In Malaysia, Pharmaniaga, the state-backed listed company, is also facing its own set of challenges and its path is a valuable
indication of regional trends affecting the industry. The undisputed leader in its home market, Pharmaniaga must go beyond
its cozy protected position (Pharmaniaga being the exclusive concessionary for public hospitals sales) and step up its efforts
to become a regional leader. Over the past few years, these efforts have become more visible as the company built a superb
new small-volume injectables (SVI) plant to FDA standards and put a foot in China through a joint venture with a company that,
such as Pharmaniaga, has public shareholders. The fact that the small-volume injectable factory (to be completed by Q4 2006)
was built to FDA standards is no luck: Azhar Hussain, the company's managing director is confident that "the next stage will
be registration and our ultimate goal will be to enter the US market with one or two products. Contract manufacturing is also
a very serious possibility. We have no limitation as we are a generic player and competition is everywhere." Looking at the
openness of his company to global cooperation, he adds that "one has to cooperate to compete nowadays."
Dynamism across the market
In the shadows of the regional leaders is a thriving lot. Medium-size companies are forcing through their market positions
by developing their niche competencies and their flexibilities to be recognized as serious market contenders. Among them,
Indonesia's SOHO, The Mensa Group, or Novell, Malaysia's Hovid and Kotra, Thailand's Siam pharmaceutical, Thai Nakorn Patana
or Philippines United Laboratories are the best in class. With challenges lurking on every pharmaceutical horizon, these companies
are using their flexibility and strong focus to design strategies that allow them to make the most out of the current situation.
Thanks to Indonesia's sheer market size, medium-size operators can have available capital to work on different approaches.
The SOHO group, for instance, is completely refurbishing its production tool to bring it to the best standards in class. Tang
Eng Liang, the company's president is clear about the mid-term targets: "We want to renovate our factory, to be able to export
to European nations first, then, who knows, to the United States"
The quality required to achieve such results should be without any compromise, and while the emphasis is on renovating the
production tool, other avenues for strengthening the business model are also sought after, as explained by SOHO Group's President
Director, Andreas Djamwari: "We also have to work towards rationalizing our portfolio, by looking at consolidating therapeutic
classes coverage amongst our products." As do many companies in the region, the SOHO group combines manufacturing alongside
distribution activities, thus allowing the company to control its own distribution channels across Indonesia as well as to
act as a distributor for any principal, local or international, willing to enter the fray. Yet, Mr. Djamwari stresses that
the company is "looking for success in manufacturing instead of only distribution."
Meanwhile, external pressure cumulates on the manufacturers' shoulders across the region to comply with more stringent quality
standards, face the ever-increasing bite of the international competition, notably from the dual threat of India and China,
and extra difficulties are being added by local authorities and regulators. In Indonesia, a price-capping policy has been
announced, although the full extent of its application is still largely unknown. Local manufacturers are willing to play the
game, all the more when the future cap doesn't affect much their bottom line because they don't produce the very basic products
that will see their sales prices capped off.
Roy Lembong, dynamic Director of Novell Pharmaceutical Laboratories, a versatile producer that has posted some of the best
growth rates in the market, is unabated by the forthcoming price control and actually sees opportunities for some local players:
"Usage of non-branded generics is low in Indonesia as there are little incentives for doctors to use them. Japan is facing
the same issue but now has incentives. Doctors here still like to subscribe products from multinationals. A price capping
will benefit patients, health systems as well as some players producing these type of cheap drugs."