Friday, January 08, 2010

8 South Asian countries are the next big emerging markets for life sciences firms looking for growth opportunities

At the end of next month, I’ll be conducting a branding and sales workshop for Asia-Pacific marketing managers.  So in preparation, I’ve been reviewing some key insights on leading health, science, and technology developments in key markets.

"The Outlook for Pharmaceuticals in South East Asia to 2013" report said eight Asian countries represented a total market of 588 million people and a combined GDP of $2.8 trillion in 2008.

The report, released by Research and Markets, said business opportunities in Asian pharmaceutical markets are very different from a few years ago. The traditional tiger economies, characterized by economic growth, free market environment, developed industry and investment in health and health infrastructure have had a long haul back from the financial instability and economic downturn in the 1990's.

At the same time, markets that had hitherto excited little industry or investor interest, have emerged as real areas of opportunity for suppliers and service companies alike. Diverse influences - from deregulation and better trade links to improved access and the rise of medical tourism - are seeing markets such as Malaysia and Vietnam take an increasingly important role in the region.

With established western markets maturing, serious attention is being paid to the countries where manufacturers can see significant long-term growth. However, effective planning is vital, and impartial, thoroughly researched business data is essential to fully appreciate the current market status as a basis for future development, the report said.
  1. The report said the Indonesian market for pharmaceuticals was valued at $1.9 billion in 2008, equal to just under $7 per capita. In overall terms, the market is similar in size to that of Egypt or Colombia, whereas in per capita terms, the total is similar to that of Vietnam. Indonesia spends an estimated 16.1% of its total health expenditure on pharmaceuticals, and around 0.4% if total GDP. The domestic pharmaceutical manufacturing industry is strong and the country has become an attractive base for many multinational producers to operate. This is largely down to a cheap labor force and generally inexpensive production costs.
  2. On Malaysia the report estimated the current growth in the market to be 11.1% per year. This would see the market surpass the $1 billion mark by 2009, and reach $1.4 billion by 2012, or $47 per capita. Having weathered the aftermath of the 1998 economic crash better than most, market growth accelerated considerably in the following years, as imports in particular continued to increase and dominate the market.
  3. About Philippines, changes to be brought by the controversial Cheaper Medicine Bill will impact the Philippines pharmaceutical market in a number of areas, including IP laws, competition and drug price control mechanisms. The market is expected to be especially volatile in the 2008-2010 period. The Philippines pharmaceutical market is valued at $1.4 billion in 2008, equal to nearly $15 per capita. In terms of the overall market this is comparable to Thailand, and in per capita terms similar to China and Iran.
  4. The report estimates the Singapore market to exhibit annual average growth of around 4%, with impressive economic indicators being tempered by the limited population size. Based on this rate, it is estimated the market will reach $809 million by 2012, equal to $176 per capita. The manufacture of pharmaceuticals is dominated by multinational companies and the government has indicated that it wants at least ten multinational manufacturing facilities operational in Singapore by 2010.
  5. The South Korean pharmaceutical market is the largest of all the 'Asian Tigers' by some considerable distance, one of the twenty largest in the world and is similar in size to that of Brazil and India. In per capita terms, the market is comparable to fellow 'Tiger' nations, Singapore and Taiwan. Intellectual property protection, long regarded as being insufficient, is likely to improve with the Free Trade Agreement (FTA) signed with the US in 2007, with an improved patent linkage system to be implemented by 2009, the report said.
  6. Taiwan is a difficult, but attractive market with strong fundamentals. Taiwan's healthy economy, steadying currency and growing imports of pharmaceuticals should see the pharma market surpass the $6 billion mark by 2012. There is a heavy multinational presence - over 70% of the market is controlled by overseas multinationals. Over 100 generic drug manufacturers currently operate in Taiwan. An opaque regulatory process and discriminatory reimbursement practices exist and legislation to bring the country more in line with international standards has been announced, but so far, little has changed.
  7. While import levels for modern drugs are approaching levels last seen before the economic recession, the Thailand market is heavily reliant on generics. The government's relationship with the international pharmaceutical industry continues to be uneasy, largely due to the country's lax patent laws and preferential treatment of domestic producers. The compulsory licensing of drugs by the government has further compounded this problem.
  8. The pharmaceutical market is expected to expand slowly in Vietnam over the next few years. The government hopes to boost per capita spending to $10-15 by 2010, through a major development program, although this figure looks ambitious. Opportunities exist within the Vietnamese market in terms of specialist pharmaceutical production, the report added.
(Source: BioSpectrum Asia, providing a specialized business-to-business information platform for life sciences industry, with comprehensive coverage and useful insights in the exciting areas of pharmaceuticals, biotechnology, medical devices, R&D, and policies.)

You can also read more about STINSON Brand Innovation and our branding assignments in Asia in the year-end “Global Issue” of our Accelerate newsletter.

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