Southeast Asia health and pharmaceutical market overview
Healthcare has been designated a priority sector for the ASEAN countries for several years. With a population of more than 600 million, this market represents another rapidly growing emerging market. In general, the market has become more attractive in recent years as wages have risen and country governments have made healthcare sector growth a priority. Country governments are actively courting investments in the sector, and opportunities for contract manufacturing abound. Regional sales of pharmaceuticals in Asia have more than doubled from $97 billion in 2001 to $214.2 billion in 2010. It is predicted that sales will reach $386 billion by 2016 (1).Variation between countries within the region, however, greatly impacts the opportunities for pharmaceutical companies. The Indonesian pharmaceutical industry, for example, has experienced high growth in recent years. There are a number of reasons for this. The market has a large (and growing) population (237 million according to a 2011 census), a steadily growing economy, and rising rates of chronic diseases like diabetes, obesity, and cardiovascular disease. Increasingly, we are seeing rates of chronic diseases in developing economies that have historically plagued more developed countries. Estimates for India and China, for example, suggest that these countries have the largest diabetic populations in the world (2). In addition, the Indonesian market has grown in part through the government's efforts to provide a system of universal healthcare. In its 2010 announcement, the government said that it would allow 100% foreign ownership of pharmaceutical companies. As a result, the pharmaceutical sector sales have experienced nearly twice the growth rate of gross domestic product (GDP).
In contrast, the Philippines' pharmaceutical industry has grown more slowly in recent years. The Philippines also has a large population (92 million according to its 2010 census) and is experiencing similar trends in the rate of chronic disease as Indonesia. But since the passage of the Universally Accessible Cheaper and Quality Medicines Act of 2008, the market for pharmaceuticals has noticeably changed. The law affected the market in several key ways. First, it set a maximum drug retail price that represented a 50% decrease for more than 100 drugs. It also accelerated the process for bringing generic drugs to market and disqualified drug makers from being able to patent new uses of previously existing drugs.
Other countries in the region possess unique characteristics that pharmaceutical companies should understand as well. Singapore, Brunei, Malaysia, and Thailand, for example, all have greater GDP per capita than Indonesia or the Philippines. Even though these countries contain fewer people than some of the others in the region, their demographics (e.g., higher incomes and increased life expectancy) may still make them attractive markets. In addition, characteristics like the fact the Singapore promotes itself as a center for medical tourism can impact the market as well.
Despite all the market potential, Asia remains a fiercely competitive region for pharmaceuticals. Part of the source of competition comes from the highly fragmented industry with literally thousands of smaller manufacturers. Many of the larger firms have been able to grow their market share partly through intensive competitive pricing (1).
Key regulatory considerations
In terms of regulation, the ASEAN countries are becoming more synchronized in the regulatory sphere. The ASEAN Leaders have resolved to form the ASEAN Economic Community (AEC) by 2015. The goal of the AEC is to establish ASEAN as a single market and production base. Tariffs will be eliminated and other barriers between the countries will be phased out. Work on harmonizing standards began in 1997, with pharmaceuticals, medical devices, and health supplements earmarked as priorities. Specifically, ASEAN leaders have agreed to mutual recognition of inspections of medicinal-products manufacturers, including post-market assessments. ASEAN has required the filing of an ASEAN Common Technology Dossier (ACTD) as the only regulatory filing required for pharmaceutical companies to gain approval of their drugs in the 10-member ASEAN states starting in 2012. In general, this standardization should reduce complexity for manufacturers interested in expanding into this region. Harmonization of standards will help member countries to lower costs and increase the quality and availability of medicines in the region. It also formulates rules for importing medicines to ensure quality drugs for the region. Recalls or product alerts in one country will be applicable for all the member nations.
Pharmacovigilance (PV) in Asia is evolving, as the region becomes one of the largest players in the pharmaceutical market. With increased numbers of clinical trials occurring in China, India, and the ASEAN region, the importance of managing adverse drug events/adverse drug reactions (ADEs/ADRs) is gaining recognition. There are a number of challenges that manufacturers will face with regard to developing a PV plan in ASEAN. These challenges include cultural variation in medical practice (Western vs. traditional), lack of PV expertise, lack of human and financial resources in regional regulatory agencies, few robust PV regulations, hesitation on the part of healthcare professionals to report adverse data, drug counterfeiting, and variable quality in drug manufacturing.
Some ASEAN countries have reasonably structured PV systems. In Singapore, for example, the Vigilance Branch of Health Sciences Authority employs a number of post-marketing risk assessment approaches to ensure the continued safe use of medical products. These include mandatory reporting from pharmaceutical manufacturers, spontaneous reporting from health professionals, literature reviews, and the exchange of regulatory information with other national drug regulatory bodies.
Many regulators in Southeast Asia are in the process of revising their existing regulations. There is also an ongoing collaboration across the region regarding harmonization and enhancement of drug safety as part of ASEAN.