells in the body. The basic principle on which they work is that they selectively kill cells that proliferate very fast (as happens in the case of cancer cells). However they are never entirely selective and that is why cytotoxic drugs have a range of side effects caused by the destruction or alteration of normal cells in the body as well. Biologics are being developed that only target specific gene sequences in cells and thus would have less side effects.

The Herceptin Story

One such drug that is a breakthrough drug is called trastuzumab. The drug is used to treat a certain kind of breast cancer that is particularly aggressive and difficult to treat or manage.

Trastuzumab works in a way that is very similar to the way antibodies work in the body. Antibodies are produced by the body’s immune system, which is the body’s defense system against foreign invaders – like viruses, bacteria, and other biological agents. They are able to recognise these foreign agents and bind to them. The body’s immune system then gets into action to destroy these foreign cells. Trastuzumab binds to a gene called the HER2 gene, that is more active in some breast cancer patients. The HER2 gene stimulates the growth of cancer cells. By binding to the HER2 gene, Trastuzumab suppresses its activity. It also stimulates the body’s own immune cells to destroy the tumour cells.

Trastuzumab belongs to a class of biologics that are called monoclonal antibodies. Monoclonal antibodies are produced from a single cell-line (hence the term ‘mono’), which is cloned to produce a very large number of cells. The cells are genetically engineered (i.e. a piece of foreign gene is introduced into the cell) to secrete the antibody we desire. Trastuzumab, for example, is made by substituting a portion of a human gene into a mouse using recombinant DNA technology. The mouse cells are thus ‘fooled’ into producing the antibody.

To continue the Trastuzumab story – the drug was marketed in 1998 by Genetech (later acquired by the Swiss multinational, Roche). It is sold under the brand name Herceptin. It is interesting to note that though the product has now been around for almost 15 years, Roche still enjoys global monopoly over the drug. The story would have been very different if Herceptin had been a drug that could be produced by the chemical synthesis route. Given the drug’s important public health benefit, many generic manufacturers (especially in India, the major centre of generic drug manufacture in the developing world) would be interested in producing their own versions of Trastuzumab. Herceptin was introduced in the global market at a time when the Indian Patent law allowed generic versions of patented drugs to be produced without any restrictions. The inability of Indian companies to come up with a generic version is related to special features that characterize biologics like Trastuzumab.

Unlike in the case of conventional ‘small molecule drugs’ it is never possible to produce an exact replica of the original drug. Biologics are extremely sensitive to the manufacturing process and the starting material. As the starting material is a living cell, it is impossible to have an exactly similar starting cell. Moreover very small changes in the manufacturing process can bring about changes in the final product. Thus, even in the case of the original product, there are variations in the product – between batches and even within the same batch. Thus the equivalents of generic versions of generics are called ‘biosimilars’.

Biosimilar manufacture is a relatively new area as the processes involved are entirely different from those used to produce drugs through the chemical synthesis route. Further, there are regulatory hurdles because the process of getting regulatory approval for biosimilars is more cumbersome than for ‘small molecule’ drugs. This is again because of the nature of biologics – because it is impossible to replicate the original drug, more data is demanded by regulatory agencies to prove that the quality, safety and efficacy profile of the biosimilar is identical to that of the reference drug (i.e. the original biologic). Consequently, in the case of biologics, patent barriers are not the only barrier to the production of biologics.

The time to act is ‘now’

Herceptin has recently been in the news because of two reasons. First, because of the interest being generated about use of Compulsory licenses (i.e. licenses issued to generic companies to manufacture patented drugs) after India issued its first compulsory license last year for another anti-cancer drug – sorafenib. The second reason is that it is only now that Indian companies have started acquiring the capacity and technical competence to produce biosimilars.

Because it now appears possible that biosimilars of Herceptin can be introduced, it is important to examine the economics and the public health importance of the drug. Treatment with Herceptin typically consists of 12 intravenous doses of the drug, administered every three to four weeks over the course of a year. Roche sells the drug for more than Rs.70,000 per dose. Clearly the cost is prohibitive for almost any Indian patient. The cost has to be seen in the context that breast cancer is the most prevalent form of cancer among urban women, and the second most prevalent for rural women According to the national cancer registry, over 1,00,000 women in India develop breast cancer every year (about 1 in 22 women in India stand at risk of getting breast cancer in their lifetime). Out of the total number of breast cancer patients, about 25% benefit from Herceptin (there are tests that can show which patients will benefit). Thus approximately 25-30,000 women would benefit from the use of Herceptin. Importantly, Herceptin is useful in the most aggressive form of the cancer, which typically afflicts younger patients. Yet because of the misuse of the monopoly situation that Roche enjoys, barely 5% of eligible patients are able to access the drug, and many of those who do are put on a lower dosage than recommended.

The situation cries for an immediate remedy. There are several issues that need to be addressed in order to expedite the entry of biosimilars of Herceptin in the Indian market. First, patent barriers need to be removed by expeditious issue of a compulsory license. The patent status of Herceptin is not clear in India as it is the subject of several litigations, however a compulsory license is the fastest way to make sure that patents are not a barrier to introduction of biosimilars. Simultaneously regulatory procedures need to be streamlined to ensure that entry of biosimilars are fast-tracked, while of course ensuring that quality is not compromised. Finally, public investment is necessary to build larger capacity in India to produce biosimilars.

Herceptin is a test case. If the attempt to get Inidan biosimilars of Herceptin in the market is successful, it has the potential to open the doors for a range of other biosimilars of other new biologic drugs that are already in the market or are being developed. Cipla’s pioneering action in 2001 revolutionized HIV AIDS treatment. Biosimilars produced by Indian companies can change the face of treatments for many diseases, now considered virtually untreatable, not just in India but across the world. There is no reason why the experience of a 97.5% drop in prices, seen in the case of HIV AIDS drugs when generics were introduced, cannot be replicated in the case of biosimilars. A bold and responsive government and regulatory agencies need to act in tandem to make this a reality. The time to act is now.

Business Quote 1

Bill Gates

“Industries are only valuable to the degree they meet human needs. There’s not some – at least in my psyche – this notion of, oh, we need new industries. We need children not to die, we need people to have an opportunity to get a good education.” Bill Gates from the Financial Times interview with Richard Waters

Nationalism destroyed the Philippine economy

The Philippine ‘labor surplus’ story
CROSSROADS (Toward Philippine Economic and Social Progress) By Gerardo P. Sicat (The Philippine Star) | Updated August 7, 2013

As discussed in last week’s column, the impressive economic growth of East Asian countries like Japan, China, South Korea, Taiwan, Hong Kong and the three ASEAN countries of Thailand, Singapore, and Indonesia could be explained by the labor surplus model of growth. The phrase “labor surplus” is merely descriptive and has no disapproving or judgmental significance.
The Philippine story of growth can also be approached using the “labor surplus” model. Official statistics report that around seven to eight percent of the labor force is unemployed. There is however a high degree of underemployment. Around 25 percent of the total labor force suffers from unemployment and underemployment.
What is worse is that unemployment and underemployment affect the younger members of the labor force by a bigger margin. The “informal sector” of the economy has enlarged to absorb all forms of underemployment.
“The Philippine growth story.” Unlike the typical East Asian narrative, the Philippine experience is unique: the labor surplus has remained a permanent feature of the economic landscape since independence.
Yet, the Philippine growth story is not one of failure. It is not a success like that of our neighbors either. It is a long-standing story of sustained “labor surplus.”
The permanent presence of high unemployment and underemployment and the modest growth of per capita GDP has been a feature of the record because of economic policies that reduced the labor absorption of new growth. It also features a high incidence of income inequality in the economy. All these outcomes form a vicious circle that has to be broken.
The turning point of broadly shared rising incomes when surplus labor is exhausted – a feature associated with inclusive growth – is never reached since the labor surplus is large.
“Unique factors that prolonged the labor surplus.” The confluence of several unique factors has made labor surplus a running feature of the Philippine story.
(a) High population growth. Population growth has remained high in the country. The inter-censal rate of growth of population is 2.18 per cent per year between 1970 to 1990. The level of population is the basis of the labor force.
Other countries in the region have reduced their population growth through their own state programs. Their high growth rates also accelerated the “demographic transition,” a natural consequence of development when parents reduce their family size as they become richer, more educated and diverse in their wants.
The passage of the RH law last year promises to give the government a handle on dealing with population issues. The effect of such a law however will not be felt until after one decade from now.
(b) Misguided economic nationalism. The nationalism of the 1930s was given expression in the restrictive economic provisions of the Constitution of 1935. These made the country adopt laws that followed the spirit of those provisions and which even extended them over other economic domains.
Hence, we got even more misguided policies that restricted the country’s economic achievements. This encouraged a dependence on state action for many types of economic protection against foreign competition. When the Constitution was rewritten after the EDSA revolution in 1987, the provisions became more expanded in coverage rather than being more limited.
(c) A long process of import substitution and economic protection. An outcome of the Constitutional restrictions has been to inculcate a mindset of protection in the philosophy of developing the economy. The industrialization process was left hostage to this mindset. Philippine industrial enterprises became highly domestic market-oriented. Big basic industries were anchored on high protection and large state support rather than geared toward supporting the growth of an economy that was exposed to competitive pressures.
Long after our neighbors had shifted their policies that enabled them to face competition in foreign markets, Philippine industries were still looking mainly inward, trying to develop a limited domestic market. This policy fostered hostility to the entry of foreign direct investments in critical industries. On the other hand, the local industries created were heavily dependent on protection and government credit support.
The import substitution industrialization which essentially got financed from the earnings of a vibrant export agricultural sector eventually led to the eclipse of agriculture industries at the expense of import substituting industries.
This prolonged protectionist outlook made the country lag far behind neighbors that learned how to adapt their economies to the consumption needs of foreign markets, the industrial economies of the US and Europe and other countries.
(d) On the wage front, the premature adoption of high standards of labor policies. The Bell economic mission in 1952 that recommended the adoption of a high minimum wage rate out of line with local market realities set the trend toward the adoption of labor standards that were out of line with promoting employment in many industries.
In no small measure did this labor market policy move the country and domestic industry away from labor-intensive economic ventures. The promotion of industries that take advantage of the nation’s economic opportunities based on its abundant labor would have caused a rapid development of the garments and textiles sector as an export industry.
But here, the confluence of high protection of the textile industry and other highly labor-using industries and the high wage policy arising from the high labor standards killed all the possibilities to exploit this line of work.
These were the initial industries that propelled the export oriented economies of all the East Asian economies in their early stages of growth. In our country, however, all these opportunities were snuffed out because of the confluence of the protection mentality and the interventionist approach in labor policy.
(e) Other factors. There are those who would assign a heavy weight to other factors. Some would ascribe them to leadership factors, to episodes of military coups and adventurism, to corruption, to cronyism, to the high cost of electricity, to inadequate infrastructure and to many other issues that could be the subject of long debate.
Certainly, some of these factors give a special twist to the Philippine story. In my view, however, their factors that I have cited can further explain these other factors that others allude to.
Misguided economic nationalism gave rise to rent-seeking, corruption, cronyism, and uncompetitive behavior dependent on state patronage. The long period of import substitution and protection has promoted further rent-seeking behavior and had corrupted the process of industrialization precisely because it was based on patronage.
All these outcomes are inherently linked to the restrictive provisions of the Constitution. The high minimum wage policy has elevated the unemployment problem by simply killing off from the Philippine economy many highly productive employment creating ventures.

You think you are overworked?

If you do and you are not Japanese, see the photo below. If you are Japanese, you are exempted from looking at the photo and must now go home and rest. We got the photo from Marco Bohr’s Visual Culture Blog, which points to as the source of the photo. It is a little blury, likely taken by a sleepy commuter using his phone to take the photo:


Lesson: A Poem

There has been too much television time given by GMA-7 and ABS-CBN to halloween, halloween costumes, and in encouraging superstition. If anything, November 1 should make us reflect about the departed and where we are headed. The first degree cousin, Dr. Albert Dy, of one of our parters just passed away a few weeks ago and it reminded us of a poem by Alfrredo Navarro Salanga


Break open a stone
and listen to it cry.

You ask why?
Don’t turn to physics:

Physics doesn’t explain

All it can do’s confirm
the breaking of stone,

Physics can’t explain
what physicists can’t hear.

Next time you hear
a broken stone cry,

Try metaphysics.
Or theology –

The disciplines
that vegetate