Abstract
In BMI’s Business Environment Ranking matrix for Q309, Malaysia remains
ranked eighth out of the 15
regional markets surveyed in the Asia Pacific
region, sandwiched between the more developed market of
Taiwan and the
considerably more populous India. The key attractions of the Malaysian
pharmaceutical market
are the government’s encouragement of the
biotechnology sector and the forecast steady annual growth in the
country’s pharmaceutical market. Between 2008 and 2013, the Malaysian
drug market is expected to grow
from MYR4.12bn (US$1.22bn) in 2008 to over
MYR6.12bn (US$2bn) at consumer prices in 2013, posting a
compound annual
growth rate (CAGR) of 10.47% in US dollar terms (or 8.22% in local currency
terms, as the
ringgit appreciates), Key drivers of growth are medical
tourism, the growing reputation of Malaysian
pharmaceuticals, the
encouragement of the generics and specialist segments and the rising demand
for and
supply of halal medicines. On the other hand, per capita
pharmaceutical consumption is quite low, especially
due to high
out-of-pocket payment levels, which make the market vulnerable to the current
economic crisis.
Other outstanding issues hampering the faster development
of more expensive medicines segments in Malaysia
include a number of
intellectual property (IP) regime deficiencies. In the 2009 versions of its
Special 301
submission, the Pharmaceutical Research and Manufacturers of
America (PhRMA) once again listed Malaysia
as one of the ‘Watch
List’ countries. The association is mainly critical of the following
facts: the government
runs a limited list of therapeutic areas for which
bioequivalence data are required; the lack of an adequate
patent linkage
system; and the deficient protection and enforcement of data exclusivity
legislation. Therefore,
we forecast that the patented drugs market will
develop at a slower pace than the generics segment, which will
additionally benefit from government encouragement and the cost-containment
pressures brought to the fore
by the current economic difficulties.
Generally speaking, however, local drugmakers are likely to weather the storm
better than their foreign
counterparts. In March 2009, Chemical Company of
Malaysia (CCM) stated that it expected to outpace its
competitors in 2009,
aiming to increase its leadership of the generic segment from 21% to 23% over
the next
twelve months. This programme will be supported by the recently
inaugurated US$2.8mn research and
development (R&D) centre in Malaysia.
The Innovax site, which will be the largest facility of its kind in the
country, will serve to facilitate launches of new generics on the market.
In the meantime, the authorities continue to implement measures supporting the
country’s nascent medical
tourism industry. For example, in April
2009, the Malaysian Health Minister invited registered foreign
professionals to Malaysia, allowing them to treat foreigners residing in the
country. According to recently
published official figures, in 2007 the
country received almost three times as many medical tourists as in 2003,
although the current economic downturn is resulting in lower demand for such
services. In fact, the
Association of Private Hospitals of Malaysia (APHM)
expects that the number of medical tourists in the
country will increase
by only 15% year-on-year (y-o-y) in 2009, compared with previous annual
increases of
between 20 and 25%.
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