Apac market overview 1

APAC Healthcare Market Overview

Report by: Shivani Chauhan

Asia-Pacific - Pharma’s New Centre of Gravity?

Report by: Shivani Chauhan

• Asia Pacific (APAC), the third largest pharmaceutical market in the world after North America and Europe, with

generics being the major driver for the pharmaceutical industry.

• In developing countries the pharma sales growth is higher, while the growth for developed countries is lower.

• Countries that will experience strong growth include Vietnam (16.4%), China (15.0%), Sri Lanka (12.4%),

Myanmar (12.2%) and Bangladesh (11.5%).

• Pharmaceuticals mount the lion share in terms of volume, having evolved into a US $1.2 trillion industry that

generates more than 60 percent of the segment with growth expected to reach to 5.3 percent per annum between

2012 and 2017 (IMS 2012).

• Combined sales of prescription drugs and over-the-counter (OTC) medicines are forecast to increase from

USD276.6bn in 2013 to USD384.7bn in 2018, representing a five-year compound annual growth (CAGR) of 7.0%.

Executive Summary

By 2017, the global pharmaceutical market is expected to grow to US$1.2 tn

2012-2017 global pharmaceutical market by region (USD, bn)

United States

2013 size: US$ 347bn


CAGR 2013-17: 1-3%

Japan



CAGR 2013-17: 2-4%

Western Europe



CAGR 2013-17: 1-3%

“APAC”



CAGR 2013-17: 12–14%

Rest of World



CAGR 2013-17: 11%

Most APAC countries are expected to drive global growth

Mature markets expected to see minimal growth

Positive growth expected, as economies recover from the Global Economic Crisis

Aging population and price reforms benefitting patent

brands to drive growth

Healthcare reform and expanded access expected

to drive positive growth

Global Market

2013 Size: US$ 991Bn

2017 Size: US$ 1,240Bn

CAGR 2013-17: 6%

Source: IMS Health Market Prognosis 2012; IMSCG Analysis

APAC: Korea, China, India,, Taiwan, Singapore, Sri Lanka, Malaysia, Thailand, Indonesia, Hong Kong, Philippines, Vietnam, Bangladesh, Pakistan, Australia, New Zealand

Changing disease patterns also will

provide pharmaceutical companies

with additional opportunities to

market their existing and increasingly

global and innovative product

portfolios.

Development of disease patterns Mortality rates, 2008–30

* Disease patterns in 2008 compared to expected pattern by 2030

Development of therapeutic areas in emerging markets within the next five years

Source: Survey results; Strategy & analysis

APAC is expected to be the key driver of global growth

15% 12-14%

12% 11-13%

3% 2-4%

USD BnCAGR %

(2008-2013) (2013-2017)

2%

7%

1-3%

1%

5% 6%

Global Pharmaceutical market by region in USD Billions (2007-2017)

5-7%

1-3%

1,300

0

1,100

1,000

900

800

700

600

500

400

300

200

100

1,200

9%

2008

$787

10%

39%

22%

12%

12%

3%

12%

2011

$937

11%

38%

20%

7%

12%

3%

11%

6%

Other

North America

Western Europe

Latin America

Japan

Middle East & North Africa

APAC*

2017

$1,240

12%

31%

16%

10%

10%

3%

18%

2016

$1,161

12%

32%

17%

9%

2010

$890

10%

38%

21%

6%

12%

2%

10%

2009

$843

10%

11%

3%

17%

2015

$1,099

11%

33%

17%

9%

11%

3%

16%

2014

$1,042

2%

34%

18%

8%

11%

3%

15%

2013

$991

11%

35%

19%

8%

12%

3%

11%

2012

$959

11%

36%

20%

7%

8%

39%

22%

6%

12%

2%

13%

Global

Forecast

Source: IMS Health Market Prognosis, May 2013

10% 8-10%

Note: Other countries include Russia, Eastern Europe, Middle

East, Africa and Oceania; *APAC includes KR, CN, TW, SG, MY, TH, ID, HK, PH, VN, AUS, NZL

Note: Historical pharma market totals may have been revised due to exchange rate adjustments

0

5

10

15

20

25

30

35

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Within APAC, pharma market growth in China and Vietnam will outpace other countries in the medium term

Source: IMS Health Market Prognosis

2013-2017 APAC

CAGR = 14%

2008-2013 APAC CAGR = 15%

APAC* pharmaceutical market size and growth by key countries (2007-2017)

Developed Asia OthersPharmerging Asia

Expansion of private hospital sector with increasing private investment will contribute to Pharma growth in Vietnam

Govt investment in healthcare infrastructure in rural China to drive future growth

Bubble size

= USD Bn 2013

sales12 Bn

USD

Fore

cast C

AG

R (

201

3-2

01

7)

(%)

Historical CAGR (2008-2013) (%)

Singapore

Philippines

Malaysia

Indonesia

Hong Kong

China

Vietnam

Thailand

Taiwan Korea

Key Insights

•Between 2013 and 2017,

APAC is expected to grow

by c.$93 Bn USD to reach

c.$225 Bn USD

•China is expected to form

87% of APAC’s total growth,

with double digit annual

growth

•Indonesia and Vietnam are

also expected to average

double-digit growth

Key Asian Country Forecasts:

Growth prospects in Tier 2 markets, while dwarfed by China, are not insignificant

Source: BMI; sales reported in US$bn at constant exchange rate at consumer prices

CountryUS$bn US$bn US$bn US$bn US$bn US$bn CAGR % CAGR %

2012 2013 2014 2015 2016 2017 2007-2012 2012-2017

China 80,1 94,1 108,2 123,2 138,1 152,8 23,9 13,8

India 18,0 19,8 22,0 24,4 27,1 30,1 17,3 10,9

South Korea 15,8 16,9 18,0 19,0 20,1 21,1 9,0 5,9

Indonesia 6,7 7,3 8,0 8,7 9,5 10,3 11,4 9,0

Taiwan 5,2 5,5 5,7 5,8 5,9 6,1 4,0 3,0

Thailand 4,4 4,7 4,9 5,2 5,5 5,8 4,9 5,6

Vietnam 2,9 3,3 3,9 4,4 5,1 5,7 27,0 14,9

Philippines 3,0 3,1 3,3 3,4 3,6 3,8 3,8 4,7

Malaysia 2,0 2,1 2,3 2,5 2,7 2,8 10,6 7,5

Hong Kong 1,3 1,4 1,5 1,6 1,7 1,8 7,2 6,2

Singapore 0,7 0,8 0,8 0,9 1,0 1,0 4,2 6,3

Total 140,2 159,2 178,5 199,2 220,1 241,4 17,1 11,5

Low per capita drug spending provides pharma companies opportunities to tap into a broad consumer base going forward

-10,000

-5,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

TaiwanKorea

India

ANZ

China

Japan

2011 pharmaceutical spend per capita** (USD)

Indonesia

5302402302202102001901801701601501406050403020100

Singapore

Philippines

Pakistan

Bangladesh

Vietnam

Thailand

900

2011 GDP per capita (USD)

Bubble size = 0.1 Bn.

2011 population

APAC^ Pharmaceutical and GDP per capita dynamics

Relatively low levels of per capita drug spend imply a large portion of the population has limited access (i.e.

affordability constraints) to drug use.

Source: IMS Market Prognosis, 2012; **2011 Total IMS MIDAS country sales / 2011 IMF population figures;

APAC includes Japan, Korea, China, India, Australia, New Zealand, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Hong Kong, Philippines, Vietnam, Bangladesh, Pakistan

Asia ClusterPharmerging AsiaDeveloped Asia

2011 Asia ex. JP GDP per

capita = 3,800 USD

2011 Asia Ex.JP

pharma

spend per capita =

33 USD

2011 Asia incl. JP GDP per

capita = 5,200 USD

2011 Asia incl. JP pharma

spend per capita = 64 USD

In terms of therapy areas, Pain, Asthma/COPD and Oncology have outpaced the broader APAC market in the past year

Sales and growth of top therapy areas* in APAC (2008-2013)

2008-2013 APAC CAGR = 15%

Source: IMS Health MIDAS, 2013; Note: *Top therapy areas comprise 80% of the APAC market; MAT Q1/2008 – MAT Q1/2013 (MAT - Moving Annual Total)

2012-2013 APAC YoY Growth = 15%

Others

Bubble size

= USD Bn 2013

sales12 Bn

USD

-10

-5

0

5

10

15

20

25

30

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Ophthamology

Anaesthesia

Asthma/COPD

Inflammatory diseases

Dermatology

Pain

Liver

Psychiatry

Rec

ent

Gro

wth

(2

01

2-2

01

3) (

%)

Historical Growth (2008-2013) (%)

Cough & cold

Vitamins & suppl

Oncology / Immunology

Neurology

Vascular disease

Hemotology

Oncology

Hospital solutionsGI

CVM

Infectious diseases

Key industry trends:

Growing trend towards cost-containment and policies supporting generics across Asia

CHINA ● Strengthening of primary care system through

healthcare reform● Expansion of private insurance● New provincial NRLs cover new drugs

● Variable reforms yielding fragmented market● Promotion of low cost Gx in hospitals● Price controls to be extended to all reimbursed

drugs, including patented brands● Increasing role of pharmaco-economics

ASEAN• Strengthening of private health infrastructure in ID• Increase in access to drugs in PH, ID & TH through government

intervention• ASEAN harmonization & stronger GMP norms• MY & SG expected to remain free of price control• Increasing emphasis on branded generics

• Pressure of price controls for EDL expected to continue in PH & TH, and rise in ID & VN

• Increasing level of protectionism• Consolidation of reimbursement schemes in TH• Increasing level of protectionism despite ASEAN harmonization

Positive impact

Negative impact

Source: IMSCG IP and Analysis

Hong Kong • Cost control in drug expenditure in public hospitals leading to

increase in the use of generics• Generic medicines are the fastest growing segment in

Pharmaceutical Industry• Healthcare Coupons for geriatrics• Public Healthcare Insurance under consultation due to ageing

population• Pharmaceutical Trade is a Free Market• No restrictions or price control in private sector

Key regional trends

• Governments promoting higher usage of generics

• Cost containment policies getting enforced stronger• Increasing level of protectionism

Key industry trends:

Growing trend towards cost-containment and policies supporting generics across ASEAN

Thailand● Move towards universal coverage

● NLED de-listings in 2008● CSMBS budget cuts & restrictions on prescribing & reimbursement● Hospital audits

Vietnam• Strong growing market• Expansion of local health insurance• Emphasis on local generics

• Strict price controls• New hospital tender regulations• Conflict of interest between MoH and provincial authorities

Positive impact

Negative impact

Source: IMSCG IP and Analysis;

Malaysia• New Pharmacy Bill (January 2013) proposing to grant

pharmacists an exclusive right to dispense medicine• 10MP plan to expand primary care sector• “1 Care for 1 Malaysia” aiming for universal coverage• Generic emphasis for public sector

• Forerunner in Halal certifications• Government favours locally produced products in both

registrations and tenders• Increasing RA standards (BE studies)

Singapore• Upgrading primary care sector (4 new hospitals and 12 new polyclinics by

2030 & financial support for GP’s) in order to cater to medial demands of ageing population

• Fast tracking of Indian Gx since 2010

Indonesia• Universal Health Coverage by 2014 and beyond• Compulsory prescribing of generics• E-catalogue tendering system since 2013

• Increasing RA hurdles and longer registration timelines• Price or access advantages to companies that manufacture locally

Philippines• KP reform aiming for UC by 2016• Expanded medicines access via Philippines Medicines policy in 2011• Cheaper medicines act & price cuts in 2009 & 2010• Maximum drug retail price (2010)

In Asian emerging markets, the sheer size of the task of improving healthcare have expedited the rise in price pressures

Source: IMS Market Expertise

However, there is a growing trend towards cost-containment and policies supporting generics across Asia

Mandatory price

cuts and pricing

controls

Increasing role of

pharmaco-

economics/DRG

implementation

Generic

penetration/ generic

emphasis

Lack of IP

protection (e.g.

compulsory

licensing)

Examples of Growth

Barriers in APAC

China

• Promotion of low cost

Gx in hospitals

• Price controls for all

reimbursed drugs

Hong Kong

• The trend of use in

generics in hospital

authority switching

from EU /ICH sources

to China /India

sources

ASEAN

• Increasing emphasis

on branded generics

• Pressure of price

controls

Korea

• Price cuts in 2012 for

off-patent, and Gx

• Prescribing controls,

DRG implementation

Source: IMSCG IP and Analysis; IMS Market Prognosis Forecast Period: 2013-2017;

Note: ASEAN includes Indonesia, Philippines, Thailand, Vietnam, Malaysia and Singapore

Low

High

Generics penetration varies across SEA and has increased overall across countries

Expanded SEA Overall Market – Originator vs. Generic Penetration (2011)

Source: IMS Analysis, IMS MIDAS Data

Reform and containment, coupled with strong local generics plays, is making SEA an increasingly difficult turf for MNCs

Expanded SEA Top 10 MNC* Market Share by Country (2010 vs. 2011)

Source: IMS Analysis, IMS MIDAS Data; *TOP-10 MNCs for 2011 comprise Pfizer, Novartis, Merck, Sanofi, AZ, Roche, GSK, J&J, Abbott and Lilly

• MNCs have lost market share to generics firms recently, as patent expiries, pricing pressure and increasingly aggressive generics competitors come into play

The strong Asia growth momentum is driven by favorable macro-economic growth, rising healthcare spend and urbanization

High-Growth Markets

Large,

Steady

Growth

Markets

Small, Steady Growth Markets

CN ID VN KR TW TH PH MY SG HK

Projected pharma

market 2017, ($ Bn)177 9 5 15 6 4 4 2 1 2

Projected 2013-

2017 growth (%)16% 13% 18% 6% 5% 4% 4% 8% 7% 8%

Strong macro-

economic growth

Increasing per

capita HC spend

Increasing wealth

of middle class

Strong population

growth

Population living in

urban centers

Ma

cro

Gro

wth

Dri

ve

rs

Source: IMS Health Market Prognosis 2013, IMSCG Analysis

Low ---- High

Regional Business Risk/Reward

Source: Hong Kong BMI Pharmaceuticals and Healthcare Report 1Q 2013

Industry

Rewards

Country

Rewards Rewards Industry Risks Country Risks Risks

Pharmaceutical

RRR

Regional

Ranking

Japan 80 63 76 80 77 79 77 1

Australia 50 87 59 72 84 77 66.2 2

South Korea 60 67 62 70 69 70 64.9 3

China 67 50 63 67 56 63 62.5 4

Singapore 40 80 50 80 79 80 61.9 5

Taiwan 53 60 55 70 65 68 60.2 6

Hong Kong 47 70 53 67 79 72 60.2 7

Malaysia 50 60 53 70 69 70 59.3 8

India 60 43 56 53 50 52 54.4 9

New Zealand 27 83 41 60 87 71 52.9 10

Vietnam 57 47 54 40 45 42 49.3 11

Indonesia 53 50 53 40 46 42 48.4 12

Thailand 47 47 47 37 58 45 46.1 13

Philippines 43 57 47 43 45 44 45.7 14

Sri Lanka 37 43 38 40 48 43 40.2 15

Pakistan 40 47 42 33 40 36 39.5 16

Bangladesh 37 43 38 40 36 38 38.3 17

Cambodia 33 37 34 30 36 32 33.5 18

Regional

average 49 57 51 55 60 57 53.4

BMI´s Risk/Reward Rating (RRR) tool, provides a globally comparative and numerically based assessment of market´s attractiveness. Scores out of 100, with 100 highest (WE: 67, CEE: 52, AM: 51, MEEA: 44)

Industry Rewards – Market expenditure, market expenditure per capita, sector value growth

Country Rewards – Urban-rural split, pensionable population, population growth

Industry Risks – Intellectual property laws, policy/reimbursements, approvals process

Country Risks – Economic structure, policy continuity, bureaucracy, legal framework, corruption

The strong Asia growth momentum is driven by favorable macroeconomic growth, rising healthcare spend and urbanization

Aggregate macroeconomic snapshot for select countries (2011-2016)

Nominal

GDP (USD Billion)

Pharma Market

growth^

IMF 2011-16

Nominal GDP

growth

2015 Urban

Population Share

(%)

Pharma

Market

(USD Billion)

113

417

5,867

279

300213

284211

494346

190123

662467

846

1,5191,116

1,921

1,593

1,646

6,475

7,29812,020

260322

161

Healthcare spend

per capita(USD)

368

179

2,080

1,438

4,774

4,065

221

1,733Singapore 1.10.8

Bangladesh 1.81.1

Malaysia 1.91.4

Philippines 3.52.8

Pakistan 3.81.9

Thailand 3.93.3

Vietnam 4.21.9

Taiwan 5.34.4

Indonesia 7.84.2

Korea 14.212.1

ANZ 16.414.5

Japan 127.4111.9

China 149.268.2

20162011 20162011

Source: IMS Market Prognosis 2012, IMSCG Analysis;

*APAC includes Japan, Korea, China, India, Australia, New Zealand, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Hong Kong, Philippines, Vietnam, Bangladesh, Pakistan

10%

2%

3%

6%

14%

7%

9%

7%

6%

7%

8%

7%

4%

17%

3%

2%

3%

13%

4%

17%

3%

15%

4%

7%

10%

7%

36%

91%

91%

92%

46%

85%

34%

36%

43%

77%

83%

33%

99%

Key challenges to further growth in emerging markets

Source: Strategy & analysis

Please feel free to contact for further information :

Shivani Chauhan

Direct: +91 9758833730

[email protected]

THANK YOU

mailto:[email protected]

Apac market overview 1

Healthcare

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