Malaysia pharmaceutical market update 2014
In pharmaphorum’s emerging markets themed month, Ames Gross of Pacific Bridge Medical explores the pharma market in Malaysia and the opportunities that Malaysia presents to pharma.
Malaysia’s economy expanded almost 5% in 2013 and has a purchasing power parity (PPP) per-capita GDP of more than $17,000. The total healthcare market in Malaysia, a country of 30 million people, was worth about $12 billion in 2013. This market is approximately the same size as the healthcare markets in Vietnam and the Philippines – which have populations three times as large as Malaysia.
Malaysia’s pharmaceutical market is valued at over $3 billion and has a double-digit annual growth rate. Thanks to an increasingly affluent and expanding middle class, an aging population, urbanization and higher quality healthcare and medicines, Malaysians spent about $400 per person on healthcare in 2013, compared with almost $240 per person in Thailand.
Healthcare in Malaysia is structured into two tiers: a government universal healthcare scheme covering approximately 60% of Malaysians and a private healthcare system. The private system is growing quickly, especially in urban areas. Approximately half of healthcare spending is out-of-pocket. Overall, more than 8% of Malaysian GDP is spent on healthcare, comparable to most European countries.
The generics manufacturing industry in Malaysia has been growing over the past decade; there are approximately 80 modern drug manufacturers licensed by the government. Although local manufacturers can produce more than three-fourths of the drug categories that are on the Essential Drugs list, imports – especially of higher end drugs – are still necessary to meet domestic demand. Domestic Malay manufacturers are now starting to increase R&D investment and produce higher value-added generic drugs like oncology medicines and biologics.
The government is the largest pharmaceutical buyer in Malaysia, accounting for half of pharmaceutical purchasing by value. The rest of the market is split between private clinics, private hospitals and pharmacies. The government purchases approximately 60% generic medicines and 40% patented drugs. There are no price controls; instead, pricing is managed through tenders for generic drugs and negotiations for patented pharmaceuticals.
Malaysian pharmaceutical regulations
Part of the Ministry of Health’s (MOH’s) Pharmaceutical Services Division, the National Pharmaceutical Control Bureau (NPCB) is the primary government agency responsible for regulating pharmaceutical products. The NPCB is both the secretariat to and the operational arm of the Drug Control Authority (DCA). The NPCB undertakes most of the day-to-day regulatory implementation, monitoring and post-market surveillance.
Drug applications are submitted electronically to the DCA, and it generally takes 9 months to 1 year to receive approval. Pharmaceuticals are divided into four categories in Malaysia: generics, over-the-counter (OTC) generics, new drug products and biologics. Depending on classification, an abridged evaluation may be possible. License applications for drug manufacturers, importers and wholesalers are submitted online or manually to the NPCB.
Imported generic and branded pharmaceuticals must both conform to a variety of conditions. Several recent updates to these requirements for generic pharmaceuticals include the necessity that the manufacturer is GMP compliant – and certified as such by a Pharmaceutical Inspection Convention (PIC) or Pharmaceutical Inspection Cooperation Scheme (PICS) member country. The imported drug must also have a Certificate of Pharmaceutical Product (CPP).
Government support of the pharma industry
Malaysia has been a PICS member since 2002 and therefore has strong Good Manufacturing Practice (GMP) regulations in place that meet international standards. In conjunction with Singapore, Malaysia has also been promoting ASEAN pharmaceutical harmonization. Geographically, Malaysia provides a good manufacturing and export base to other Southeast Asian nations while also maintaining a skilled workforce and relatively inexpensive land and labor costs.
The Malaysian government has classified healthcare as a National Key Economic Area (NKEA). The government plans to expand the healthcare market through investment in healthcare infrastructure, clinical research, promotion of generic drug exports and medical tourism. Foreign investment in private healthcare facilities has also increased as the country has expanded its role in the medical tourism market – with the number of medical tourists doubling from 2007–2012.
The Malaysian government recently announced almost a dozen new projects worth $300 million under the healthcare NKEA. These projects include three new manufacturing plants, and expansion of a current production facility, and several foreign-domestic joint ventures.
In addition to building hospitals and clinics, the government has spent almost $13 million establishing clinical research hubs around Malaysia. A network of 27 clinical research centers is linked with all Malaysian public healthcare facilities – including over 50 hospitals, 100 clinics, almost 600 clinical investigators and 18 million potential patients. The government hopes to increase local clinical trials from less than 100 in 2009 to over 1,000 by 2020.
The government sees biotechnology as a key part of its efforts to industrialize and increase its knowledge-based economy. Several Biotech hubs have been established around the country and by 2020 are expected to create more than 150,000 new jobs, add $13 billion to the gross national income and bring $4.5 billion in foreign investment.
Along with well-established infrastructure and good patent protection, Malaysia has also put in place a set of policies aimed to entice foreign pharmaceutical companies to set up in-country facilities. These policies include customized incentives for sizeable investments, duty exemptions, a 10 year tax holiday, no equity restrictions and access to ASEAN markets via Malaysia’s free trade agreements (FTAs).
Non-communicable diseases (NCDs) are increasingly prevalent in Malaysia. Almost 80% of Malaysian adults have a NCD. In 2013, the MOH announced that NCDs were the largest cause of hospital admission, mortality and premature death in Malaysia. Mortality due to NCDs is projected to grow almost 20% over the next decade.
Over the 2000–2012 period, there was a 35% increase in the rate of NCDs and a 100% increase in deaths due to NCDs – with cardiovascular diseases showing the greatest increase. Almost 70% of Malaysians have at least one risk factor for cardiovascular disease, while a third have two risk factors. Among Malaysians over the age of 30, about 50% have hypertension and almost 40% are obese. Malaysia is considered to be the most overweight country in Southeast Asia.
Close to one quarter of Malaysians aged 30 and older have diabetes, though many remain undiagnosed. By 2020, 4.6 million Malaysians over the age of 18 will have diabetes – an increase of 1 million over 2013. Demographically, Malaysians will soon be an aging society. The proportion of the population over the age of 60 will reach 20% by 2050, up from almost 8.5% in 2013. This will increase the need for old-age care and orthopedic products.
The changing disease burden and demographic profile provide good opportunities for foreign pharmaceutical companies that have already developed drugs to treat these Western type diseases.
Foreign companies doing business in Malaysia
Due to strict regulations, many foreign pharmaceutical companies have not set up manufacturing plants in Malaysia – instead importing their products and utilizing local distributors or their own sales teams. Companies with Malaysian operations structured in this way include Pfizer, Astra Zeneca and Eli Lilly. Yet with the increasing support of the Malaysian government, more foreign companies have been expanding their in-country operations. YSP Industries, Xepa-Soul Pattinson, Novartis and GSK have recently opened manufacturing plants in the country. Novartis and Novo Nordisk have signed MOUs with the Malaysian MOH for training or disease awareness campaigns.
More than 100 Indian companies have operations in Malaysia — with joint ventures accounting for about 60%. Indian biotech and pharmaceutical companies have invested more than $1.1 billion in Malaysia. Since 2011, several major Indian drug companies have opened manufacturing and / or R&D plants in Malaysia, hoping to both sell to the domestic market as well as export products to other countries in Southeast Asia. Indian companies with a manufacturing presence in Malaysia include Cipla, Dr. Reddy’s Labs and SM Pharmaceutical.
Ranbaxy announced plans in 2013 to construct a $35 million Greenfield manufacturing plant in the Kulim Hi Tech Park. According to the company’s Malaysia Managing Director, T. Jeyabalan Thangarajah, “in addition to serving the local market, the new facility will also export products to the ASEAN market, Middle East, Europe, Sri Lanka, China and other… nations.” The plant, Ranbaxy’s second in Malaysia, will manufacture dosage forms in the anti-diabetic, cardiovascular, gastrointestinal and anti-infective areas.
The Malaysian pharmaceutical market is growing quickly. Western drug companies that have drugs for NCDs should continue to prosper.
Other articles by Ames Gross:-
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 Asia market. 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. For more information, visit www.pacificbridgemedical.com.
Closing thought: Will the rate of NCDs in Malaysia continue to rise at the current rate?