Report from Southeast Asia - Pharmaceutical Technology

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Report from Southeast Asia
A unique demographic and payer mix make ASEAN an increasingly attractive region.

Pharmaceutical Technology
Volume 37, Issue 6, pp. 32-36

In-region considerations

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 and vaccines.

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 unsustainable.

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).


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