Head of Dexa Medica, Ferry Soetikno believes that price cap will " push a rationalization of prices and increase accessibility
and affordability." Expanding on the conundrum faced by the industry confronted to the future price cap he asks: "How do you
link a good insurance system and good suppliers without sacrificing the sustainability of the companies? With higher accessibility,
more people will go for more frequent health visits. This means more units sold, which in turn will balance the losses of
price caps. The nature of the business will change and will turn even more towards volume-oriented activities."
This should favor those with large installed capacities. In the case of Novell though, the corporate strategy is to look up
and aim at the top segment of the market by putting effort on the products through product development, high-end technology,
and strong marketing. "We need technology, information on how to make products, how to achieve EU GMP standards and the right
quality insurance system, etc."
With products ranging from oncological through to psychotic and osteoporosis treatments, the company is already positioned
beyond commodity drugs and into the high-value added segments. The next stage for Novell and for Southeast Asian companies
willing to stay abreast of the competitive environment and to succeed going forward will be not only to manage the changes
domestically, in particular those induced by the pressure on public health systems and the transition into private health
insurance but also product development and using pharmaceutical technologies available.
Climbing the value ladder
Novell's Roy Lembong adds that "Indonesian companies need to improve their product development and be able to do for instance
produce slow release products with good bioequivalent data." Dexa Medica, one of the leading companies also worked on technological
solutions to retain the edge. Developing its own fast-disintegrating capsules as well as sustained-release products, the company
managed to license one of its products to Glaxo Indonesia. Improving delivery systems, packaging, or formulations to the point
of achieving out licensing deals is a path of excellence that many in the region want to go down. These standards are meant
to allow them to better compete domestically, regionally, and even beyond. Roy Lembong is for instance considering that Novell
is positioning itself on a par with central and eastern European manufacturers in terms of quality ambitions, and taping developed
markets such as Australia, or southern Europe.
For Mensa, a group built from an API trading and distribution company that also manufactures and distributes pharmaceutical
finish forms, the challenges of the environment bring countless opportunities and it is up to the fittest to survive and thrive.
"Those who cannot comply will have to look for contract manufacturing. Local GMP was the first stage of challenge for the
local manufacturers, CGMP was the second, and we, in our company are already thinking about the third stage to be able to
service US and European markets. There will be opportunities for those serious in this business," explains Jimmy Sudharta,
President Director of Mensa Group.
Indeed, he highlights a point that many across the region like to put forward: The sector across the ASEAN region is facing
radical transformation movement: the cost of compliance and the ever-increasing standards of quality throughout the life sciences
industry pushes out of the game many medium to small size players who have been reacting too little or too late. And, the
sector will concentrate and change its shape in the next half decade: This will also press forward for a concentration movement
that is likely to affect many, and present local and foreign pharmaceutical players with acquisition opportunities.
Malaysia and Singapore: beyond PICs
Both members of the pharmaceutical inspection Cooperation scheme (PICs), Malaysia and Singapore are the only Asian representatives
of the club. Therefore, they are considered like the quality heralds of the region, adopting CGMP standards ahead of the rest
of Southeast Asia. For Singapore, host to mainly international original drug makers, the membership is a natural step. Singapore's
pharmaceutical industry is driven by the multinationals that have brought in their seamless standards before the country even
joined PICs. There are only two noticeable local generic companies that try to find a place in the sun, and the health system
is meant to favor originators. With a total market of $350 million, the cake isn't as appetizing as Indonesia or Thailand,
yet Big Pharma investment is very steady.