Asia is currently perceived, as one of the fastest growing healthcare markets in the world, and pharmaceuticals is no exception. After going through one of the toughest times ever at the height of the economic crisis in the late 1990s, most Asian markets have recovered strongly and look set to forge ahead in this millennium. Asian governments and the private healthcare sector are taking steps to ensure that they are not left behind in the ''new age'' of healthcare.
Governments are either forming regulations or programs to make their countries attractive to healthcare investors in terms of manufacturing of research or are making solid investments themselves to being them on par with their Western counterparts.
Healthcare industries in Asian countries have evolved from consisting mainly of multinational companies with import and marketing functions. There is now a wide range of such companies involved in product development, clinical trials, research and manufacturing activities in the region. Additionally the traditional healthcare market segments like pharmaceuticals have now expanded to include a significant portion of other healthcare segments like medical devices, diagnostics, hospital equipment and information systems, biotechnology and ehealth.
Frost & Sullivan estimates that the total pharmaceutical market in Asia Pacific stood at more than US$95 billion in 2001, and this represents approximately 28 percent of the world market in terms of manufacturers'' revenues.
By 2005, manufacturer revenues in this region are expected to surpass US$110 billion. Hopefully, with continuing economic recovery and more stable currency trends, Asian pharmaceutical markets are forecast to experience growth in the 2000-2005 period with a Compound Annual Growth Rate (CAGR) of 5.8 percent (10.4 percent excluding Japan). Strongest growing markets are China, India, South Korea, Australia and Taiwan.
There are key trends that have pushed or are pushing this development among which are the large population base with the increasing percentage of the aged, the increasing incidence of ''Western'' lifestyle diseases, better infrastructure in terms of facilities, hospitals and skills as well as Government support for healthcare research and development.
Other major changes in the Asian markets are national healthcare reforms, maturing national health insurance systems and increasing coverage of populations by medical insurance, a growing popularity of the internet, intensifying local competition and an increasing number of research centers in Asia .
One of the major challenges in Asia is the impact of the growing population especially that of the elderly, which is causing an increase in the prevalence of diseases, related to old age. With an estimated population of 3.2 billion in 2000, the Asia Pacific region holds approximately 40 percent of the world population, but the increasing life expectancy is contributing towards the gradual ''graying'' of Asia. By 2005, it is estimated that 25 percent of the population in Australia and Japan will be above 55 years of age.
In Hong Kong, Taiwan and South Korea, it is estimated at 11 percent, while for Singapore, it is estimated at almost 8 percent. Increasing urbanization, spending power and sophisticated lifestyles are also causing an increase in awareness on issues such as weight reduction and hair loss.
On the other hand, cost containment due to increasing healthcare costs as well as insurance and reimbursement are issues that are being scrutinized in every country. Total healthcare expenditure in Asia stood at $463 billion in 2001, with a per capita healthcare expenditure of $162. This is strongly influenced by Australia, Japan and New Zealand, all of which had per capita expenditures of more than $1,000 in 2001, followed by Singapore at $857.
Countries with increasing healthcare expenditure are China, India and Korea. Japan already has very high healthcare expenditure and has strong pricing reforms in place. Australia, Thailand and Taiwan also have strict reimbursement systems and control prices of products. With skyrocketing healthcare costs, it is expected that health authorities in most Asian countries will implement some form of pricing control while simultaneously boosting the local manufacturing industry.
Looking into the crystal ball?
Genetics research has the potential to dramatically change the way we treat disease, and the deciphering of the human genome will drive the drug discovery process, which will ultimately result in targeted therapeutics. It is expected that the drug discovery time period could shrink from the current decade to five to seven years, but this again depend on the ability of researchers to apply proteomics in targeting the compounds. Difficult to treat diseases like cancer are expected to witness an explosive influx of new products and technologies. The efforts put into genetic and biotechnology research in Asian countries like Japan, Korea, Singapore and Taiwan could potentially mean that new agents be discovered in this part of the world rather than as it has been traditionally in the West.
Japan will continue to be the largest market in Asia, but the challenge will come from China. With the medical and healthcare industry expected to be fastest growing industry in China in 2001, China will remain largest pharmaceutical market in Asia after Japan over the forecast period. Consumer confidence is on the rise with China''s entry into WTO, as well as reform of both financing and delivery of the healthcare system (New Pharmaceutical Law). Continued price declines are expected but outweighed by strong volume growth. China is ahead of the curve of major countries with the establishment of Gene Valley in Shanghai, which is targeted at being the second Silicon Valley in biotechnology research. However, the problem of counterfeit drugs in China continues at epidemic proportions.
Paving the Way for Drug Development
Asian countries are gradually shifting their priorities from being a low-cost manufacturing region to medical research, development and biotechnology research. Researchers are aware that the newest healthcare drugs will be based on genetic knowledge and Governments have taken to steps to give Asia the opportunity to be part of the genomic revolution. Government commitment and funding have prompted international companies to alliance or establish research centers in the region. Singapore has invested $600 million in 2000 to build the biotech industry. In Hong Kong, Government funding for healthcare R&D reached $516 million in 1999, while in Taiwan it reached $1 billion.
The Singapore government is taking strong initiatives to make Singapore a hub for biotechnology and research in the Asian region. In recent years, Singapore has taken various steps like providing strong infrastructure and venture capital to give it an edge over other countries in Asia. The Singapore government''s International Business Hub program is aimed at establishing the country as the regional center for healthcare. In June 2000, the Singaporean government launched the Genomics Program to study the genetic make-up of diverse Asian peoples. This $34 million project aims to be the launching pad for developing new drugs and customized treatments. Singapore is also building a base for its pharmaceutical and biotechnology companies and companies like GlaxoSmithKline, Schering-Plough, Aventis Pharma and Merck Sharp & Dohme have set up plants in Singapore.
The Japanese government had allocated $530 million to the Millennium Project for biotech for the period April 2000 to March 2001. This project is a joint industry-government-academia effort to promote new industries with a total allocation of almost $ 1 billion. Biotechnology accounts for more than half of the budget, and will be focusing on discovering new therapies for diseases that are characteristic of senior citizens such as dementia, cancer, diabetes and hypertension. Besides new therapies resulting from human genome research, Japanese pharmaceutical companies such as Daiichi Pharmaceuticals, Fuso Pharmaceutical Industries and Tanabe Seiyaku have begun to focus on regenerative therapies. 20 to 30 large Japanese pharmaceutical companies will jointly invest around $4.1 billion and work together in an effort to speed up the development of gene therapy in Japan.
India''s Department of Biotechnology plans to spend $65 million on genomic research over the next five years, bringing five-year forecasts for the country''s spending to $85 million. The funds will be distributed among 15 to 20 research teams in government centers and universities across the country. Major research areas under this project will include pharmacogenomics, structural genomics and proteomics. Since the mid-1980s, India has invested over $300 million in biotechnology, creating a good research infrastructure.
The Korean government is also strongly encouraging drug development, and is encouraging local authorities to establish science parks. The Korea Biotechnology Industrialization Center is scheduled to be completed in 2002 in Inchon Songdo Techno Park. It is approved by US FDA to support adoption of GMP and will help meet the need for a pilot plant facility. There are currently 300 new drugs under development in Korea, with 23 in progress or completion of clinical tests. Korea expects to reap revenues of US$10 billion in 2010 from biotechnology products in various sectors.
Healthcare companies would do well to include Asia in their marketing plans for the future or they stand to lose out on the fastest growing market in the world.
-- The author is Regional Research Manager, Healthcare Asia Pacific, Frost & Sullivan.
Conference highlights
Organised by the Asia Business Forum, the 11th Annual Asia Pharmaceutical Conference will see an outstanding line-up of distinguished speakers addressing cutting-edge issues. The conference aims to offer practical insights to help companies stay ahead of the times in order to increase market shares and maximize profits with new market opportunities.
IMS Health Asia will share the importance overview of macro-environmental issues and trends across 10 countries in Asia. Pharmacia is slated to discuss the latest changes in regulatory issues in Korea, Taiwan, China and ASEAN. Emerging markets India and China will also be focused on. Organization of Pharmaceutical Producers of India (OPPI) and Banner Pharmacaps, India will review the potential of India becoming the next pharmaceutical powerhouse. Delivery systems as the country''s strategic tool for growth will also be presented. Baker & McKenzie, Hong Kong and China Concept Consulting, Hong Kong will also keep your updated on the China market while the Bureau of Food and Drugs, Philippines will share on drug utilization and registration in the Philippines.
More in store are commercializing biotechnology and right branding strategies. The Clinical Trials and Epidemiology Research Unit will also share on the future of clinical trials in Asia. Rhodia, Hong Kong will let you in on current tolling possibilities and sourcing issues.