JAZA’s Acceptance Speech on Being Awarded The Metrobank Professorial Chair for Public Service & Governance

JAZA's Acceptance Speech

Fr. Jet Villarin, President of the Ateneo de Manila University, and an old friend, thank you for leading the way with your opening remarks. Dr. Tonette Palma-Angeles, Vice President of the Ateneo Professional Schools, another old friend, always a pleasure to be back at the Ateneo.

The Deans of the Ateneo Professional Schools, Dean Rudy Ang of the Ateneo School of Business, Dean Ronaldo Mendoza of the Ateneo School of Government, and Dean Manolet Dayrit of the Ateneo School of Medicine and Public Health, this year’s host for the Professorial Chair, Mr. Chito Sobrepeña, President of the Metrobank Foundation, thank you for your opening message – it was wonderful to hear about the great work you do at the foundation.

To the Executives of the Metrobank Group of Companies, the Metrobank Foundation, and the Manila Doctors Hospital, thank you for being here today.

I would also like to make special mention of Dr. Alran Bengzon, former secretary of health and founder of the Ateneo School of Medicine and Public Health, and with whom we share similar passions with, as well as Ted Ferrer, a long-time Ayala executive, but more importantly the founder of and our partner at Generika.

I am honored and humbled to be here today to receive the Metrobank Foundation Professorial Chair Award for Public Service & Governance. I would like to thank especially, Dean Manolet Dayrit, and the Ateneo School of Medicine and Public Health, who, as this year’s hosts, have graciously chosen us for our work in healthcare. As many of you may know, healthcare is fairly new to the Ayala Group, and so to receive this recognition early on, is, to us, a wonderful affirmation. I am delighted to be here today to speak about our approach to healthcare, and the innovations we are introducing to improve healthcare for more Filipinos. It still comes as a surprise to many that Ayala’s first venture into healthcare can be traced back to our earliest days, when, in 1834, Johann Andreas Zobel, set-up “La Drogueria y Botica de Zobel,”in Intramuros. The drugstore survived for over a hundred years, but eventually closed during the second World War.

Fast forward to 2015, we would eventually return to healthcare, and once again in the retail pharmacy space, with the establishment of AC Health, and its partnership with Generika Drugstore. Today, our portfolio includes a chain of clinics, called FamilyDOC, and various health technology solutions, such as an online pharmacy start-up called MedGrocer.

It is important to note that our return to healthcare was not by chance. It was a result of a deliberate exercise in innovation, something which we have embedded into our thinking at the Ayala Group. Allow me to begin by briefly touching on our view on innovation in the Ayala Group, since it is the same mindset that has shaped our approach to healthcare.

At the Ayala Group, we pride ourselves in having a long history of reinvention and disruption across the many industries we are present in. Innovation has been key to our success and longevity as a business.
We see potential in new businesses and industries, continuously reinventing our portfolio to remain relevant to the changing times. But beyond just portfolio building, we have made a concerted effort to invest in businesses that improve people’s lives. Our goal is to make businesses better by filling in existing gaps or serving unmet needs. Ultimately, we have a fundamental belief in the concept of shared value – that businesses have a unique role in social development, and that shared value can only truly be achieved when one builds social impact into the very fabric of one’s businesses.

To us, that is the most powerful type of innovation – building businesses that address social needs and improve lives. This is what we call “Inclusive Innovation.”

Let me share three examples from across the Ayala Group to illustrate our approach to this kind of innovation, starting with our experience in Manila Water.

Few of you might still recall the terrible water situation we had in Metro Manila back in the 1990’s. The water crisis was even more pronounced in low-income communities. Back then, people would queue in long lines twice a day to buy their water in pails, at 40 pesos per cubic meter, or a total cost of up to 1,500 pesos per month.

In response, Manila Water pioneered what we called the Tubig Para sa Barangay program, an innovative approach of working with low-income communities to ensure that they could have proper access to affordable water. The program introduced flexible financing options, socialized tariff schemes, and more importantly, engaged community members as partners in the program.

Today, participants in our program enjoy clean and potable water from their own homes with significant cost-savings, paying only 9.47 pesos per cubic meter, which is an average of only 165 pesos per month. More importantly, we have achieved 100% collection efficiency in the program’s communities, water-borne diseases in their areas have been reduced, and the overall sanitation conditions have greatly improved.

Let me share with you an example of this innovation mindset in our education business. A few years ago, we were looking at the educational sector and noted the massive dropout rates across all educational levels. I was astonished with the numbers: out of those who enter Grade 1, only 29% get to enter college, with only 21% eventually graduating. Among these graduates, only 9% are considered employable.

To address these critical gaps, our team brainstormed on various possible ideas, one of which was the concept behind APEC Schools. APEC Schools, which stands for “Affordable Private Education Centers,” aim to address the lack of access to quality, affordable education, particularly in the high school level.

APEC’s learning modules focus on enhancing employability, and cultivating life skills. The modules build industry-specific knowledge, but also focus on IT proficiency, business communication skills, and critical thinking, to name a few. Very importantly, it also provides its students with valuable soft skills and work habits, such as self-confidence, grit, and persistence. Today, APEC has over 16,000 students across 23 sites in Mega-Manila.

As a final example, let me share with you our experience with Mynt, our fintech joint venture with Globe and Ant Financial. The Philippines remains largely unbanked. We still live in a society where 70% of Filipinos do not have a bank account. In fact, 1 out of 3 LGUs is considered unbanked.

But with mobile penetration at 117% and a population that was very adept with mobile technology, we saw an opportunity to provide mobile payment and lending solutions to unbanked and underserved Filipinos.
Mynt’s GCash is a micropayment service that transforms a mobile phone into a virtual wallet, which can be used to buy prepaid load, pay bills, send money, and shop online. Its lending company, Fuse Lending, offers personal and business loans, using innovative credit scoring methods.

Mynt now has the biggest mobile money base in the country, with more than 3 million registered customers, 12,000 partner outlets and facilities, and ~₱1 billion in transaction value per week. And with Ant Financial now as our strategic partner, we see great potential in expanding these services to millions of Filipinos.

These are just some examples of how we have developed new ideas to address gaps and social needs. In a similar way, we view healthcare as an industry that is ripe for disruption and reinvention, with great potential for more inclusive innovation.

Globally, countries have struggled with how to provide better healthcare at lower costs, amidst evolving market demands. Healthcare systems around the world must grapple with shifts to an aging population, a growing number of chronic diseases, and greater demand for patient-centered care. The United Nations estimates that, between 2015-2030, there will be a 56% increase in the elderly population. In addition, disease profiles have shifted, from predominantly acute infectious diseases, to chronic lifestyle-related diseases. According to the World Health Organization, non-communicable diseases, such as hypertension and diabetes, account for 70% of all deaths globally. On top of these demographic shifts, consumer mindset is also changing – patients want to be more empowered about their health, and are demanding more convenience and accessibility.

In response to these trends, we now see a lot of disruptive innovation happening in healthcare globally. First, we are already seeing the emerging disruption of traditional business models in a major effort to bring down the cost of care and create better synergies. In 2017, CVS Pharmacy and Aetna announced a merger that would combine the largest pharmacy retailer in the US, with a leading health insurance provider, seeking to integrate pharmacy and financing capabilities, with direct further access to consumers. Meanwhile, just a month ago, Amazon, Berkshire Hathaway, and JP Morgan announced a partnership to set-up a healthcare company that would provide more cost-effective services for its workforce of over a million employees. The combined scale and expertise of these partners, hints at the potential to build technology-enabled solutions to address rising healthcare costs in the US.

Another area of disruptive innovation I foresee, will come with new technologies and discoveries in the field of gene sequencing and DNA testing. I am fascinated with how gene therapy has ushered in a new era of personalized medicine, where screening can identify genetic predispositions and treatment can be customized down to the molecular level. Last month, doctors at the University of Pennsylvania announced that they will soon begin human trials utilizing gene editing technology, called CRISPR, to treat certain cancers. The treatment will consist of editing DNA from a patient’s immune cells so that they are able to recognize and fight off cancer cells. The same technology can potentially be used to treat thousands of genetic diseases, many of which are incurable today. And while much is still unknown or controversial in the field of genetics, imagine the possibilities that this technology could unlock in the future, allowing us to battle, and win over, diseases we barely understand today.

In the Philippines, we also believe the healthcare system is ripe for disruption. Admittedly, we are grappling with our own healthcare issues as a country, but our issues are far more fundamental. Access to affordable, quality healthcare is a basic gap that unfortunately persists today. At the Ayala Group, we are cognizant of these gaps, and have made a commitment to invest in healthcare to help address these gaps.

Healthcare is important to us at the Ayala Group for several reasons. First, we recognize that healthcare is an integral part of the national agenda. We share the view that healthcare is not only a component for progress, but a fundamental right for all, as our good friend Dr. Alran Bengzon says. Second, as our economy improves, we see increasing demand and awareness of healthcare products and services, especially with the growing middle class. Third, and perhaps most compelling, is that across a Filipino patient’s life cycle, there is a clear need for improved healthcare. From birth to death, from cradle to grave, Filipinos struggle with poor health outcomes. The Department of Health estimates that on average, 60 infants die per day. A study conducted by The Economist, ranks the Philippines as the 78th out of 80 countries in terms of Quality of Death. It is evident that there is much room to improve the way healthcare is delivered today.

At AC Health, we believe we can improve healthcare by building an integrated healthcare ecosystem across the continuum of care, with retail health services at the forefront, creating affordable, last-mile access to millions of Filipinos. We envision over 1000 Generika pharmacies, 100 FamilyDOC clinics, and strategic partnerships with hospitals and specialty centers, tied together by innovative technology, to create a seamless experience and an integrated network. Most importantly, we keep our patients at the heart of everything that we do.

We believe the private sector plays an important role in improving healthcare, collaborating amongst each other, filling gaps, developing new innovations, and offering services that are complementary to what the public sector can provide.

Let me give you a few examples.

First, the private sector, with its access to capital and speed to market, can fill in the gaps in the industry and streamline processes. As an example, we are building FamilyDOC community clinics all around greater Metro Manila to help address the need for primary care. FamilyDoc clinics are a 3-in-1 retail model, consisting of a pharmacy, laboratory services, and primary care consultations. These services are offered at affordable price points, and more importantly, at convenient locations near residential communities. By the end of this year, we will have over 50 clinics, employing 120 primary care physicians, and over 200 allied health professionals.
With FamilyDOC, we hope to bridge the gap for affordable and quality primary care, specifically in middle-class communities where health facilities and medical professionals may not be easily accessible.

Meanwhile, Generika Drugstore, through its network of over 750 pharmacies nationwide, offers access to quality generic medicines, with up to 85% savings versus branded equivalents. I am astounded that our medicine at times still costs 30 times more than other countries.

I am proud to say that Generika was recently recognized by the ASEAN Business Awards as the first recipient of the new Inclusive Business Award. Generika bested 28 other companies from all over the ASEAN region, and was recognized for its inclusive business model, which pioneered the retail of quality generic medicines in the Philippines.

In continued partnership with our good friend Ted Ferrer and his family, we hope to deliver more affordable medicine to many more Filipinos, and promote the importance of over-all health and wellness more broadly.
Second, the private sector can encourage innovation and new technologies to deliver better healthcare. We have several examples of health technology at the Ayala Group. Through Globe’s KonsultaMD, users get 24/7 access to a licensed doctor through their mobile phones. In the pharmacy retail space, MedGrocer is creating a convenient channel through its online platform and delivery of medicine. AC Health has also developed its own in-house Electronic Medical Records and Clinical Information System, which allows us to utilize real-time data to improve efficiency and patient care at our FamilyDoc clinics. More importantly, it also enables us to perform extensive data analytics for population health, allowing us to monitor health outcomes, incidence rates, and disease trends at the community level. Apart from our Electronic Medical Records, FamilyDoc also utilizes tele-radiology, through a 3rd-party provider called LifeTrack. Through Lifetrack’s platform, clinics are able to digitally send x-ray and ultrasound images to Lifetrack’s pool of certified radiologists, who are then able to give an official reading in as little as 15 minutes. These health technology solutions not only improve efficiency and provide cost-savings, they also expand the reach of services, enable integration, and improve quality of care.

Before I end, I just wanted to reiterate an important point. The work that we do in healthcare is about improving lives. Ultimately, healthcare is about people. And while we are still in the very early stages of our healthcare business, I am encouraged with the many stories we have already begun to see, where you can really feel the impact one can have on our customers and patients.

Allow me to share with you a story from one of our patients, Lola Nina, an 86-year old senior from Taguig, where, thankfully, we have built one of our FamilyDOC primary care clinics. A few months ago, Lola Nina’s blood pressure shot up to dangerous levels, which could not be brought down by her usual medicines. Rather than going on an hour-long trip to her usual healthcare facility, she visited our FamilyDOC clinic, which was a few minutes from her home. She was assessed by our doctors, and her blood pressure was controlled with medication. But beyond simply controlling her symptoms, her doctor took the time to do a comprehensive assessment, which revealed an underlying Urinary Tract Infection as a trigger to her increased blood pressure.

I am proud to say Lola Nina is now well and comes in regularly for her blood pressure monitoring. She feels stronger, and is able to spend more time with family and friends, even going back to her weekly ballroom dancing, after five years of not doing so. She has also become one of our brand ambassadors, bringing in family, and fellow seniors to our clinics.

I like Lola Nina’s story, because, while it certainly illustrates the importance of quality accessible health care services, it also demonstrates the transformative effect that primary healthcare can have. Improving healthcare is not just about the body, medicine or disease – it is also about enabling people to live their lives better.

In closing, I would like to advocate for a collaborative approach between the public and private sector towards the common goal of improving healthcare for all.
For the private sector, we encourage more participation and partnerships among stakeholders to help fill in the gaps in the market, and to continue to invest in innovation, whether in the form of products, services or business models.

For the government and public sector, I would encourage regulatory frameworks that promote expansion of reach and services to many more Filipinos. In particular, we look forward to further improvements in government healthcare financing through PhilHealth, including packages to promote primary care benefits. I am delighted to learn that, as of 2016, PhilHealth now covers 91% of the population. With such a large member base, PhilHealth can serve as an excellent platform to improve financial accessibility. I believe we need to continue increasing awareness of benefits, so that more Filipinos understand, and avail of, the range of services that are now accessible through PhilHealth. We also encourage the creation of programs, funding, and incentives that can hopefully increase both the supply of medical professionals and healthcare facilities. Finally, we look forward to policy and regulation that can enable and encourage the development of new health technology services to reach a broader base of the population.

We believe the challenges of healthcare cannot be met by a single sector alone – we need the engagement of multiple stakeholders to ensure that we are protecting the fundamental right of all Filipinos to receive the healthcare they need and deserve.

I would like to take this opportunity to thank the Metrobank Foundation, and the Ateneo Professional Schools, for organizing this event, and for their commitment to ensure the continuity of the Professorial Chair though the years. I believe this can serve as an excellent vehicle to promote greater collaboration among the different groups present here today. Know that we, at Ayala, share your dedication to building a stronger culture of public service and good governance, not only in healthcare, but across the entire Ayala group.

Thank you, and a pleasant morning to all.

-Jaime Augusto Zobel de Ayala

 Chairman and CEO

 Ayala Corporation

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AC Education Acquires National Teachers College

AC Education, Inc. (“AEI”), the wholly-owned education arm of Ayala Corporation, was selected as the winning bidder of the tender process conducted for the sale of shares of National Teachers College (“NTC”). A Share Purchase Agreement for approximately 96% of NTC’s shares has been executed by the parties. The acquisition remains subject to certain closing conditions, including securing the necessary regulatory approvals.

NTC is located on Nepomuceno Street, Quiapo, Manila and was founded in 1928, as the first school in the country to offer General Education leading to a Bachelor of Science in Education. It has a long track record of commitment to excellence in teaching, growth and inclusion, with almost 10,000 students from Basic to Higher education. It is one of the most well-recognized teacher education institutions in the country, with Level III Accreditation from PACUCOA for its Bachelor programs in Elementary and Secondary Education, and over 3,500 Education students in both college and graduate programs. NTC has also established growing Colleges of Accountancy & Business, Arts & Science, Hospitality Management and Information Technology, and a School of Advanced Studies.

Ayala Corporation started investing in the education sector in 2012 through AC Education, with a vision of delivering affordable and quality education that leverages an industry-based, experiential and technology-enabled approach, to significantly improve the employability of its high school and college graduates. AC Education’s Professional Employment Program (PEP) has significantly increased the employability and starting salaries of its college and senior high graduates.

In Basic Education, AEI has built the largest chain of stand-alone, private high schools in the country, APEC (“Affordable Private Education Center”) Schools, with approximately 16,000 students in 23 sites in Metro Manila, Cavite, Rizal and Batangas. In Higher Education, AC Education has invested in the University of Nueva Caceres (“UNC”) located in Naga City, with approximately 8,000 students. It is the oldest and one of the largest private schools in the Bicol region, offering college programs in Engineering and Architecture, Business and Accountancy, Education, Computer Studies, Law, Arts & Sciences, Criminology, Nursing and Graduate Studies. Together with NTC, the combined population of AC Education’s schools is approximately 34,000 students.

“We are very grateful that several groups had expressed their sincere interest in continuing the legacy of National Teachers College as established by our forebears. In selecting the buyer who shall acquire the shares of NTC, it was important to look not only at the capability to expand the school’s horizons, but also at the alignment of values and vision for raising our Filipino youth to be excellent teachers, industry leaders, or capable, competent individuals, in whatever path they may choose. We look forward to working with AC Education in this transition process and in moving NTC closer to becoming the world-class institution it was intended to be. We are honored to pass on the torch to AC Education, which we are confident will remain committed to building on the ideals upon which NTC was founded,” said Atty. Rolando De Castro, Chairman of the Board of The National Teachers College.

“The Ayala Group is committed to investing in the Education sector because we recognize that it is critical to building our nation. We believe that NTC can play an integral role in our efforts to contribute to a better education system in the Philippines, because of NTC’s long and successful track record in producing quality educators who go on to teach in both public and private schools,” said Mr. Jaime Augusto Zobel de Ayala, Chairman and CEO of Ayala Corporation.

“Our goal is to fulfill the vision of NTC’s founders of ‘…quality education for teacher preparation and development of manpower skills, anchored on the ideals of Excellence, Relevance, Access and Effectiveness, geared towards national productivity and world class competitiveness.’ We are committed to investing in further quality at NTC, and building on its traditions of excellence and inclusiveness,” said Mr. Alfredo I. Ayala, CEO of AC Education.

Mr. Ayala added, “We believe that NTC will be a key strategic element in the merger we have proposed between AC Education and iPeople.” Last month, AC Education and iPeople announced that they had executed a Non-Binding Term Sheet for their potential merger. iPeople is the listed education arm of House of Investments Inc., a member of the Yuchengco Group of Companies. Together with APEC Schools and UNC, NTC would be part of the assets that AC Education would contribute to its potential merger with iPeople, the parent of Mapua University, Malayan Colleges Laguna and Malayan Colleges Mindanao.

BPI Capital Corporation acted as the financial advisor of AC Education for the acquisition.