The countries of South East Asia with a combined GDP of US$ 2.2 trillion in 2006 represent a total market of 588m people. Southeast Asia, which includes some of the fastest-growing economies in the world, is becoming an increasingly important market for pharmaceutical and medical products, including products for diagnosing and treating infectious diseases.
Emerging potential
# Taiwan, an East Asian island has a population of 22.9m in 2005 and GDP of the country is estimated to be US$ 611.5 billion in 2005.
# The population in Philippines for the year 2005 is estimated to be 85.24m, of which only 4% of them are aged 65 and above. The life expectancy at birth is 70.21 years. The total healthcare expenditure in 2004 was US$ 2.68 billion with government expenditure accounting for 42.7% of the overall healthcare expenditure.
# Thailand's population in 2005 was 67.23m, of which 8% were under the age group of 65 and above. The total healthcare expenditure in 2004 was US$ 5.45 billion with government expenditure accounting for 62% of the overall healthcare expenditure.
# Malaysia has been acknowledged as the richest and best managed Islamic democracy in the world with one of the highest living standards in South East Asia, largely because of its expanding industrial sector. In 2005, the population of the country was estimated to be 24.3m with a growth rate of 1.78%. The GDP of the country is estimated to be US$ 290.2 billion in 2005 with a real GDP growth of 5.3%.
# Vietnam is the populous country among the mainland Southeast Asian countries. In 2005, the population of the country was 83.9m. Vietnam's economy grew by 8.4% in 2005 with a GDP of US$ 232.2 billion. Industrial sector is the country's leading sector which contributes 41% to the country's GDP.
# Singapore, one of the world's most prosperous economy, is a tiny city-country with a population of 4.43m but with a GDP of US$ 132.3 billion in 2005 and a GDP growth of 5.7% which ranks 56th in the world. Its economy is largely dependant on its service sector that contributes 66% of the GDP and the remaining on the industrial sector. The government expenditure on healthcare is estimated to be 31.93% of the total healthcare expenditure (US$ 1.37 billion) in 2004.
Pharmaceutical market
The pharmaceutical market in Philippines was valued at US$ 1.58 billion in 2005, growing at a rate of 8.2% compared to the previous year. Generic drugs accounted for 22% of the overall pharmaceutical market in Philippines while branded drugs accounted for 78% of the overall pharmaceutical market in value terms for the year 2005. Ventolin was the top selling branded drug in 2005. However, the pharmaceutical market in Thailand was valued at US$1.41 billion in 2005. The pharmaceutical market got the well-deserved boost with the implementation of the '30 baht' scheme in 2001. Generic drugs dominated the market both in terms of value and volume. Branded drugs accounted for 35% of the overall pharmaceutical market in value terms for the year 2005. Lipitor was the top selling branded drug in 2005.
The Malaysian market is estimated to be US$0.46 billion in 2005 and is growing at a rate of 8%. The Malaysian market relies considerably on imports (65%) to meet its pharmaceutical requirements. Generics dominate the Malaysian pharmaceutical market taking 65% of the market share.
The market in Vietnam was valued at US$ 0.46 billion in 2005, an increase of 16.4% over the previous year. The Vietnamese pharmaceutical market has grown at a CAGR of 15.55% over the period starting from 2001-2005.
The Singapore pharmaceutical market was US$ 0.26 billion in 2005 that grew by 3.88% during 2001-05. The pharmaceuticals market of Singapore has been witnessing an upward trend from 2003. The slump in 2002 and 2003 was due to many reasons. A decline in the government's healthcare expenditure, reduced healthcare expenditure by residents due to a weak economy in 2002 and 2003, reduced expenditure by the drug manufacturers on advertisement, etc are some. However, the revival of the industry after 2003 was due to SARS.
Market segmentation
In Thailand, prescription drugs accounted for 60% of the pharmaceutical market in 2005.Nearly 23% of the pharmaceutical market in Taiwan is catered to by generic drugs with the local players mainly operating in this segment. One of the major local generic players is the Yung Shin pharmaceutical firm. Cardiovascular is the leading therapeutic segment in Taiwan with sales of US$ 561m in 2005 accounting for 17% of the overall pharmaceutical market. The top four products in sales as on September 2005 are cardiovascular drugs namely Norvasc, Lipitor, Diovan and Cozaar. Prescription drugs accounted for 60% of the pharmaceutical market in Philippines in 2005.
With increasing knowledge about different sorts of medication available and which type to take for different ailments, the OTC (over the counter) market in Malaysia, currently occupies 40% of the market that is expected to grow at a rapid rate.
The major therapeutic segments include cardiovascular (24%), metabolism (14%), neuromuscular diseases (10%) and antibiotics (18%). The pharmaceutical market in Vietnam is mostly dominated by prescription drugs that accounts for 74% of the total pharmaceutical market in value terms. With regard to branded and generics, branded drugs accounts for 75% of the overall pharmaceutical market valuing around US$ 345m in 2005.
Singapore's drug sales comprises of 92% of branded drugs and the remaining by generics. High proportion of branded drugs sales is due to a wealthy economy; however, popularity of generics is on the rise due to its cost effectiveness. 8 out of top 10 drugs in market are for lifestyle diseases like cancer and cardiovascular diseases wherein these diseases accounted for nearly 57% of deaths in 2005.
Imports & Exports
The total pharmaceutical import made by Thailand in 2005 was US$ 0.96 billion while the pharmaceutical import made from India during April 2004 - March 2005 was US$ 48.9m. The pharmaceutical export from Taiwan was valued at US$ 0.14 billion in 2005 growing at a rate of 63% compared with the previous year.
The total pharmaceutical import made by Philippines in 2005 was US$ 0.4 billion and the pharmaceutical import made by India during April 2004 to March 2005 was US$ 22 million.
In 2005, Malaysia imported US$ 0.76 billion worth pharmaceutical goods from various countries. Total export of pharmaceuticals by the country was US$79.5m in 2000 that gradually increased to US$ 0.16 billion in 2005. In the financial year 2004-2005, Malaysia imported US$ 27.9m from India which is a decrease of 3% as compared to the previous year. Singapore's pharmaceuticals import has constantly increased from US$ 717.39m in 2000 to US$ 1 billion in 2005 with an annual CAGR of 5.97%. The exports in Singapore recovered since 2005, due to increased production from the newly set up manufacturing facilities by Pfizer and Novartis.
MNCs dominate
In Thailand, the top 10 pharmaceutical companies included mainly multinational firms with Pfizer being the leader followed by Sanofi-Aventis and AstraZeneca. AstraZeneca's two leading products that featured in the top 10 products list are Meronem and Nexium. In Taiwan, the branded drugs segment is dominated by multinational players like Pfizer, Sanofi-Aventis, GSK, and Novartis. Prescription drugs account for 70% of the total pharmaceutical market while the main market for these drugs are the hospitals.In Philippines, the top 10 pharmaceutical companies list was dominated by multinational firms. Except United Laboratories Inc, the others were multinational companies namely GSK, Pfizer, Wyeth, Sanofi-Aventis and AstraZeneca in 2005. United Laboratories was the leading pharmaceutical company with brands suchas Ceelin, Biogesic,Solmux, and Neozep.
The Vietnamese pharmaceutical market too has been dominated by multinational companies. GlaxoSmithKline is the leading pharmaceutical company in Vietnam.
Singapore is fast becoming the favourite manufacturing base for many MNC's. GlaxoSmithKline tops the major drug manufacturers list followed by Pfizer in 2005. Six leading drug manufacturers already have their manufacturing plants in Singapore. Of late, a few more companies like Lonza have announced their investment plans, to set up a biopharmaceutical unit; Edward Lifesciences to build a tissue heart manufacturing plant; and SGS to set up a quality control labs for drugs, etc.
Regulatory environment
In Taiwan, the Department of Health (DOH) regulates the overall healthcare services in the country. The Bureau of Pharmaceutical Affairs (BPA) under the DOH handles the pharmaceutical regulations. For a pharmaceutical product to be marketed in Taiwan, it has to be approved by the DOH. Taiwan Intellectual Property Office (TIPO) coordinates and administers Taiwan's IPR policies.
In the Philippines, the Bureau of Food and Drugs (BFAD) is the authorized government agency for ensuring safety, efficacy, purity and quality of health products including food, drugs, medical devices, diagnostic reagents, cosmetics and household hazardous substances.
In Thailand the Food and Drug Administration (FDA), under the Ministry of Public Health (MOPH), is the agency vested with the authority and responsibility of ensuring the delivery of safe, quality and effective health products, including food, pharmaceuticals, medical devices and cosmetics. In order to import, sell or manufacture drugs in Thailand, a company must obtain a license. The Drug Control Division of FDA is in charge of reviewing and issuing registration licenses for drugs.
In Malaysia, Pharmaceuticals are regulated by the Drug Control Authority (DCA) and the regulation process is subject to the Control of Drugs and Cosmetics Regulations of 1984. Only local distribution companies can submit a drug registration application. Therefore, foreign companies with no local presence in Malaysia must designate a Market Authorization Holder (MAH) as their local representative. In Vietnam all pharmaceutical products must be permitted by the Drug Administration before marketing them in Vietnam. To start a business in Vietnam, one has to go through 11 steps and over 50 days on an average, at a cost equal to 50.6% of gross national income (GNI) per capita. In 2005, Vietnam's Drug Administration Department released a new regulation stating that foreign drug companies could not raise their drug prices without prior permission from the Ministry of Health.
The Health Science Authority is the regulatory body looking into drug registrations, regulations, patents, etc in Singapore. The recent regulatory issues are; amended patent bill, new guidelines for disease awareness campaign, updated Good Distribution Practice (GDP) Guidelines for Pharmaceuticals, good distribution practices certification guidelines, etc, which are collectively aimed at an improved industry environment. The new patent amendment in Singapore is focussed on three main areas; improving patent term, allowing parallel drug importation under certain circumstances and improving the patent application process by hastening the process.
Future outlook
The pharmaceutical industry in Taiwan is expected to register a growth of 9% in 2006 and estimated to grow at a CAGR of 6.79% during the period 2005-2010 to reach US$ 4.59 billion by 2010. This growth is expected to be triggered by the growing generic presence, increasing geriatric population and increasing incidence of lifestyle disorders. The pharmaceutical market in Philippines is estimated to grow at a rate of 8.5% in 2006 to reach US$ 1.71 billion and estimated to grow at a CAGR of 8.4% during the period 2005-2010 to reach US$ 2.36 billion in 2010. The industry is expected to grow with the increasing ageing population and improving economic standards of the people.
Thailand's pharmaceutical market is estimated to grow at a rate of 14.7% in 2006 to reach US$ 1.6 billion and estimated to grow at a CAGR of 13.17% during the period 2005-2010 to cross US$ 2.5 billion. The industry is expected to grow due to an increasing ageing population and rising lifestyle disorders such as cardiovascular diseases. The Malaysian Pharmaceutical market would grow at a CAGR of 8% during 2006 to 2010 and by 2010 would reach US$ 0.68 billion. Backed by good quality products, good manufacturing practices in world-class facilities, good distribution infrastructure, the generic pharmaceutical industry in Malaysia is definitely poised for a major growth. The pharmaceutical market in Vietnam is expected to grow at a CAGR of 14.17% over the period from 2006-2010 and is expected to reach US$ 0.9 billion by 2010. This could be attributed to the increasing OTC market and also an increase in lifestyle diseases.
Singapore's pharmaceutical industry is projected to grow by a CAGR of 6.7% during the period 2006-10 and reach US$ 0.36 billion in 2010. Current low spending on healthcare by the Singapore central government is expected to go up in future. Singapore's developed country disease profile held lifestyle diseases as the main cause of death, the government's plans of making Singapore-a medical hub of Asia, increasing foreign investment in pharma manufacturing, etc may keep the growth momentum of Singapore's pharma industry in the future.
(Compiled by Cygnus Business Consulting and Research,Hyderabad)