Malaysia pharmaceutical market update, 2013
Ames Gross of Pacific Bridge Medical provides an overview of the pharmaceutical market in Malaysia.
Malaysia’s pharmaceutical market is currently worth $3 billion, more than three times the size of the market in Singapore. Malaysia’s market for drugs is growing rapidly, at average annual rates of 10 – 12 percent. At the same time, the country’s overall economy is booming. In 2012, it had a growth rate of 5.6 percent, compared to rates of 1.3 percent in Singapore and just 1 – 2 percent in the US and Europe.
Spending on healthcare is also up. Malaysia’s 29 million people now spend an average of $375 per year on healthcare, with about $75 of that going to pharmaceuticals. Compared to ten years ago, spending on healthcare has more than doubled. As per capita income goes up, Malaysians are devoting more disposable income to pharmaceutical products.
Malaysia is heavily reliant on imports for high end drugs. Foreign pharmaceutical companies (with the exception of GlaxoSmithKline and some Indian drug firms) do not generally manufacture their products in Malaysia. Astra Zeneca, Eli Lilly, Novartis, Pfizer and Schering Plough distribute their products – mostly branded drugs – through their own sales force and local distributors.
Altogether, there were 234 drug companies licensed by Malaysia’s Drug Control Authority (DCA) in 2012. Major local companies include Pharmaniaga Manufacturing Berhad, Hovid Berhad and CCM Duopharma Biotech Sdn Bhd. These manufacturers primarily produce generic drugs, especially antibiotics, painkillers, injectables and health supplements.
Growth areas in Malaysia include treatment for non-communicable diseases like diabetes. One in five Malaysians over 30 has diabetes, but only half are diagnosed. Foreign pharmaceutical companies with strong diabetes portfolios (like Eli Lilly and Novo Nordisk) are seeing double digit growth in Malaysia.
National healthcare policy
In 2010, Malaysia’s government identified healthcare as one of 12 national key economic areas (NKEAs). Under the NKEA plan, the government hopes to grow the country’s healthcare market (currently valued at $10.3 billion) to $13.5 billion by 2020. Already, Malaysia has committed several billion to investment in healthcare infrastructure, clinical research and health tourism.
“Malaysia’s 29 million people now spend an average of $375 per year on healthcare…”
Currently, Malaysia has 334 hospitals, with 133 public and 201 private facilities. Under the NKEA plan, Malaysia’s Ministry of Health (MOH) will construct eight new hospitals, 150 rural clinics, 40 community health clinics and 50 additional “basic service” clinics by 2015.
Another goal of Malaysia’s NKEA plan is to boost clinical research in Malaysia. In 2009, just 100 clinical trials were ongoing in the country. The MOH hopes to increase this number to 1,000 by 2020. To do so, it has already committed $12.5 million to establishing clinical research hubs in each of the country’s 13 states. In addition, it has set up a working committee to streamline ethics and regulatory processes, increase the number of local investigators and site coordinators, and collaborate with international sponsors for patient recruitment.
Finally, the government is encouraging foreign pharmaceutical manufacturers to set up operations in Malaysia through a number of tax incentives. Duty exemptions and multiyear tax holidays have attracted about six major Indian companies since 2011, including Ranbaxy, Strides Arcolab, Cipla, Biocon and Dr. Reddy’s Labs.
These Indian generics manufacturers are not only targeting the Malaysian market, but they are also using the country as a manufacturing base for export to the rest of Southeast Asia.
To register a drug in Malaysia, applicants must submit all materials to Malaysia’s Drug Control Authority (DCA). The DCA is a division of the National Pharmaceutical Control Bureau (NPCB) under the MOH. It is responsible for the registration of drug products and the licensing of drug manufacturers, importers and wholesalers. It is also responsible for monitoring the quality and safety of registered products.
Pharmaceutical products in Malaysia are divided into the following categories:
• New drug products
• Generics (scheduled poisons)
• OTC generics (non-scheduled poisons)
New drug products, biologics and regular generic products must undergo a full evaluation by the DCA. Certain classes of OTC medicines (such as antiseptics, nasal decongestants and topical antibacterials) can go through the abridged channel for evaluations.
“One in five Malaysians over 30 has diabetes, but only half are diagnosed.”
Abridged evaluations take six months, and require submission of the following administrative data:
• Product name
• Name and strength of active substance and excipient
• Dosage form
• Product description
• Recommended dose
• Administration route
• Warnings and precautions
• Side effects
• Storage condition
• Shelf life
• Batch manufacturing formula
• Packaging and labeling information
A full evaluation takes 12 months. It requires data that supports product quality, safety and efficacy, in addition to the administrative information listed above. Imported products also require the submission of either a Certificate of Pharmaceutical Product (CPP) or a Certificate of Free Sale (CFS) and a Good Manufacturing Practice (GMP) certificate from the relevant authorities.
Pharmaceutical product registration in Malaysia is valid for five years. Registration renewal must be completed six months prior to the expiration date of the original registration.
“In 2009, just 100 clinical trials were ongoing in the country.”
Government fees are $330 per product registration, and between $395 and $1,315 for associated laboratory testing fees. Laboratory fees are determined by the product type (i.e. new drug products versus generics) and the number of active ingredients in the product.
Applications must be submitted online via Malaysia’s “Quest 2” registration system. Applicants should be locally incorporated companies with a permanent address in Malaysia. If the applicant is not the product owner, then a letter of authorization from the product owner must also be submitted.
The NPCB evaluates applications and issues licenses for drug manufacturers, importers and wholesalers. All licenses are good for one year and typically take one month to process. Applications may be done manually or online through the “Quest 2” system. Fees for importer’s and wholesaler’s licenses are $165, while fees for manufacturer’s licenses are $330. Applications must include the following information:
• Organization chart of the company (including staff names)
• Floor plan
• List of storage facilities
• Products recall procedure
• Registration of Company (ROC) or Registration of Business (ROB) certificate
• Business license
• Retention of Pharmacist certificate
• Annual registration certificate
• Type A license (the license authorizing a pharmacist to import, store and deal in controlled substances, in wholesale and retail settings)
In addition, applicants for a manufacturing license must submit a detailed layout plan of their facilities to the Center for Compliance and Licensing of National Pharmaceutical Control Bureau.
“Recently, Indian pharmaceutical companies have led the charge to set up manufacturing facilities in Malaysia.”
Foreign companies in malaysia
Recently, Indian pharmaceutical companies have led the charge to set up manufacturing facilities in Malaysia. In 2012, Ranbaxy announced that it would build a $40 million manufacturing facility that – when combined with output from its one other Malaysian facility – would triple the company’s output in Malaysia to about 3 billion doses per year. In 2011, Biocon started construction on a $160 million manufacturing and R&D facility in Johor. The new facility will produce biosimilar insulin and insulin analogues. It should be operational by 2014.
Western pharmaceutical companies are also increasing their presence in the country. In 2012, Watson Pharmaceuticals inherited a Malaysian facility after it acquired Ascent Pharmahealth. Novartis – which currently has several manufacturing facilities in the country – signed a Memorandum of Understanding (MOU) with Malaysia’s MOH in 2012.
According to the MOU, Malaysia’s MOH will help Novartis expand market access for several innovative products. It will also partner with Novartis to expand its pool of clinical trials candidates. In return, Novartis will use money from its $700 million venture fund to sponsor training and development workshops for clinical researchers and government investigators in Malaysia.
Another foreign pharmaceutical company partnering with the MOH is Novo Nordisk. In November 2012, it signed an agreement to set up a nationwide health promotion program for diabetes. The program will include a three year study and outreach activities aimed at healthcare workers and Malaysians suffering from diabetes.
About the author:
Ames Gross is president and founder of Pacific Bridge Medical, a Bethesda, Md.-based consulting firm that helps medical companies doing business in the Asian market (www.pacificbridgemedical.com). A recognized national and international leader in the Asian medical markets, he founded Pacific Bridge Medical in 1988, which has helped hundreds of medical companies with business development and regulatory issues in Asia.
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