Other healthcare access considerations include country-specific items like the government's role in overall health spending.
Singapore, for example, has rejected the idea of a generous welfare system, but does fund free medical care at government
hospitals for the needy, and has created a universal health system characterized by medical savings accounts. While this system
is supported by subsidies, no healthcare services in Singapore are provided to patients free of charge; the out-of-pocket
expenses act as a deterrent from seeking out unnecessary services. Just less than half the hospitals in Singapore are government
run and tend to be less expensive for patients than their private equivalents.
Other countries in the region such as Thailand have funded largely government-run programs to achieve near-universal health
coverage for years, and other countries (e.g., Vietnam) are looking to employ some of the same tactics. Understanding the
payer mix and the challenges facing each of these payers will be crucial to understanding the market opportunities in each
of these markets.
In contrast, many of Indonesia's more than 250 million residents find even minimal healthcare inaccessible. Access to a physician
or other healthcare professionals across Indonesia's 6000 inhabited islands varies greatly. While larger cities generally
offer a range of medical services, in remote areas such as the province of Papua, it can take days to reach medical care.
Implications for successful market entry and in-region partnering
Under the ASEAN Economic Community (AEC), a single regional common market of countries will be created in 2015. The regional
objective is to create a highly competitive market of more than 600 million people with free flow of goods, services, investment
capital, and skilled labor. This shift will also include reductions in tariffs and regulatory and administrative procedures,
all elements that should stimulate pharmaceutical market growth.
The eight Asian countries that are part of the ASEAN region represent a market that has historically generated relatively
little industry or investor interest, but this situation is changing. Diverse influences from deregulation and better trade
links to improved medical access and the rise of medical tourism are resulting in a market with an increasingly important
global role to play.
As the single common market develops, specific implications for the pharmaceutical industry have emerged:
- Regulatory capacity in many ASEAN nations is constrained by human and financial resources requiring pharmaceutical companies
to invest in developing in-region capabilities.
- Gaps often exist between written regulatory guidance and actual enforcement throughout the region, again reflecting the gap
in human and financial investment.
- All ASEAN countries are net importers of pharmaceuticals (with the exception of Singapore) due to lack of investment in R&D
capacity and capabilities (versus regulatory framework).
- New, harmonized drug regulatory frameworks reduce administrative barriers and encourage research and development of drugs
Additionally, as the healthcare sector has an immediate impact on the pharmaceutical sector, shifts in healthcare policy have
enormous implications for the industry. Health insurance payment and infrastructure are relatively new and vary greatly among
the ASEAN countries. In many countries, the majority of the population pays out-of-pocket for drugs and health services. And
even in countries with health insurance infrastructure, there are limited resources available, so high drug prices are largely
Moving forward in Southeast Asia
There are many opportunities for pharmaceutical companies looking to expand in Southeast Asia. As regulation across the region
becomes more harmonized and complexity decreases against a backdrop of largely sustained economic growth, the ASEAN region
looks increasingly attractive. Understanding the unique demographic and payer mix of each country will be crucial to move
forward and take advantage of the opportunities presented in this region.
—Jill E. Sackman is a senior consultant at Numerof & Associates, Inc.
1. "Asia Competition Barometer: Pharmaceuticals," The Economist Intelligence Unit Report (2012).
2. Shaw, et al., Diabetes Research and Clinical Practice, 87 (Jan 2010).