Thailand pharmaceutical market update 2014

This article looks at the pharmaceutical market in Thailand in pharmaphorum's emerging market themed month.

Thailand, with a population of 67 million, has grown rapidly over the past 20 years. In 2013, Thailand had a healthcare market of $15.8 billion, about half the size of Taiwan's. Per-capita spending on healthcare was almost $240 in 2013 – and the majority is spent on pharmaceuticals. As the Thai population grows, urbanizes, becomes more affluent, ages and is increasingly sedentary, demand for better healthcare will increase.

The pharmaceutical market in Thailand had a 2013 value of more than $4.5 billion, almost the same size as the Taiwan market. Already the second largest in Southeast Asia (behind Indonesia), the Thai drug market is projected to double by 2020. The branded generic sector is growing very quickly.

Thailand has a universal healthcare system that provides at least a basic level of care to all Thai citizens. This system is divided into three programs. The Civil Servant Medical Benefit Scheme gives approximately 7 million government workers excellent healthcare benefits. The Social Security Scheme covers about 10 million private sector workers and is based on an employer contribution system. Finally, the Universal Coverage Scheme provides free basic healthcare coverage to the remaining 50 million Thais.

The universal healthcare system has resulted in comparatively low out-of-pocket payments as a percentage of pharmaceutical spending – about 15% in Thailand, compared to 60% in India. As a percentage of total government expenditure, the Thai government spends 14% on healthcare, more than many European countries. Hospitals purchase about 75% of all drugs sold in Thailand, usually on the basis of generic tenders or negotiation for branded drugs.

The number of Thai domestic drug companies has been growing quickly over the past decade since the introduction of the Universal Coverage Scheme. The government is now funding more R&D, encouraging the local drug industry to move up the value chain. Pharmaceutical exports are valued at over $300 million and are primarily shipped to other Southeast Asian nations like Vietnam, Cambodia and Myanmar. Biotechnology is also promoted by the government, with the recent introduction of biotech parks and big tax incentives. Medical tourism is another priority for the Thai government. The country's almost 1,500 hospitals see more than 2.1 million foreign patients annually.

Thai pharmaceutical regulations

Part of Thailand's Ministry of Public Health (MPH), the Thai FDA (TFDA) is the regulatory agency in charge of drugs in Thailand. The TFDA's Drug Control Division has responsibility for drug licensing, inspection, registration and post-market surveillance. Drugs are categorized as either traditional or modern medicines. The levels of oversight and types of application required are different based on this categorization. Modern medicines are further divided into three classifications.

Generic drug applications should include material on quality control, general product information and product manufacturing. New generic drug applications should include a full set of the generic dossiers as well as bioequivalence study data and literature that supports efficacy and safety. New drug applications should include information on safety, efficacy and quality, including process validation and stability studies. For new drug applications, the ASEAN Common Technical Requirements and Dossier are accepted. Licenses do not currently have an expiration date. Import and manufacturing licenses are valid for one calendar year and need to be renewed annually.

The Thai government is currently working on an amendment to the country's Drug Act that will update the pharmaceutical regulations. Proposed revisions would define three replacement categories for pharmaceuticals -- pharmacy-dispensing, prescription-only and household remedies. Manufacturers not compliant with GMP principles would not be allowed to produce or sell their drug products. Product licenses would be valid for five years and renewable. State-owned drug companies would also need to comply with licensing and product registration requirements. Product liability would be introduced, and fines for not complying with regulations would be significantly increased.

Disease trends

Infectious diseases are still a significant problem in Thailand. Officially, about half a million people have HIV/AIDS – though the estimated number is over 1 million. Dengue fever affected more than 150,000 Thais in 2013, double the number infected in 2012. There were almost 50,000 chickenpox cases in 2013. Influenza, tuberculosis, hepatitis, Japanese encephalitis, malaria and leptospirosis are also common in Thailand.

Western and lifestyle diseases have also been increasing. Non-communicable diseases account for almost three-fourths of all deaths in Thailand. Cardiovascular diseases and cancer are the leading causes of mortality. About 10% of Thai adults have diabetes, while approximately 25% have hypertension. Obesity is increasing. Thailand is also aging, with more than 25% of the population projected to be over the age of 60 by 2050. Many Thais at high risk for osteoporosis have neither been diagnosed as such nor received any treatment.

Thailand's Universal Coverage Scheme has special funding to promote screening and care for hypertension and diabetes to increase preventative healthcare. This should lead to an increase in the demand for medicines to treat these "Western" conditions, and Western pharmaceutical companies should benefit.

Foreign companies in Thailand

Thailand provides many benefits for foreign companies looking to manufacture or source their products in Thailand – including a skilled workforce, strong medical training, a friendly regulatory environment and a well-established infrastructure. Thailand has applied for membership in the Pharmaceutical Inspection Cooperation Scheme (PICS), so Good Manufacturing Practice (GMP) standards are increasingly at international levels. The government also offers incentives like tax holidays and reduced equipment import duties for foreign pharmaceutical investors. For companies looking to do R&D or clinical trials in Thailand, further advantages include a treatment naïve population and a tropical setting.

Although almost 80% of the drug companies operating in Thailand are local firms, imported pharmaceuticals make up a significant portion of the pharmaceutical market by value. More than $1.1 billion worth of drug products are imported each year. Companies based in the U.S., Germany, France and Switzerland together account for about 44% of all imported drug sales.

Prominent foreign pharmaceutical companies operating in Thailand include GSK, Sanofi, Roche, AstraZeneca, and Novartis. To date, not that many multinational drug firms have made investments in in-country facilities. Foreign pharmaceutical companies generally employ several large Thai contract manufacturers to either re-package their imported drugs or produce their products locally.

For instance, Pfizer engages a Thai contract manufacturer, Biolab, which itself is the third largest domestic pharmaceutical manufacturer. Pfizer's GM has noted that the company's products are increasingly accessible to Thai citizens as health and beauty and pharmacy chains – like Watsons and Boots – expand around the country.

Another example is Merck, which concentrates on marketing branded generics for cardiology and diabetes to the public sector along with more specialized drugs for endocrinology, fertility and oncology to the private sector. Merck is also expanding its geographical focus outside of Bangkok and employs two local contract manufacturers. The company hopes to export products made in Thailand to other nations around Southeast Asia.

Conclusion

The Thai drug market provides excellent opportunities for international pharmaceutical companies.

Other articles by Ames Gross:-

• Malaysia pharmaceutical market update 2014

• Singapore's pharmaceutical industry 2014 update

• The key characteristics of China's pharmaceutical market

• Opportunities in China's API market

• Opportunities in Japan's API market

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: What does the future look like for the pharma market in Thailand?