The generic pharmaceutical market in Asia, excluding Japan and China, is estimated at $3.4 billion in 2001. The market is growing at a Compound Annual Growth Rate from 2001 to 2007 at an estimated 11.1 per cent. The markets in the region are at their growth stages, except in Taiwan where the market is already saturated.
Nevertheless, prospects for the generic market in the region looks very bright as two main trends are observed. The governments' efforts to reduce healthcare spending prompted regulations to encourage purchases of less expensive drugs. In addition, the patent expirations of some 47 blockbuster drugs in the next 5 years are providing opportunities for manufacturers to produce generic versions of the drugs.
Frost & Sullivan's assess that the potential high growth areas in the region are actually in the Indochina caucus. Countries such as Vietnam, Cambodia and Myanmar, although small in terms of market size, nonetheless is predicted to generate strong demands for generic products in the future. This is primarily because the pharmaceutical industry here is still at their infancy and expected to grow by leaps and bounds.
Frost & Sullivan recently published a Market Engineering Report on the Asian Generic Pharmaceutical Market. This is a study on the generic pharmaceutical market in 4 countries in Asia; namely in Malaysia, Philippines, Singapore and Taiwan.
Malaysia: Grabbing the big Slice
The Malaysian generic pharmaceutical market was valued at approximately RM390 million in 2001. The market has been growing modestly at an average annual rate of 10 per cent. However, strong growth is anticipated in the market, which propels a Compound Annual Growth Rate from 2001 to 2007 at an estimated 12.5 per cent. The robust growth is mainly due to the increasing quality of products that are available in the market and the patients' need to save on healthcare spending. As no national healthcare insurance policy is available in Malaysia as yet, most patients are forced to self-finance their medical costs.
The transformation of growth rates occurred when in 2000 the Ministry of Health published the National Drug List. The list contained information on medicines for basic and specific treatments. The availability of the list gave patients the option to select a branded drug or its generic counterpart. This helped boost generic drugs sales growth from 9 percent in 1999 to 20 per cent in 2000. Currently the National Drug List is available on line to provide convenient access to information.
Ten active market competitors dominate the generic market scene. In 2001 the top three players held approximately 50 per cent share in the market. The large generic manufacturers in Malaysia, such as Xepa Soul-Pattinson (Apex Pharmacy), Y S P Industries, and Raza Manufacturing also have ties with foreign manufacturers to produce or distribute products. Among the foreign generic manufacturers that have agreements with the local firms are Soul-Pattinson (Australia), Yung Shin Pharmaceutical (Taiwan), and Alphapharm (US). As Malaysia has a relatively small population base, the manufacturers also seek neighboring countries to expand their market coverage. Companies with manufacturing facilities based in Malaysia, serves surrounding markets, such as Singapore, Thailand, Philippines and Indochina. For example, YSP Industries' plant in Bangi caters to markets in Singapore, Thailand, Philippines, Myanmar, Cambodia and Vietnam.
The implementation of the ASEAN Free Trade Area (AFTA) agreement will also have an impact on the generic pharmaceutical industry. It has actually opened a Pandora box of threats and opportunities in the generic pharmaceutical market. Products originating from signatory countries will be free from tariff and non-tariff barriers. The flow of pharmaceutical products from neighboring countries is expected to increase, tightening competition and pushing local manufacturers to create competitive advantages. Most would likely resort to reduced pricing or increased quality. The good news is that the impact will not be felt immediately, as the countries are still working on harmonizing or standardizing the registration requirements.
Nevertheless, despite the looming tough competitive environment, the global generic drug pie is getting bigger. With major blockbuster drugs coming off-patent in the next five years, there is ample room for growth. The key factor lies with the generic pharmaceutical companies in Malaysia to take advantage of this opportunity by preparing new products in their production pipeline, to ensure sufficient cash cows to bank on.
As in all market driven industries, with the impending liberations on the various markets, it will be a game of survival of the fittest. The generic pharmaceutical companies in Malaysia will definitely have a fine chance of survival, and thrive much better in the market. Backed by good quality products, good manufacturing practices in world-class facilities, good distribution infrastructure, the generic pharmaceu-tical industry in Malaysia is ready to take on the open market challenge.