Healthy Contrasts: A Look at Markets and Health Systems Across the ASEAN Region - Pharmaceutical Technology

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Healthy Contrasts: A Look at Markets and Health Systems Across the ASEAN Region

Pharmaceutical Technology

The US spends 15% of its gross domestic product (GDP) on healthcare, with spending growing by about 5% per year; the EU spends 9.2% of GDP, increasing by about 4.1% annually (according to 2005 figures from The Economist Intelligence Unit), Indonesia spends just 3.1%—but is expected to grow at a steady 14.1% per year from 2005 to 2010. The picture for the Philippines is similar, with current spending of 3.2% expected to grow at 13.4% annually. Thailand devotes 3.3% of its GDP to healthcare and expects to grow by 10.8% annually. Malaysia spends 3.8% of its GDP on healthcare, and shows solid growth projections at 11.3%. Singapore leads the region, spending 4.5% of its GDP in healthcare, but it will grow at just 8% per year.

Healthy market prospects

The overall regional market size (including countries not surveyed in this review such as Vietnam, Myanmar, Cambodia, Laos, and Brunei Darussalam) totals $7 billion, with a projected compound annual growth rate (CAGR) of about 13% through 2010 (source IMS Health 2005). Again, Indonesia heads the list, with a $2.2 billion market growing 12% per year over the next 5 years. Thailand comes in second, at $1.5 billion, but its growth rate is should be just shy of 16% over the next 5 years. The Philippine market is estimated at $1.4 billion, with a CAGR of 9%. The Singaporean market is $350-400 million with a 10% CAGR. And the Malaysian market is worth more than $500 million, matching Thailand's 16% growth rate.

Despite these attractive figures, and the very large populations, the markets of the Association of Southeast Asian Nations (ASEAN, pose certain challenges for foreign manufacturers: Not only do individual markets vary greatly in size, but they are also organized in sometimes radically different ways.

Indonesia, a shaky giant

In Indonesia, the specter of avian influenza and the strain on medical services following the devastating December 2004 tsunami and the June 2006 earthquake in central Java have underscored the limited means of the country's public hospitals and the critically under-funded health sector. The only social security scheme is open only to employees of the government or companies with more than 10 workers. Prescription drugs are distributed through either pharmacies or hospitals, while OTC products are distributed through 2.5 million outlets across Indonesia, from drugstores to supermarkets. Physicians do not dispense medications directly to the patients (unlike the practice in Malaysia and Singapore). Many players in the region describe market access as "difficult," for a number of reasons: registering drug products isn't easy, and despite recent attempts by the National Agency of Drug and Food Control (NA-DFC) to simplify its procedures, delays still run 100–150 business days for a generic product registration and 300 business days for a New Chemical Entity (NCE). According to Indonesian professionals, delays can run even longer.

Thailand, the price of populism

Following the election of Prime Minister Thaksin Shinawatra, Thailand started implementing a program of "universal coverage," allowing its citizens to obtain a medical consultation, prescription, and medicine for a mere 30 Thai baht ($0.80). The policy, besides severely straining public health and hospitals budgets, also increased the market size, albeit mainly benefiting cheap prescription drugs.

As a dispensary market, hospitals are central in the Thai system and account for over 65% of drug sales, followed by health centers, where patients can consult general practitioners and specialists and be prescribed drugs at the unit level. These centers account for 5% of pharmaceutical sales. Private pharmacies sell the remaining 30%. It is worth noting that most drugs are freely available; even many antibiotics can be purchased without a prescription.

Public hospitals (which account for 80% of the total hospital drug sales) purchase drugs by public tenders, where the main criterion is product price. Medicine purchased in these tenders must meet criteria established by the National Essential Drug List, established in 1999 by Thailand's Food and Drug Administration.


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