Mr_Akhilesh

COUNTRY COMPARISON PHARMAJANUARY 2011 Revision History Date | Revision Number | Document Manager | Revision Purpose | | | | | | | | | | | | | ------------------------------------------------- Table of Contents 1 THE HEALTH CARE SECTOR 5 1.1.1 Country Structure India 5 1.1.2 Population- India 5 1.1.3 Pharmaceutical Spend per Capita- India 6 1.1.4 Disease Profile - India 6 1.1.5 Healthcare Sector - India 6 1.1.6 Healthcare Funding - India 7 1.1.7 Healthcare Insurance - India 9 1.2.1 The Health Sector Malaysia 10 1.2.2 Malaysia Key Economic Indicators 11 1.2.3 Malaysia Healthcare Sector 12 1.2.4 Malaysia Healthcare Structure 13 1.2.5 Malaysia Healthcare Sector Funding 14 1.2.6 Malaysia Healthcare Initiatives 15 1.2.7 Malaysia Medical Tourism 15 2 INDUSTRY OVERVIEW 18 2.1.1 Pharmaceutical SWOT Analysis- India 18 2.1.2 Indian Economic SWOT- India 20 2.1.3 India Political SWOT- India 23 2.2 Malaysia Industry Overview 25 2.2.1 Malaysia Country Strengths Pharmaceuticals and Healthcare Industry SWOT 25 2.2.2 Malaysia Political SWOT 28 2.2.3 Malaysia Political SWOT Malaysia Economic SWOT 30 2.2.4 Malaysia Business Environment SWOT 31 2.2.5 Malaysia Industry Structure 32 2.2.6 Malaysia Industry Size 33 2.2.7 Malaysia Priority Status for Pharma 33 2.2.8 Malaysia Industry Structure 34 2.2.9 Malaysia Industry Size 35 2.2.10 Malaysia Priority Status for Pharma 36 2.2.11 Malaysia Overview- Pharmaceutical Industry 36 3 PHARMACEUTICAL REGULATORY REGIME 39 3.1.1 IP Laws - India 39 3.1.2 Approval times- India 39 3.1.3 Recent Regulatory Developments - India 40 3.1.4 Biotechnology Regulatory Board - India 40 3.1.5 US FDA’s new office- India 41 3.1.6 IP Regime - India 41 3.1.7 Pricing and Reimbursement- India 41 3.2 Malaysia Regulatory Regime 43 3.2.1 Malaysia Incentives 43 3.2.2 Malaysia Regulation 44 3.3.3 Malaysia Regulation 45 4 PHARMACEUTICAL PRODUCTION- MANUFACTURING 47 5 PHARMACEUTICAL MARKET 48 5.1.1 Pharmaceutical Market- India 48 5.1.2 Pharmaceutical Growth- India 48 5.1.3 Market Risks - India 48 5.1.4 Indian- Market Summary- India 49 5.1.5 Pharmaceutical Market- India 49 5.2 Pharmaceuticals Market Malaysia 50 5.2.1 Malaysia Growth Rate 50 5.2.2 Malaysia Growth Rate 51 5.2.3 Malaysia Pharmaceutical Market Growth 51 5.2.4 Malaysia Size of Pharmaceutical Market 53 5.2.5 Malaysia Export Opportunities 54 6 PHARMACEUTICAL SEGMENTS 55 6.1.1 Generic drugs- India 55 6.1.2 Prescription Drugs- India 55 6.1.3 Prescription and OTC Medicines- India 56 6.2 Malaysia Pharmaceutical Segments 57 6.2.1 Malaysia Generic Drugs 57 6.2.2 Malaysia Segments of Pharmaceutical Market 57 6.2.3 Malaysia: Demand for Generics on the Rise 58 6.2.4 Malaysia: OTC/Herbal Products 59 7 PHARMACEUTICAL R&D 60 7.1 Research and Development- India 60 7.2 Malaysia Research & Development 60 8 PHARMACEUTICAL INDUSTRY PLAYERS- COMPANIES 61 8.1.1 Foreign Pharmaceutical Companies - India 61 8.1.2 Pharmaceutical Companies- India 61 8.1.3 Pharma Industry Players- India 62 8.1.4 Competitive Landscape- India 62 8.2.1 Malaysia Status Of Pharma Companies 63 8.2.2 Malaysia Companies Competitive Landscape 63 9 PHARMACEUTICAL INDUSTRY ENVIRONMENTS- KEY DRIVERS 67 9.1.1 Country Risk- India 67 9.1.2 Key Drivers - India 67 9.1.3 Key Growth Factors- Industry- India 67 9.1.4 Key Growth Factors- Macroeconomic- India 69 9.1.5 Plenty of Demand- India 70 9.1.6 From Primary To Tertiary- India 71 9.1.7 Risks To Outlook- India 72 9.1.8 Risks To Outlook Medium Term Outlook Time to Shine'- India 72 9.2 Industry Overview 75 9.2.1 Malaysia Industry Structure 75 9.2.2 Malaysia Industry Size 76 9.2.3 Malaysia Priority Status for Pharma 76 9.2.4 Malaysia Driver- Malaysian Pharmaceutical Market 77 9.2.5 Malaysia Global Pharmaceutical Industry 77 10 PHARMACEUTICAL FORECASTS 79 10.1.1 Overall Market Forecast- India 79 10.1.2 Pharmaceutical Market Forecast 2005- 2019- India 79 10.1.3 Patented Product Market Forecast- India 81 10.1.4 Generic Drug Market Forecast- India 82 10.1.5 Pharmaceutical Trade Forecast- India 86 LIST of Tables No table of figures entries found. LIST of Figures [ No table of figures entries found. ] 1 THE HEALTH CARE SECTOR 2.1.1 Country India In spite of rapid development ,India faces numerous problems – such as high levels of poverty and illiteracy, persistent malnutrition, and environmental degradation. India's large, growing and ageing population is an big attraction for pharmaceutical firms. According to The UN Population Division, the country population will increase to 1.41bn in 2020 – a rise of 36% from 1.04bn in 2000. The percent of the population aged 65 and over will increase from 4.3% to 6.3% over the same period. However, due to the country’s vast 1.17bn population, individual spending is actually very low. This will change as the economy develops and the middle class expands. However, US$14 per capita spending is among the lowest in the world, similar to the levels of Pakistan and Vietnam. However, we caution that per-capita spending on medicine in India is, and will remain, relatively low (US$14 in 2009, US$31 in 2014 and US$50 in 2019). 2.1.2 Population- India 2.1.3 Pharmaceutical Spend per Capita- India 2.1.4 Disease Profile - India The prevalence of chronic diseases will increase dramatically in emerging markets. As the economy has develops, incomes rise and people consume more calories, leading to conditions such as obesity and diabetes. The prevalence of obesity in males in rural and urban areas is 24% and 41%. Among females, the corresponding figures are 26% and 54%. 2.1.5 Healthcare Sector - India Healthcare services are provided by public and private sectors, the latter having developed in the latest decades when India embraced privatization. Private healthcare boasts of superior quality and facilities. It accounts for more than 65% of primary care and more than 40% of hospitals, resulting in personnel shortages in the public sector. The large geographical size and growing population numbers traditionally have hampered adequate access to medicines and medical services in the sub-continent. Overcrowded public hospitals are a continuous problem and finances remain scarce for providing extra beds and facilities. The situation is perpetuated by low government spending on health, despite the fact that the majority of the population is forced (by low income) to use public facilities. The Federation of Indian Chambers of Commerce and Industry (FICCI) believe that it would cost approximately US$200bn over the next five years to solve the crisis in Indian healthcare. According to a study conducted by the FICCI, even though 72% of India’s population lives in rural areas, 80% of doctors, 75% of dispensaries and 60% of hospitals are in urban areas. It is hence almost impossible for the rural people to receive quality healthcare services. To address the funding shortfall, the federation has proposed a five-pronged public-private-partnership (PPP) model. 2.1.6 Healthcare Funding - India In March 2008, India revealed the populist 2008-2009 Union Budget, which came into effect on April 1 2008. A cut to excise duty on all formulation products and more funds directed to disease programmers should have led us to revise figures upwards; however, medicine price cuts introduced simultaneously by the NPPA have negated this scenario. A total of INR15, 580 crore (US$3.86bn) was set aside for healthcare in the budget, which is an encouraging 12.3% increase on the previous year’s figure. To reinvigorate small-scale rugmakers, excise duty has been halved to 8.0%, while the levy for the HIV/AIDS drug atazanavir and bulk drugs for its manufacture has been abolished completely. The Indian Drug Manufacturers’ Association (IDMA) claims its lobbying over the last two-to-three years played a significant part in the decision to lower excise duty. A distinct loser in the budget was the research sector. Despite the allowance of tax breaks of 125% on expenses incurred on outsourced R&D, the OPPI said that an opportunity had been missed. The body had wanted the continuation of tax breaks on in-house R&D until 2017, since discovery research is a lengthy and expensive process. OPPI had also suggested a tax holiday on exports of biotechnology, R&D and clinical trials, which was not included in the budget. While speaking at the opening of the first of Apollo’s Reach Hospitals at Karim Nagar via tele-link in September 2008, Indian Prime Minister Manmohan Singh emphasised the need for public-privatepartnerships in the health sector. Due to the vastness of India and its under-developed infrastructure, the public sector alone cannot bear the burden of increasing demand for healthcare. The prime minister was encouraged by Apollo’s Reach Hospital initiative, which will provide dependable, affordable and accessible care, and hopes that such efforts will be repeated by other providers. 2.1.7 Healthcare Insurance - India India’s vast 1.15bn population generally pays for healthcare out-of-pocket. According to the WHO, the private sector accounted for nearly three quarters of total healthcare spending in 2007. Of that non-public expenditure, just 1.1% was directed to prepaid or risk-pooling plans – which BMI uses as a proxy for health insurance. Therefore, we calculate that India’s health insurance market was valued at US$325mn two years ago. According to ‘senior executives in the business’, as quoted by The Economic Times, the market is estimated, as of April 2009, to have a value of INR6, 500 crore (US$1.3bn). This valuation is 30% more than the previous year. The increase in the uptake of policies is being driven by greater consumer awareness and higher demand for healthcare in the world’s second most populous country. Nevertheless, only 2% of the population – mainly those on high- or upper middle-level incomes – has health insurance. The number of providers operating in India is very low. There are full-spectrum insurers such as ICICI Lombard, Iffco Tokio, Bajaj Allianz and Reliance General, as well as specialist firms, such as Apollo DKV, Max Bupa and Star Health & Allied Insurance. Due to the returns on offer, we expect many more to enter the market over the near term. One of the more recent entrants to the rapidly expanding sector is Max Bupa. Formed in July 2008, the company is a joint venture between UK-based Bupa and domestic player Max India. Using seed capital of INR100 crore (US$20mn), it intends to have 1mn customers within three years. In June 2009, India based Religare Enterprises signed an agreement with Swiss Re to establish a joint venture with an initial investment of US$100mn. Operations are expected to start in 2010. At that time, Swiss Re was already present in the India health insurance market, holding a 26% stake (the maximum permissible) in TTK Healthcare Services. 1.2.1 The Health Sector Malaysia * Population 27.7 million * Labour force 12.0 million * Unemployment rate 3.3% * GDP RM528.3 billion (USD149.7 billion) * GDP growth 4.6% * Per capita income RM25,784 (USD7,304) * Inflation rate (CPI) 5.4% * Total export (f.o.b.) RM663.5 billion (USD188.0 billion) * Total import (c.i.f.) RM521.5 Total Area | 330,000 square kilometres (127,000 square miles) | Political Structure | A federation with 13 states (11 in peninsular Malaysia and 2 in Malaysian Borneo) and 3 federal territories. As a federation, the governance of the country is divided between the federal and the state governments | System of Government | Parliamentary democracy with a constitutional monarch | Population | 28.31 illion (2009)* | 1.2.2 Malaysia Key Economic Indicators *   | 2009e | 2010f | Population | 28.3 million | 28.9 million | GDP | RM512.4 billion | RM525.4 billion | GDP Growth | -1.7% | 4.5 - 5.5% | Per capita income | RM24,055 | RM24,661 | Inflation rate (CPI) | 0.6% | 2.25% | Labour force | 12.1 million | 12.2 million | Unemployment | 3.7% | 3.6% | Total export (f.o.b.) | RM553.3 billion* | RM559.0 billion | Total import (c.i.f.) | RM434.9 billion* | RM452.8 billion | Major exports*: Electrical and electronic products : Palm oil and palm oil-based products : Liquefied natural gas (LNG) : Crude petroleumChemicals and chemical products : Refined petroleum products | Major imports*: Electrical and electronic products : Machinery, appliances and parts :Chemicals and chemical products : Manufactures of metal :Transport equipment | 1.2.3 Malaysia Healthcare Sector The vast majority of the population is covered by public healthcare insurance, which is particularly important for the rural poor. Low-cost government services are financed by taxes and other public revenues, although they continue to suffer staff shortages. The government runs around 130 public hospitals. The increasing prosperity has in recent years encouraged the development of the private medical insurance market and provision. Malaysia boasts more than 250 large private medical facilities, many of which are privatized public institutions, as well as around 2,000 private clinics. Meanwhile, in order to help meet the government’s pharmacist to population ratio of 1:2,000, Malaysia would need to double the number of pharmacists to around 14,000 to meet the government’s target, Another government initiative to improve public healthcare coverage is the ‘1Malaysia’ clinics programme, launched in early 2010. Currently, there are around 50 such centers in Malaysia, which are open during weekends and public holidays, as well as between 10am and 10pm. 1.2.4 Malaysia Healthcare Structure Malaysia’s primary care model has been acknowledged by the World Health Organization as a viable system to achieve “Health for All”. The demand for Quality healthcare continues to rise in Malaysia with increasing affluence and rising consumer awareness. Currently, about 7.02% of the country’s GDP is expected to be spent on healthcare. This is expected to increase with the growing population and a longer life expectancy, as well as the Government’s increasing expenditures on provision of better healthcare facilities and services. Healthcare remains a priority of the Malaysian Government. For 2009, the Government increased budget allocation for healthcare by 20% to USD3.85 billion (RM13.7 billion). A total USD618 million (RM2.2 billion) of the budget will be spent for healthcare development to enhance health facilities and provide medical equipment, increase supply of medicines, develop human resources, intensify research and enforcement activities, as well as to build more hospitals, clinics and quarters. 1.2.5 Malaysia Healthcare Sector Funding According to the WHO, a total of US$3.1bn was spent on health in Malaysia during 2000, which equated to 3.30% of GDP. In 2005, the government subsidized MYR8bn (US$2.4bn) towards overall healthcare spending. However, in 2008, this figure rose to MYR12.2bn (US$3.96bn), while the public healthcare budget was expected to top US$3.7bn in 2009. However, the Malaysian government risks further unpopularity if it goes ahead with plans to encourage individuals to contribute more to public healthcare funds. 1.2.6 Malaysia Healthcare Initiatives In early 2010, the government launched another healthcare initiative aiming to reduce overcrowding in urban areas-based public hospitals. The 1Malaysia programme comprises some 50 clinics operated by medical assistants (MAs) rather than doctors, though MAs still refer the more serious cases to hospitals. While the scheme has been criticized over its staffing composition, many patients have welcomed the improvement in access and a reduction in consultation costs, which can be as low as MYR1. The government is investing MYR10mn in assessing the pilot 50 facilities before expanding the programme further. 1.2.7 Malaysia Medical Tourism To this end, in its 2010 budget, the government decided to increase tax incentives for healthcare service providers who serve foreign health tourists. The Malaysian medical tourism industry should also benefit from Singapore's Ministry of Health (MoH) deciding to allow their residents to utilise savings held in the national medical savings scheme for services at two Malaysian hospitals, which are run by Health Management International (HMI). Furthermore, HMI is planning to apply for Malaysian physician licenses, which would allow Singapore doctors to work in its Malaysian facilities. Medical tourism is becoming increasingly important to both Malaysia’s travel and healthcare industries. Indeed, over the past decade, medical tourism has grown to become second largest foreign exchange earner for the country. To facilitate this trade, the government set up the Health-care Travel Council which promotes 35 private hospitals for medical tourism. Meanwhile, tax breaks have been introduced for hospitals running medical tourism programmes (see below), while incentives have been provided to help hospitals to expand their facilities. According to the Prime Minister Najib Razak, the medical tourism revenues of the 35 designated hospitals grew to MYR299bn from MYR59bn in the past five years. There are now approximately 375,000 foreign patients seeking treatment in the country each year, up from 100,000 five years ago. The advantages of the Malaysian medical tourism industry include low-costs, a well developed infrastructure and high medical standards. In a related development, in April 2009, the Malaysian Health Minister invited registered foreign professionals to Malaysia, allowing them to treat foreigners residing in the country. He added that many people prefer to be treated by medical people from their own country, and it will also enable foreign people to be treated at significantly lower cost in Malaysia. The registered foreign doctors will be allowed when the services provisions of the ASEAN Free Trade Area agreement comes into force, expected before the end of the year. In November 2009, in a bid to boost numbers in the coming years, the government decided to increase tax incentives for healthcare service providers who serve medical tourists, with the intention of enhancing medical tourism. The government increased tax rebates to 100% (from 50%) in its 2010 budget as an endorsement of its healthcare services overseas. 2 INDUSTRY OVERVIEW 3.1.1 Pharmaceutical SWOT Analysis- India Strengths Massive pharmaceutical market growth potential, highly reliant on modernization and reform. • Strong local manufacturing sector with leading domestic players Establishing a notable international presence. • Low-cost but skilled English-speaking labor force. • Long-established trade patterns with Western Europe and the US. • Swift market approval times. Weaknesses Among the least-developed pharma markets in Asia with extremely low per capita consumption. • Opaque and biased government drug pricing and reimbursement policy. • Underdeveloped healthcare infrastructure. • Vast regional disparities in healthcare coverage. • Lack of comprehensive drug reimbursement. • Movement away from original drug research will lower future margins. • Many multinationals already selling their products at reduced prices. Opportunities Robust generic and OTC drug market growth, with the latter benefiting from expected liberalization of sales channels. • Large and growing population boosting pharmaceutical and medical demand. • Underdeveloped market for chronic illnesses and diagnostics. • The recognition of pharmaceutical patents from January 2005. • Rising demand for generic drugs in its Asian neighbors, and globally. • Ongoing free trade agreement (FTA) negotiations with the Association of South East Asian Nations (ASEAN) group of countries. • Increased demand for active pharmaceutical ingredients (APIs) produced in India. • Increasing research and development (R&D) activity by domestic firms. • Global expansion of larger local companies. • Increased public funding for disease eradication programmers. • Political changes in the US to promote use of Indian generic drugs. Threats Failure to properly enforce World Trade Organization (WTO)-compliant patent legislation for drugs. • Considerable counterfeit drug industry. • Government failure to revise its opaque and discriminatory pricing and Reimbursement policy. • Need for overhaul of healthcare delivery structures hampering better Access to medicines. • Government plans to impose further price controls on essential medicines. • India’s patent laws threatened by litigation. • Manufacturing problems pose threat to Indian generic exports, especially to the US. 3.1.2 Indian Economic SWOT- India Strengths * India has a very large domestic market, and rising domestic demand is a major driver of economic growth. * A vast supply of inexpensive but skilled labor has turned India into the back office of the world. Around half of the population is under the age of 25. * Booming exports of IT-enabled services, from call centers to software developers, are a valuable source of foreign exchange Weaknesses * Despite rapid economic growth, India remains a very poor country. According to BMI estimates, India's GDP per capita was US$1,149 in 2008, compared with US$3,214 in China. * Agriculture remains inefficient. Poor June-September monsoon rains can slash rural incomes and consumption. Two-thirds of the population depends on farming for its livelihood. * India has chronic trade and fiscal deficits, the latter of which is ballooning due to fiscal stimulus measures. The government spends a significant part of its revenue on interest payments, salaries and pensions. This limits the amount of money available on infrastructure improvements. Opportunities * India's emerging middle class will continue to drive demand for new goods and services. A wealthier society, combined with tax reforms, would serve to boost revenue receipts, relieving fiscal pressures. * The government has implemented some tax reforms. A value-added tax (VAT) introduced in 2005 to replace a complex web of sales taxes and a uniform goods and services tax to be implemented in April 2010 help should help boost compliance and therefore raise government revenue. Threats * India's dependency on oil imports is problematic. This undermines the trade balance and makes India vulnerable to energy price-driven inflation. * India is at risk of severe environmental problems. Many of its cities' air and rivers are heavily polluted, raising questions about the sustainability of the economy's rapid growth. India Business Environment SWOT Strengths * India is now one of the biggest recipients of foreign direct investment (FDI) among emerging markets, having attracted US$36.7bn of inflows in 2008, according to the United Nations Conference on Trade and Development (UNCTAD) – a 60% increase on the previous year. * An inexpensive but skilled English-speaking labor force can do the jobs of Western workers for a fraction of the wages paid in North America or Europe. Weaknesses Despite pockets of excellence, such as the IT sector, overall literacy rates in India remain far lower than in Asian and other key emerging market nations. India's infrastructure is notoriously inadequate. A 500km road journey can take as much as 24 hours, owing to poor road conditions, congestion and toll booths. * The competitiveness of local firms is undermined by reams of official red tape, from foreign investment restrictions to inflexible labor laws. * Intellectual property rights are poorly protected in India. India is one of nine countries on the 'priority watch list' for 2008 compiled by the Office of the US Trade Representative. Opportunities * India could enhance the competitiveness of local industry through further liberalization and deregulation. * Ongoing infrastructure projects ranging from roads, railways, and airports should provide opportunities for foreign investors for many years to come. * Indian Prime Minister Manmohan Singh is eager to reform the banking sector in order to increase the availability of long-term financing, particularly for large infrastructure projects. Threats * The arrival of Western players, including management consultants Accenture and technology giant IBM, is bidding up local wages in the outsourcing sector. India faces growing challenges from countries such as Vietnam and potentially Bangladesh in a variety of sectors. * China still remains a major competitor for FDI flows into India. India has excessive bureaucracy and poor infrastructure in comparison with China. The November 2008 Mumbai terror attacks demonstrated that security issues will increasingly be in investors' considerations. 3.1.3 India Political SWOT- India Strengths * India is the world's largest democracy. A secular constitution, framed in1950, officially guarantees justice, liberty and equality while aiming to promote fraternity among the citizenry. More than 1,000 political parties registered for the April-May 2009 general elections, competing for the preference of India's 714mn eligble voters. * Despite its multitude of problems, India has generally managed to avoid the hard authoritarian rule or military coups which have occurred in many other developing countries including India's neighbors Bangladesh, Myanmar and Pakistan. Weaknesses Large coalition governments complicate policy-making at the centre, as coalition partners and outside parties pursue their own agendas. The competence of state government varies enormously across India's 35 states and union territories. * India's tense relationship with Pakistan still weighs on regional stability. The two countries have gone to war three times since they were 'partitioned' on independence from British rule in 1947. Opportunities * India has edged closer to the US in foreign policy in recent years, with Prime Minister Manmohan Singh finally closing an eagerly sought civilian nuclear deal with Washington in October 2008. We see the deal as evidence of Washington's increased interest in having New Delhi as a geopolitical * Partner in Asia. The fact that both the US and India are democracies, and the presence of a two million-strong affluent Indian Diaspora in the US, are bringing the two countries closer together. * Thawing relations with Pakistan, following the earthquake crisis in October 2005 and a tentative peace process initiated in 2004, has made it easier for the parties to defuse potentially explosive situations, such as the Mumbai attacks in November 2008, which Islamabad acknowledges were planned and launched from its territory. Threats * Hindu nationalism presents a growing threat to India's constitutionally enshrined secularism. Communal tensions between the Hindu majority and minority Muslims, Christians, Sikhs and Buddhists have often erupted into deadly violence with the Gujarat riots in 2002-2003 being the latest instance of large-scale killings. * India has experienced a series of serious terrorist attacks over the past two years, perpetrated by radical Islamist as well as rural Maoist groups. The Mumbai attacks in November 2008, perpetrated by Pakistani-based terrorists, have raised the specter of further violence. 3.1 Malaysia Industry Overview 3.2.4 Malaysia Country Strengths Pharmaceuticals and Healthcare Industry SWOT Strengths * Increasingly progressive government policy * Improving local manufacturing standards * Robust market growth in recent years * Absence of price controls in the private sector * Sizeable generics market, given low patient purchasing power * Prescribing and dispensing dealt with by general practitioners * Halal medicines improving access to global Islamic markets * OTC and generics markets set to grow strongly over next 9 years Weaknesses * Markedly behind South Korea, Singapore and Taiwan in terms of pharmaceutical expenditure and Foreign Direct investment (FDI) * Lax patent law conspicuously below international standards * Reforms promotes generic products worsening conditions for Multinationals * Strict government drug pricing policy biased towards local producers * Local manufacturing predominantly of inexpensive, basic medicines * Hi-tech end Market reliant on importspressuring government finances * Lack of IPR protection and enforcement * Bilateral free trade agreement talks with the US have been abandoned Opportunities * Generics sector as an integral factor of market growth * Exports growing in the face of rising regional and global demand, as well as increasing trade links * Increasingly sophisticated pharmaceutical demand * Government desire to prevent and contain disease outbreaks * ASEAN harmonisation encouraging the adoption of Western regulatory standards and the improvement of Intra-regional trade * Potential membership of a multilateral trans-Pacific trade agreement. * Investment in the biotech sector development supported by government initiatives * Malaysia becoming an attractive location for medical tourism. * More transparent legislation and the attraction of foreign investment. * Increased trade and investment collaboration with China * Planned investment in the expansion of medical facilities * Malaysia offers a considerable contract manufacturing opportunities Threats * Government resistance to aligning domestic patent law fully with international standards, coupled with Encouragement of parallel trade * Existence of a significant counterfeit drugs sector * Government failure to revise discriminatory pricing policy * Increased focus on internationally recognized norms and legislation to disadvantage local players * Possible introduction of price ceilings on essential medicines * Potentially detrimental impact of the discussed Free Trade Agreement (FTA) with the US * Government seeking compulsory licenses for patented drugs 3.2.5 Malaysia Political SWOT Strengths * Malaysia is a successful example of a democratic Islamic state. Despite murmurs of discontent among hard-line Muslims in some states, Malaysia is unlikely to abandon moderate Islam * Despite having two other significant minority races (Chinese and Indians), Malaysia has not been rocked by any major racial unrest since 1969, lending credence to its sustainable multi-racial Society * The Malay half of the population holds a constitutionally enshrined special position in society, amounting to positive discrimination in not only jobs, but also wealth. Resentment is an obvious byproduct, and the challenge is to produce enough prosperity to reduce tension * The controversial Internal Security Act (ISA) - which allows for detention without trial - has been wielded by the government on several occasions with the explicit reason to quell unrest. However, some detentions have been viewed as an attempt by the government to suppress the opposition * The relatively weak performance by the ruling Barinas Nasional (National Front) in the general elections held on March 8 2008, has paved the way for the stalled reformist agenda - promised by former Prime Minister Abdullah Ahmad Badawi back in 2004 - to gather pace This would help to open up the country's closed political system and improve transparency and accountability within key institutions * Newly-appointed Prime Minister Najib Razak came into power promising reforms and changes. His actions have thus far been promising, potentially paving the way for a significant overhaul of Malaysia's political and economic system * Ethnic tension will remain a non-violent, but simmering, problem, so long as there remains a threat that the influence of hardliner Islam could revive. For now, however, the hardliners have lost much of their political clout * Despite a change of premier in April 2009, the ruling Barisan Nasional coalition will remain under pressure from a resurgent opposition Failure to adequately deal with issues such as corruption, a slowing economy and the divisive affirmative action policy could yet see Anwar Ibrahim's opposition coalition force the Barisan Nasional from power. 3.2.6 Malaysia Political SWOT Malaysia Economic SWOT Strengths * During the past four decades, Malaysia has transformed itself from a commodities-dependent economy into a major world source for lectronics and computer parts * Malaysia is the world's largest producer of rubber, palm oil, pepper and tropical hardwoods, and is still a net exporter of crude oil. All this provides a solid platform for economic growth Weaknesses * Malaysia's relative insulation from global energy price shocks is being eroded. It is now likely that within the next few years Malaysia will become a net importer of oil. * Malaysia's economic openness can be as much of a burden as a benefit, since it confers a high degree of vulnerability to global growth and capital flows. Opportunities * The opportunity for private-sector-led growth will improve as the government continues divestment of state shareholdings in order to raise funds to narrow the budget deficit. * Malaysia's majority Muslim population and the government's ongoing efforts to boost Islamic finance could see Malaysia become a major financial hub over the medium-term horizon. Threats * Wages are higher in Malaysia than in a number of its competitors, such as China and Vietnam, which could be a long-term hindrance to economic expansion. To maintain its competitive edge, Malaysia needs a steady stream of inward investment. * Malaysia's dependence on migrant labour, particularly for low-skilled jobs, poses a threat to longterm economic stability. 3.2.7 Malaysia Business Environment SWOT Strengths * Standards of corporate governance in Malaysia have greatly improved since the Asian financial crisis at the end of the 1990s – more so, in fact, than in many neighboring countries * Foreign companies, or at least foreign manufacturing companies, looking to do business in Malaysia will continue to be Weaknesses * State subsidization of prices will remain a peripheral but persistent part of daily economic life in Malaysia * Doing business in Malaysia will always, to some extent, mean dealing with the politically well-connected * Big construction projects – and big contracts for foreign construction firms - are unlikely to be as much of a priority for Malaysia's government as they were under the administration of former Prime Minister Mahathir Mohamad. Threats * The waterways and shipping lanes that surround Malaysia will continue to experience the threat of piracy and terrorism * Malaysia is at risk of losing out to China in the race for foreign investment. Penang, once the pillar of Malaysia's electronics industry, has seen an exodus of foreign firms, with Seagate, Motorola and Solectron all shifting production elsewhere in Asia * 3.2.8 Malaysia Industry Structure Malaysian pharmaceutical manufacturers have the capability to produce medicines in all dosage forms e.g. tablets (coated & non-coated), capsules (hard and soft gelatin), liquids, creams, ointments, sterile eye drops, small volume injectables (ampoules and vials), large volume infusions, dry powders for reconstitution and active pharmaceutical ingredients (API). Local manufacturers have also developed and launched off-patent generics and herbal products using their own brands. Currently, the local industry is producing about 30 per cent of the domestic demand, as well as exporting to the Asia-Pacific Rim countries, the Middle East, Africa, Latin America and Europe. Total exports in 2008 amounted to RM513 million (US$142 million). With the admission of Malaysia as a member of the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation/Scheme (PIC/S) in January 2002, the country's exports of pharmaceutical products received a boost, especially among the member countries, which include the EU, Australia and Canada. 3.2.9 Malaysia Industry Size To date, a total of 234 pharmaceutical companies with Good Manufacturing Practices certification have registered with the DCA. The principal regulatory authority on the production, import and sale of pharmaceuticals (including traditional medicines) in Malaysia is the Drug Control Authority (DCA) of the Ministry of Health. Of these, a total of 67 companies are involved in the production of modern medicines comprising mainly analgesics, antacids, anti - hypertensives, diuretics, antibiotics and anti-histamines in the form of tablets, capsules, drops, powders, creams, ointments, injectibles, syrups, ophthalmic and nasal preparations. The remaining 167 companies are local traditional and herbal medicine manufacturers 3.2.10 Malaysia Priority Status for Pharma Currently, the manufacture of pharmaceuticals and related products (which include pharmaceutical goods, clinical diagnostic reagents, gelatine or gelatine products, intravenous, dialysis or irrigating solutions, vaccines, medicaments) are eligible for normal Pioneer Status or Investments Tax Allowance incentives. The development, testing and production of pharmaceuticals promoted under biotechnology are eligible for High Technology Pioneer Status or Investments Tax Allowance incentives The pharmaceutical industry is one of the new growth areas targeted for promotion and development by the Government. The products manufactured by the Malaysian pharmaceutical industry are broadly categorised into four categories, i.e prescription medicines, over-the-counter (OTC) products, traditional medicines and health/food supplements. The pharmaceutical companies are mainly small and medium-sized companies engaged in the production of generic drugs, traditional medicines and herbal supplements as well as contract manufacturing for foreign multinational corporations (MNCs). 3.2.11 Malaysia Overview- Pharmaceutical Industry An analysis of Malaysia's healthcare spending in comparison with select Asian countries shows that Malaysia ranks fifth in healthcare spending, despite a relatively small population. The healthcare spending of Malaysians are growing at about 13 percent a year. This is indicative of a trend toward an increasingly healthy lifestyle and promises to open up opportunities for Malaysia's pharmaceutical companies to meet the increased demand for healthcare products. Currently, domestic participants dominate the scene for generics and over the counter (OTC) products, while multinational companies reign strong in branded/ethical drugs. According to Frost & Sullivan estimates, the Malaysian pharmaceutical industry, valued at $1,027 million in 2007, will grow to reach $1,800 million by 2013, at a CAGR of 10.5 percent. The key drivers that are envisaged to fuel this growth are as follows: * Medical tourism: Malaysia is fast emerging as a value-for-money destination with world-class health and medical facilities. In 2006, about 300,000 foreign patients received medical treatment in the country, generating foreign exchange earnings of more than $ 27.63 million. The rapid spread of awareness about medical tourism and increase in visits from foreign patients are likely to drive the demand for pharmaceutical products. * Market for generic products: In keeping with global trends, the patent expiry of blockbuster drugs, coupled with government support and rising healthcare costs, is likely to spur the demand for generic products. * Specialist therapy-driven market: The increased incidence of the top five death-related diseases and the booming biotechnology industry will contribute to the rise of the market for specialist therapies. * Increased demand for OTC/food supplements, herbal and traditional products: As the population ages and becomes more health conscious, there is an increased demand for OTC/food supplement products, as well as herbal and traditional medicines. This is expected to continue and will contribute to the growth of Malaysia's pharmaceutical industry. While there are strong drivers for the growth, the Malaysian pharmaceutical industry is faced by restraints as well. These are as follows: * The continued increase of imported products continues to impact the growth of local products. * As public hospital contracts tend to be awarded mainly to one particular generics manufacturer, the other local generic manufacturers have to compete with multinationals in the private market. * Since Malaysia is a free market, the intense price competition among the participants will affect profit margins. * The ban on direct-to-consumer advertising has also limited the marketing channels for pharmaceutical participants. * 3 PHARMACEUTICAL REGULATORY REGIME 4.2.12 IP Laws - India India’s IP laws leave a lot to be desired, but have improved dramatically since the country signed the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. A leading representative of WTO has stated that India must update its patent laws to international standards to encourage and reward innovation. The change is virtually inevitable as the reform will benefit domestic drug makers that are involved in R&D, as well as foreign players. If changes are not undertaken, investment in the country will fall, severely hampering economic development. 4.2.13 Approval times- India Likewise, approval times are shortening, with some innovative products being introduced in a relatively short period after mature market launch. 4.2.14 Recent Regulatory Developments - India In May 2009, the DCGI decided to withdraw the powers given to state-level regulators to issue export quality licenses, which are called Certificates of Pharmaceutical Products. The move was designed to centralize and standardize procedures. R&D centers In July 2009, the DCGI identified six R&D centers in which new drugs will be tested before they are launched. The government relies on the clinical data provided by drug makers and believes that testing new drugs in recognized government laboratories will provide more quality assurance to consumers. At that time, the government was trying to create public-private partnership (PPP) models to enhance infrastructure and the testing facilities of these laboratories. 4.2.15 Biotechnology Regulatory Board - India In July 2009, the Indian Department of Biotechnology (DBT) planned to create a separate regulator for the biotechnology sector. The National Biotechnology Regulatory Board would be responsible for identifying and controlling drugs and vaccines which are developed from natural sources. In April 2009, inspectors from the WHO audited the Central Drugs Standard Control Organization (CDSCO) and the Central Drug Laboratory. Encouragingly, a ‘high score of 100’ was given, which was a vast improvement on the 2007 inspection, when a score of 40 was assigned. 4.2.16 US FDA’s new office- India The US FDA’s opening of a new office in India during January 2009 is likely to boost Indian pharma companies’ attempts to process their US FDA applications and accelerate approvals for marketing in the global market. At that time, the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) had also shown an interest in setting up an office in the country. 4.2.17 IP Regime - India A leading representative of WTO has stated that India must update its patent laws to international standards to encourage and reward innovation. The change is virtually inevitable as the reform will benefit domestic drug makers that are involved in R&D, as well as foreign players. If changes are not undertaken, investment in the country will fall, severely hampering economic development. 4.2.18 Pricing and Reimbursement- India The NPPA is responsible for fixing and controlling the prices of 74 bulk drugs and formulations under the Essential Commodities Act, although only a few OTC ingredients (such as ephedrine) are price controlled. The latest round of price cuts came in April 2008, as part of the populist 2008-2009 Union Budget, despite a cut to excise duty on all formulation products. Overall, price control covers around 40% of the total pharmaceutical market in India. Given that a number of essential drugs are already imported due to their low profit margins at home, the move to include more drugs under the price-fixing system has potential to worsen access to products and put the local industry at a disadvantage. This would open the door to regional competition, especially from parts of South East Asia. Furthermore, industry sources claim the change may also encourage the counterfeit industry to the overall detriment of both legitimate pharmaceutical industry and public health. The NPPA’s price controls and opaque pricing mechanisms are a subject of long-standing criticism. The agency has been keen to keep prices as low as possible, and has been reluctant to award price rises in line with inflation. The profits of pharmaceutical companies are also limited to 8-13% of pre-tax sales. Industry players, and in particular multinationals, view such practices as a major barrier to market entry and have voiced their opposition accordingly. As of July 1 2006, the maximum retail price (MRP) of a drug sold in India includes local taxes. The NPPA has very little access to market information originating from retail outlets. Therefore, it relies on prices that drug companies give chemists. This is sourced by the market research firm ORG IMS Research, a joint venture (JV) between IMS Health and ACNielsen. The Indian government announced in November 2006 that the country’s pharmaceutical industry voluntarily reduced the prices of 886 pharmaceutical products by between 0.26% and 74.50%. Medicines targeted for the cuts included anti-diabetic agents and antibiotics, as well as painkillers and antihypertensive. However, local sources decried the reductions, claiming that the list of formulations covered only approximately 10% of the market by volume and around 5% by value. Although the list included nearly 100 types of drugs, the leading brands were not included. This led to speculation that the pharmaceutical industry is merely negotiating with the government in order to prevent regulation on Essential drugs, by offering some price concessions on its lowest-selling brands. Central VAT is 16.0% or 57.5% of the MRP. State VAT accounts for a further 4% of the drug price, with wholesale margins being around 10% of the MRP (excluding taxes). The final consumer price includes a margin of 20% of the MRP (excluding taxes). Price-controlled products have a retail margin set at 16% by the Drugs Price Control Order (DPCO). Both wholesale and retail margins are determined by the OPPI and the All India Organization of Chemists & Druggists (AIOCD). 4.2 Malaysia Regulatory Regime 4.3.19 Malaysia Incentives Effective from the year of assessment 2009, the corporate tax rate is reduced to 25% and the maximum individual tax rate is revised from 28% to 27%. Malaysia Tax also offers a wide range of tax incentives for manufacturing projects under the Promotion of Investments Act 1986 and the Income Tax Act 1967. The main incentives are the Pioneer Status, Investment Tax Allowance, Reinvestment Allowance, Incentives for High Technology Industries and Incentives for Strategic Projects and Incentives for the Setting-up of International/ Regional Service-based Operations. Worship * Talented, young, educated and productive workforce * Multilingual workforce speaking 2-3 languages, including English * Comprehensive system of vocational and advanced skills training. * Harmonious industrial relations with minimal trade disputes 4.3.20 Malaysia Regulation The manufacture and marketing of pharmaceutical products in Malaysia are as heavily regulated as in most developed countries. All medicines marketed in Malaysia are required to be registered by the Drug Control Authority (DCA) of the Ministry of Health. All manufacturers, importers and wholesalers are required to the licensed by the DCA.  http://www.bpfk.gov.my The registrations of prescription and OTC medicines, requires proof of efficacy, quality and safety, and are subjected to stringent screening and testing as well as regular and random post-marketing surveillance and testing. All manufacturers in Malaysia are subjected to regular and random inspection by DCA inspectors. To be licensed, manufacturers must be in full compliance with the Code of Good Manufacturing Practice, which is currently based on the PIC Code as Malaysia is currently a PIC/S member. Medicines are regulated under the Poisons Act, the Dangerous Drugs Act and the Drugs Act. Medicine advertisements require prior approval by the Medicines Advertisement Board. Malaysia is a member of the WTO and has acceded to the TRIPS agreement. Patents are registered and copyrights are protected. 3.3.3 Malaysia Regulation The manufacture and marketing of pharmaceutical products in Malaysia are as heavily regulated as in most developed countries. All medicines marketed in Malaysia are required to be registered by the Drug Control Authority (DCA) of the Ministry of Health. All manufacturers, importers and wholesalers are required to the licensed by the DCA.  http://www.bpfk.gov.my The registrations of prescription and OTC medicines, requires proof of efficacy, quality and safety, and are subjected to stringent screening and testing as well as regular and random post-marketing surveillance and testing. All manufacturers in Malaysia are subjected to regular and random inspection by DCA inspectors. To be licensed, manufacturers must be in full compliance with the Code of Good Manufacturing Practice, which is currently based on the PIC Code as Malaysia is currently a PIC/S member. Medicines are regulated under the Poisons Act, the Dangerous Drugs Act and the Drugs Act. Medicine advertisements require prior approval by the Medicines Advertisement Board. Malaysia is a member of the WTO and has acceded to the TRIPS agreement. Patents are registered and copyrights are protected. 3 PHARMACEUTICAL PRODUCTION- MANUFACTURING India accounts for almost 10% of global drug production by volume and is increasingly focusing on indigenous R&D. India accounts for almost 10% of global drug production by volume and is increasingly focusing on indigenous R&D. There are about 3,000 pharmaceutical manufacturers, the vast majority of which focus on generic drugs. India is home to 250 large manufacturers, and the domestic drug industry employs a workforce of approximately 460,000 people. However, underproduction of essential drugs is a considerable problem in India, which has led to an increase in imports of these products, despite strict price controls. 5 PHARMACEUTICAL MARKET 6.1.1 Pharmaceutical Market- India India has one of the largest pharmaceutical markets in Asia, currently Valued at US$16.32bn. India is the fourth largest market in the Asia Pacific region, behind Japan, China and South Korea. Pharmaceutical expenditure in 2009 was 1.24% of GDP,which is just below the global average of 1.40%. . 6.1.2 Pharmaceutical Growth- India Significant market growth will be sustained over the medium term. By 2014 and 2019, overall pharmaceutical sales will reach INR 1,539bn (US$40.18bn) and INR2,648bn (US$70.60bn) respectively. 6.1.3 Market Risks - India India’s IP laws leave a lot to be desired, but have improved dramatically since the country signed the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. Likewise, approval times are shortening, with some innovative products being introduced in a relatively short period after mature market launch. 6.1.4 Indian- Market Summary- India India is the fourth largest market in the Asia Pacific region, behind Japan, China and South Korea. However, US$14 per-capita spending is among the lowest in the world, similar to the levels of Pakistan and Vietnam. Pharmaceutical expenditure in 2009 was 1.24% of GDP, which is just below the global average of 1.40%. Generic drugs will continue to account for the vast majority of drug consumption in India (at around 75% of total Pharmaceutical Market By Sub-Sector (US$bn) spending), largely owing to the low cost and limited purchasing power of most of the population. A substantial amount of the Indian generic drug market comprises illicit products, due to the country’s lax patent laws. However, conditions are quickly changing for the better. In recent years, India has begun to export large amounts of generic drugs to the International market, which has proved highly lucrative. 6.1.5 Pharmaceutical Market- India India has one of the largest pharmaceutical markets in Asia, currently valued at US$16.32bn. However, due to the country’s vast 1.17bn population, individual spending is actually very low. This will change over our five-year forecast period as the economy develops and the middle class expands. 6.1 Pharmaceuticals Market Malaysia 6.2.6 Malaysia Growth Rate Over the last decade, the Malaysian pharmaceutical market grew at between 8 to 10% annually. The 2004 market size was estimated to be about RM3 billion for prescription and OTC medicines. The market for traditional medicines together with health and food supplements was estimated to be about RM2 billion. However the market still relies, to a significant extent, on imports. Manufacturers There are currently 296 manufacturers in Malaysia licensed by the Drug Control Authority. Of these, 87 are licensed to produce pharmaceuticals. There are also another 148 manufacturers licensed to produce traditional medicines and 61 for cosmetics. Another significant development in the industry is the growth in pharmaceutical exports. The increasing awareness by local manufacturers of the export potential of Malaysian pharmaceuticals had resulted in an average growth of 10.7% between 1995 to 1999 in which the export value totaled RM280 million 6.2.7 Malaysia Growth Rate Over the last decade, the Malaysian pharmaceutical market grew at between 8 to 10% annually. The 2004 market size was estimated to be about RM3 billion for prescription and OTC medicines. The market for traditional medicines together with health and food supplements was estimated to be about RM2 billion. However the market still relies, to a significant extent, on imports. There are currently 296 manufacturers in Malaysia licensed by the Drug Control Authority. Of these, 87 are licensed to produce pharmaceuticals. There are also another 148 manufacturers licensed to produce traditional medicines and 61 for cosmetics. Another significant development in the industry is the growth in pharmaceutical exports. The increasing awareness by local manufacturers of the export potential of Malaysian pharmaceuticals had resulted in an average growth of 10.7% between 1995 to 1999 in which the export value totaled RM280 million. 6.2.8 Malaysia Pharmaceutical Market Growth Despite the economic downturn, the Malaysian pharmaceutical market posted a 3.4% year-on-year (y-o-y) growth in 2009, to reach the value of MYR4.29bn (US$1.24bn) at consumer prices. Through to 2014, and in line with economic recovery, increases in medical and healthcare modernization, we forecast that the market will develop at a compound annual growth rate (CAGR) of 7.30% in local currency terms, to reach MYR6.10bn (US$1.75bn) in 2014. The strongest-growing prescription segment will be generics (posting a CAGR of 9.67%, in contrast to 4.09% expected for patented drugs), even though higher value development will be precluded by their lower prices. Over-the-counter (OTC) products will gain market share at the expense of prescription drugs, as the regulatory and economic environments become more conducive to their development. In the meantime, although Malaysia remains a moderately attractive regional market, again placing eighth of the 15 Asian Pacific markets surveyed in our Business Environment Rating (BER) matrix for Q210. T The Malaysian pharmaceutical market e country's biotechnology potential has increased. Some of the most notable developments over the past few months include the signing of a licensing agreement between local Inno Biologics and German CEVEC Pharmaceutical GmbH, under which the former will use the latter's innovative technology to develop cell lines and produce biopharmaceutical products. Inno Biologics also forged an agreement with compatriot CCM Duopharma to develop a version of erythropoietin (EPO) for the treatment of anaemia associated with cancertreatment or kidney failure, which has the potential to reduce the governments expenditure on imported EPO by as much as 40%. 6.2.9 Malaysia Size of Pharmaceutical Market The macroenvironment will be defined by an increase in GDP and population during the forecast period. Politically, the government aims to reduce its fiscal deficit in 2010 and 2011, following a recent period of fiscal stimulus and loose monetary policy. Economically, Malaysia has a below average projected GDP for the Asia Pacific region, although GDP growth is expected to increase in the forecast period. The Economist Intelligence Unit (EIU) projects GDP to be slightly less than Thailand in 2015. Legally, the US Trade Representative (USTR) has kept Malaysia on its Watch List for 2010, and there are concerns held by the US trade association PhRMA over the counterfeiting of medicines. Demographically, the population is estimated to have a high growth rate. By 2015, the EIU projects that the population of Malaysia will be less than half the size of Thailand. The elderly population is expected to grow in the forecast period. Malaysia has a largely young population, with those aged between 0-14 years old making up nearly a third of the total. The pharmaceutical market is small and relies heavily on the import of medicaments. Espicom projects the market to grow at a healthy CAGR in the forecast period. However, it will remain as one of the smallest pharmaceutical markets in the Asia Pacific region in size terms, slightly larger than Pakistan. 6.2.10 Malaysia Export Opportunities The pharmaceutical industry in Malaysia relies heavily on imported products, which fulfill 70 percent of demand, as Malaysians place higher trust in imported brands. The major imported drugs in Malaysia are lifestyle drugs such as cholesterol lowering and anti-diabetics, supplements to treat erectile dysfunction, cardiovascular, and oncology drugs. This reliance on imported drugs has resulted in intense competition between imported and locally manufactured products, resulting in local companies looking for export opportunities. Currently, domestic companies export to countries in Latin America, Asia Pacific, the Middle East, and Africa. After the acceptance into the Pharmaceutical Inspection Co-operation Scheme (PICS), Malaysia has started to venture into the European Union, Australia, Canada, and other PICS country members. In the vitamins segment, key export destinations include Singapore, Vietnam, Brunei, Hong Kong, Taiwan, India, Japan, and Germany, while other destinations in Africa and Central America bring the total to 30 countries. The total export value of drugs from Malaysia stood at $131 million in 2004 and Frost & Sullivan estimates the value to grow at a rate of 5.4 percent between 2006 and 2103. 6 PHARMACEUTICAL SEGMENTS 7.2.11 Generic drugs- India Generic drugs will continue to account for the vast majority of drug consumption in India (at around 75% of total spending), largely owing to the low cost and limited purchasing power of most of the population. A substantial amount of the Indian generic drug market comprises illicit products, due to the country’s lax patent laws. However, conditions are quickly changing for the better. In recent years, India has begun to export large amounts of generic drugs to the international market, which has proved highly lucrative 7.2.12 Prescription Drugs- India The separation of the prescription and OTC medicines remains problematic, given the large volume of prescription drugs available over the counter as well as the presence of counterfeit drugs. The development of the healthcare system should improve the situation with the respective sectors gradually becoming more clearly defined. While prescription drugs account for approximately 85% of sales, the share of drugs prescribed by a doctor is likely to be far lower. Traditional and ayurvedic medicines very popular; however, these types of interventions are not included in our pharmaceutical market calculation. Alimentary tract, antibiotics and respiratory drugs are some of the most prominent prescription segments, as are cardiovascular and nervous system remedies, with vitamins leading the OTC sector. 7.2.13 Prescription and OTC Medicines- India The separation of the prescription and OTC medicines remains problematic, given the large volume of prescription drugs available over the counter as well as the presence of counterfeit drugs. The development of the healthcare system should improve the situation with the respective sectors gradually becoming more clearly defined. While prescription drugs account for approximately 85% of sales, the share of drugs prescribed by a doctor is likely to be far lower. Traditional and ayurvedic medicines very popular; however, these types of interventions are not included in our pharmaceutical market calculation. Alimentary tract, antibiotics and respiratory drugs are some of the most prominent prescription segments, as are cardiovascular and nervous system remedies, with vitamins leading the OTC sector. 7.2 Malaysia Pharmaceutical Segments 7.3.14 Malaysia Generic Drugs Foreign pharmaceutical companies are encouraged to set up facilities in Malaysia to manufacture off-patented drugs. Foreign pharmaceutical companies are encouraged to set up facilities in Malaysia to manufacture off-patented drugs. 7.3.15 Malaysia Segments of Pharmaceutical Market In December 2009, there were over 200 pharmaceutical manufacturers licensed by the Drug Control Authority, although nearly two-thirds of these were traditional medicine manufacturers. There is little multinational manufacturing activity in the country due to strict regulations, although these may be relaxed in the future. Ranbaxy and GSK are the only examples of the large global multinational companies which have manufacturing operations in the country. As most pharmaceutical manufacturing is for local consumption, the balance of pharmaceutical trade will remain considerably negative, and the deficit is likely to increase in the forecast period. The government has identified biotechnology as one of the core technologies to accelerate the transformation of Malaysia into a knowledge-based economy and an industrialised nation by year 2020. The Malaysian Biotechnology Corporation (BiotechCorp) is the leading agency responsible for the co-ordinated implementation of the National Biotechnology Policy (NBP). With the government focusing on biotechnology as one of the new drivers of economic growth, a number of new biopharmaceutical research companies have emerged in recent years. The most important biologic manufacturers include Bioven, CCM Duopharma, Inno Biologics and Ninebio. The National Pharmaceutical Control Bureau (NPCB) has adopted the Guidance Document and Guidelines for the Registration of Biosimilars, making Malaysia only the second country, after Australia, in the Asia Pacific region to adopt regulations for biosimilar registration. In March 2010, Indian-based Avesthagen announced that it has begun manufacturing two biosimilar products at Inno Biologics’ Putra Nilai facilities in Malaysia. 7.3.16 Malaysia: Demand for Generics on the Rise The Government will continue to be the major purchaser of generic products in order to reduce the cost of healthcare financing. With the increased number of public hospitals, the demand for generic products is also set to rise. Frost & Sullivan believes that bio-generics are set to become the next big battleground between multinational and local pharmaceutical companies. The high profits generated from biological therapeutics will attract great interest among the local manufacturers in the future. 7.3.17 Malaysia: OTC/Herbal Products Malaysians are making a lifestyle shift and are turning toward wellness and self-administered healthcare, driven by a fast-paced life and the realization that accompanying chronic illnesses are becoming more prevalent and cannot always be cured with conventional allopathic therapies. In light of this, they are increasingly seeking out alternative therapies to maintain health and prevent illnesses. This shift, in conjunction with growing awareness of the benefits of non–conventional approaches, will influence the growth and strengthen the OTC drugs and herbal medicines sectors, and in turn create growth opportunities for domestic pharmaceutical participants. 7 PHARMACEUTICAL R&D 8.3 Research and Development- India Despite a challenging intellectual property regime, pharmaceutical research and development (R&D) activates are increasing in India. The sector received a boost in September 2009, when the MSD- Welcome Trust Hilleman Laboratories was launched in India. With US$147mn in start-up funding, the organization will initially attempt to develop heat-stable vaccines and a group A streptococci preventative. The MSD-Welcome Trust Hilleman Laboratories will also look to optimise existing vaccines. 8.4 Malaysia Research & Development A significant development of the industry over the last decade is the strong emphasis placed by local manufacturers on research and development, particularly in areas of product innovation and improvement as well as in bio-pharmaceutics and natural products with resultant patents. 8 PHARMACEUTICAL INDUSTRY PLAYERS- COMPANIES 9.5.18 Foreign Pharmaceutical Companies - India The March 2010 data from AIOCD Pharmasofttech AWACS reveal that Pfizer, Abbott Laboratories, Novartis, Solvay, Eli Lilly and Merck Sharp & Dohme (MSD) posted year-on-year (y-o-y) growth rates of 32.7%, 47.6%, 23.7%, 56.4%, 25.9% and 84.5%, respectively. 9.5.19 Pharmaceutical Companies- India Indian pharmaceutical companies are under-appreciated investment opportunities. The key reason for this view is the recent upgrade of our forecast for medicine sales in the world's second most populous country. Given the intrinsic market access issues facing foreign players, domestic drug makers are ideally placed to capitalize on one of the world’s most promising emerging pharmaceutical markets. Moreover, Indian pharmaceutical companies are increasingly penetrating developed countries where margins are higher and operational risks are lower, such as the US and Western Europe. 9.5.20 Pharma Industry Players- India There are about 3,000 pharmaceutical manufacturers, the vast majority of which focus on generic drugs. India is home to 250 large manufacturers, and the domestic drug industry employs a workforce of approximately 460,000 people. However, underproduction of essential drugs is a considerable problem in India, which has led to an increase in imports of these products, despite strict price controls. 9.5.21 Competitive Landscape- India India boasts of a diverse pharmaceutical industry portfolio, directly employing nearly 0.5mn people. It consists of pharma manufacturers in India (primarily research-based companies with international links) organised under the OPPI umbrella, and foreign players operating from abroad. The Indian pharmaceutical sector has seen tremendous growth in the last decades and is showing few signs of abating. Indeed, Indian drug companies are making their mark on the wide international market. Annual pharmaceutical R&D spend is in excess of US$520mn, according to AESGP data. The domestic market, estimated at more than INR770.8bn (US$16.32bn) in 2009, ranks high in quality, technology, organisation and range of products manufactured in comparison to other countries at a similar stage of development. However, it is fragmented, with more than 20,000 sites registered for production. Around 250 firms hold more than 70% of the market. The concentration in the hands of the top 10 players is more than 5%. Local producers supply 70%+ of the market for bulk drugs, intermediates, formulations, capsules and injectables. High output is guaranteed by a large and cheap labour force, low production and R&D costs, as well as a strong balance of trade. India is one of the regional leaders in biotech and similar advances, taking advantage of its internal resources and international connections. Drug manufacturing is one of the relatively few industries in India open to 100% foreign ownership. The situation will continue to encourage international interest in the local market, which 8.2.1 Malaysia Status Of Pharma Companies According to the Drug Control Authority (DCA) of the Ministry of Health, currently there are 234 pharmaceutical companies licensed by theDCA comprising 167 traditional medicine companies and 67 modern medicine companies. 8.2.2 Malaysia Companies Competitive Landscape Domestic Pharmaceutical Industry The local industry remains focused on the production of generics and lower-tech medicines. The localdrug industry is dominated by one company, Pharmaniaga, which controls around 30% of the total market. In the future, domestic sector development is likely to remain centered on the operations of the industry’s larger producers, as these look to benefit from the onset of ASEAN harmonisation, which has brought marked growth in the private sector and opened up export markets. The modernization of the sector is also likely to see many smaller drug companies disappear as a result of the tightening of regulations, with the costs of the required upgrading being a major problem. Pharmaniaga has had a turbulent start to 2010. Following the February release of financial results that BMI described as 'disappointing', the company's manufacturing licence has been revoked by the Pharmaceutical Services Division of the Ministry of Health as of March 2010. The firm's majority shareholder, UEM Group Berhad, has subsequently failed to deny claims that it plans to divest its interest in Pharmaniaga. Despite these setbacks, the outlook for Pharmaniaga is positive. According to Edge Malaysia, sources suggest that the pharmaceutical company has retained its lucrative 10-year concession for the provision ofgeneric drugs to the Malaysian government. This deal will provide a steady revenue stream and allow Pharmaniaga to increasingly explore growth strategies such as ramping-up exports to neighbouring countries and producing higher-value medicines. The revocation of the manufacturing licence followed aroutine audit of Pharmaniaga's Bangi plant. Inspectors found 'a few' non-compliance issues, according tothe firm's managing director, Mohammed Abdullah. He believed that the problems could be rectifiedwithin a week and ministry officials would return 'very soon'. If the facility shutdown exceeds seven days, customers will be affected, added Abdullah. Medicine manufacturing accounted for approximately 10% of Pharmaniaga's turnover, or US$38.2mn, in2009. However, it is the firm's most profitable division. It is BMI's view that a significant delay to the resumption of production at the Bangi factory will have two main effects. Sales and profitability will drop due to a lack of products reaching the market. Demand for Pharmaniaga services, such as distribution activities, will also decline as result of lower stakeholder confidence in the Shah Alam-based firm. The uncertainty over the future involvement of UEM Group Berhad in Pharmaniaga is a moderate concern. The drug maker’s parent company is in negotiations with several parties to dispose of its entire86.31% equity stake. UEM Group Berhad has until March 29 to ensure it meets the 'public spread requirement' – a 25% public shareholding in Pharmaniaga. BMI believes a merger between Pharmaniaga and compatriot drug maker CCM Duopharma remains a distinct possibility. At the end of 2007, there were approximately 235 GMP-compliant manufacturers in Malaysia licensed bythe DCA, some of which act as sales agents for international pharmaceutical companies. Around 30 arelicensed to manufacture prescription medicines, while the rest produce OTC medicines. Some 140manufacturers are licensed to produce traditional and herbal medicines, with such products integrated intothe mainstream healthcare system. Malaysian companies’ market share rose to 20-30% in recent years, in comparison to the 1995 figures of only 10-15%. In January 2009, the health ministry of China allowed the importation of medicines from Malaysia that had been certified by the Malaysian government. Malaysia’s membership of the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation/Scheme (PIC/S) puts localmanufacturers in a good position to export to developed markets. Foreign Pharmaceutical Industry Due to their strength in innovative products, multinationals control about 70% of the pharmaceuticalmarket, especially in terms of innovative and specialized products. All of the major multinational drug companies are represented in Malaysia, although only a small number have a direct manufacturing presence, largely as a result of restrictive regulatory practices. Pharmaceutical Demand A survey carried out by the Ministry of Health, which was published in May 2006 and aimed to be the first independent study of its kind, indicated that the pharmaceutical market is at a comparatively early stage of development. The research confirms the fundamental role played by older, mainly generic, drugs and copies. Significantly, sales of the top 40 drugs available in 2004 were only equivalent to around 10% of the country’s total pharmaceutical market. Furthermore, in all but the most life-saving and inexpensive drugs for chronic disease – such as metformin in diabetes – the private market continues to account for the overwhelming majority of sales. Moreover, the data indicate that true prescription drugs account for a less substantial share of overall demand than in advanced markets. This is unsurprising in light of the availability of powerful OTC pharmaceuticals, and the low-cost focus of public sector reimbursement. 8 PHARMACEUTICAL INDUSTRY ENVIRONMENTS- KEY DRIVERS 9.1.1 Country Risk- India Scores for economic structure and corruption are moderate in global terms. But India is held back by an entrenched culture of bureaucracy, arguably a vestige of colonial rule. On a positive note, the country scores high for policy continuity, which is backed up by the longest and most exhaustive constitution in the world. 9.1.2 Key Drivers - India Key drivers of medicine demand are the country's booming economy and greater state involvement in the healthcare sector 9.1.3 Key Growth Factors- Industry- India Healthcare expenditure in India is expected to increase from INR2, 088bn (US$44.21bn) in 2009 to INR2, 326bn (US$53.60bn) in 2010. Due to the strengthening rupee, this equates to growth of 11.4% in local currency terms and 21.2% in US dollar terms Annual per-capita spending on medical services was US$37 in 2009, well below the regional average of US$123. The government accounts for just over a percent of GDP are a disappointing 3.4%. By 2014, yearly healthcare spending will have risen to INR3, 648bn (US$95.24bn). The key driver of healthcare spending in India is the expanding economy. India’s real economy enjoyed a steady return to form in the latter half of 2009, and BMI’s Country Risk team is confident this momentum will be sustained well into FY2010/11, despite official efforts to cool activity. The main engine of the economy – domestic demand – will be fuelled by rising private consumption and fixed investment levels, as well as the need to rebuild inventories. In February 2010, BMI upgraded its real GDP growth forecasts for FY2009/10 and FY2010/11 to 7.0% (from 6.1%) and 7.5% (from 6.4%), respectively, putting India right among the world’s top economic performers in the coming years. India’s growing and ageing population is another reason for healthcare spending increasing rapidly. According to the United Nations Population Division, the number of people living in the Asian country is forecast to increase from 1.21bn in 2010 to 1.29bn in 2015 – a rise of 6.6%. Between 2025 and 2030, India’s population will exceed that of China’s and become the largest in the world. The percentage of India’s population aged 65 or over is expected to increase from 4.9% in 2010 to 13.7% in 2050. India’s government has minimal involvement in the healthcare sector. In its place, health insurance companies and private hospital chains are experiencing robust sales growth. The increased provision of low-cost generic drugs in underserved rural areas, such as that offered by Novartis’s Arogya Parivar (Healthy Family) project, introduced in 2008, is also boosting the private healthcare market. Growth in healthcare expenditure will be moderated by a greater uptake of vaccines and continued lack of state investment. 9.1.4 Key Growth Factors- Macroeconomic- India A Steady Return to Form In 2010 BMI View: India's domestic demand-driven economy continues to enjoy a steady cyclical recovery, and we are confident that this growth momentum will spill over into FY2010/11 (April-March) despite official measures to tone down accommodative policies. As a result, we have bumped up our real GDP growth projections for FY2009/10 and FY2010/11 to 7.0% (from 6.1%) and 7.5% (from 6.4%), respectively. India's real economy has enjoyed a steady return to form in the latter half of 2009, and we are confident that this momentum will be sustained well into FY2010/11 in spite of official efforts to cool activity. The main engine of the economy – domestic demand – will be fuelled by rising private consumption and fixed investment levels, as well as the need to rebuild inventories. In our view, these collective factors will more than offset tighter government spending and a smaller positive contribution from net exports. With this in mind, we have upgraded our real GDP growth forecasts for FY2009/10 and FY2010/11 to 7.0% (from 6.1%) and 7.5% (from 6.4%), respectively, putting India right among the world's top economic performers in the coming years. 9.1.5 Plenty of Demand- India Critical to our forecasts is the belief that public spending has played a less important role in driving the economic recovery in India than in other Asian economies, which points to a less volatile growth Trajectory going forward. We note that government consumption has contributed roughly 2.6 percentage points (pp) to headline growth in the last four quarters, above the 0.5pp typically seen in this category. Nevertheless, it has been final private sector demand that has really ignited the economic upturn, with household spending and gross fixed capital formation accounting for 5.6pp of Q309's 6.7% growth rate. Both of these expenditure categories will continue to benefit from financial sector stability, surging capital flows and falling unemployment in 2010, even as the government unwinds its extraordinary stimulus. Improving global liquidity has revived foreign direct investment (FDI) and foreign institutional investment (FII), particularly in the real estate, infrastructure and construction sectors. Meanwhile, fundraising activity (both domestically and via overseas borrowings) has perked up, which bodes well for increased capex next year. Adding business restocking into the equation – after a massive 45.4% y-o-y depletion in Q309 – there appears to be sufficient internal demand to keep the economy motoring along. What is more, the normalization of rates, which we expect to kick off in early 2010, is unlikely to have a profound impact on private sector demand. For one thing, we do not expect monetary policy to be tightened with anywhere near the same aggression as the 275bps easing cycle seen between November 2008 and April 2009. We are penciling in only 100bps of hikes during the calendar year, taking the repo rate to 5.75% by end-2010. More importantly, perhaps, we note that credit growth has not played a particularly significant role in the recovery story to date. While domestic passenger car sales (to take one example of consumer spending) have continued to surge, with growth hitting a whopping 60.8% y-o-y in November, this has occurred at a time when commercial credit growth has moderated to its lowest rate in decades. 9.1.6 From Primary To Tertiary- India On the output side, the deficient monsoon has had less of an impact on agricultural output than previously feared. While we could yet see some contagion of the Q409 numbers due to a poor summer (kharif) crop, a better-than-expected winter (rabi) harvest is likely to be a mitigating factor. The important point to note is that India's economy is now less susceptible to poor monsoon rainfall than during previous downturns. For one, agricultural output is less dependent on the kharif harvest. Despite a decline in kharif production in Q309, it only accounted for 18% of agriculture and mining output during the quarter. More significantly, the economy as a whole is less reliant on the agricultural sector than during previous business cycles. In nominal GDP terms, agriculture has fallen from around 50% in FY1950-51 to just 16.5% in FY2008/09. In contrast, services have taken up a greater share of national output, accounting for 63% in FY2008/09 (from 35% in FY1950/51). Bottom line is that rural incomes in India, and by extension spending, are no longer dictated by seasonal factors. 9.1.7 Risks To Outlook- India Our largely bullish growth outlook does come with caveats, however. First off, we acknowledge that a sharper tightening of public spending than currently assumed could yet take the fizz out of private sector consumption and investment. Similarly, should the Reserve Bank of India (RBI) adopt a more hawkish position in the face of resurgent consumer and asset price inflation, this again could dampen sentiment and constrain financing. On the external front, a second dip in activity in the US (and to a lesser extent in China) could provoke another drying up of foreign capital flows. 9.1.8 Risks To Outlook Medium Term Outlook Time to Shine'- India There are many compelling reasons to stay long-term bullish on India – a domestic consumption-to-GDP ratio of 70%; rising productivity; a massive consumer base; net domestic savings worth about 35% of GDP; increasing liberalization (both financial and commercial); improving physical infrastructure and telecommunications; policy credibility – to name a few. With these factors in mind, we see Indian trend growth settling at around 7.8% over the next decade. Nevertheless, we will need to see greater progress on fiscal retrenchment and critical reforms for India to reach its true growth potential. With a third of federal government spending needed to service interest, and the public debt burden at around 80% of GDP, a fiscal roadmap is urgently needed. While we expect to see a better fiscal performance in FY2010/11, as revenues recover and expenditure is trimmed, wholesale reforms are needed. Recent efforts not only to implement a nationwide goods and services tax (GST), but to also divest state interests in strategic companies is a good start, but more will be needed to plug the country's chronic budget shortfalls and prevent a crowding out of the private sector. Financial sector reform is another key policy area. We expect the government to push through pension and insurance reforms in 2010, which would potentially increase financial intermediation and competition in the industry. Successful passage would allow for better resource allocation, as more savings are channeled into investment. Prescription Drug Market Forecast Prescription Drug Market Forecast represents one of the most significant growth opportunities in the global pharmaceutical industry. Sales of prescription medicines are forecast to Increase from INR653.6bn (US$13.84bn) in 2009 to INR756.9mn (US$17.44) in 2010. Due to the strengthening rupee, this equates to growth of 15.7% in local currency terms and 26.0% in US dollar terms. A booming economy and greater state involvement in healthcare will ensure this growth trajectory continues over the medium term. BMI’s Pharmaceutical Expenditure Forecast Model reveals that sales of prescription drugs will post 2009-14 CAGRs of 14.6% in rupees and 19.6% in US dollars. The respective 10-year CAGRs are 13.1% and 15.7%. By 2019, the prescription drug sector will have reached a value of INR2,231.8bn (US$59.52bn). Prescription drugs account for the majority of India’s pharmaceutical market, which we define as sales of OTC medicines plus prescription drugs. As of year-end 2009, prescribed medicines accounted for 84.8% of the overall market. This share is expected to decrease gradually through to 2013, before slowly rising again. A key driver of prescription drug sales in India is the modernization and expansion of the healthcare sector. According to the Central Bureau of Health Intelligence, the number of hospitals in the South Asian country increased from 5,479 in 2005 to 11,289 in 2008 – a rise of over 100%. A total of 6,298 hospitals with 142,396 beds are situated in rural areas while 2,774 hospitals with 324,206 beds are in urban zones. The number of doctors registered with state medical councils has increased from 560,000 in 2000 to 725,000 in 2008. More prescribers, combined with a larger and generally wealthier population, equates to higher prescription drug sales. However, this growth will be moderated by fewer dispensing doctors, a trend for rational prescribing, prosecution of quacks and less off-label prescribing. 9.1 Industry Overview 9.2.9 Malaysia Industry Structure Malaysian pharmaceutical manufacturers have the capability to produce medicines in all dosage forms e.g. tablets (coated & non-coated), capsules (hard and soft gelatin), liquids, creams, ointments, sterile eye drops, small volume injectables (ampoules and vials), large volume infusions, dry powders for reconstitution and active pharmaceutical ingredients (API). Local manufacturers have also developed and launched off-patent generics and herbal products using their own brands. Currently, the local industry is producing about 30 per cent of the domestic demand, as well as exporting to the Asia-Pacific Rim countries, the Middle East, Africa, Latin America and Europe. Total exports in 2008 amounted to RM513 million (US$142 million). With the admission of Malaysia as a member of the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation/Scheme (PIC/S) in January 2002, the country's exports of pharmaceutical products received a boost, especially among the member countries, which include the EU, Australia and Canada. 9.2.10 Malaysia Industry Size To date, a total of 234 pharmaceutical companies with Good Manufacturing Practices certification have registered with the DCA. The principal regulatory authority on the production, import and sale of pharmaceuticals (including traditional medicines) in Malaysia is the Drug Control Authority (DCA) of the Ministry of Health. Of these, a total of 67 companies are involved in the production of modern medicines comprising mainly analgesics, antacids, anti - hypertensives, diuretics, antibiotics and anti-histamines in the form of tablets, capsules, drops, powders, creams, ointments, injectibles, syrups, ophthalmic and nasal preparations. The remaining 167 companies are local traditional and herbal medicine manufacturers 9.2.11 Malaysia Priority Status for Pharma Currently, the manufacture of pharmaceuticals and related products (which include pharmaceutical goods, clinical diagnostic reagents, gelatine or gelatine products, intravenous, dialysis or irrigating solutions, vaccines, medicaments) are eligible for normal Pioneer Status or Investments Tax Allowance incentives. The development, testing and production of pharmaceuticals promoted under biotechnology are eligible for High Technology Pioneer Status or Investments Tax Allowance incentives The pharmaceutical industry is one of the new growth areas targeted for promotion and development by the Government. The products manufactured by the Malaysian pharmaceutical industry are broadly categorised into four categories, i.e prescription medicines, over-the-counter (OTC) products, traditional medicines and health/food supplements. The pharmaceutical companies are mainly small and medium-sized companies engaged in the production of generic drugs, traditional medicines and herbal supplements as well as contract manufacturing for foreign multinational corporations (MNCs). 9.2.12 Malaysia Driver- Malaysian Pharmaceutical Market This section aims to provide an overview of the Malaysian pharmaceutical industry in terms of the factors that drive and restrain the market, sales trends, government initiatives, and potential growth and market opportunities. At the outset, a brief discussion on the global pharmaceutical industry is also provided, in order to highlight the trends that have resulted in a shift of global pharmaceutical trend away from the West to Asia, including Malaysia.’ 9.2.13 Malaysia Global Pharmaceutical Industry In 2006, the global pharmaceutical market stood at $607.0 billion and Frost & Sullivan estimates this market to reach $818 billion by 2013. | In 2006, Asia Pacific contributed to 7.0 percent of the total market share and this is expected to increase as the Asia Pacific market displays an upward trend in growth. The increased share of contribution from Asia Pacific countries is expected to be fuelled by the expiry of patents and limited pipeline of blockbuster drugs. This opens up opportunity for developing nations to strengthen their local pharmaceutical industries by entering the arena of generics and traditional medicine. Furthermore, with the growing trend among companies to outsource clinical work to contract research organizations, contract manufacture their products, and enter partnerships with other companies to increase their competitiveness, the opportunities for emerging countries for R&D and manufacturing are expected to open up considerably. Frost & Sullivan believes that generics, biotechnology, and specialist-driven therapies will drive the pharmaceutical market in countries such as Malaysia. 10 PHARMACEUTICAL FORECASTS 11.1.1 Overall Market Forecast- India India’s pharmaceutical market is set for a period of rapid expansion. Combined sales of prescription drugs and OTC medicines will increase from INR771bn (US$16.32bn) in 2009 to INR895bn (US$20.62bn) in 2010. Due to the strengthening rupee, this equates to growth of 16.1% in local currency terms and 25.7% in US dollar terms. Foreign drugmakers are therefore set for a lucrative year. 11.1.2 Pharmaceutical Market Forecast 2005- 2019- India Market expansion will be sustained by a combination of factors over the next decade. The key driver of medicine sales is a booming economy. In February 2010, BMI’s Country Risk team said that Indian industry was ‘on fire’, with reported output growth of a remarkable 16.8% y-o-y in December 2009, the fastest rate of expansion in two decades. Manufacturing, which accounts for roughly 80% of the industrial production index, rose by 18.5% y-o-y, more than offsetting a subdued agricultural performance (which suffered in Q409 due to the lagged effects of a poor monsoon). Over the next decade, India’s GDP is forecast to more than treble, from INR58, 919bn (U$1,309bn) in 2009 to INR191, 024bn (US$5,094bn) in 2019. Another source of increased demand for medicines in India is greater state involvement in healthcare, which, traditionally, has been minimal. The FY2010/11 (April-March) budget provides INR18,380 crore (US$3.99bn) for the Ministry of Health & Family Welfare, representing an 18.0% increase compared with the previous year. The government also intends to provide INR155.25 crore (US$33.6mn) in dedicated funds to the Department of Pharmaceuticals for the first time. Inflation is a significant issue in India. The consumer price index (CPI) – which BMI uses as a proxy for inflation – averaged 12.0% during 2009. This is high by regional and global standards and an acute concern for all stakeholders. We expect the CPI to rise slightly to 12.8% in 2010, before stabilising at 8.0% over the medium term. India’s large, growing and ageing population is an obvious enticement for pharmaceutical firms. According to the UN Population Division, the number of people living in the country will increase from 1.04bn in 2000 to 1.41bn in 2020 – a rise of 36%. The percent of the population aged 65 and over will increase from 4.3% to 6.3% over the same period. However, we caution that Indian per-capita spending on medicine is, and will remain, relatively low (US$15 in 2009, US$31 in 2014 and US$50 in 2019). Nevertheless, India represents one of the most attractive pharmaceutical markets. Sales of medicines are expected to post compound annual growth rates (CAGRs) of 14.83% and 13.13% through 2014 and 2019 respectively. Within a decade, the value of the pharmaceutical market will exceed US$70bn. 11.1.3 Patented Product Market Forecast- India Patented medicines will remain a marginal player in the overall market, having only posted around INR63.4bn (US$1.34bn) in 2009 sales. The figure is likely to reach INR135.6bn (US$6.66bn) by the end of the five-year forecast period, although patented pharmaceuticals are predicted to gain some market share at the expense of generic drugs. International players will remain the leading suppliers of novel and hi-tech drugs, but some larger local companies will increasingly invest in their own R&D activities as a means of keeping their competitiveness in a strictly price-controlled market. As the disease profile of the Indian sub-continent becomes increasingly Western in style, sales of more advanced medicines, such as those to treat cardiovascular diseases, diabetes and cancer-related conditions will be key drivers. Most of the demand will be satisfied by imported novel medicines, especially on the hi-tech end of the scale. Ophthalmology medicines will be particularly rofitable, given the high number of cataract sufferers in the country. 11.1.4 Generic Drug Market Forecast- India India’s INR590.2bn (US$12.50bn) generic drug market is characterised by healthy growth, low pack prices, medicines that would be termed ‘patented’ in most other countries, and very few foreign players. BMI is forecasting a CAGR of 14.45% through to 2019, when the sector will have a value of INR1,982.1bn (US$52.86bn). Clearly there is significant potential, but we note that both OTC medicines (+15.87%) and patented products (+16.41%) will experience steeper sales trajectories in India over the medium term. The major driver of the country’s generic drug market is the patent regime, which does not meet international standards. Under Indian IP law, drug makers can use a process called ‘reverse engineering’ to manufacture drugs patented before 1995. This means that many blockbuster medicines are available in India at very low prices. As with most other countries, generic drugs are predominantly sold in hospitals and pharmacies. Perhaps the most promising sales outlets are part of the Jan Aushadhi scheme. These stores sell unbranded generic medicines at prices that are affordable to the majority of the vast 1.17bn population. For example, a strip of the painkiller nimesulide is available for INR2.50 (US$0.05), which compares favourably to the INR32 (US$0.67) charged for the branded version. The top ten pharmaceutical firms in India are dominated by generic drug manufacturers. According to market research firm IMS Health, the leading company is Mumbai-based Cipla, which generated sales of US$353mn in 2008. Meanwhile, the best selling medicine is Pfizer’s antihistamine Corex (chlorphenamine). The fact that this product’s active ingredient was discovered nearly 60 years ago underlines the developing nature of India’s pharmaceutical market. BMI’s valuation of India’s generic drug market may be higher or lower than other business intelligence firms. Public domain market data is collated, composited and continuously curate by a team of industry experts. Sales projections are generated using a top-down approach from BMI’s Drug Expenditure Forecast Model. The semi-automated tool incorporates historic trends, macroeconomic variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market. Despite buoyant local demand, Indian generic drug manufacturers are increasingly looking at emerging markets. Africa is particularly attractive, as it has limited local manufacturing capacity and a great demand for low-cost generic preparations, especially HIV/AIDS drugs. In addition, markets in South America and South East Asia, where prices and volumes are higher, are also being targeted. OTC Medicine Market Forecast Sales of OTC medicines in India are forecast to increase from INR117.2bn (US$2.48bn) in 2009 to INR244.7bn (US$6.39bn) in 2014, representing a CAGR of 15.87%. The review of the Schedule K Drugs (prescription-only products) and Cosmetics is presently under way, resulting in the likely liberalization of OTC sales. The Schedule K notification (Ref. GSR No.471 (E)) dated August 4 2006 seeks to allow sale of ‘household remedies’ in general stores – much more common than pharmacies – f = forecast.Source: AC Nielsen, AESGP, BMI research; *advertised Non-prescription drugs. For data, see Forecast Tables section but is only applicable to settlements below. Where the population is less than 1,000. Moreover, prescription-to-OTC switches have been encouraged through the revision of Schedule H, which lists drugs that can only be prescribed by a general practitioner or hospital doctor. Leading OTC categories include vitamins and minerals, cough and cold, gastrointestinal remedies, analgesics, dermatological and herbal medicines, according to AESGP data. However, many prescription drugs can be purchased without prescription, which has meant that OTC switching is not actively promoted. Nevertheless, progress has been slow as there are still hundreds of molecules on Schedule H that are safe, effective and classified as OTC in many other parts of the world. Two such examples are the Antihistamine chlorpheniramine and the cough suppressant dextromethorphan. Both have been recommended for removal from Schedule H, but reclassification is still on the horizon. Signifying the scale of the problem, 534 other drugs are in the same position. Currently, about 80% of OTCs are sold through chemists and drugstores, with direct sales and sales through grocers only allowed in rural areas with fewer than 1,000 inhabitants. If the changes receive legislative approval, aspirin, acetaminophen, analgesic balms, antacids, oral dehydration solution, gripe water, cough and cold treatments including inhalers, tetracycline-based ophthalmic ointments and low-dose hormonal contraceptives will become available as OTCs, significantly boosting their respective therapeutic areas. However, the true OTC segment will continue to suffer strong competition from traditional medicines, including ayurveda, unani and siddha. According to official data, around 70% of all people in India use such remedies for primary healthcare that are not recorded in the pharmaceutical industry statistics. The traditional medicine sector is presntly undertaking a US$2mn project to fund the creation of the Traditional Knowledge Digital Library in order to prevent companies and individuals from claiming patents and rights on such remedies. In a startling development, a remedy from the ancient ayurveda system became the top selling drug in India. The Himalaya Drug Company’s Liv 52, which is a mixture of botanicals, posted sales of over INR107 crore (US$20mn) in the year ended August 2007, according to market research firm ORG-IMS Health. Demonstrating the magnitude of this achievement, the product has overtaken well-known medicines such as Pfizer’s Corex (chlorpheniramine + codeine), Nicholas Piramal’s Phensedyl (promethazine + codeine + ephedrine) and Novartis’ Voveran (diclofenac) in revenue generation. 11.1.5 Pharmaceutical Trade Forecast- India Although export sector growth has been rapid in recent times, BMI expects an even faster growth rate over the forecast period, averaging more than 15% per year. By 2014, exports are expected to approach US$10.67bn, with most of the value generated by generic drugs and active pharmaceutical ingredients (APIs). The volues should be boosted by the government’s proposal to build Pharmaceutical zones in major international airports to facilitate the testing of drugs prior to exporting Pharmaceutical Trade Forecast (US$mn) country. However, as larger domestic Companies are increasingly investing in the development of their own R&D facilities for the development of new drugs, this may also result in exports of novel products towards the end of the forecast period. The recently signed FTA between India and the ASEAN has been warmly welcomed by generic drug manufacturers in the world’s second most populous country. Exports from India to South East Asia will rise, with the gradual abolition of trade tariffs on 80% of goods traded between India and the economic bloc over six years. However, the key development from the news is that a similar but more lucrative pact with Japan is now high on the agenda. In July 2008, the Pharmaceuticals Export Promotion Council (Pharmexcil), which represents major pharmaceutical companies in India, proposed the establishment of a registration office in Brussels for pharmaceutical companies that want to market their products in Europe. The move can be seen as a step to strengthen Indian pharmaceutical exports. However, around the same time,Indian exports received a blow, when the Pakistani government blocked the proposal to import around 400 drugs from India. Local drug makers protested against the proposal by the commerce ministry saying that over 1mn jobs would be affected by the plan while over US$120mn worth of annual exports could also be threatened. Other negative developments for Indian exports include the recent spate of accusations of sub-standard manufacturing by the US FDA, leveled against Indian drug makers’ facilities. Lupin (not for the first time) has become the third drug maker from the country to be accused of sub-standard manufacturing by the US FDA in recent months, which will attract greater scrutiny on the sector as a result. After conducting a two-week evaluation of Lupin’s Mandideep factory in Madhya Pradesh, the FDA inspectors found 15 anufacturing deficiencies. The company has addressed eight of the problems and is investigating the remaining ones ‘expeditiously’. Given that the failures are not as serious as those found at Ranbaxy’s dewas and Paonta Sahib plants or Sun Pharmaceuticals’ facility in Detroit, Lupin is allowed to continue manufacturing at Mandideep. However, if GMP is not reinstated, stronger sanctions will be imposed. In September 2008, the FDA blacklisted 30 Ranbaxy drugs that are sold in the US, following a two-year investigation. Shortly after, Sun Pharmaceuticals’ US-based subsidiary, Caraco Pharmaceutical Laboratories, received an FDA manufacturing warning. The agency will not approve any of the firm’s regulatory submissions until the problems are resolved, although applications from Sun Pharmaceuticals are unaffected. Other Indian companies to receive manufacturing warnings from the FDA in the past include Wockhardt and Granules India. Risks to BMI’s forecast for India’s pharmaceutical exports emerged in mid-2009. EU authorities had seized in-transit medicines made in India, believing them to be counterfeit. The reality was that the generic drugs were legal according to the country of destination. However, they breached EU IP rules. Other Healthcare Data Forecasts India will continue to struggle to provide adequate healthcare services to its rapidly growing population, which is also exhibiting signs of ageing. According to the statistics recently released by Population Statistics Bureau (PSB), India is predicted to overtake China by 2050 as the most populous country in the world, with just under 1.63bn people. Such demographic changes will significantly alter and increase India’s demand for pharmaceuticals and health services, the needs of which still remain unmet. Public funded healthcare will be the main provider for the bulk of the poor population, although people are increasingly turning to private providers offering better facilities and smaller waiting lists. Public facilities will continue to suffer personnel shortages, which the government has been unprepared to address in recent times. However, recurring public health emergencies (such as the recent SARS and avian flu outbreaks) will continuously highlight various healthcare system inadequacies. And this needs to be debated lest they become insurmountable obstacles to the country’s future performance. Key Risks to BMI’s Forecast Scenario The domestic market growth could be adversely affected by the local industry’s escalating concentration on international markets. The local producers are increasingly targeting foreign markets over the domestic market as export trade offers better profit margins. Additionally, the government’s plan to place all essential medicines under the price control system and to reduce the price of about 8% of all medicine brands sold in the country will significantly decrease future revenues and market values. Although the government continues to modernise the domestic healthcare system, the domestic drug market could suffer as a result of its less lucrative status. In contrast to foreign sales, domestic performance is much poorer because of market uncertainties. A number of local producers have also acquired pharmaceutical operations overseas in order to minimize the negative impact of the domestic market performance. In the short term, the OTC market may expand more rapidly than forecasted with the local industry reportedly set to invest significantly in expanding facilities and product portfolios. Recent reports by Indian pharmaceutical manufacturers of their intention to switch at least 12 prescription drugs to OTC status should further raise growth within the sector. Although the drugs are currently included within the country’s prescription list, or ‘Schedule H’, the OPPI is in the process of submitting the 12 drugs to the DCGI for approval. Generally, positive political and economic developments are likely to boost India’s local and international potential as a pharmaceutical supplier. IP environment improvements will stimulate this trend and likely increase the country’s pharmaceutical output in the medium to long term, while exports should be boosted by the activities of the new US government. However, short-term economic slowdown and higher inflation may have a slightly negative effect on the overall industrial climate and consumer spending, as did the high price of energy. I. Malaysia Health Expenditure | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 1.1Health expenditure (US$bn) | 5.73 | 6.69 | 8.15 | 9.35 | 9.00 | 10.77 | 1.2 Health expenditure (%GDP) | 4.15 | 4.27 | 4.35 | 4.45 | 4.55 | 4.65 | % increase in Health Expenditure | | | | | | | 1.3 Health expenditure per capital | 219.60 | 251.49 | 299.70 | 337.53 | 317.86 | 372.80 | 1.4 Public sector health expenditure (%) | 44.77 | 45.22 | 44.00 | 43.00 | 42.00 | 41.00 | I. India Health Expenditure | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 1.1Health expenditure (US$bn) | 30.25 | 34.84 | 38.14 | 40.76 | 44.21 | 53.60 | 1.2 Health expenditure (%GDP) | 3.65 | 3.48 | 3.42 | 3.37 | 3.36 | 3.22 | % increase in Health Expenditure | | | | | | | 1.3 Health expenditure per capital | 27.35 | 30.94 | 33.28 | 34.93 | 37.22 | 44.33 | 1.4 Public sector health expenditure (%) | 22.41 | 24.96 | 25.38 | 26.52 | 27.62 | 28.65 | I. Malaysia Health Expenditure | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 1.1Health expenditure (US$bn) | 11.98 | 12.26 | 13.10 | 14.57 | - | - | 1.2 Health expenditure (%GDP) | 4.75 | 4.85 | 4.90 | 5.00 | - | - | % increase in Health Expenditure | | | | | - | - | 1.3 Health expenditure per capital | 406.08 | 408.69 | 429.59 | 468.33 | - | - | 1.4 Public sector health expenditure (%) | 40.00 | 39.00 | 38.50 | 38.00 | - | - | I. India Health Expenditure | 2011 | 2012 | 2013 | 2014 | - | - | 1.1Health expenditure (US$bn) | 63.33 | 73.77 | 84.34 | 95.24 | - | - | 1.2 Health expenditure (%GDP) | 3.14 | 3.05 | 2.97 | 2.92 | - | - | % increase in Health Expenditure | | | | | - | - | 1.3 Health expenditure per capital | 51.44 | 58.87 | 66.11 | 73.34 | - | - | 1.4 Public sector health expenditure (%) | 29.61 | 30.49 | 31.28 | 31.96 | - | - | II. India Healthcare Infrastructure | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2.1 Hospitals | 5,479 | 7,663 | 9,923 | 11,289 | 12,192 | 13,046 | 2.2 Beds per 000 population | 0.34 | 0.44 | 0.42 | 0.42 | 0.43 | 0.45 | 2.3 Doctors per 000 population | 0.59 | 0.60 | 0.60 | 0.61 | 0.62 | 0.63 | Percentage increase in Beds per 000 | | | | | | | Percentage increase in Doctors per 000 | | | | | | | | | | | | | | II. India Healthcare Infrastructure | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2.1 Hospitals | 13,828 | 14,520 | 15,101 | 15,838 | - | - | 2.2 Beds per 000 population | 0.46 | 0.47 | 0.48 | 0.49 | - | - | 2.3 Doctors per 000 population | 0.63 | 0.64 | 0.65 | 0.65 | - | - | Percentage increase in Beds per 000 | | | | | | | Percentage increase in Doctors per 000 | | | | | | | | | | | | | | II. Malaysia Healthcare Infrastructure | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2.1 Hospitals | 404.00 | 408.00 | 412.00 | 416.00 | 420.00 | 423.00 | 2.2 Beds per 000 population | 1.07 | 1.06 | 1.05 | 1.04 | 1.03 | 1.06 | 2.3 Doctors per 000 population | 0.85 | 0.91 | 0.87 | 0.86 | 0.88 | 00.88 | II. Malaysia Healthcare Infrastructure | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2.1 Hospitals | 426.00 | 427.00 | 428.00 | 429.00 | - | - | 2.2 Beds per 000 population | 1.04 | 1.04 | 1.04 | 1.03 | - | - | 2.3 Doctors per 000 population | 0.89 | 0.89 | 0.90 | 0.90 | | | III Malaysia- Drug Expenditure | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 3.1 Drug Market expenditure | 0.84 | 0.93 | 1.06 | 1.22 | 1.22 | 1.44 | 3.2 Per Capita drug mark expenditure (US$) | 32.02 | 35.14 | 39.13 | 44.04 | 43.07 | 49.89 | 3.3 Drug market expenditure as % GDP | 0.61 | 0.60 | 0.57 | 0.58 | 0.62 | 0.62 | Percentage increase in Drug Market Expentiture | | | | | | | Percentage increase in {er Capita Drug Market Expentiture | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | III Malaysia- Drug Expenditure | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 3.1 Drug Market expenditure | 1.59 | 1.59 | 1.66 | 1.81 | - | - | 3.2 Per Capita drug mark expenditure (US$) | 53.81 | 53.10 | 54.56 | 58.14 | - | - | 3.3 Drug market expenditure as % GDP | 0.63 | 0.63 | 0.62 | 0.62 | - | - | Percentage increase in Drug Market Expentiture | | | | | | | Percentage increase in {er Capita Drug Market Expentiture | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | III India - Drug Expenditure | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 3.1 Drug Market expenditure | 9.26 | 11.24 | 12.71 | 14.23 | 16.32 | 20.62 | 3.2 Per Capita drug mark expenditure (US$) | 8.38 | 9.99 | 11.08 | 12.20 | 13.74 | 17.05 | 3.3 Drug market expenditure as % GDP | 1.12 | 1.12 | 1.14 | 1.18 | 1.24 | 1.24 | III India - Drug Expenditure | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 3.1 Drug Market expenditure | 25.12 | 30.08 | 35.14 | 40.18 | - | - | 3.2 Per Capita drug mark expenditure (US$) | 20.41 | 24.01 | 27.54 | 30.94 | - | - | 3.3 Drug market expenditure as % GDP | 1.25 | 1.24 | 1.24 | 1.23 | - | - | IV Malaysia- Pharmaceutical Imports - Exports (US$mn) | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 4.1 Exports US$mn) | 87.05 | 97.08 | 163.97 | 133.97 | 140.67 | 147.70 | 4.2 Imports (US$mn) | 566.33 | 655.57 | 775.31 | 816.85 | 914.87 | 1,024.65 | 4.3 Balance US$mn) | -479.28 | -558.49 | -611.35 | -682.88 | -774.20 | -876.95 | Percentage Increase in Exports | | | | | | | Percentage Increase in Imports | | | | | | | | | | | | | | IV India - Pharmaceutical Imports - Exports (US$mn) | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 4.1 Exports US$mn) | 2,011 | 2,453 | 3,077 | 4,128 | 4,882 | 5,765 | 4.2 Imports US$mn) | 249 | 362 | 482 | 612 | 696 | 787 | 4.3 Balance US$mn) | 1,762 | 2,091 | 2,595 | 3,516 | 4,186 | 4,978 | IV Malaysia- Pharmaceutical Imports - Exports (US$mn) | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 4.1 Exports US$mn) | 155.97 | 164.86 | 174.42 | 184.89 | - | - | 4.2 Imports (US$mn) | 1,147.61 | 1,285.32 | 1,439.56 | 1,621.31 | - | - | 4.3 Balance US$mn) | -991.64 | -1,120.46 | -1,265.14 | -124.42 | - | - | Percentage Increase in Exports | | | | | | | Percentage Increase in Imports | | | | | | | | | | | | | | IV India - Pharmaceutical Imports - Exports (US$mn) | | | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 4.1 Exports US$mn) | 6,775 | 7,921 | 9,217 | 10,670 | - | - | 4.2 Imports US$mn) | 886 | 991 | 1,103 | 1,221 | - | - | 4.3 Balance US$mn) | 5,889 | 6,930 | 8,114 | 9,450 | - | - | V Malaysia- Prescription Market (U$$) | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 5.1 Prescription drug market (US$bn) | 0.63 | 0.70 | 0.80 | 0.89 | 0.89 | 1.04 | 5.2 Prescription drug market as % total market | 75.13 | 75.3 | 74.70 | 73.11 | 72.80 | 71.98 | Percentage Increase in Prescription drug market | | | | | | | | V India - Prescription Market (U$$) | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 5.1 Prescription drug market (US$bn) | 7.93 | 9.79 | 10.91 | 12.09 | 13.84 | 17.44 | 5.2 Prescription drug market as % total market | 85.6 | 87.1 | 85.9 | 85.0 | 84.8 | 84.6 | V Malaysia- Prescription Market (U$$) | | | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 5.1 Prescription drug market (US$bn) | 1.13 | 1.12 | 1.16 | 1.25 | 1.34 | 1.44 | 5.2 Prescription drug market as % total market | 71.21 | 70.49 | 69.81 | 69.17 | 68.58 | 68.02 | Percentage Increase in Prescription drug market | | | | | | | | | | | | | | V India - Prescription Market (U$$) | | | | 2011 | 2012 | 2013 | 2014 | | | 5.1 Prescription drug market (US$bn) | 21.20 | 25.33 | 29.51 | 33.79 | | | 5.2 Prescription drug market as % total market | 84.4 | 84.2 | 84.0 | 84.1 | | | VI Malaysia- Patented Drug Market | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 6.1 Patented products (US$bn) | 0.42 | 0.47 | 0.53 | 0.59 | 0.57 | 0.66 | 6.2 Patented market as % total market | 50.83 | 50.72 | 49.90 | 48.11 | 46.90 | 45.59 | Percentage Increase in Patented drug market | | | | | | | VI India - Patented Drug Market | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 6.1 Patented products (US$bn) | 0.72 | 0.89 | 1.02 | 1.16 | 1.34 | 1.72 | 6.2 Patented market as % total market | 7.81 | 7.90 | 8.00 | 8.12 | 8.23 | 8.34 | VI Malaysia- Patented Drug Market | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 6.1 Patented products (US$bn) | 0.70 | 0.68 | 0.69 | 0.73 | 0.76 | 0.80 | 6.2 Patented market as % total market | 44.27 | 42.95 | 41.63 | 40.29 | 2.62 | 2.70 | Percentage Increase in Patented drug market | | | | | | | VI India - Patented Drug Market | | | | 2011 | 2012 | 2013 | 2014 | | | 6.1 Patented products (US$bn) | 2.12 | 2.558 | 3.05 | 3.54 | | | 6.2 Patented market as % total market | 8.45 | 8.57 | 8.69 | 8.81 | | | VII Malaysia Generics Drugs Market | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 7.1 Generics market (US$bn) | 0.20 | 0.23 | 0.26 | 0.31 | 0.32 | 0.38 | 7.2 Generics market as % total market | 24.30 | 24.60 | 24.80 | 25.00 | 25.90 | 26.40 | Percentage Increase in Generic drug market | | | | | | | VII India Generics Drugs Market | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 7.1 Generics market (US$bn) | 7.21 | 8.90 | 9.90 | 10.93 | 12.50 | 15.72 | 7.2 Generics market as % total market | 77.8 | 79.2 | 77.9 | 76.8 | 76.6 | 76.3 | VII Malaysia Generics Drugs Market | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 7.1 Generics market (US$bn) | 0.43 | 0.44 | 0.47 | 0.52 | 0.58 | 0.65 | 7.2 Generics market as % total market | 26.94 | 27.54 | 28.18 | 28.88 | 29.64 | 30.46 | Percentage Increase in Generic drug market | | | | | | | VII India Generics Drugs Market | | | | 2011 | 2012 | 2013 | 2014 | | | 7.1 Generics market (US$bn) | 19.08 | 22.75 | 56.46 | 30.25 | | | 7.2 Generics market as % total market | 75.9 | 75.6 | 75.3 | 75.3 | | | VIII Malaysia OTC Drug Market (US$mn) | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 8.1 OTC market (US$bn) | 0.21 | 0.23 | 0.27 | 0.33 | 0.33 | 0.40 | 8.2 OTC market as % total market | 24.87 | 24.68 | 25.30 | 26.89 | 27.20 | 28.02 | Percentage Increase in OTC drug market | | | | | | | VIII India OTC Drug Market (US$mn) | | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 8.1 OTC market (US$bn) | 1.33 | 1.45 | 1.79 | 2.14 | 2.48 | 3.17 | 8.2 OTC market as % total market | 59.6 | 62.3 | 79.5 | 98.6 | 1172 | 137.8 | VIII Malaysia OTC Drug Market (US$mn) | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 8.1 OTC market (US$bn) | 0.46 | 0.47 | 0.50 | 0.56 | 0.62 | 068 | 8.2 OTC market as % total market | 28.79 | 29.51 | 30.19 | 30.83 | 31.42 | 31.98 | Percentage Increase in OTC drug market | | | | | | | VIII India OTC Drug Market (US$mn) | | | | 2011 | 2012 | 2013 | 2014 | | | 8.1 OTC market (US$bn) | 3.92 | 4.75 | 5.62 | 6.39 | | | 8.2 OTC market as % total market | 160.7 | 187.0 | 216.7 | 244.7 | | | I COUNTRY PROFILE | Malaysia | India | Sri Lanka | 1.1 Area in Square Kilometers | 330,252 | | | 1.2 Population (2010) million | 28.9 | | | 1.3 Age Group 0-21 years | | | | 1.4 Age Group 21-65 years | | | | 1.5 Age Group > 65 years | | | | 1.6 Population Urban | | | | 1.7 Population Rural | | | | 1.8 Labor Force- million | 12.2 (2010) | | | 1.9 Unemployment rate | 3.6%(2010) | | | 1.10 Per Capita Income (USD) | 7304 | | | | | | | II THE ECONOMY | | | | 2.1 GDP (USD) bn | 149.7 | | | 2.2 GDP Growth | 4.6% (2010) | | | 2.3 Per Capita GDP | | | | 2.4 Inflation rate (CPI) | 2.25% (2010) | | | | | | | III HEALTH PROFILE | | | | 3.1 Per capita Health spending | | | | 3.2 Health Expenditure USD bn | 618 (2009) | | | 3.3 Health Expenditure % of GDP | 7.02% | | | 3.4 Public Sector Health Expenditure | | | | | | | | | | | | IV HEALTH INFRASTRUCTURE | | | | 4.1 Number of Hospitals | 408 | | | 4.2 Number of Public Hospitals | 130 | | | 4.3 Private Hospitals | 250 | | | 4.4 Number of Hospitals- Urban Areas | | | | 4.5 Private Clinics | 13000 | | | 4.6 Number of Beds | | | | 4.7 Number of Doctors | 25102 | | | 4.8 Beds | 53,414 | | | 4.9 Doctors Per 000 Population | 1105 | | | | | | | | | | | V HEALTH INDICATORS | | | | 5.1 Crude Birth Rate (per 1000 population) | 17.5 | | | 5.2 Crude Death Rate (per 1000 population) | 4.5 | | | 5.3 Infant Mortality Rate (per 1000 live births) | 6.3 | | | 5.4 Life Expectancy - Male (age in years) | 71.7 | | | 5.5 Life Expectancy - Female (age in years) | 76.5 | | | | | | | | | | | | | | | VI HEALTH SUPPORT SYSTEMS | | | | | | | | 6.2 Health Insurance | | | | 6.3 Pharmacist to population ratio | 1:2,000 | | | | | | | 6.4 Medical Tourism | 375,000 | | | | | | | VII PHARMA INDUSTRY | | | | 7.1 Local Pharma Industry | 30 % of domestic demand | | | 7.2 Total exports in 2008 -USD | 142 million | | | | | | | 7.Pharmaceutical companies | 234 | | | 7.4 Production of modern medicines manufacturers | 67 | | | 7.5 Traditional and herbal medicine manufacturers | 167 | | | * 7.6 Status for Pharma | Priority | | | 7.7 Pharmaceutical Industry USD million 2007 | 1,027 2007 | | | 7.8 Pharmaceutical industry Growth Rate | | | | * | | | | * VIII REGULATORY NORMS | | | | * 8.1 IP Laws | | | | * 8.2 Approval times | | | | 8.3 Pricing and Reimbursement | | | | 8.4 Tax Rate- Corporate | 25% | | | 8.5 Tax Rate Individual | 27% | | | | | | | | | | | IX DRUG MARKET | | | | 9.1 Drug Market Expenditure USD bn | | | | 9.2 Per capita drug market expenditure USD bn | | | | 9.3 Drug Market Expenditure % of GDP | | | | | | | | X PHARMACEUTICAL MARKET | | | | 10.1 Total Market USD bn | | | | 10.2 Prescription Drug Market USD bn | | | | 10.3 Patented products USD bn | | | | 10.4 Generic Products | | | | 10.5 OTC Products | | | | 10.6 Medical Devices | | | | | | | | XI PRODUCTION- IMPORTS EXPORTS | | | | 11.1 Imports | | | | 11.2 Production | | | | 11.3 Exports | | | | 1.4 Sales USD bn | | | | | | | | XII DISEASE PROFILE | | | | | | | | | | | | | | | | XIV TAXATTION | | | | Central VAT | | | | State VAT | | | | | | | | XV LOW COST MODEL | | | | | | | | XVI AVERAGE EBIDTA | | 22-23% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 Population wise India is a bigger attraction for Pharmaceutical Companies … | Malaysia | India | Sri Lanka | 1.1 Population (2010) million | 28.9 | | | 1.2 Age Group 0-21 years | | | | 1.3 Age Group 21-65 years | | | | 1.4 Age Group > 65 years | | | | 1.5 Population Urban | | | | 1.6 Population Rural | | | | 1.7 Labor Force- million | 12.2 (2010) | | | 1.8 Unemployment rate | 3.6%(2010) | | | 2. Per Capita income is the lowest for India … | Malaysia | India | Sri Lanka | | | | | | | | | | | | | | | | | 3. Per Capita Health Expenditure is relatively low … | Malaysia | India | Sri Lanka | | | | | | | | | 4. But as incomes grow, Unemployment goes down and more numbers of the family earn, the family incomes will boom. & The net impact will be an increase the average per capita spend on health | Malaysia | India | Sri Lanka | | | | | | | | | 5. In absolute terms the drug market expenditure has in the three countries been as under | Malaysia | India | Sri Lanka | | | | | | | | | 6. The growth of drug expenditure in the three countries is as below | Malaysia | India | Sri Lanka | | | | | | | | | 7. The growth per Capita drug market expenditure will be …. | Malaysia | India | Sri Lanka | | | | | | | | | 8. The total drug market expenditure as % of GDP … | Malaysia | India | Sri Lanka | | | | | | | | | 9 The Growth in Economy | Malaysia | India | Sri Lanka | GDP | | | | GDP Growth 2005-2010 | | | | GDP Growth Projected | | | | 10 Pharmaceutical Revenues | Malaysia | India | Sri Lanka | Domestic Sales | | | | Exports | | | | Total Revenue | | | |