With increased internal and investment in pharmaceutical manufacturing facilities in a move to boost exports, Malaysia's healthcare sector is showing strong signs of growth. The total healthcare market in Malaysia, a country of 30 million people, was worth about $12 billion in 2013.
Healthcare in Malaysia is structured into two tiers. A government universal healthcare scheme covering approximately 60 per cent of Malaysians and a private healthcare system. The private system is growing quickly, especially in urban areas. Approximately half of healthcare spending is out-of-pocket. Overall, more than eight per cent of Malaysian GDP is spent on healthcare, comparable to most European countries.
Key growth areas include biotechnology; namely drug discovery, new product development , technology acquisition and licensing ; generic drug production. The recent release of halal pharmaceutical guidelines points to the fact that Malaysia has the potential to take a leading role in the fast-growing halal pharmaceutical market.
The pharma industry is an important component of the healthcare sector in Malaysia. The industry has high growth potential, both in the domestic and export markets, in view of its present strength in the production of generic drugs. There are also vast opportunities to capitalise on the country’s diversified natural flora and fauna to develop resource-based biogeneric drugs.
The potential of the domestic pharmaceutical industry has been recognised by the Malaysian government which has identified it as a strategic industry which should be promoted.
The government is the largest pharmaceutical buyer in Malaysia, accounting for half of pharmaceutical purchasing by value. The rest of the market is split between private clinics, private hospitals and pharmacies. The government purchases approximately 60 per cent generic medicines and 40 per cent patented drugs. There are no price controls; instead, pricing is managed through tenders for generic drugs and negotiations for patented pharmaceuticals.
Malaysia is a member of Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (PIC/S). Membership in the PIC/S indicates that the local industry has established high pharmaceutical manufacturing standards. In conjunction with Singapore, Malaysia has also been promoting ASEAN pharmaceutical harmonization. Geographically, Malaysia provides a good manufacturing and export base to other Southeast Asian nations while also maintaining a skilled workforce and relatively inexpensive land and labour costs.
The Malaysian government has classified healthcare as a National Key Economic Area (NKEA). The government plans to expand the healthcare market through investment in healthcare infrastructure, clinical research, promotion of generic drug exports and medical tourism. Foreign investment in private healthcare facilities has also increased as the country has expanded its role in the medical tourism market – with the number of medical tourists doubling from 2007–2012.
The Malaysian government recently announced almost a dozen new projects worth $300 million under the healthcare NKEA. These projects include three new manufacturing plants, and expansion of a current production facility, and several foreign-domestic joint ventures.
In addition to building hospitals and clinics, the government has spent almost $13 million establishing clinical research hubs around Malaysia. A network of 27 clinical research centres is linked with all Malaysian public healthcare facilities – including over 50 hospitals, 100 clinics, almost 600 clinical investigators and 18 million potential patients. The government hopes to increase local clinical trials from less than 100 in 2009 to over 1,000 by 2020.
The government sees biotechnology as a key part of its efforts to industrialize and increase its knowledge-based economy. Several Biotech hubs have been established around the country and by 2020 are expected to create more than 150,000 new jobs, add $13 billion to the gross national income and bring $4.5 billion in foreign investment.
Along with well-established infrastructure and good patent protection, Malaysia has also put in place a set of policies aimed to entice foreign pharmaceutical companies to set up in-country facilities. These policies include customized incentives for sizeable investments, duty exemptions, a 10 year tax holiday, no equity restrictions and access to ASEAN markets via Malaysia's free trade agreements (FTAs).
Over the last decade, the Malaysian pharmaceuticals market grew at between eight to 10 per cent annually. Malaysia's pharmaceutical market is valued at over $3 billion. Thanks to an increasingly affluent and expanding middle class, an ageing population, urbanization and higher quality healthcare and medicines, Malaysians spent about $400 per person on healthcare in 2013.
The market is based on a strong domestic generic sector and imports of branded and patented medicines. The generics manufacturing industry in Malaysia has been growing over the past decade. There are approximately 80 modern drug manufacturers licensed by the government. Although local manufacturers can produce more than three-fourths of the drug categories that are on the Essential Drugs list, imports – especially of higher end drugs – are still necessary to meet domestic demand. Domestic Malay manufacturers have started to increase R&D investment and produce higher value-added generic drugs like oncology medicines and biologics.
Pharmaceutical products manufactured by the Malaysian pharmaceutical industry can be broadly categorised as Prescription, Over-the-counter (OTC), Traditional medicines,Health and food Supplement
The prescription medicines comprise patented and generic drugs, the sale and transaction of which are confined to doctors and pharmacists. The other three categories namely OTC, traditional medicines and health/food supplements may be sold by non-professional outlets and to members of the public.
There are currently 250 manufacturers in Malaysia licensed by the Drug Control Authority. Of these, 74 are licensed to produce pharmaceuticals. There are also another 176 manufacturers licensed to produce traditional medicines and 207 for cosmetics.
The Malaysian pharmaceutical industry has the capability to produce almost all dosage forms, including sterile preparation such as eye preparations, injections (both large and small volume), soft gelatin capsules of various sizes and shapes, time release medications and powders for reconstitution. The industry can now produce almost 80 per cent of the various categories in the Malaysian
The principal regulatory authority on the production, import and sale of pharmaceuticals (including traditional medicines) in Malaysia is the Drug Control Authority (DCA) of the Ministry of Health. All manufacturers, importers and wholesalers are required to be licensed by DCA. The National Pharmaceutical Control Bureau (NPCB) acts as the secretariat to DCA.
A well regarded local regulatory and surveillance framework is a major strength of Malaysian pharmaceutical industry. The manufacture and marketing of pharmaceutical products in Malaysia are as heavily regulated as in most developed countries. It has also the advantage of being a member of PIC/S. It is also a credible halal platform for promoting pharmaceutical to Islamic countries.
There are also vast opportunities to capitalize on the country’s diversified natural flora and fauna to develop resource-based biogeneric drugs. Malaysia is one of the world’s 12 most bio-diverse countries and offers high potential for sourcing active compounds for therapeutics and wellness products. The market for bio-generics is relatively unexplored, which vast opportunities for further development.
Niche pharmaceutical products are also expected to create a significant market segment, as well as high potential. These products have unique formulations or use special ingredients, targeted at specific smaller segments of the market but commanding premium prices. Examples are pharmaceuticals products in novel dosage forms, herbal drugs and drugs for tropical diseases.
Major Players in the industry include CCM Pharmaceuticals Sdn Bhd, Duopharma (M) Sdn Bhd, Kotra Pharma (M) Sdn Bhd, Pharmaniaga Bhd, Y.S.P Industries, Hoe Pharmaceuticals Sdn Bhd, Hovid Sdn Bhd., Royce Pharma Manufacturing Sdn. Bhd.
Malaysia's economy expanded almost five per cent in 2013 and has a purchasing power parity (PPP) per-capita GDP of more than $17,000.
Part of the Ministry of Health's (MOH's) Pharmaceutical Services Division, the National Pharmaceutical Control Bureau (NPCB) is the primary government agency responsible for regulating pharmaceutical products. The NPCB is both the secretariat to and the operational arm of the Drug Control Authority (DCA). The NPCB undertakes most of the day-to-day regulatory implementation, monitoring and post-market surveillance.
Drug applications are submitted electronically to the DCA, and it generally takes nine months to one year to receive approval. Pharmaceuticals are divided into four categories in Malaysia: generics, over-the-counter (OTC) generics, new drug products and biologics. Depending on classification, an abridged evaluation may be possible. License applications for drug manufacturers, importers and wholesalers are submitted online or manually to the NPCB.
Imported generic and branded pharmaceuticals must both conform to a variety of conditions. Several recent updates to these requirements for generic pharmaceuticals include the necessity that the manufacturer is GMP compliant – and certified as such by a Pharmaceutical Inspection Convention (PIC) or Pharmaceutical Inspection Cooperation Scheme (PICS) member country. The imported drug must also have a Certificate of Pharmaceutical Product (CPP).
Due to strict regulations, many foreign pharmaceutical companies have not set up manufacturing plants in Malaysia – instead importing their products and utilizing local distributors or their own sales teams. Companies with Malaysian operations structured in this way include Pfizer, Astra Zeneca and Eli Lilly. Yet with the increasing support of the Malaysian government, more foreign companies have been expanding their in-country operations. YSP Industries, Xepa-Soul Pattinson, Novartis and GSK have recently opened manufacturing plants in the country. Novartis and Novo Nordisk have signed MoUs with the Malaysian MOH for training or disease awareness campaigns.
More than 100 Indian companies have operations in Malaysia -- with joint ventures accounting for about 60 per cent. Indian biotech and pharmaceutical companies have invested more than $1.1 billion in Malaysia. Since 2011, several major Indian drug companies have opened manufacturing and / or R&D plants in Malaysia, hoping to both sell to the domestic market as well as export products to other countries in Southeast Asia. Indian companies with a manufacturing presence in Malaysia include Cipla, Dr. Reddy's Labs and SM Pharmaceutical.
Malaysia's pharmaceutical and healthcare markets continue to show strong growth, and the government's 2014 budget allocation for the healthcare sector supports the market. The country's private healthcare sector is attracting foreign investment and development, which supports the growing medical tourism market. However, the shortage of specialist medical staff and the significant presence of counterfeit drugs are issues the country must overcome to avoid them negatively impacting the industry.