More on pharma row

Last week, we shared the bits of information from our coffee shop colleagues regarding the silent nervousness in the banking sector. The anxiety was reportedly spurred by the sudden flight of European conglomerate Diethelm Keller Siber Hegner (DKSH) from its operations in the Philippines. According to our colleagues and their sources in the banking sector, the extrication by the centuries-old Swiss firm may have left behind a financial mess in the country.

We have the fuller picture now.

We understand that while the sudden flight of DKSH out of the country may have caused very serious headaches for its clients here, their situation is not without a solution. True, the bungled operation of the European conglomerate had been unfair to big clients like United Laboratories, Mead Johnson, Johnson and Johnson, Novartis and other small Filipino pharmaceutical firms.

But our sources say there are very good developments in the local pharmaceutical industry’s distribution sector, with the likes of Mckenzie, Getz and Aboitiz coming in to fill the void left by DKSH. This welcome development in the sector augurs well for the effort by the pharmaceutical firms to bring their distribution operations back to normal.

The distribution sector, they add, is growing thereby ensuring that pharmaceutical products are efficiently brought to the outlets by the expanding number of players in the sector even without DKSH in the picture.

It seems everyone is trying to help pick up the pieces left behind by the alleged misadventure of DKSH in the country. This is good news.

Our sources say the company is reportedly already facing cases in Philippine courts filed by erstwhile customers and local banks.

The banking industry is still closely guarding the amount of its exposure to DKSH . Some of our media friends covering the banking beat say the amount could be in the vicinity of a billion pesos.

The banking industry, our colleagues explain, could be nervous because DKSH may have already placed itself out of the reach of the local banking industry after incurring the loans and piling up the losses in its operations leading to the reported eventual closure.

As we earlier reported, our colleagues say this company came into the country with a bang, but eventually packed up after it was reportedly unable to plug and explain the huge losses it was incurring.

When there was nothing more they could do about it, they did what they thought was best – pack up quietly and quickly go.

The sudden departure also placed in jeopardy the welfare and future of over a thousand Filipino workers who cast their lot with the European conglomerate. It appears they were just left in the cold after the European expatriates caught the proverbial first plane out of the country. Situations like this tend to reflect a total absence of conscience.

The Filipino workers were abandoned without any arrangements being made on how they will be compensated or on how the future will be for them.

If the tale of the saga of DKSH in the country is true, I hope they are made to take responsibility for their actions. Even at this point, its name and that of its fully-owned local subsidiary, Edward Keller, would have already acquired very negative connotation in this country and in the region.

We are probably just a small market for such a giant European conglomerate. But we can be the showcase, the evidence even, of a misadventure which constitutes a very dark chapter in their corporate history.

Readers’ viewpoint

Our piece on DKSH drew varied reactions. Here goes:

"I read your column in today’s STAR and please allow me to share with you a bigger picture of the Diethelm Keller Siber Hegner misadventure in the Philippines. It was established in the Philippines about three years ago with a big bang of a P900-million 40-acre inauguration of its warehouse plant complex in Mamplasan, Laguna with no less President Arroyo as special guest. It was a partnership between Unilab and Diethelm with the plant and land provided by the former and bulk of distribution of Unilab products being handled by the the latter. Unilab, previously had closed down its network of nationwide provincial depots to pave the way for Diethelem Distribution system and retrenched its employees. Unilab has envisioned its Diethelm venture to be its jumping point in strengthening its overseas distribution operations where Diethelm has strong base. According to the message emailed by Unilab President and CEO to its employees first week of March this year, Unilab was gyped by Diethelm blind and found out too late that it stashed away a sizeable amount of its business. Though Unilab bigwigs would not say how much is the extent of the damage, sources privy to Unilab boardrooom had placed the amount between P 800-million to P1.5 billion in lost revenues (collectibles). The cause of this misfortune, many are speculating, is either the wizardry of Diethelm top honchos or the mediocrity of Unilab bigwigs. However, many old employees of Unilab are smelling and telling a different fishy tale of this deal gone awry and believe that some smarter folks just fattened their pockets." — Name withheld upon request

"I just wanted to provide a slight correction to your article today on the pharmaceutical industry in the Philippines. The F. E. Zuellig Corporation was incorporated in the Philippines in 1939. It is not a Swiss company, though its founders (and current owners) were Swiss nationals. It is now the largest drug distributor in the Asia Pacific region and also manufactures a lot of drugs for multinationals in the Philippines though its subsidiary Interphil.

But it is a Filipino company! Like San Miguel, Unilab, Universal Robina, Liwayway, Zuellig is a true-blue Filipino multinational corporation. We should be proud of its success." — From Rogelio Dimaculangan

"The debacle of Diethelm Philippines, Inc. is truly unfortunate. Yes, the massive losses would certainly affect the company books, the local banking industry and maybe, just maybe, the prices of the medicines we buy.

May I just point out that the impending closure of this distribution giant would also result to the displacement of more than 650 regular employees like me, notwithstanding the contractual employees who would soon be in the employment lines and a few hundreds of other regular employees who similarly lost their employment months earlier. In addition, small local suppliers are now in a bind on how they can collect their receivables from the distressed company.

I handle a small foreign company or "principal" under Diethlem, and for now, my greatest concern is how to maintain a steady supply of our medicines to those patients taking them as the current supply in the drugstores may not last until I find a new distributor.

I just wished that your column could have captured the human side of the "Pharma Row" and not just its business side." – From Boom Dizon

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