Malaysia Pharmaceuticals & Healthcare Report - Q4 2012
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Transcript of Malaysia Pharmaceuticals & Healthcare Report - Q4 2012
Q4 2012www.businessmonitor.com
pharmaceuticals & healthcare report
issN 1748-2038published by Business monitor international ltd.
malaYsia INCLUDES BMI'S FORECASTS
Business Monitor International 85 Queen Victoria Street London EC4V 4AB UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: [email protected] Web: www.businessmonitor.com
© 2012 Business Monitor International. All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher.
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MALAYSIA PHARMACEUTICALS & HEALTHCARE REPORT Q4 2012 INCLUDES 10-YEAR FORECASTS BY BMI
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: August 2012
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CONTENTS
CONTENTS ........................................................................................................................................................ 3
Executive Summary ......................................................................................................................................... 7
SWOT Analysis ................................................................................................................................................. 9 Malaysia Pharmaceuticals And Healthcare Industry SWOT ................................................................................................................................. 9 Malaysia Political SWOT .................................................................................................................................................................................... 10 Malaysia Economic SWOT .................................................................................................................................................................................. 10 Malaysia Business Environment SWOT ............................................................................................................................................................... 12
Pharmaceutical Risk/Reward Ratings .......................................................................................................... 13 Table: Asia Pacific Pharmaceutical Risk/Reward Ratings, Q412 ........................................................................................................................ 13 Rewards ............................................................................................................................................................................................................... 14 Risks .................................................................................................................................................................................................................... 14
Malaysia – Market Summary ......................................................................................................................... 16
Regulatory Regime ......................................................................................................................................... 18 Regulatory Developments .................................................................................................................................................................................... 18 Bioequivalence ..................................................................................................................................................................................................... 19 Regional Collaboration ....................................................................................................................................................................................... 20 Pharmaceutical And Medical Advertising............................................................................................................................................................ 20 Labelling Requirements ....................................................................................................................................................................................... 21 Intellectual Property Regime ............................................................................................................................................................................... 22 Counterfeit Pharmaceuticals ............................................................................................................................................................................... 23 Compulsory Licensing ......................................................................................................................................................................................... 23 Free Trade Agreements........................................................................................................................................................................................ 24 Pricing And Reimbursement ................................................................................................................................................................................ 25
Industry Trends And Developments ............................................................................................................ 27 Epidemiology ....................................................................................................................................................................................................... 27 Non-Communicable Diseases .............................................................................................................................................................................. 28 Communicable Diseases ...................................................................................................................................................................................... 28 Healthcare Sector ................................................................................................................................................................................................ 29 Table: 2011 Entry Points Projects Summary ....................................................................................................................................................... 30 Health Insurance ................................................................................................................................................................................................. 31 Table: Main Features Of 1Care ........................................................................................................................................................................... 31 Healthcare Sector Funding .................................................................................................................................................................................. 32 Table: Public Sector And Private Sector Healthcare Developments .................................................................................................................... 33 Medical Tourism .................................................................................................................................................................................................. 33 Biotechnology And Research ............................................................................................................................................................................... 35 Clinical Trials ...................................................................................................................................................................................................... 37 Clinical Trials Industry Developments................................................................................................................................................................. 38 Medical Devices................................................................................................................................................................................................... 38 Leading Medical Device Players ......................................................................................................................................................................... 39 Recent Medical Devices Industry Developments .................................................................................................................................................. 39
Industry Forecast Scenario ........................................................................................................................... 41 Overall Market Forecast...................................................................................................................................................................................... 41 Table: Pharmaceutical Sales Indicators 2008-2016 ............................................................................................................................................ 42
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Key Growth Factors – Industry............................................................................................................................................................................ 43 Table: Healthcare Expenditure Indicators 2008-2016 ......................................................................................................................................... 44 Table: Healthcare Governmental Indicators 2008-2016 .................................................................................................................................... 44 Table: Healthcare Private Indicators 2008-2016 ................................................................................................................................................ 45 Key Growth Factors – Macroeconomic ............................................................................................................................................................... 46 Prescription Drug Market Forecast ..................................................................................................................................................................... 48 Table: Prescription Drug Sales Indicators 2008-2016 ........................................................................................................................................ 49 Patented Drug Market Forecast .......................................................................................................................................................................... 50 Table: Patented Drug Market Indicators 2008-2016 ........................................................................................................................................... 51 Generic Drug Market Forecast ............................................................................................................................................................................ 52 Table: Generic Drug Sales Indicators 2008-2016 ............................................................................................................................................... 53 OTC Medicine Market Forecast .......................................................................................................................................................................... 54 Table: OTC Medicine Sales Indicators 2008-2016 .............................................................................................................................................. 55 Pharmaceutical Trade Forecast .......................................................................................................................................................................... 56 Table: Exports and Imports Indicators 2008-2016 .............................................................................................................................................. 57 Medical Device Market Forecast ......................................................................................................................................................................... 59 Table: Medical Devices Sales Indicators 2008-2016 ........................................................................................................................................... 60 Other Healthcare Data Forecasts ........................................................................................................................................................................ 61 Key Risks To BMI’s Forecast Scenario ................................................................................................................................................................ 62
Competitive Landscape ................................................................................................................................. 63 Domestic Pharmaceutical Industry ...................................................................................................................................................................... 63
Foreign Pharmaceutical Industry ............................................................................................................................................................................. 63 Table: Leading Malaysian Pharmaceutical And Healthcare Companies ............................................................................................................. 64 Company Activities .............................................................................................................................................................................................. 64 Halal Medicine .................................................................................................................................................................................................... 65 Traditional Medicine ........................................................................................................................................................................................... 66 Pharmaceutical Distribution................................................................................................................................................................................ 67
Company Profiles ........................................................................................................................................... 68 Local Companies ...................................................................................................................................................................................................... 68
Pharmaniaga ....................................................................................................................................................................................................... 68 Prime Pharmaceutical ......................................................................................................................................................................................... 71 Bumimedic ........................................................................................................................................................................................................... 72 Hovid ................................................................................................................................................................................................................... 73 Chemical Company of Malaysia .......................................................................................................................................................................... 75 Kotra Pharma ...................................................................................................................................................................................................... 77
Multinational Companies .......................................................................................................................................................................................... 80 GlaxoSmithKline .................................................................................................................................................................................................. 80 Pfizer ................................................................................................................................................................................................................... 82 Novartis ............................................................................................................................................................................................................... 84 Merck & Co ......................................................................................................................................................................................................... 86 Sanofi ................................................................................................................................................................................................................... 88 Eli Lilly Malaysia ................................................................................................................................................................................................ 90 Ranbaxy Malaysia ............................................................................................................................................................................................... 91
Demographic Outlook .................................................................................................................................... 92 Table: Population By Age Group, 1990-2020 ('000) ........................................................................................................................................... 93 Table: Population By Age Group, 1990-2020 (% of total) ................................................................................................................................... 94 Table: Key Population Ratios, 1990-2020 ........................................................................................................................................................... 94 Table: Rural/Urban Population Split, 1990-2020 ................................................................................................................................................ 95
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Glossary .......................................................................................................................................................... 96
BMI Methodology ........................................................................................................................................... 98 How We Generate Our Pharmaceutical Industry Forecasts ................................................................................................................................ 98 Pharmaceuticals Risk/Reward Ratings Methodology........................................................................................................................................... 99 Ratings Overview ................................................................................................................................................................................................. 99 Table: Pharmaceutical Business Environment Indicators ..................................................................................................................................100 Weighting ............................................................................................................................................................................................................101 Table: Weighting Of Components .......................................................................................................................................................................101 Sources ...............................................................................................................................................................................................................101
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Executive Summary
BMI View: Malaysia may have one of the region’s lowest per capita spend in terms of healthcare as a
percentage of GDP – 4.3% in 2011 – but it boasts a growing private healthcare sector and is
experiencing increased investment in public healthcare as existing facilities are modernised. Generic
drugs are one key growth area, particularly as drug patents expire, and the government’s intention to
create a new regulatory body and implement the Medicine Device Act in October 2012 will improve the
operating environment. Risks remain, however. Counterfeit and substandard drugs are commonplace,
and pharmacists’ requests to charge a consultation fee will only encourage low-income patients to look
for cheaper remedies for their ailments. Malaysia’s stance on intellectual property may deter investors,
with media reports claiming that the government objects to a proposed increase in patent periods for
drugs by foreign firms, which forms part of the Trans-Pacific Partnership Agreement.
Headline Expenditure Projections
Pharmaceuticals: MYR5.55bn (US$1.81bn) in 2011 to MYR6.2bn (US$1.93bn) in 2012;
+10.2% in local currency and +6.2% in US dollars. Forecast down slightly from Q312 on
account of new historical data.
Healthcare: MYR36.35bn (US$11.88bn) in 2011 to MYR39.03bn (US$12.29bn) in 2012;
+7.4% in local currency and +3.4% in US dollars. Forecast up slightly from Q312 on account
of new historical data.
Medical devices: MYR3.97bn (US$1.30bn) in 2011 to MYR4.30bn (US$1.36bn) in 2012;
+8.5% in local currency and +4.5% in US dollars. Forecast up from Q212 on account of new
historical data.
Risk/Reward Rating: In our latest proprietary Pharmaceutical Risk/Reward Ratings (RRRs) matrix for
Asia Pacific, Malaysia ranks an unchanged eighth out of the 18 countries surveyed regionally. Its
composite score is also unchanged at 59.3 out of 100. Malaysia is an attractive market for international
investors, though its longer-term rewards are dragged down by factors such as low per capita spending on
pharmaceuticals.
Key Trends And Developments
The Malaysian Pharmaceutical Society presented a proposal to the Ministry of Health to charge
customers a professional fee of MYR5. Private doctors’ fees are also expected to increase by
14%.
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In June 2012, Novartis signed a Memorandum of Understanding with the Ministry of Health to
further enhance the country’s progress in the National Key Economic Area programme. Novartis
set up a US$700mn fund to support domestic healthcare start-ups.
Local press reports in August 2012 indicated that the Malaysian government is not in favour of
the Trans-Pacific Partnership Agreement, a free trade agreement that is intended to increase the
patent period of drugs by foreign countries.
BMI Economic View: The latest data from Q212 show that real GDP posted a better-than-expected 5.4%
year-on year (y-o-y) growth. While BMI’s analysts have raised our full-year GDP forecasts for Malaysia
accordingly, we note that May is typically a peak month in terms of activity, and questions whether this
healthy growth can be sustained. Factors holding back Malaysia’s economy include its net exports and
property sector.
BMI Political View: Malaysia’s government is keen to boost international investment, with recent
initiatives announced in July 2012 including a series of tax incentives to encourage foreign direct
investment inflows. BMI welcomes the government’s moves to create a new financial district in Kuala
Lumpar, but in the long term, ethnic diversity continues to have a heavy influence on domestic politics,
and this will affect political stability and, subsequently, investor consequence.
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SWOT Analysis
Malaysia Pharmaceuticals And Healthcare Industry SWOT
Strengths Increasingly progressive government policy, aimed at attracting international investment. Improving local manufacturing standards, with a commitment to biotech development. Sizeable, and growing generic drugs market, given low patient purchasing power and lax patent
laws. Manufacturing of halal medicines improving access to other global Islamic markets.
Weaknesses Markedly behind South Korea, Singapore and Taiwan in terms of per-capita pharmaceutical expenditure and foreign direct investment.
Lax patent law remains conspicuously below international standards, government rejection of Trans-Pacific Partnership Agreement could deter multinational firms.
Strict government drug pricing policy heavily biased towards local drug producers. Market reliant on imports, particularly at the hi-tech end of the scale, placing pressure on
government finances.
Opportunities Exports growing due to rising regional and global demand, as well as increasing trade links. ASEAN harmonisation encouraging the adoption of Western regulatory standards and the
improvement of intra-regional trade. Potential membership of a multilateral trans-Pacific trade agreement. Investment in the biotech sector development supported by government initiatives. Malaysia becoming an attractive location for medical tourism. More transparent legislation and the attraction of foreign investment. Planned investment in the expansion of medical facilities.
Threats Government resistance to aligning domestic patent law fully with international standards, coupled with encouragement of parallel trade.
Existence of a significant counterfeit drugs sector. Government seeking compulsory licences for patented drugs. From July 2012, pharmaceutical products not manufactured in PIC/S member countries will be
required to obtain GMP certification prior to sale in Malaysia, which will disadvantage importers from less-regulated markets.
Increasingly unclear economic and political situation negatively impacting investor sentiment.
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Malaysia Political SWOT
Strengths Malaysia is an example of a successful democratic Islamic state. Despite murmurs of discontent among hard-line Muslims in some states, Malaysia is unlikely to abandon moderate Islam.
Despite having two significant minority ethnicities, Chinese and Indians, Malaysia has not been rocked by any major racial unrest since 1969. This lends credence to the argument that its multiracial society is sustainable.
Weaknesses The Malay half of the population holds a constitutionally enshrined special position in society, amounting to positive discrimination in jobs and wealth. Resentment is an obvious by-product, and the challenge is to produce enough prosperity to reduce tension.
The controversial Internal Security Act, which allows for detention without trial, has been wielded by the government on several occasions with the avowed intention of quelling unrest. However, some detentions have been viewed as an attempt by the government to suppress the opposition.
Opportunities The relatively weak performance by the ruling Barisan Nasional in the 2008 general elections has paved the way for the stalled reformist agenda – promised by former prime minister Abdullah Ahmad Badawi back in 2004 – to gather pace. This would help open up the country's closed political system and improve transparency and accountability within key institutions.
Prime Minister Najib Razak came to power in 2009 promising reforms and changes. His actions have thus far been deemed progressive, potentially paving the way for a significant overhaul of Malaysia's political and economic system.
Threats Although it is likely to remain non-violent, ethnic tension will continue to simmer as long as there remains a threat that the influence of hard-line Islam could revive. For now, however, the hardliners have lost much of their political clout.
Despite a change of premier in April 2009, the Barisan Nasional coalition will remain under pressure from a stronger opposition. Failure to deal adequately with issues such as corruption, a slowing economy and the divisive affirmative action policy could see Anwar Ibrahim's opposition coalition force Barisan Nasional from power.
Malaysia Economic SWOT
Strengths During the past four decades, Malaysia has transformed itself from a commodity-dependent economy into a major world source for electronics and computer parts.
Malaysia is one of the world's largest producer of rubber, palm oil, pepper and tropical hardwoods, and is still a net exporter of crude oil. All this provides a solid platform for economic growth.
Weaknesses Malaysia's relative insulation from global energy price shocks is being eroded. It is now likely that within the next few years Malaysia will become a net importer of oil.
Malaysia's economic openness can be as much of a burden as a benefit, since it confers a high degree of vulnerability to global growth and capital flows.
Oil-related taxes contribute more than 40% of the state's revenues. The lack of alternative income poses a threat to the government's ability to function and sustain economic development, potentially leading to economic stagnancy.
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Opportunities The opportunity for private sector-led growth will improve as the government continues divestment of state shareholdings in order to raise funds to narrow the budget deficit.
Rising consumption levels over the coming years will provide new growth avenues in industries such as retail.
Malaysia's majority Muslim population and the government's ongoing efforts to boost Islamic finance could see Malaysia become a major financial hub over the medium term.
Threats Wages are higher in Malaysia than in a number of its competitors, such as China and Vietnam, which could be a long-term hindrance to economic expansion. To maintain its competitive edge, Malaysia needs a steady stream of inward investment.
Malaysia's dependence on migrant labour, particularly for low-skilled jobs, poses a threat to long-term economic stability.
Oil-related taxes make up more than 40% of the state's revenues at a time when Malaysia is expected to become a net petroleum importer by as early as 2013. The over-reliance on oil poses a threat to the government's ability to fund and sustain economic development over the long term.
The government's already-poor fiscal position is threatened by increasingly unsustainable subsidies on essential consumer goods (especially petrol) which could further strain its finances.
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Malaysia Business Environment SWOT
Strengths Standards of corporate governance in Malaysia have greatly improved since the Asian financial crisis at the end of the 1990s – more so, in fact, than in many neighbouring countries.
Foreign companies, or at least foreign manufacturing companies, looking to do business in Malaysia will continue to be welcomed with open arms - with the government offering lavish tax breaks and concessions.
Weaknesses State subsidisation of prices will remain a peripheral but persistent part of daily economic life in Malaysia.
Doing business in Malaysia will always, to some extent, mean dealing with the politically well-connected.
Big construction projects – and big contracts for foreign construction firms – are unlikely to be as much of a priority for Malaysia's government as they were under the administration of former prime minister Mahathir Mohamad.
Opportunities The opportunity to invest in Malaysian state assets could improve. The government, if it sticks to its word, will conduct its biggest ever divestment of state shareholdings.
Malaysia is eager to compete globally in banking. It currently lacks a domestic champion; however, with 10 main institutions in the market, bank consolidation is a strong possibility.
The opening of free trade agreement negotiations with the EU as well as the Trans-Pacific Partnership may lead to an improvement to the country's business environment owing to freer markets, if talks succeed.
Threats The waterways and shipping lanes that surround Malaysia will continue to experience the threat of piracy and terrorism.
Malaysia is at risk of losing out to China in the race for foreign investment. As Malaysian income level rises, it will need to seek investment opportunities in higher value-added industries.
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Pharmaceutical Risk/Reward Ratings
Table: Asia Pacific Pharmaceutical Risk/Reward Ratings, Q412
Rewards Risks
Industry Rewards
Country Rewards Rewards
Industry Risks
Country Risks Risks
Pharma RRR
Regional Rank
Japan 80 63 76 80 77 79 77,0 1
South Korea 63 67 64 70 69 70 66,4 2
Australia 50 87 59 72 84 77 66,2 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
Indonesia 53 50 53 40 46 42 48,4 11
Vietnam 50 47 49 40 45 42 46,3 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 53,3
Scores out of 100, with 100 highest. Source: BMI
In BMI’s RRR matrix for Q412, Malaysia is again placed eighth out of the 18 markets surveyed in the
region. Key attractions of the Malaysian pharmaceutical market over the longer term are the
government’s encouragement of the biotechnology sector and the country’s economic development,
which will improve consumer purchasing power with regard to pharmaceuticals. On the other hand, per
capita pharmaceutical consumption is quite low, especially due to the high out-of-pocket payment levels,
and this is set to worsen as price increases are proposed both in terms of specialist doctors’ fees and the
prospect of pharmacists charging for consultations. The component parts of Malaysia’s RRR are:
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Rewards
Industry and country rewards scores are weighted and combined to form the overall rewards score.
Malaysia score was unchanged at 53 this quarter, two percentage points ahead of the regional average of
51.
Industry Rewards
Malaysia’s pharmaceutical market
receives a score of 50 – a figure that has
remained unchanged this quarter.
Malaysia’s relatively low per capita
consumption of pharmaceuticals, due to
the low- to middle-income status of the
Malaysian economy, together with the
high share of out of pocket payments that
makes demand for pharmaceuticals very
income sensitive. And if proposals for
pharmacists to charge customers MYR5
per consultation are approved by the
Ministry of Health, BMI will consider a
downward revision to this score. Positive factors contributing to the score include a growing population
and demand for innovative drugs as well as for improvements to the healthcare industry in general.
Malaysia does remain vulnerable to one-off threats, however, such as natural disasters.
Country Rewards
Malaysia again scores 60 for this indicator, a score that sits above the regional average of 57. The score
reflects a low proportion of pensionable population in comparison to its Asian peers, and well as a vast
number of rural dwellers. On a positive note, Malaysian population is fast growing, which should uphold
the development of its pharmaceutical market. While the growth of medical tourism is another reward
boosting this score, as it encourages a strong private healthcare sector.
Risks
Pharmaceutical market and country risks are weighted and combined to form the score for risks to
potential returns. Malaysia’s score of 70 is considerably above the regional average (57). The country is
considered as posing some risks to multinationals, although presenting a respectable long-term prospect
in the Asian region.
Risk/Reward Ratings By Subsector Score
Q412
Source: BMI
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Industry Risks
Malaysia’s score remains at 70 for market risk, which refers to a subjective assessment of the country’s IP
laws, policy and reimbursement regimes, as well as to the speed and efficiency of the approvals process.
However, despite the positive prospect of harmonisation with the Association of Southeast Asian Nations
(ASEAN), BMI will consider downgrading this score if it is confirmed that the Malaysian government
does not adher to the patent extension terms of the Trans-Pacific Partnership Agreement, as it may deter
multinationals from launching innovative medicines in the country. The counterfeit drug industry is also a
negative factor affecting this score.
Country Risks
The figure for Malaysia’s country risk (69) is supported by a relatively high level of policy continuity, but
is weighted down by corruption, cumbersome bureaucracy and a patchy legal framework. Beyond major
cities, where tourism and private investment is more commonplace, many parts of the country suffer from
insufficient investments in healthcare. Overall, however, Malaysia’s score remains considerably above
the regional average of 60, which serves to increase its attractiveness as an investment destination.
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Malaysia – Market Summary
The Malaysian pharmaceutical market is relatively underdeveloped by international standards. The
market is based on a strong domestic generic drugs sector and imports of branded and patented medicines.
BMI calculates that pharmaceutical spending represented 0.65% of GDP in 2011, which is low even by
regional standards. BMI forecasts that the Malaysian drug market, valued at around MYR5.55bn
(US$1.81bn) in 2011, will post a CAGR of 9.4% in local currency terms between 2011 and 2016.
Boosted by conWith considerable
encouragement from the government, the
generic drug sector will expand in volume
terms, although its value gains against the
patented drug market will be smaller, due
to its low prices. Imports (of patented and
high-tech drugs primarily) will continue to
dominate the Malaysian market, with
multinationals taking a lion’s share. The
encouragement of the generic drug sector
will provide new opportunities for the local
industry, which will increasingly need to
boost its competitiveness in the face of
regional harmonisation and free trade
agreements (FTAs) with major trading
partners. Concerns regarding counterfeit drugs remain however, creating a window of opportunity for
high-quality generic drug manufacturers as the government introduces more stringent regulations.
The vast majority of local producers concentrate on generic and over-the-counter (OTC) medicines, with
output mainly intended for domestic consumption. The domestic manufacturers association, the
Malaysian Organisation of Pharmaceutical Industries (MOPI), claims that local manufacturers can
produce 80% of the drugs on the Malaysian National Essential Drugs List (NEDL). In the meantime,
exports have also been boosted by rising regional and global demand as well as increased trade links with
other major markets, although the market will remain import-dependent. Leading domestic producers
include Asia Pharmaceutical Products and Pharmaniaga, with the latter increasingly targeting
overseas markets.
From an industry perspective, the Malaysian drug manufacturing and clinical trial industry will continue
to develop as an increasingly attractive option for international firms, such as Sanofi Pasteur which turned
to Malaysia to conduct Phase III clinical trials for its dengue vaccine, as the country has a large pool of
Pharmaceutical Market By Sub-Sector (US$bn)
2011
Source: IMS Health Asia, AC Nielsen, domestic companies, local press, BMI
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highly trained but inexpensive research professionals. The government has been making concerted efforts
to reinforce this trend, focusing on the development of the pharmaceutical and biotech hub around the
capital Kuala Lumpur. Malaysia is a member of the PIC/S, which is intended to ensure mutual confidence
in manufacturing standards.
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Regulatory Regime
The government introduced Malaysia’s current legal framework governing the quality of
pharmaceuticals, registration of drugs, licencing of manufacturers, importers, wholesalers and retailers in
the 1950s. The main regulatory authority in Malaysia is the Drug Control Authority (DCA), under the
auspices of the Ministry of Health.
Drug registration processes used to be lengthy, at up to two years. However, the approval period for the
registration of pharmaceutical products with single ingredients was shortened from six months to 60 days
in 2011, as part of the government’s efforts to encourage growth in the pharmaceutical industry.
The main responsibility of the DCA is to ensure the safety, quality and efficacy of pharmaceuticals in
Malaysia. DCA-approved locally-made drugs are also accepted in OECD countries, illustrating the
quality of generic medicines produced in Malaysia.
According to the DCA, any drug in a pharmaceutical dosage form for human or animal use must be
registered with the agency before they can be manufactured, imported, distributed or sold in the country.
The regulation does not apply to diagnostic agents and test kits for laboratory use; non-medicated medical
and contraceptive devices; non-medicated bandages and surgical dressings; and instruments, apparatus,
syringes, needles, sutures and catheters. All local pharmaceutical manufacturers must be licensed by the
DCA.
Regulatory Developments
In June 2012, the Ministry of Health announced its intention to set up a new regulatory body as part of an
upcoming pharmacy bill, to monitor and regulate the sale and use of pharmaceuticals. The new body will
have the power to issue guidelines on generic drugs and drug pricing mechanisms and will consolidate the
functions of the Pharmacy Board, the DCA and the Medicines Advertisement Board, whose functions
currently overlap.
In order to ensure imported medicines comply with safety and quality standards in Malaysia,
pharmaceutical products not manufactured in PIC/S member countries were required to obtain GMP
certification from July 2012 prior to sale in the country. Citing India as an example, Minister of Health
Liow Tiong Lai said products from that country will have to be inspected as it is a non-PIC/S country,
unless a PIC/S authority has already inspected and approved the manufacturing facility in India.
Despite the pending GMP requirements on imported productions to Malaysia, BMI cautions that this may
not be implemented properly in reality. Currently, pharmaceuticals in Malaysia are regulated under the
Drug and Cosmetics Regulations 1984 (revised 2005). For imported products, companies must file a CPP
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from the pharmaceutical authority in the country of origin. If a CPP is not available, a GMP certificate or
manufacturing licence is generally acceptable, along with a CPP from the country of the product owner or
a CPP from country of release. However, Liow’s announcement of mandatory GMP certification implies
implementation of the Drug and Cosmetics Regulations has not been entirely effective in keeping non-
CPP licensed products away from Malaysia.
Nevertheless, we note that while the introduction of a mandatory GMP certification for imported
medicines may seem like a threat to smaller foreign pharmaceutical players initially due to higher
operation costs, it will be extremely beneficial for companies looking to introduce drugs in multiple
countries. More importantly, ASEAN members have already fully or partially executed the ASEAN
pharmaceutical regulatory harmonisation programme, providing opportunities for companies looking to
the region for expansion.
A topic that has come under discussion in Malaysia in recent years (following the passing of the Malaysia
National Medicine Policy in October 2006) is the separation of prescribing and dispensing in Malaysia, in
line with broader regional trends. BMI strongly welcomes this separation of roles as there is a clear
conflict of interest, but acknowledges that it may not be possible in remote parts of the country.
In Malaysia, general practitioners frequently have a separate business at their clinics that allows them to
sell the medicine they prescribe. This is seen as convenient because patients, who are commonly old and
sometimes physically impaired, do not have to travel to another location to receive their pharmaceuticals,
but critics claim that dispensing activities distracts doctors from their core purpose – diagnosing disease
and prescribing treatment. Some even claim that GPs purely prescribe and then dispense branded drugs
over generic alternatives, in order to enjoy higher margins.
Supporters of the prescribing/dispensing split concede that changes will take a long time to implement,
with the number of pharmacists and private community pharmacies currently not considered to be
adequate to allow for a smooth transition. Any change may be followed by a rise in consultation fees – as
has recently happened in South Korea – in order to compensate doctors for the loss of income.
Bioequivalence
The Malaysian government is looking to raise quality and technical standards in the local pharmaceutical
industry by tightening bioequivalence rules. The government is expected to implement new regulations in
2012, under which all generic drugs submitted for approval in the country will have to present
bioequivalence to a selected branded comparator product. According to Liow Tiong Lai, the regulations
will bring the local pharmaceutical industry in line with international standards. BMI expects that the
government will include such regulations in the remit of the new regulatory body when it is established.
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Regional Collaboration
The idea of ASEAN pharmaceutical regulatory harmonisation was first proposed by Malaysia in 1992.
The ASEAN subsequently established a Pharmaceutical Product Working Group (PPWG) in 1999 to
develop harmonised pharmaceutical regulations and an ASEAN common technical dossier (CTD) for
member states. The aim of the harmonisation process is to eliminate technical barriers to trade without
compromising drug quality, safety and efficacy. Brunei, Indonesia, Malaysia, Singapore, the Philippines,
Thailand and Vietnam have fully implemented the ACTD. Cambodia and Laos have implemented the
dossier partially, while there has been no meaningful update from Myanmar.
The ACTD is very similar to the International Conference on Harmonisation of Technical Requirements
for Registration of Pharmaceuticals for Human Use (ICH-CTD), given that the PPWG has adopted
several guidelines from the ICH. However, the ACTD is simpler as it only has four modules, instead of
five. As in the case of the ASEAN, pharmaceutical harmonisation is part of the region’s ongoing efforts
to promote economic integration.
In 2007, the AEC blueprint was adopted as guidance towards the establishment of the economic
community by 2015. The key goals of the AEC are to become a single market and production base, a
highly competitive economic region, a region of equitable economic development and a region fully
integrated into the global economy. Healthcare is listed as one of ASEAN’s 12 priority integration
sectors. Under the plan, key aims in relation to healthcare include:
Promoting investment in primary healthcare infrastructure.
Developing strategies for ASEAN to strengthen the capacity and competitiveness in health-
related products and services (including pharmaceutical sector).
Promoting the application of biotechnology and R&D.
The exchange of information and experiences on drug price control to access essential drugs.
Exchanging experiences on public health policy formulation and management.
Pharmaceutical And Medical Advertising
Advertising of all registered drugs is permitted in Malaysia, and is regulated by the Medicines
Advertisement Board. Its functions will almost certainly be incorporated under the country’s new
regulatory body, which the government plans to create according to press reports in Q212. In 2011, the
Ministry of Health reported that it issued 204 warning letters and 42 cases were referred for investigation
– 41 of which led to manufacturers being fined – for misleading advertising. Between January 2012 and
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May 2012, the Ministry of Health stated that it has issued 197 warning letters, and has taken 24 cases to
court.
In May 2005, the Malaysian Medical Association implemented a guideline permitting doctors and
hospitals to advertise their medical services. While the guideline has a number of restrictions, doctors and
hospitals are able to advertise their medical specialities and any new or technologically advanced medical
equipment. However, the advertisements are limited in their claims, prohibiting medical providers from
exaggerating their abilities, asserting their achievements or ‘overselling’ a product.
The government allows private healthcare providers to promote their services through all media, Health
Minister Dato’ Sri Liow Tiong Lai said in September 2010, with further liberalisation of advertising
guidelines enacted in late 2011 in a bid to promote medical tourism in the country. Lai said the decision
was taken to keep the country in line with the changes in the wider healthcare environment and to ensure
the country maintains its competitiveness to attract medical tourists. However, he warned that the
Ministry of Health would monitor advertisements and violation of the law would be punished.
Labelling Requirements
Under Regulation 12(1) of the Poison Regulation 1952, where any poison (prescription and non-
prescription medicines) is sold or supplied as a dispensed medicine, or as an ingredient in a dispensed
medicine, the container of such medicine shall be labelled, in a conspicuous and distinct manner, with: the
name and address of the supplier or seller; the name of the patient or purchaser; the name of the medicine;
adequate directions for the use of such medicine; the date of delivery of such medicine; and where such
medicine is sold or supplied.
At present, Malaysian private clinics and pharmacies are not required to comply with standard labelling
regulations. In practice, this means most medicines, which are usually taken out of standard packs and
repacked, do not come with appropriate usage and indication information.
In October 2005, the Ministry of Health stated that all registered medicines be labelled with a Meditag – a
hologram security patch. The Meditag scheme was introduced in early 2005 in an effort to combat the
prevalence of unregistered copy drugs, counterfeits and other healthcare products in the domestic
pharmaceutical market. All products registered with the Malaysia DCA, including traditional medicines
and health supplements, are required to bear the Meditag device, with cosmetics and OTC external care
items such as anti-bacterial, oral care or anti-acne products exempt.
Under the guidelines, anyone who fails to abide by this law will be subject to a fine, imprisonment or
both. First-time offenders will be fined up to MYR25,000 (US$6,632) and/or jailed for up to three years.
Any corporate entity failing to abide by this law will also be charged a fine of MYR50,000 (US$13,264)
for first-time offenders, or MYR100,000 (US$26,529) for subsequent offenders. The Meditag scheme
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will involve the participation of enforcement officers, who will conduct visual scans of the symbols and
markings on the Meditag device, as well as verify the manufacturer’s serial number.
In May 2012, Health Minister Liow Tiong Lai announced that medical devices would also receive greater
protection from counterfeit and substandard copies, with the introduction of the Medical Device Act in
October 2012. Medical device manufacturers are not obliged to register their products – they can
volunteer to do so under the Medical Devices Establishments system – but BMI believes that the
voluntary nature of this scheme leaves scope for counterfeiters.
Intellectual Property Regime
Despite a major revision of patent law in 2001, and subsequent amendments in 2003, patent protection
continues to be the cause of friction between the government and international drug manufacturers. While
the government revised the period of protection for pharmaceuticals (increasing it to 20 years) following
pressure from the international pharmaceutical community, it also implemented legal provisions that have
come under heavy criticism from the industry. These include:
The stipulation that the limited manufacturing, use and sale of a generic drug before the expiry
of the original’s patent should no longer be considered patent infringement;
Provisions allowing the licensing and production of medicines by the government under certain
conditions, without the patent holder’s consent.
The 2003 amendment attempted to make registering a patent easier and less expensive. Under this system,
international patent applications may be made in any one of the countries of the Patent Co-operation
Treaty, an initiative by the World Intellectual Property Organization (WIPO). More recently, local press
reported that the Malaysian government is not in favour of the patent extension aspects of the Trans-
Pacific Partnership Agreement, as the health minister is cited as stating that this agreement, if
implemented, will make healthcare more expensive. The Malaysian government’s key concern is that
foreign firms’ patent extensions would start from their Malaysian launch, not from their original launch.
The Office of the US Trade Representative (USTR) has been listing Malaysia as a watch list country
since 2003 in its Special 301 Report on Intellectual Property Protection, a status backed by the
Pharmaceutical Research and Manufacturers of America (PhRMA), the research-based US drug industry
association. The bodies criticised Malaysia on a number of points, including the level of counterfeiting
taking place in the country (despite the introduction of holograms on pharmaceutical packaging), the
difficulty in applying process patents, the lack of data exclusivity (which has not been aligned with the
WTO’s TRIPS agreement) and the overall poor standard of regulatory enforcement.
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Additionally, the PhRMA has criticised the lack of patent linkage as part the registration process, which
has led to instances of generic products being launched while original patents are still in effect. On a
positive note, in 2006, Malaysia created a specialised IP court, which is designed to more effectively
handle civil and criminal copyright cases. However, the government is still criticised for its apparent
regulatory bias in favour of local manufacturers through procurement preferences and regulations only
allowing local agents to participate in tenders, as well as through proposals including the promotion of
‘national self-reliance’ for the products on the NEDL. In contrast, NEDL listings for innovative
pharmaceuticals can take up to five years to be achieved following approval.
Counterfeit Pharmaceuticals
PhRMA has proposed the implementation of stronger criminal penalties for infringers. The association is
calling for closer cooperation between the US and Malaysian governments, which should involve the
tightening of the current legal framework covering counterfeit medicines. Nevertheless, despite the fact
that the country has no legislation that specifically targets online counterfeiting, the authorities have
reportedly been successful in reducing online sales of fake medicines through a dedicated unit.
In a related development, in April 2012 the pharmaceutical services division of the MoH and Singapore’s
Health Sciences Authority signed a memorandum of understanding (MoU). The MoU will help the
countries to reduce costs and save time by sharing resources and pharmaceutical regulatory information,
while also strengthening enforcement and help to reduce trade in illegal medicines.
Despite the introduction of holograms on pharmaceutical packaging, the level of counterfeit trade in
Malaysia remains significant due to issues such as lax enforcement. A small but notable proportion of
drugs on the market are counterfeit although estimates vary as to what market share they represent, from
low single digit percentages to up to 10%.
The Federation of Chinese Physicians and Medicine Dealers Association has urged the Malaysian people
to be vigilant against counterfeit Chinese medicines in the market. The president of the association, Ting
Ka Hua, suggested that people check the hologram on the packaging of any medicines purchased. The
counterfeit products are mainly cough syrups, as well as drugs for the treatment of rheumatism.
Compulsory Licensing
In May 2007, during FTA negotiations with the US, Malaysia stated that it was seeking the right to issue
compulsory licences on patented drugs. While Malaysia is legally within its rights, as permitted by WTO
rules, the country was discouraged to do so by the US.
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Malaysia has already issued compulsory licences on a set of drugs, although some dispute this. In 2004,
the country issued a compulsory licence to Indian drugmaker Cipla for a supply of anti-retrovirals
(ARVs) in the management of HIV/AIDS. The medicines involved were US-based Bristol-Myers
Squibb’s didanosine and UK firm GlaxoSmithKline (GSK)’s zidovudine and lamivudine + zidovudine.
This action has pushed prices down significantly. Previously at MYR1,200 (US$351) per month, the
average cost for patients fell dramatically to MYR200 (US$58) and then to MYR150 (US$44). Given that
the average monthly wage in Malaysia is approximately US$1,000, compulsory licences have made
ARVs affordable to the vast majority of the population.
Free Trade Agreements
Malaysia and the US appear suspended FTA negotiations in early 2009 but, the possibility of Malaysia
joining an alternative, multilateral trans-Pacific trade deal remains open. The proponents of a trade deal
maintain that a FTA would generate jobs for Malaysians and attract more clinical research to the country,
encouraged by the enhanced intellectual property environment. However, consumer and trade activists are
deeply concerned that the pact will deprive citizens of access to cheap generic drugs, particularly
medicines for HIV/AIDS, as well as resulting in higher prices. In August 2012, local press reports
claimed that the government was against aspects of the Trans-Pacific Partnership Agreement, which
would permit the extension of foreign manufacturers’ drug patents, which, if confirmed, will hinder
relations with the US further.
Other deals signed by Malaysia in recent years include the July 2006 FTA with Japan. Malaysia became
the third country – after Singapore and Mexico – to conclude an FTA with Japan, which will allow the
two countries to scrap tariffs on most industrial goods, improve investment conditions and respect IP
rights. The ASEAN-Australia-New Zealand FTA (AANZFTA) was signed in 2008, envisaging a regional
common market by 2015.
A proposed EU-Malaysia FTA entered the discussion phase – centred around intellectual property rights
– in May 2011. Prices of medicines are expected to increase as, under the proposed agreement,
pharmaceutical companies’ patent rights would be extended from the present 15 years to 20 years.
The country is also seeking to increase its co-operation with the Middle East, and especially Oman, which
is Malaysia’s third-largest trading partner among the members of the Gulf Co-operation Council (GCC),
providing healthcare and hospital management expertise, among other services.
Going forward, the recent global financial crisis provided an impetus for an increase in Malaysia-China
trade, as consumers from developed countries such as the US and the eurozone cut back on spending,
turning Malaysian exports towards regional economies to sell their output. Indeed, the fact that Malaysia
was proactive in pushing for the signing in November 2004 of a ASEAN-China Free Trade Agreement
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(FTA) – the country was one of the six ASEAN nations to have had their MFN rates on Chinese goods
reduced to 0% by 2010 – signifies the level of confidence and commitment the Malaysian government
has in forging stronger trade relations with China. In tandem, the same trade rules apply to China,
enabling more than 9,000 types of Malaysian goods to be duty-free, serving as a boon to Malaysia’s
export sector. Furthermore, we believe the signing of the ASEAN-China Investment Agreement in June
2009 – the third and last instalment encompassing the three-part ASEAN-China FTA – will cement the
trend, as a common investment area will reduce market risk and uncertainty for Chinese investors to
commit their funds to Malaysia.
Pricing And Reimbursement
Pricing regulations are different for the public and private sectors in Malaysia, but the division is
becoming increasingly blurred. Parallel imports have been legalised in a bid to cut costs in the public
sector, undermining revenues on branded products. The practice is angering the multinational sector, with
foreign players critical of the government’s biased approach to regulatory and enforcement issues. The
new regulatory body proposed by the Ministry of Health in mid-2012 will have the power to issue drug
pricing mechanisms. No timeline on the creation of this regulatory body has been publicised.
In July 2012, the secretary general of the coalition party Democratic Action Party – part of the ruling
coalition – Lim Guan Eng, claimed that the Ministry of Health must allow medical device and
pharmaceutical product manufacturers to sell their products directly, rather than through a wholesaler, to
the public health sector directly to reduce costs.
In the public sector, prices on an essential drugs list (in operation since 1983) are set by the Ministry of
Health following negotiations with its main wholesaler, Pharmaniaga Logistics (formerly Remedi
Pharmaceuticals). This subsidiary of leading drug company Pharmaniaga, is responsible for around 75%
of medicines purchased by public healthcare institutions. The strict policy results in public prices being
set below market prices, which is necessary, given that the government is responsible for around 60% of
reimbursement amounts.
The NEDL is based on the essential drug list. Presently, the NEDL – used in both the private and public
sectors – contains around 360 chemical entities and 600 preparations, which cover treatments in primary,
secondary and tertiary settings. The supplementary list contains a further 257 entities and 391
preparations, and covers special treatments in tertiary healthcare facilities. The updated NEDL was
published in 2008. Drugs outside the NEDL’s remit are priced freely.
Out-of-pocket spending on drugs accounts for around 25% of the total, with private insurance covering
some 15%. According to reports in New Strait Times, around 15% of the population has private
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insurance. All foreign workers are required to purchase hospital insurance, which is expected to bring in
some MYR200mn in revenue per annum.
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Industry Trends And Developments
Epidemiology
Cancer, hypertension and circulatory problems account for most deaths and cases of hospitalisation in
Malaysia. Heart disease is the number one killer. In July 2010, local press reported that four in every ten
adults in Malaysia suffer from high blood pressure. Up to 60% of all cases of coronary disease are treated
in public facilities, indicating the high cost to the government.
Diseases – including heart problems –
resulting from unhealthy lifestyle (such as
smoking and unhealthy eating) are
increasing in prevalence. According to a
WHO study published in the scientific
journal The Lancet, the results of a global
study published in July 2012 showed that
61.4% of Malaysians aged over 15 are not
physically inactive, ie they do not do
moderate exercise five time a week.
Obesity is a growing concern in Malaysia,
to the degree that the Ministry of Health
announced in July 2012 that it plans to
employ more dieticians in public hospitals.
According to BMI’s Burden of Disease Database (BoDD), Malaysia will experience the greatest
improvement in disease burden, after Singapore, in the region over the next 20 years. By 2030, a
projected 106.4 disability-adjusted life years (DALYs) per 1,000 people will be lost to all disease and
injuries. The growing economy of Malaysia will result in increased wealth in the longer term, which will
be spent by the state on high-tech hospitals and clinics, while personal spending will be directed to goods
such as OTCs.
On a similarly positive note, Malaysia has managed to significantly reduce child mortality since 1990,
according to data from the Institute for Health Metrics and Evaluation at the University of Washington.
The study put Malaysia in 29th place in its global rankings for mortality for children under five in 2010,
giving the country a 5.1 mortality rate per 1,000 births. The institute estimates a total of 2,852 under-five
deaths in 2010 in Malaysia. This is a significant improvement on the country’s 1990 ranking of 42nd,
when Malaysia had an under-five child mortality rate of 16.43.
Burden Of Disease Projection
2005-2030
f = forecast. DALYs = disability-adjusted life years. Source: BMI's Burden of Disease Database (BoDD).
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Non-Communicable Diseases
In June 2012, the Ministry of Health claimed that more than 17mn people in Malaysia lives with a non-
communicable disease, and that an even higher number of people have a disease that has not yet been
diagnosed. The government estimates that 2.6mn people have diabetes, 5.8mn have hypertension, 6.2mn
have high cholesterol and 2.5mn are obese.
Malaysia’s Deputy Prime Minister, Muhyiddin Yassin, has said that one of the main factors behind the
country’s rising cost for healthcare is the high sugar intake, with the government considering cutting
sugar subsidies. The country has the highest percentage of diabetic patients in South East Asia, placing a
disproportionate burden on the healthcare system. According to the International Diabetes Federation’s
Diabetes Atlas, approximately 11.7% of the population had diabetes in 2011, the highest proportion in the
region, and this will increase to 13.3% in 2030, slightly below Singapore’s 15.5% in the same year.
Muhyiddin said the government will save more than MYR567mn (US$187mn) if the sugar subsidies
were cut as there will be a lower level of sugar-related diseases such as obesity and diabetes.
The control of diabetes in the country is largely dependent on public education, with associations such as
Persatuan Diabetes Malaysia (Malaysian Diabetes Association) and the National Diabetes Institute
educating the public through their diabetes awareness programmes. In addition, the government has listed
several insulin and other anti-diabetic agents on its National Essential Drug List, ensuring volume sales
for manufacturers that are able to list metformin and a number of other drugs. In January 2012, under the
Sihat 1 Malaysia programme that aims to promote healthy living, Healthy Life Software collaborated
with the government to provide a healthcare package that includes a total of 118 screenings (eg for
diabetes, hepatitis B, tumour markers) to enable early interventions.
Malaysian patients spend about MYR700mn (US$219.4mn) a year on kidney dialysis, according to
Health Director-General Hasan Abdul Rahman. He said 15% of the population, or 4.1mn people, are at
risk of suffering from chronic kidney disease. He said the incidence of the disease could be prevented
through proper care and early detection. The government will spend around MYR3mn (US$0.9mn) on
training to doctors on new guidelines in 2012.
Communicable Diseases
Over the past decade, Malaysia has stepped up efforts to prevent and contain infectious disease outbreaks.
As a result, Malaysia is now largely free of diseases such as polio, which was eradicated in 1992.
In late 2009, researchers from the University Malaysia Sarawak successfully isolated a new – fifth –
cause of malaria, in a study funded by the Wellcome Trust. The malaria parasite P. knowlesi, which had
previously been linked only to monkeys, has been shown to be widespread among humans in the country.
Kudat in Sabah was selected in early 2012 as the research area for a study on P. knowlesi. The five-year
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research programme will be conducted with financial assistance of MYR14.62mn (US$4.76mn) from the
British government.
The number of dengue cases reported in Malaysia increased by 13% y-o-y to 12,518 in the first seven
months of 2012. The rise in dengue cases has put Malaysia on alert and the government has declared the
disease a ‘serious threat’. The disease killed 25 people in January-July 2012, compared to 19 in the same
period in 2011.
According to most WHO recent figures, Malaysia has around 75,000 HIV-positive patients. The
country’s HIV/AIDS prevalence is the fifth highest in the region. The government has implemented
public health programmes targeting a decrease in HIV infections by providing contraceptives and
educating commercial sex workers on dangers of unprotected sex. The United Nation’s UNICEF
programme has been providing care for HIV orphans in Malaysia. Malaysia was largely on target to
achieve the UN Millennium Development Goals on curbing the spread of HIV/AIDS by 2010, by
implementing needle-exchange services and similar harm-reduction measures. Through to 2013, HIV-
reduction programmes are expected to receive a further US$88mn in funding.
In July 2012, Health Minister Liow Tiong Lai said that Malaysians, particularly those born before 1989,
need to go for hepatitis screening, as cases of hepatitis B and C doubled in number in 2011, rising to
1,250 and 1,047 respectively (compared to 640 and 724 in 2010).
Healthcare Sector
Malaysia is one of the most ethnically diverse Asian countries. It comprises ethnic Malays (the majority)
and 30% Chinese immigrants, with the remainder including Indians, Pakistanis and Tamils. Adequate
healthcare provision for all demographic characteristics is complex.
Malaysia has about 3,500 clinics, 138 government hospitals and many other healthcare-related facilities
such as medical institutions, medical colleges, laboratories and 1Malaysia Clinics, where patients pay
MYR1 (US$0.34) for a consultation, while foreigners pay MYR15 (US$5.04). The country has been
investing heavily in healthcare infrastructure but many facilities still suffer staff shortages.
The 1Malaysia Clinics programme was launched in early 2010. Nevertheless, following Malaysia’s
achievements in the 2011 Healthcare NKEA programme, the government has outlined 11 targets for the
2012 Healthcare NKEA. Key targets include corporatisation of the Clinical Research Malaysia
amendment to the Patent Act, establishing a Medical Device Authority and expansion of hospitals and
ambulatory centres.
According to Minister of Health, the six EPPs initiated in 2011 have exceeded the targets set last year by
124%, generating MYR3.1bn (US$1.01bn) in investment and creating 18,059 jobs. Under EPP 1 for the
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provision of mandatory private healthcare insurance for foreign workers, the country set a target of
1,205,000 workers but exceeded it by 16.8% to cover 1,407,919 workers.
BMI believes the systematic execution of these EPPs will successfully transform the pharmaceutical and
healthcare sectors in the country. We highlight that the country is more likely to achieve success in its
healthcare goals than in its objectives for the pharmaceutical sector given that the domestic industry has
to compete with multinational pharmaceutical companies such as Pfizer, Roche and Novartis;
international generic drug players such as Ranbaxy, Cipla and Teva; and countries with established
biotechnology sectors such as South Korea, Taiwan and neighbouring Singapore. In contrast, achieving
its healthcare goals is dependent mainly on the government’s commitment. BMI notes that the country
failed to achieve its target for EPP 3, which is more influenced by external demands.
Table: 2011 Entry Points Projects Summary
Key Performance Indicator Target (FY2011) Actual (year to date)
EPP 1 Foreign workers with private health
insurance coverage 1,205,000 1,407,919
EPP 2 Number of researches conducted 260 321
EPP 3 Export growth of pharmaceutical
products 15% (MYR610mn,
US$199mn) 12% (MYR594mn,
US$194mn)
EPP 4 Revenue generated from medical
tourism MYR431mn (US$141mn) MYR436mn (US$142mn)
as of November 2011
EPP 5 Survey on radiology services in
Ministry of Health hospitals All 39 hospitals 39
Pilot project on outsourcing radiology
services Extended to September 30
2011 95% completed
EPP 6 Construction of Health Metropolis to
being in Q411 Q411 95%
Source: Malaysia Economic Transformation Programme Annual Report 2011
Currently, there are around 50 such centres in Malaysia, which are open during weekends and public
holidays, as well as between 10am and 10pm. The programme primarily aims to reduce overcrowding in
town-based public hospitals, although one such facility was opened in a rural area (in Jeli) in order to
improve access to medical services. The government is investing MYR10mn in assessing the scheme
before expanding it further.
However, the programme has been criticised by the Malaysian Medical Association (MAA) because it is
not staffed by doctors, but rather by medical assistants (MAs) instead and those with serious conditions
are referred to hospitals.
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Malaysia’s Sabah state is planning to implement its ‘One School One Clinic’ strategy in a bid to offer
better healthcare to the rural community. Under the new strategy, announced in mid-2011, up to 800
mini-clinics will be established in schools in remote parts of the state.
Health Insurance
Table: Main Features Of 1Care
Primary health care (PHC) Aim: Promote preventive care and early intervention.
Each individual will be registered with a PHC provider who is a family doctor and dentist.
The PHC provider will only refer patients with serious conditions to hospitals, thereby
reducing over-reliance on hospitals.
Social health insurance (SHI) Aim: A pooled single fund to promote social solidarity and unity.
There will be a predetermined ‘Benefits Package’ scheme introduced which comprises of SHI,
funds from general taxes and minimal co-payments.
SHI will be contributed by employer, employee and government
The government will further contribute (via taxes collected) to other MoH activities, and the
PHC portion of SHI, resulting in higher spending by the government (2.85%)
Source: MoH
The vast majority of the population is covered by public healthcare insurance, which is particularly
important for the rural poor. Low-cost government services are financed by taxes and other public
revenues.
A new healthcare reform, known as the ‘1Care for 1Malaysia’ programme, was first proposed by the
government in 2009 to provide universal and quality healthcare for citizens. In order to have total
coverage, a national social health insurance will be set up run by a not-for-profit body, the National
Healthcare Financing Authority, under the Ministry of Health. In late 2010, the Federation of Malaysian
Consumers Associations (Fomca) urged the country’s government to immediately implement the National
Healthcare Financing Scheme in order to ensure affordable medical services for the public. The request
followed more than 50 complaints that the association received regarding excessive payments made by
the public for medical services at hospitals.
However, the 1Care proposal was largely unwelcomed by the public as they fear there will be an increase
in tax contributions without a proportional increase in healthcare provision. Additionally, as the
government has been elusive about the details in the proposal it is unlikely that the public will strongly
support the change. The government has still not decided whether to use the Employees Provident Fund
(EPF) system, the hybrid system or the taxation system, with the blueprint reportedly to be ready by 2014.
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Medical practitioners and consumers came together in December 2011 to form the Citizens’ Healthcare
Coalition (CMC) and started the Tak Nak 1Care (Say No To 1Care) campaign on Facebook, YouTube
and Twitter. According to one CHC member, employees (excluding government servants, pensioners and
businesses) will have to contribute 10% of their monthly income to the SHI, essentially making people
pay for the less advantaged. The CHC also took issue with apparent limited healthcare benefits, such as
free visits to GPs being limited to six times a year, with one ailment allowed to be addressed per visit, and
patients being assigned to specific GP, taking away choice.
However, BMI also believes the government has done a poor job at addressing the speculation. Health
officials told the Malaysian Pharmaceutical Society during a seminar in January 2012 that the 1Care plan
is in phase three of a five-phase implementation. Dr Noardin Saleh, the MoH’s health policy and planning
deputy director, said: ‘The 1Care transformation proposals are now in the final stages.’ Subsequently, on
February 8 2012, Minister of Health Lio Tiong Lai said the healthcare system revamp is still in its
‘infancy’, while no proposals about 1Care (preliminary or not) have been listed on the MoH’s website.
The increasing prosperity has encouraged the development of the private medical insurance market.
Malaysia boasts more than 250 large private medical facilities, many of which are privatised public
institutions, as well as around 2,000 private clinics. In May 2006, new regulations introduced mandatory
registration of all private medical and dental clinics. Legislation also stipulates that private clinics must
provide minimum basic outpatient emergency care for the occasional patient who may need it. There are
changes ahead in this sector, however, as the Ministry of Health announced in July 2012 that it is likely to
permit private doctors to raise their fees by 14%, if proposals are approved in parliament.
Healthcare Sector Funding
The Malaysian government allocates only 5% of the national budget to healthcare. In July 2010, the
amount stood at MYR13.1bn (US$4.1bn), down from MYR13.8bn (US$4.3bn) in 2009. The Malaysian
Medical Association stated that the country spends only MYR1,280 (US$400) per patient in healthcare.
In Malaysia’s budget for 2011, one of the key aims was to expand public health services. To ensure
access to quality healthcare, the government allocated MYR15.2bn (US$5.1bn) to construct new
hospitals, increase the number of medical professionals and obtain medical equipment supply. An
additional 25 1Malaysia Clinics will also be added to the current 51 clinics.
In the 2012 budget, the government outlined the following programmes, although we note that the
transformation of the public healthcare sector will not be as fast as in the private sector:
MYR15bn (US$4.8bn) will be allocated to operating expenditure and MYR1.8bn (US$574mn)
for development expenditure.
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Hospitals will be upgraded and constructed, including the upgrade of 81 rural health clinics and
50 new 1Malaysia Clinics.
Hospital Kuala Lumpur will be upgraded to be the country’s premier hospital.
Table: Public Sector And Private Sector Healthcare Developments
Public Sector Private Sector
July 2012: BP Healthcare Group established its first ENT and gastroscopy speciality centre in Kuala Lumpur.
July 2012: Healthcare provider IHH Healthcare Berhan may acquire more hospitals in areas with unmet
demand, revealing plans to increase the number of hospital beds by 17% by 2017.
May 2012: Susil said that the government is aware of the shortage of medical professionals in government hospitals and clinics. He added that private wings will be established in government hospitals to help slow down the brain drain to private sector.
May 2012: According to the Business Times, the country could see at least 17 new private hospitals by
2015.
April 2012: MYR5 (US$1.60) administration fee for government hospitals and clinics will be scrapped from May.
March 2012: Universiti Teknologi Malaysia is partnering KPJ Healthcare to build a research-based hospital at its main campus in Skudai. The partners will cooperate on
advanced medical machines and research and development for new medical innovations.
December 2011: The Malacca state government has pledged to make a fresh delivery of drugs at public hospitals, which are experiencing a shortage of medicine for almost a month. State Health, Project Rehabilitation, Suburban Development and NGO Committee chairman Seet Har Cheow said that the drugs have already been sent to the hospitals. Cheow said the shortages would be addressed by December 8. He claimed that the shortage was encountered due to several inevitable factors.
February 2012: The Normah Medical Specialist Centre in has secured Joint Commission International
accreditation for the delivery of its healthcare services, making it the first private hospital in Borneo to be
awarded the accreditation.
October 2011: The government has allocated MYR300mn (US$95.7mn) to upgrade the 141-year-old Hospital Kuala Lumpur into the premier hospital in the country with state-of-the-art equipment.
January 2012: Allianze University College of Medical Sciences will build two hospitals in Penang by 2015. The construction of the two hospitals is estimated to
involve investment of MYR2bn (US$0.63bn)
Source: BMI research
Medical Tourism
Medical tourism is becoming increasingly important to both Malaysia’s travel and healthcare industries.
Malaysia received a total of 392,956 healthcare travellers in 2010, generating over US$100mn in revenue.
Revenue from medical tourism in Malaysia has grown by 30% a year for the three years up to 2012,
according to Health Minister Liow Tiong Lai. The Star reported that the number of medical travellers has
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increased by more than 30% over the same period. Malaysia received approximately MYR511.2mn
(US$165.7mn) from foreign patients in 2011, compared with MYR378.9mn (US$122.81mn) in 2010 and
considerably above the government target of MYR430mn.
Over the past decade, medical tourism has grown to become second largest foreign exchange earner for
the country. To facilitate this trade, the government set up the Health-care Travel Council, which
promotes private hospitals for medical tourism. Tax breaks have also been introduced for hospitals
running medical tourism programmes, while incentives have been provided to help hospitals to expand
their facilities. The hospitals now receive 100% tax exemptions for the construction of new hospitals and
for the expansion, modernisation and renovation of existing ones.
As a testament to the effectiveness of such incentives, in February 2012, Malaysia-based KPJ
Healthcare said its 2011 revenue from medical tourism reached MYR45mn (US$14.7mn), accounting
for approximately 10% of the country’s medical tourism market. KPJ is also partnering Universiti
Teknologi to build a research-based hospital at its main campus in Skudai. The partners will cooperate on
advanced medical machines and R&D for new medical innovations, with KPJ targeting medical tourism-
related revenue to contribute to 25% of its total by 2020.
At the end of 2011, Malaysian private healthcare providers were asked to improve their services and
facilities to counter stiff competition from foreign investors. This comes as the country is prepared to
liberalise its private-healthcare services during 2012. The liberalisation drive will permit up to 100%
foreign equity participation in selected sub-sectors, allowing the healthcare industry to become borderless
and enable Malaysia to compete globally. Liow said the government had been taking measures for the
transformation of the Malaysian healthcare tourism industry and promote itself beyond Indonesia to target
China, Australia, the Middle East and the UK.
At the same time, the government further liberalised advertising rules in order to enable the country to
compete with neighbours and in turn emerge as one of the healthcare hubs in the region. The country’s
share in the healthcare market is very small as compared with Singapore and Thailand, which have
registered significant growth every year. The health minister mentioned that the ministry is set to open
call centres in China and Indonesia in 2012 for attracting medical tourists.
The advantages of the Malaysian medical tourism industry include low-costs, a well-developed
infrastructure and high medical standards. For example, an angioplasty that can cost US$57,000 in the
US, and US$13,000 in Thailand, costs just US$11,000 in Malaysia. Meanwhile, a knee replacement
which costs US$40,000 in the US and US$13,000 in Singapore, comes in at just US$8,000 in Malaysia.
This value offering has helped institutions such as the Pantai Medical Centre (PMC), which now runs
nine hospitals in the country. According to PMC, the majority of foreign patient come from Indonesia,
with other also arriving from the Middle East and Europe.
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Since March 2012, the number of medical tourists from Singapore has increased as Singapore residents
were allowed to utilise savings held in the national medical savings scheme (Medisave) for overseas
hospitalisation and day surgeries at two hospitals in Johor (Regency) and Malacca (Mahkota Medical
Center). The Singapore’s Ministry of Health (MOH) added that the scheme will be initiated with two
providers – Health Management International (HMI), which runs the two Malaysian hospitals, and
Parkway Holdings.
Biotechnology And Research
In regional terms, Malaysia has a small biotechnology sector, dominated by around 35 small and medium-
sized companies. A number of larger players have developed strong R&D sectors within the overall
corporation structure. Most of the activity is recorded in specialist biotechnology (dealing in tissue culture,
diagnostics, vaccines, clinical testing and blood bank collection), bio-pharmaceuticals and suppliers to the
biotech industry. The government has a three-phase biotechnology policy:
Phase I (2005-2010): focus on capacity building and the establishment of BiotechCorp;
establishment of advisory and implementation councils; education and training of workers;
development of a legal and intellectual property framework; key areas of focus: creation of jobs
in agricultural, healthcare, industrial biotechnology and bioinformatics.
Phase II (2010-2015): emphasis on biotech business aspects: drug discovery, new product
development, technology acquisition and licensing.
Phase III (2016-2020): dependent on the results of the first two phrases, it aims to bring local
biotech companies to international status.
In 2009, the chief executive officer of the Malaysian Biotechnology Corporation (BiotechCorp) stated that
the Malaysian biotech industry is expected to contribute 5% to the country’s GDP by 2020, up from 1% in
2009, to generate 280,000 jobs. He also added that the industry has a total investment of MYR1.37bn
(US$402mn), which is approximately 1% of the GDP. BiotechCorp is establishing a MYR318mn
(US$100mn) Bio-Technology Venture Fund to boost the country’s biotechnology industry. By 2015, it
hopes to make MYR9bn (US$2.8bn) in investments in the country’s biotech industry, up from the
approximately MYR3bn (US$0.9bn) it has already secured.
In H211, Bio X Cell invested MYR450mn (US$141mn) in the infrastructure and construction in a biotech
park in Nusajaya, Iskandar Malaysia. The firm expects key components of the park to be completed by
Q312.
The biotechnology sector receives grants from the National Council for Scientific Research and
Development (NCSRD) under the Ministry of Science, Technology and Environment (MOSTE), with
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further incentives provided by the Inland Revenue Board and the Malaysian Industrial Development
Authority (MIDA), venture capitals and banks. One of the more prominent funds in the field is the
Malaysian Life Sciences Capital Fund, which was created as a joint project between the government-
owned venture capital firm, Malaysian Technology Development Corp (MTDC), and US Burill & Co,
in 2005.
The Malaysian Chapter of the Federation of Asian Biotech Associations (FABA) was launched in August
2006. FABA aims to encourage biotechnology investment from private sector corporations, as well as to
improve the relationship between public and private biotechnology spheres. To this end, the government
offers a number of financial incentives, such as a 100% group tax relief or deduction on qualifying
investments in biotechnology, a 10-year tax-exempt pioneer status, exemption of import duties on
approved equipment and materials, and double tax deductions on qualifying expenses and R&D
investments. Moreover, the Malaysian stock Exchange (MESDAQ) offers benefits in terms of venture
capital consideration to biotech companies, given their higher risk profiles.
In an attempt to make Malaysia more attractive for foreign investors, the government unveiled a national
policy in mid-2005, which earmarked biotechnology as the next engine of growth. Despite government
aspirations of attracting US$10bn in foreign and local investment to the biotechnology industry over a 10-
year period, the Bio-Valley Project has proved to be a dismal failure, with only three companies signing
up to establish production facilities by the end of 2005.
Nevertheless, the government is undeterred in its focus on the development of biotechnology. Authorities
created the BioNexus Malaysia programme, which will eventually encompass a network of centres of
excellence comprising existing institutions around the country, presently has three components: a centre
of excellence for agricultural biotechnology will be part of the Malaysian Agriculture Research and
Development Institute (Mardi) and Universiti Putra Malaysia; a centre of excellence for genomics and
molecular biology will be based at the Universiti Kebangsaan Malaysia; and a centre of excellence for
pharmaceuticals and nutraceuticals will be built at the BioValley site.
Malaysia’s natural biodiversity is providing a further draw for R&D investment. In May 2011, Fanny
Rousin of France’s National Center for Scientific Research (CNRS) identified meiogynine A, isolated
from Meiogyne Cylindrocarpa, which could potentially treat cancer. Malaysia has a regulatory
framework to protect its natural resources from biopiracy. In 2005, the government drafted the Access
and Benefit Sharing Bill (ABS Bill) to ensure the fair sharing of benefits from Malaysia’s genetic
resources. The bill requires all parties involved in bioprospecting to obtain permits.
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Clinical Trials
Despite some IP and regulatory shortcomings – not least the government’s reluctance to agree to the
Trans-Pacific Patent Agreement – the environment for novel pharmaceutical products in Malaysia is
relatively favourable. The fact that the government is willing to fund innovative medicines has also
stimulated the development of locally based clinical research by multinational companies. Additionally,
local clinical trials – conducted both in private and public hospitals – are low-cost.
Late-stage or phase III studies – which usually enrol several thousand patients across the globe – are the
most common trial in Malaysia. According to clinicaltrials.gov, some 138 studies were recruiting
volunteers in August 2012, out of some 507 total trials registered.
Further growth of the sector will be
dependent on the government’s
willingness to ensure that bioequivalence
data cover all therapeutic areas, as well as
ensure a more balanced regulatory
environment that would not discriminate
between local and foreign producers.
The network of clinical trial centres
(CRCs) enables the Ministry of Health to
provide a ‘one-stop’ conduit for clinical
research organisations (CROs) to test
drugs and devices. This results in reduced
costs due to operational efficiencies being
realised at every step of the process. In
fact, in July 2011, the Malaysian
government launched Clinical Research
Malaysia (CRM) in a bid to attract clinical trials to the country. CRM will be operated as a non-profit
government site management organisation for providing access to 23 CRCs and independent CRCs, built
in private hospitals and medical universities in the country. Pharmaceutical industry sponsors and contract
research organisations can use CRM as a single point of information and referral system for a network of
341 hospitals and hundreds of clinical sites across Malaysia. Additionally, CRM will provide potential
investigators, legal services and training.
There are some drawbacks that prevent CROs from fully exploiting the potential in Malaysia. A common
internal view is that the country gets ‘overlooked’ as potential investors either go to the large population
Clinical Trial Registrations
2006-2009
Sourced by date of initial registration. Source: ClinicalTrials.gov, BMI
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centres of India and China, or opt for technological hubs, such as Singapore and Hong Kong. Other
reasons are negative perceptions surrounding bureaucracy, delayed timelines and long registration times.
In fact, contrary to popular conceptions, it only takes six weeks for an investigation to receive approval
from the authorities. Moreover, procedural delays should not be that common, as good clinical practice
(GCP) is very much the applied standard. True, a comparatively large amount of paperwork is involved,
but this is fairly standard, and is arguably of benefit to one or more involved parties. That Sanofi
Pasteur’s dengue vaccine Phase III clinical trials – which offered proof of efficacy according to the firm
in July 2012 – were partly trialled in Malaysia is good news for the sector. Indeed, Sanofi aims to boost
bilateral collaboration with the government in the healthcare sector.
Clinical Trials Industry Developments
In July 2012, Sanofi announced plans to expand its presence in Malaysia, a country that is included in
its global clinical trials for a dengue vaccine.
In March 2012, Malaysian Biotechnology Corporation and Quintiles agreed a memorandum of
collaboration to support Malaysia’s biotechnology industry.
In June 2011, Indian stem cell-based medicinal products manufacturer Stempeutics Research
obtained approval from the Malaysian Regulatory Authority to undertake clinical trials for its
investigational new drug (IND) for osteoarthritis and cerebral stroke in the country, reported Express
Healthcare Management.
In the same month, Malaysian biotechnology company Sentinext Therapeutics reported its readiness
to conduct clinical trials of a vaccine for the prevention of infections caused by enterovirus 71
(EV71). The first phase of the trials is scheduled to start in 2012.
Medical Devices
Under current regulations, medical device manufacturers are not obliged by law to register their products;
voluntary registration was introduced in late 2005, but the abundance of substandard and counterfeit
devices on the market has led to government to introduce obligatory registration. This is expected to form
part of the Medical Device Act that the government will implement in October 2012
The market is dominated by imports (at around 90%), especially at the hi-tech end of the scale, although
there is room for contract manufacturing as local demand increase in the face of demographic, economic
and healthcare technology improvements. Malaysia is active in exports of low-end devices.
Malaysia exports a number of items, with a focus on surgical and examination gloves, catheters (the
country manufactures 80% of the total global supply of rubber-based catheters) and condoms, which
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accounted for 85% of exports in 2005. The domestic industry is also active in the production of needles,
medical and surgical instruments and appliances, and orthopaedic appliances.
Leading Medical Device Players
Malaysia has around 300 small and medium-size manufacturers of medical devices, according to the
country’s Medical Devices Association (MDA). The majority of these are involved in low-tech
production, including gloves, needles, dialysers and contact lenses. Nevertheless, the 2006-2020 Third
Industrial Master Plan envisages local companies getting involved in the value-added manufacturing, of
products such as in vitro devices and electro-medical equipment.
One of the more prominent local medical device manufacturers is Ambu, which is active in the
cardiology and neurology segments. Other more prominent local players include WRP Asia Pacific and
Supermax Corp.
Established in 1991, Malaysia’s Top Glove is the world’s largest producer of rubber gloves. Its 20
factories churn out nearly 15bn pairs of gloves annually and export goods to 185 countries. The
slowdown in the world economy is unlikely to have an impact on sales because gloves are a ‘necessity
item in the healthcare industry’. Similarly, rubber gloves remain the ‘most basic and affordable’
protection, and can therefore be afforded by most stakeholders in the healthcare industry globally.
In terms of foreign medical device players, medical technology company B Braun Medical Industries
has a considerable interest in Malaysia, which also acts as its Asia Pacific regional office.
Since establishing a presence in 1972, to 2008, the company invested a total of MYR1bn (US$287mn) in
the South East Asian country. A total of 4,700 people are employed and over 10% are engaged in the
manufacturing of pharmaceuticals. According to the Democratic Action Party’s secretary general, Lim
Guan Eng, Malaysia’s Ministry of Health must permit the manufacturers of medical devices to sell their
goods directly to the public health sector, rather than through a wholesaler, as a means of reducing
expenses. Eng stated that his request echoed the concerns of B. Braun Medical Suppliers’ former board
chairman, Ludwig Georg Braun.
Other foreign companies active in Malaysia include Japanese Japan Medical Products, Australian
Ansell, and US-based Sharp-Roxy (which provides ioniser systems to hospitals, among other products),
Tyco, Rusch and CR Bard.
Recent Medical Devices Industry Developments
EPI Mobile Health Solutions launched a handheld heart monitor in Malaysia in August 2012, forming
part of a mobile phone. The phone’s built-in sensors can take an electrocardiogram and then send this file
to a Health Concierge centre. A response to the results of the ECG is sent back via SMS.
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In February 2012, Bernama reported that US-based firm Motorola Solutions is aiming to improve the
healthcare sector in Malaysia, as services in the county are facing challenges. Through its Malaysian
venture, Motorola Solution Malaysia, the firm is collaborating with major healthcare providers to offer
better healthcare services, while also looking to build a long-term partnership with the country.
In the same month, Malaysian healthcare group BP started offering an extensive range of new healthcare
and other professional services through its companies in the country. The group has also rolled out
centralised tele-radiology services through BP Radiology that allow facilities to link all the radiographic
images from x-rays, mammograms, DEXA, CT scans and ultrasounds digitally to its other diagnostic
centres nationwide.
Also in February, UK-based medical technology company PneumaCare reported plans to expand its
business footprint in South East Asia with a collaboration with Hospital Kuala Lumpur (HKL). The
company wants to step up its operations as a potentially huge market exists in the region for
its PneumaScan respiratory assessment device.
In November 2011, US manufacturer and distributor of medical products Mitegen and Malaysian Helix
Biotech reached an agreement for the distribution of the Mitegen’s products in Malaysia. Helix Biotech
will market and distribute MicroMount, MicroLoop, MicroMesh, RT Aligner and other product lines.
In July 2011, US-based St Jude Medical announced plans to lay off 450 Swedish employees by the end
of 2012 and to move its cardiac rhythm management products manufacturing to Puerto Rico and Malaysia
in order to cut costs.
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Industry Forecast Scenario
Overall Market Forecast
BMI revised up its forecast for the Malaysian pharmaceutical market following receipt of the most recent
market information and reappraisal of historic data. According to the Pharmaceutical Association of
Malaysia (PhAMA), combined sales of prescription and OTC drugs increased to MYR5.00bn
(US$1.55bn) in 2010, equating to strong y-o-y growth of 17%.
The Malaysian pharmaceutical market is
skewed towards private (60%) over public
(40%), which leaves it vulnerable to
macroeconomic factors. Supported by an
expanding economy, improving medicine
regulations, healthcare provision expansion
and modernisation and relative political
stability, combined sales of prescription
drugs and OTC drugs are forecast to
increase to MYR8.68bn (US$2.89bn) in
2016. Due to the gradually strengthening
ringgit, the CAGR growth of 9.4% in local
currency terms will translate into a US
dollar CAGR of 9.8%.
In addition, the country expects to generate
revenue of MYR17.1bn (US$5.4bn), gross national income of MYR11.4bn (US$3.6bn) and 86,000 new
jobs by 2020 through seven healthcare industry EPPs under the Healthcare NKEA, including projects for
pharmaceutical exports, clinical research and health tourism. According to Minister of Health Liow Tiong
Lai, the six EPPs already in operation, excluding the medical device manufacturing project that is
launching in 2012, successfully contributed gross national income of MYR4.65bn (US$1.52bn) in 2011.
While external risks are present, for the time being, we envisage the key drivers of growth will be medical
tourism, the growing reputation of Malaysian pharmaceuticals, the encouragement of the generic and
specialist segments, as well as the rising demand for and supply of halal medicines. On the downside,
Malaysia will still feel the effects of the global economic downturn, and factors such as the government’s
decision to not support the Trans-Pacific Partnership Agreement, according to local press reports, may
deter investment by multinationals, particularly those concerned about the robustness of patent protection
Pharmaceutical Market Forecast
2007-2021
f = forecast. CER = constant exchange rate. Source: IMS Health Asia, AC Nielsen, domestic companies, local press, BMI
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in the country. By 2021, we expect the market to be worth MYR12.13bn (US$4.04bn), translating into a
local currency CAGR of 8.1% over our 10-year forecast period.
The public sector will continue to provide the bulk of volume demand, especially with the planned
improvement and expansion of medical services. The government has made the healthcare industry a
priority, implementing schemes to boost the sector. Growth should also be supported by an ageing and
expanding population, as consumers becomes increasingly aware of alternative products, and government
priorities remain favourable. Traditional medicine is expected to post strong gains, due to rising
awareness of self-medication and cost containment, although the prospect of pharmacists charging a
MYR5 (US$1.60) consultation fee may deter patients from using the pharmacy, and they could opt for
cheaper sources of treatment as a result – increasing the risk of use of counterfeit drugs.
Table: Pharmaceutical Sales Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Pharmaceutical sales (US$bn) 1.215 1.214 1.553 1.814 1.926 2.165 2.410 2.669 2.895
Pharmaceutical sales (US$bn), % chg y-o-y 14.189 -0.102 27.922 16.796 6.207 12.393 11.315 10.751 8.445
Pharmaceutical sales (MYRbn) 4.048 4.276 5.001 5.549 6.116 6.712 7.351 8.008 8.684
Pharmaceutical sales (MYRbn), % chg y-o-y 10.700 5.629 16.958 10.945 10.224 9.738 9.520 8.935 8.445
Pharmaceutical sales at constant exchange rate (US$bn) 1.323 1.398 1.635 1.814 1.999 2.194 2.403 2.617 2.838
Pharmaceutical sales, per capita (US$) 44.187 43.435 54.679 62.850 65.697 72.685 79.666 86.904 92.856
Pharmaceutical sales, % of GDP 0.546 0.629 0.653 0.651 0.683 0.703 0.720 0.736 0.750
Pharmaceutical sales, % of health expenditure 14.404 13.715 14.860 15.264 15.672 16.048 16.453 16.843 17.237
f = forecast. Source: IMS Health Asia, AC Nielsen, domestic companies, local press, BMI
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Key Growth Factors – Industry
BMI calculates that in 2011, Malaysia spent 4.3% of its GDP on healthcare, a figure that sits below the
regional average of around 5%. The value does not correlate directly to the quality of healthcare provided,
but it does give an indication of the government’s commitment to healthcare provision. Since 2004,
private healthcare expenditure has increased more than government healthcare expenditure. In 2011,
private healthcare expenditure reached MYR16.25bn (US$5.31bn), representing just under 45% of total
healthcare spending in Malaysia. While the implementation of 1Care will increase government healthcare
spending, BMI believes the rate of increase will still be lower than in the private sector. This assumption
is confirmed with recent developments, such as BP Healthcare’s decision to open 10 new branches,
announced in June 2012, and its announcement that it opened a specialists ENT and gastroscopy
speciality centre in Cheras, Kuala Lumpar, in July 2012.
Further development will be driven by a greater knowledge of disease and better access to modern
medicines, especially in rural areas where healthcare is based on traditional remedies.
Improving regulatory and trade
conditions should continue to attract
investment from multinationals, aiding
market development: Novartis’ MoU
signed with the Ministry of Health in
June 2012 to further enhance the
country’s progress in the National Key
Economic Area is one example of
Malaysia’s attraction to private investors.
Closely tied in with this advance is the
harmonisation of procedures within the
ASEAN region, with alignment
providing better market access for
multinationals looking to establish or
expand operations in an increasingly
lucrative regional market. The recent strengthening of regional cooperation and collaboration with respect
to significant healthcare areas suggests that the harmonisation initiative is developing successfully. Where
Malaysia risks deterring the manufacturers of innovative drugs is in its intellectual property regime, with
the state reportedly rejecting parts of the Trasn-Pacific Partnership Agreement which would see
international firms granted extended patent protection rights.
Healthcare Expenditure Forecast
2007-2021
f = forecast. CER = constant exchange rate. Source: World Health Organization (WHO), BMI
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Table: Healthcare Expenditure Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Health expenditure (US$bn) 8.44 8.85 10.45 11.88 12.29 13.49 14.65 15.85 16.79
Health expenditure (US$bn), % chg y-o-y 19.03 4.91 18.06 13.71 3.44 9.76 8.58 8.19 5.96
Health expenditure (MYRbn) 28.11 31.18 33.66 36.35 39.03 41.82 44.68 47.54 50.38
Health expenditure (MYRbn), % chg y-o-y 15.40 10.93 7.94 8.01 7.35 7.16 6.83 6.41 5.96
Health expenditure at constant exchange rate (US$bn) 9.19 10.19 11.00 11.88 12.76 13.67 14.60 15.54 16.47
Health expenditure per capita (US$) 306.78 316.70 367.96 411.76 419.21 452.92 484.22 515.98 538.69
Health expenditure (% GDP) 3.79 4.59 4.39 4.26 4.36 4.38 4.38 4.37 4.35
f = forecast. Source: World Health Organization (WHO), BMI
Table: Healthcare Governmental Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Government health expenditure (US$bn) 4.657 4.931 5.801 6.572 6.778 7.417 8.029 8.661 9.149
Government health expenditure (US$bn), % chg y-o-y 20.1 5.9 17.6 13.3 3.1 9.4 8.3 7.9 5.6
Government health expenditure (MYRbn) 15.515 17.371 18.684 20.107 21.521 22.994 24.490 25.982 27.448
Government health expenditure (MYRbn), % chg y-o-y 16.5 12.0 7.6 7.6 7.0 6.8 6.5 6.1 5.6
Government sector health expenditure, % of total 55.20 55.71 55.51 55.31 55.14 54.98 54.81 54.65 54.49
e/f = BMI estimate/forecast. Source: WHO, BMI
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Table: Healthcare Private Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Private health expenditure (US$bn) 3.8 3.9 4.6 5.3 5.5 6.1 6.6 7.2 7.6
Private health expenditure (US$bn), % chg y-o-y 17.7 3.7 18.6 14.2 3.8 10.2 9.0 8.6 6.3
Private health expenditure (MYRbn) 12.6 13.8 15.0 16.2 17.5 18.8 20.2 21.6 22.9
Private health expenditure (MYRbn), % chg y-o-y 14.1 9.7 8.4 8.5 7.8 7.6 7.2 6.8 6.3
Private sector health expenditure, % of total 44.8 44.3 44.5 44.7 44.9 45.0 45.2 45.4 45.5
e/f = BMI estimate/forecast. Source: WHO, BMI
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Key Growth Factors – Macroeconomic
Malaysia's real GDP grew by a better-than-expected 5.4% year-on-year (y-o-y) in Q212, beating
consensus estimates of around 4.6% by a significant margin. Real GDP growth in Q112 was also revised
upwards to 4.9% from 4.7% previously. The latest reading is expected to trigger a wave of analyst
upgrades over the coming weeks, which is likely to push consensus estimates for growth towards the
upper range of Bank Negara Malaysia (BNM)'s target of 4.0-5.0%. From our perspective, however, more
recent economic data in July – which reflected a substantial slowdown in exports across the region and a
peak in the industrial production cycle in Malaysia – reinforced our view that economic growth would
remain subdued this year. Nonetheless, we have revised our full-year real GDP growth forecast upwards
to 3.8% (up slightly from 3.3% previously), after taking into account the better-than-expected print for
Q212.
Pickup In Investment Unlikely To Last Malaysia – Contribution to Real GDP Growth by Expenditure (pp)
Source: BMI, Bank Negara Malaysia
One-Off Effects
Looking at the expenditure breakdown, we note that economic activity was mainly driven by a sharp
pickup in gross fixed capital formation (GFCF), which contributed 6.2 percentage points (pp) to headline
growth. In year-on-year terms, GFCF growth accelerated from 16.2% in Q112 to 26.1% in Q212. The
acceleration in GFCF growth was mainly attributed to the implementation of new investment projects in
the oil and gas, transport, utilities and services sectors, according to BNM governor Zeti Akhtar Aziz.
These projects have also boosted growth in the construction sector, which accelerated from 7.5% y-o-y in
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Q112 to 15.5% in Q212. We believe that this one-off increase in new investment projects is unlikely to be
sustained over the remaining quarters of the year, especially given that the outlook for Malaysia's
economy remains cloudy. Meanwhile, net exports continued to be a greater drag on the economy having
contributed a negative 4.9pp to headline growth in Q212, down from the negative 3.1pp contribution in
the previous quarter.
Peaking Cycle
Malaysia – Industrial Production Index & Components, % chg m-o-m annualised 3mma
Source: BMI, Bank Negara Malaysia
Industrial Production Peaked
As the accompanying chart shows, industrial production in Malaysia appears to have peaked in May. We
note that industrial production activity since 2007 has traditionally peaked around May, and we expect to
see the same phenomenon this year. This has been supported by the trade figures in June, which showed a
sharp decline in import growth and a continued slowdown in export growth (see 'Disappointing Trade
Data Suggest Potential Rate Cut In September' August 10, 2012). Imports of intermediate goods – which
we see as a leading indicator of activity in the manufacturing sector – contracted by 5.3% y-o-y in June,
falling sharply from the 6.6% growth rate recorded in May. This is in line with our view that
manufacturers will continue to draw down their inventories in anticipation of a continued slowdown in
export orders over the coming months. These factors suggest to us that economic growth should moderate
over the coming quarters, culminating in a subdued full-year real GDP growth of just 3.8%.
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Prescription Drug Market Forecast
The market for prescription drugs was valued at MYR4.01bn (US$1.3bn) in 2011. As market
modernisation continues, the use of doctors and hospitals will encourage higher consumption of
prescription medicines, although the higher uptake of generic drugs and the expected separation of
prescribing and dispensing will act as barriers to growth, as will economic pressure on the private sector
and the possible extension of compulsory licences for some patented products.
Threats to the forecasts are on the
downside, given the discussions over the
separation of prescribing and dispensing.
To this end, in January 2009, the
Malaysian Pharmaceutical Society (MPS)
proposed the creation of a zoning system to
facilitate the transition, with those areas
with sufficient numbers of pharmacists to
be the first to start dispensing but to date,
no major changes have been implemented
in this area. BMI forecasts that the
prescription market to grow by a local
currency CAGR of 8.8% over our 10-year
forecast period, which is ahead of the
overall market (8.1%). By 2021, the
segment’s value at consumer prices will
top MYR9.30bn (US$3.10bn), representing a larger 76.7% of the total market.
Presently, the distinction between OTC and prescription market is also blurred, as doctors can both
prescribe and dispense, which has – in the past – made market estimations difficult to make. The private
sector accounts for 60-70% of the prescription market. Much of this is informal, with prescription drugs
often available OTC. As in many Asian countries, physicians often sell the drugs they prescribe. Around
45% of non-OTC drugs are sold by dispensing medical practitioners, with a further 30% being sold
through public/private healthcare institutions. Dispensing pharmacies account for the remaining 25%.
With pharmacists’ requesting permission to charge a professional fee of MYR5 (US$1.60), the percentage
share held by pharmacies may decline.
According to the Health Ministry, some MYR150-200mn is spent on medicines for diabetes, high blood
pressure and elevated cholesterol levels each year. There is an increasing mortality and morbidity rate
from diabetes mellitus, which varies due to the culturally diverse population. The proportion of the
Prescription Drug Market Forecast
2007-2021
f = forecast. Source: IMS Health Asia, domestic companies, local press, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 49
population with diabetes has increased from 6% to 10% over the past 20 years and this figure is expected
to reach 13% by 2020.
Officials have noted that as the data indicate that less than 2% of the population use hypolipaemics on a
regular basis, it is likely that related conditions are under-diagnosed. The relative expense of patented
cholesterol reducers has been blamed as a disincentive for their use.
Table: Prescription Drug Sales Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Prescription drug sales (US$bn) 0.89 0.88 1.12 1.31 1.40 1.59 1.78 1.99 2.17
Prescription drug sales (US$bn), % chg y-o-y 11.76 -0.53 26.49 17.36 7.06 13.24 12.10 11.48 9.11
Prescription drug sales (MYRbn) 2.96 3.11 3.60 4.01 4.46 4.93 5.44 5.96 6.51
Prescription drug sales (MYRbn), % chg y-o-y 8.35 5.17 15.65 11.48 11.11 10.56 10.29 9.65 9.11
Prescription drug sales, % of total sales 73.11 72.80 71.98 72.33 72.91 73.46 73.98 74.47 74.92
e/f = BMI estimate/forecast. Source: IMS Health Asia, domestic companies, local press, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 50
Patented Drug Market Forecast
A focus on generic drugs will lead to a
gradual decline in the demand for
advanced medicines should fall over the
coming years. Patented drugs will also play
a smaller role in the market, as
manufacturers may be reluctant to launch
advanced, innovative medicines in
Malaysia without adequate guarantees that
patent protection will be enforced. Overall,
the five- and 10-year growth of the
patented market is expected to be at a level
of around 9.0% and 7.4% respectively in
local currency CAGR terms, therefore
trailing that of the overall and generic drug
markets.
Patented drugs will lose market share, as generic products take a greater share of the total market. BMI
calculated that the patented market held 42.3% of the total market in 2011, down on 43.5% in 2010, even
though its absolute value continues to grow. By 2016, patented products will be worth MYR3.87bn
(US$1.29bn), making up 44.5% of the total market, before dropping to just under 42.7% by 2021.
Diabetes treatments, beta blockers, angiotensin agents, drugs for pulmonary obstruction disorders,
antihistamines and serum anti-lipidaemia products remain some of the best-sellers, followed by drugs in a
number of other categories, including calcium channel blockers, systemic anti-bacterials, anti-
inflammatories and anti-rheumatics and diuretics. The present levels of under-diagnosis and under-
treatment will boost the growth of the above therapeutic areas, although the relatively high price of novel
patented medicines represents a hindrance.
Overall, main drivers of the patented segment will include higher healthcare expectations, demographic
changes and the availability of new drugs on the market, boosted by improved operating conditions, made
possible by rising international collaboration and FTAs. As such, the Malaysian government’s reported
reluctance to agree to the Trans-Pacific Partnership Agreement, which would increase the patent periods
of drugs by foreign companies, could have a negative impact on the market share taken by patented drugs
during the course of our forecast period.
Patented Drug Market Forecast
2007-2021
f = forecast. Source: IMS Health Asia, domestic companies, local press, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 51
Table: Patented Drug Market Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Patented drug sales (US$bn) 0.585 0.558 0.675 0.768 0.856 0.977 1.084 1.195 1.289
Patented drug sales (US$bn), % chg y-o-y 10.099 -4.493 20.925 13.703 11.424 14.218 10.907 10.244 7.847
Patented drug sales (MYRbn) 1.948 1.967 2.175 2.349 2.716 3.029 3.305 3.584 3.866
Patented drug sales (MYRbn), % chg y-o-y 6.736 0.986 10.560 8.007 15.639 11.520 9.119 8.437 7.847
Patented drug sales, % of prescription sales 65.807 63.187 60.408 58.525 60.912 61.438 60.784 60.110 59.416
Patented drug sales, % of total sales 48.115 46.000 43.484 42.332 44.412 45.133 44.968 44.762 44.515
e/f = BMI estimate/forecast. Source: IMS Health Asia, domestic companies, local press, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 52
Generic Drug Market Forecast
BMI has raised its forecast of the size of
the generic drug market in this report,
thanks to new historical data. We calculate
that the generic drug market stood at
MYR1.66bn (US$544mn) in 2011, and
that it continues to show further growth
potential. BMI’s forecast shows a local
currency CAGR of 9.7% over the 2011-
2016 period, which will moderate in
subsequent years. Through to 2021, we
expect the generic drug market to reach
MYR4.13bn (US$1.38bn) at consumer
prices, with a CAGR of 8.2% and 8.4% in
local currency and US dollar terms,
respectively.
Drivers of generic drug market growth are mostly volume based, with the government spending an
increasing amount of money on the purchasing of generic medicines, on account of the rising number of
non-communicable disease patients across the country. Malaysia’s Ministry of Health has implemented a
generic drug policy in which government hospitals have to prescribe generic drugs when the patents for
the originator drugs expire. This is in line with the government’s aim to promote the local medicine
manufacturing industry under the National Key Result Areas programme. Patent expiries will be the key
driver for growth in Malaysia’s generic drug sector.
At the Global Bio-Herbs Economic Forum in Kuala Lumpur, Health Minister Liow Tiong Lai said that,
with state support, generic drugs could contribute US$5bn to Malaysia’s economy by 2020. He added that
foreign worker insurance, diagnostic services, medical tourism, health metropolises and clinical research
centres were other sub-sectors in line for government assistance under the NKEA programme.
Other growth drivers are the rising quality of generic products, cost-containment needs and
implementation of the ASEAN Free Trade Area (AFTA) agreement, with products from signatory
countries to be exempt from import barriers and tariffs. The flow of imports is expected to increase,
tightening competition and pushing local manufacturers to create competitive advantages.
Additionally, government efforts to lower healthcare spending, which prompted new regulations, will
stimulate the generic drugs market, which has so far been growing at a very modest pace. Presently,
Generic Drug Market Forecast
2007-2021
f = forecast. Source: IMS Health Asia, domestic companies, local press, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 53
generic drugs are poorly promoted in Malaysia, with branded drugs generally viewed as superior in
quality.
One of the main barriers to the development of the generic drug market is not pharmacists, but doctors.
Doctors are still unwilling to prescribe generic drugs in large amounts, as most are engaged in the
lucrative practice of dispensing patented and branded prescriptions.
Table: Generic Drug Sales Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Generic drug sales (US$bn) 0.304 0.325 0.443 0.544 0.549 0.613 0.699 0.793 0.880
Generic drug sales (US$bn), % chg y-o-y 15.109 7.090 36.036 22.943 0.896 11.716 14.002 13.395 11.005
Generic drug sales (MYRbn) 1.012 1.146 1.425 1.665 1.743 1.901 2.133 2.379 2.640
Generic drug sales (MYRbn), % chg y-o-y 11.593 13.234 24.377 16.784 4.713 9.077 12.163 11.536 11.005
Generic drug sales, % of prescription sales 34.193 36.813 39.592 41.475 39.088 38.562 39.216 39.890 40.584
Generic drug sales, % of total sales 25.000 26.800 28.500 30.000 28.500 28.328 29.012 29.705 30.406
e/f = BMI estimate/forecast. Source: IMS Health Asia, domestic companies, local press, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 54
OTC Medicine Market Forecast
Malaysia’s OTC drug market is expected to record a 7.2% local currency CAGR value increase over the
2011-2016 period, which will dip to 6.3% over the 10-year forecast. The value of OTC products reached
a calculated MYR1.54bn (US$502mn) in 2011 (27.7% of the total market) and is forecast to expand to
MYR2.18bn (US$726mn) in 2016, accounting for a smaller share (25.1%) of the total market.
Steady absolute value growth is attributed
to several factors, but mainly to importance
of branding, greater health awareness
among consumers and greater willingness
to self-medicate. Additionally, the
expected separation of prescribing and
dispensing has the potential to improve
OTC values and volumes beyond the
forecast, if and when implemented.
Downside risks to the OTC market include
a lack of distinction between OTCs and
prescription-only medicines: if consumers
do not know the difference, and if they are
able to purchase both prescription and
OTC drugs without a prescription, then market divisions are absent. Manufacturers’ ability to advertise all
types of medicine to the general public blurs this distinction further. One other concern for OTCs is the
prospect of pharmacists charging a MYR5 consultation fee. Patients often visit the pharmacist for minor
ailments that can be treated with non-prescription remedies; a charge will deter patients from consulting
the pharmacist and will have a negative impact on sales.
In the meantime, the value of herbal medicines will also increase, supported by the government’s backing
for R&D in the area of medicinal plants. Having been worth around MYR300mn (US$82mn) in 2006, the
herbal medicines market is likely to top MYR1bn (US$330mn) at consumer prices by 2013, according to
local sources’ estimations, despite some outstanding regulatory and quality issues.
Growth in vitamins and dietary supplements and stable demand for cough, cold and allergy remedies,
analgesics and medicated skincare treatments should be among the main contributors to overall growth in
the sector. Digestive remedies in particular, will perform strongly over the forecast period, while the
government anti-smoking drive expected to benefit the nicotine replacement segment of OTC medicines.
Additionally, traditional medicines are also expected to make notable gains over the coming years, as the
population seeks to lower its healthcare costs.
OTC Medicine Market Forecast
2007-2021
f = forecast. Source: AESGP, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 55
Most of the OTC medicines are imported, illustrating future commercial potential for foreign
manufacturers. Vitamins and dietary supplements are an exception, with Malaysia exporting such
products to over 30 countries worldwide, including Singapore, Vietnam, Brunei, Hong Kong, Taiwan,
Japan and Germany, as well as Africa and Central America.
Table: OTC Medicine Sales Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Over-the-counter (OTC) medicine sales (US$bn) 0.327 0.330 0.435 0.502 0.522 0.575 0.627 0.682 0.726
Over-the-counter (OTC) medicine sales (US$bn), % chg y-o-y 21.352 1.067 31.761 15.343 3.982 10.113 9.140 8.679 6.515
Over-the-counter (OTC) medicine sales (MYRbn) 1.088 1.163 1.401 1.535 1.657 1.781 1.913 2.045 2.178
Over-the-counter (OTC) medicine sales (MYRbn), % chg y-o-y 17.645 6.866 20.468 9.565 7.915 7.512 7.380 6.897 6.515
Over-the-counter (OTC) medicine sales, % of total sales 26.885 27.200 28.016 27.668 27.088 26.539 26.020 25.533 25.079
e/f = BMI estimate/forecast. Source: AESGP, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 56
Pharmaceutical Trade Forecast
Like most countries, Malaysia has a
negative pharmaceutical trade balance,
which is not expected to be reversed,
despite strong increase in export values
and volumes. According to UN Comtrade,
the leading countries of origin in 2010
included Australia (US$97mn),
Switzerland (US$84mn), France
(US$83mn), Germany (US$84mn) and the
US (US$71mn). In the same year,
Malaysia’s key export destination was
Singapore, which received US$30mn
worth of Malaysian pharmaceuticals, or
36% of total exports.
We highlight the government’s concerted
effort to enhance the pharmaceutical and healthcare sector. In its latest policy to improve pharmaceutical
quality, imported pharmaceutical products not manufactured in PIC/S member countries were required to
obtain good manufacturing practice certification from July 2012, prior to sale in the country. BMI also
believes the government’s plans as part of the NKEA programme will help to reduce the reliance on
imports. The government will provide MYR96mn (US$32.3mn) from 2010 to 2012 to construct
manufacturing facilities for the production of generic drugs.
The pharmaceutical industry in Malaysia is forecast by the government to achieve export growth of 8% y-
o-y in 2012, reaching MYR610 (US$200mn), according to Minister of Health Liow Tiong Lai, with
pharmaceuticals having been identified as a strategic economic area to be developed as a driver of growth
for the economy. During the launch of the PhAMA Industry Fact Book, Liow said: ‘It is my fervent wish
to see more multinational companies partnering with local Malaysian pharmaceutical companies as this is
one of the key strategies identified that can provide the impetus which will enable the sector to achieve its
fullest potential.’ Consequently, we forecast sector exports will grow at CAGRs of 9.0% in local currency
terms and 9.4% in US dollars term through to 2016, reaching MYR758mn (US$252mn) by the end of the
five-year forecast period.
In addition, the country is renewing its commitment in biotechnology. In phase II (2010-2015) of its
National Biotechnology Policy, the government emphasises biotech business aspects such as drug
discovery, new product development, technology acquisition and licensing. Despite these initiatives, we
Pharmaceutical Trade Forecast (US$mn)
2007-2016f
f = forecast. Source: United Nations Comtrade Database DESA/UNSD, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 57
do not expect the country to reverse the negative pharmaceutical trade balance, given they are still in their
early stages. Instead, increasing domestic demand for medicines, a significant proportion of which the
local manufacturing industry will be unable to meet, will stimulate the growth of pharmaceutical imports
over the next five years.
Furthermore, although bilateral FTA negotiations with the US were abandoned in 2009, both parties will
be aiming to include Malaysia in a multilateral trans-Pacific agreement. Yet recent local press reports
from August 2012 suggest that Malaysia has objected to one aspect of the Trans-Pacific Partnership
agreement: the obligation to increase patent periods of drugs by foreign companies.
On a broader scale, exports have also benefited from the further opening of China’s economy following
WTO entry, which led to a drop in import tariffs. The elimination of tariffs under the Japan-Malaysia
Economic Partnership Agreement and the consequent FTA will serve to further boost trade between the
two countries. BMI expects more drugmakers in South East Asia to attain GMP accreditation after a
major trade agreement was signed in April 2009.
The Sectoral Mutual Recognition Arrangement for GMP Inspection of Manufacturers of Medicinal
Products is designed to remove barriers that impede the trade of pharmaceuticals between ASEAN
member states. A country’s drug regulator will approve a drugmaker’s plant and this certification will be
accepted by fellow ASEAN states, thereby reducing a duplication of effort. In addition to adhering to
GMP standards, the agreement states that medicine producers must also meet PIC/S guidelines.
Conceived by the EU authorities, PIC/S is proving increasingly popular as it seeks to encourage dialogue
between regulatory authorities.
Table: Exports and Imports Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Pharmaceutical exports (US$mn) 116.28 120.30 144.74 161.06 166.06 183.68 203.49 227.57 252.61
Pharmaceutical exports (US$mn), % chg y-o-y -13.272 3.459 20.310 11.279 3.100 10.613 10.787 11.833 11.000
Pharmaceutical exports (MYRmn) 387.39 423.78 466.15 492.74 527.24 569.42 620.66 682.73 757.83
Pharmaceutical exports (MYRmn), % chg y-o-y -15.922 9.394 9.998 5.705 7.000 8.000 9.000 10.000 11.000
Pharmaceutical imports (US$mn) 767.580 870.083 900.480 1120.30 1242.47 1460.87 1695.66 1963.55 2230.59
Pharmaceutical imports (US$mn), % chg y-o-y 8.338 13.354 3.494 24.412 10.905 17.577 16.072 15.798 13.600
Pharmaceutical imports (MYRmn) 2557.11 3064.88 2900.09 3427.33 3944.86 4528.70 5171.77 5890.65 6691.78
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 58
Table: Exports and Imports Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Pharmaceutical imports (MYRmn), % chg y-o-y 5.028 19.858 -5.377 18.180 15.100 14.800 14.200 13.900 13.600
Pharmaceutical trade balance (US$mn) -651.29 -749.77 -755.73 -959.24
-1076.41
-1277.18
-1492.16
-1735.97
-1977.98
Pharmaceutical trade balance (MYRmn)
-2169.71
-2641.10
-2433.94
-2934.58
-3417.62
-3959.28
-4551.10
-5207.91
-5933.94
e/f = BMI estimate/forecast. Source: United Nations Comtrade Database DESA/UNSD, BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 59
Medical Device Market Forecast
BMI calculates that Malaysia’s medical
devices sector stood at MYR3.97bn
(US$1.30bn) in 2011, accounting for just
0.5% of the country’s GDP. By 2016, we
expect the value of Malaysia’s medical
devices market to have reached
MYR6.19bn (US$2.06bn), growing at a
CAGR of 9.3% in local currency terms,
which is above the increase in healthcare
spending. BMI believes medical device
manufacturers will benefit from the
expected improvements in public health
services and Malaysia’s commitment to
drive its medical tourism industry. In
addition, the Medical Device Act, will also
boost the market once implemented in October 2012, and will help reduce the presence of counterfeit
devices in the country.
Downsides to the risk include the fact that healthcare modernisation efforts are currently focused on
expanding access to medicines rather than to expensive medical diagnostics, which will remain the case
for some years to come. Additionally, the high percentage of out-of-pocket expenditure as a proportion of
total healthcare spending will continue to act as a brake on the development of medical device values in
Malaysia, where much of the rural population (especially) has no means of accessing expensive medical
services.
Currently, most of the high-tech medical devices are imported from Germany, the US and Japan.
However, Malaysia now has a positive trade balance, exporting US$1.03bn worth of medical devices and
importing US$933mn in 2011. The most-traded medical devices include general devices such as sight-
testing instruments, electro-medical apparatus, and radiotherapy and orthopaedic instruments. The
country now serves 80% of the global catheters and 60% of the global rubber glove market.
In the meantime, the local medical devices industry remains focused on lower-end scale, in terms of
product mix. Although the demand is mostly met through imports, Malaysia does have a significant
export activity in the field of surgical gloves, catheters and similar low-tech devices. The new Medical
Device Act should help improve manufacturing standards nationally.
Medical Device Market Forecast
2007-2021
f = forecast. CER = constant exchange rate. Source: BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 60
Table: Medical Devices Sales Indicators 2008-2016
2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Medical device sales (US$bn) 0.931 0.936 1.137 1.296 1.355 1.514 1.685 1.884 2.064
Medical device sales (US$bn), % chg y-o-y 16.683 0.576 21.523 13.983 4.540 11.683 11.332 11.815 9.535
Medical device sales (MYRbn) 3.100 3.297 3.663 3.966 4.303 4.692 5.140 5.653 6.192
Medical device sales (MYRbn), % chg y-o-y 13.118 6.347 11.108 8.273 8.495 9.045 9.537 9.982 9.535
Medical device sales at constant exchange rate (US$bn) 1.013 1.078 1.197 1.296 1.407 1.534 1.680 1.848 2.024
Medical device sales, % of GDP 0.418 0.485 0.478 0.465 0.481 0.491 0.504 0.519 0.535
Medical device sales, % of total healthcare sales 11.029 10.573 10.883 10.910 11.025 11.219 11.504 11.889 12.290
e/f = BMI estimate/forecast. Source: BMI
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 61
Other Healthcare Data Forecasts
The number of private hospitals in Malaysia proliferated in the 1980s, driven by increased affluence of
the country’s population, the demand for better services and the government’s privatisation programme,
which led to a number of state-owned healthcare facilities becoming for-profit enterprises. Private
hospitals continue to increase in number. Recent examples include BP Healthcare Group’s establishment
of a ENT and gastroscopy speciality centre in Cheras, Kuala Lumpur in July 2012, and IHH Healthcare
Berhad’s announcement in July 2012 that it plans to acquire more hospitals in the country.
Malaysia’s Health Director General Hasan Abdul Rahman revealed that a total of 32,979 doctors were
serving in the country in 2010, reported Bernama. He added that about 22,429 doctors were working in
the public sector, 19,429 in the Health Ministry and the remainder with other government agencies
including public universities and the Defence Ministry. Rahman mentioned that the government is aiming
to achieve a doctor-population ratio of 1:400 by 2020, adding that the government has been making
efforts to counter a shortage of doctors by bringing Malaysian specialist doctors back from abroad and
recruiting foreign specialist doctors.
In fact, the country is already facing shortages of certain medical professionals, due to its changing
demographics and epidemiological profile and emigration. In a move to encourage doctors to continue
practicing in the country, the government announced its plans in Q312 to allow speciality and private
doctors to raise their charges by 14%.
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 62
Key Risks To BMI’s Forecast Scenario
While generic drugs play a major part in the Malaysian market, the development of a genuine sector has
been slow. However, the government continues to encourage their use and its perseverance could see a
sizeable increase in the generic drugs market above the level already forecast, especially given the recent
legalisation of parallel trade and the challenging economic situation.
The prescription of generic products in the public sector is becoming increasingly popular, indicating a
greater willingness to use low-cost medicines, but it is the changes in the private sector that remain
crucial to market development. In the meantime, the private sector, which favours patented products, as
they bring higher revenues for healthcare providers, would have also felt the pinch of the economic
downturn.
Given the notable level of counterfeit pharmaceuticals in the country, the difficulties in applying process
patents, a lack of data exclusivity and an overall poor standard of enforcement of regulations,
multinationals’ revenues over the forecast period may be lower than predicted for certain products.
In the long term, there are mixed messages for manufacturers of innovative, patented products. While
Malaysia embraces ASEAN harmonisation procedures, it is also reluctant to permit extensions to patents,
which forms part of the Trans-Pacific Partnership Agreement. In terms of counterfeit drugs, the prospect
of a Medical Device Act in October 2012 will show increased government commitment to cracking down
on substandard medical devices, while plans for a new regulatory body should help improve the
operational environment.
Moreover, regional competition, especially from Singapore and China, will hamper Malaysia’s efforts to
increase pharmaceutical exports. Additionally, a serious risk to the sector’s performance and development
would be a sharper-than-expected Chinese slowdown, precipitated by a bursting of the property bubble
that has been forming in large urban cities such as Beijing and Shanghai. Indeed, Chinese demand for
Malaysian exports makes up about 20% of total outbound shipments for Malaysia.
Malaysia is presently debating the separation of prescribing and dispensing, with the implementation of
changes likely in the short to medium term, in line with wider Asia Pacific trends. When the change is
actioned, BMI will adjust its prescription and OTC forecasts accordingly. Similarly, the government is
debating the introduction of national social health insurance, the creation of which will shape the
country’s healthcare spending priorities.
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 63
Competitive Landscape
Domestic Pharmaceutical Industry
The local industry remains focused on the production of generic and lower-tech medicines. In the future,
domestic sector development is likely to remain centred on the operations of the industry’s larger
producers, as these look to benefit from the onset of ASEAN harmonisation, which has brought marked
growth in the private sector and opened up export markets. The modernisation of the sector is also likely
to see many smaller drug companies disappear as a result of the tightening regulations, with the costs of
the required upgrades being a major problem.
At the end of 2007, there were approximately 235 GMP-compliant manufacturers in Malaysia licensed by
the DCA, some of which act as sales agents for international pharmaceutical companies. Around 30 are
licensed to manufacture prescription medicines, while the rest produce OTC medicines. Some 140
manufacturers are licensed to produce traditional and herbal medicines, with such products integrated into
the mainstream healthcare system.
In June 2010, Malaysian Health Minister Dato’ Sri Liow Tiong Lai was reported by The Star Online as
saying that the healthcare industry has the potential to contribute MYR10bn (US$3.09bn) to the country’s
economy by 2020, if it focuses on the areas of pharmaceuticals (including exports of higher quality
generic drugs), the production of medical equipment, health tourism and specialists’ training. The
ministry said healthcare services currently contribute only MYR4bn (US$1.23bn).
Foreign Pharmaceutical Industry
Due to their strength in innovative products, multinationals control about 70% of the pharmaceutical
market, especially in terms of innovative and specialised drugs. All of the major multinational drug
companies are represented in Malaysia, although only a few have a direct manufacturing presence, largely
as a result of restrictive regulatory practices. Companies with significant local production facilities are B
Braun, GlaxoSmithKline (GSK), Johnson & Johnson (J&J) and Ranbaxy. Multinationals, which are
primarily represented by the Pharmaceutical Association of Malaysia (PhAMA), are gradually getting
involved in the fields of local biotechnology, clinical trials and bio-equivalence studies, illustrating rising
market potential as well as an improvement in operating conditions.
Multinationals are gaining ground in Malaysia. In June 2012, Novarits signed a memorandum of
understanding with the Ministry of Health to futher enhance the country’s progress in the National Key
Economic Area programme for healthcare, while Sanofi, which has conducted Phase III trials for its
dengue vaccine in the country, has also announced plans to expand its presence in Malaysia.
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
© Business Monitor International Ltd Page 64
In the future, multinational activity is likely to reflect sector modernisation and the proliferation of free
trade agreements (FTAs), but at a pace of development slower than, for example, Singapore, which holds
greater investment potential and offers a more favourable regulatory environment. In the current year,
market activities will be dictated by negative economic conditions, which are likely to boost the use of
cheaper generic products across the board.
Table: Leading Malaysian Pharmaceutical And Healthcare Companies
Name
Market capitalisation
(US$mn) P/E ratio Revenue (US$mn) Website
Pharmaniaga 189 0.60 391.0 www.pharmaniaga.com
CCM Duopharma 109 11.16 35.0 www.duopharma.com.my
Apex Healthcare 75 8.91 88.0 www.apexpharmacy.com
Hovid 43 7.77 108.0 www.hovid.com
YSP Southeast Holding 36 9.57 39.0 www.yspsah.com
Kotra Industries 23 6.43 30.0 www.kotrapharma.com
Sunzen Biotech 10 17.90 8.5 www.sunzen.com.my
Source: Investor Relations
Company Activities
Altona Diagnostics, from Germany, officially opened its new Asia Pacific regional headquarters in Kuala
Lumpar in July 2012.
In Q212, Novartis signed a memorandum of understanding with the Ministry of Health to further enhance
Malaysia’s progress in the National Key Economic Area programme for healthcare. Novartis established
a US$700mn fund to support the setting up of new Malaysian companies.
In June 2012, Sanofi announced plans to expand its presence in Malaysia, through bilateral collaboration
with the government in the healthcare sector. The cooperation will encourage R&D in the vaccine sector.
In April 2012, Dutch-Malaysian firm NYOYN Asia said it intends to introduce its products to all local
hospitals in Malaysia and will start operations at its manufacturing facility in Kedah to meet more local
demand.
In February 2012, biotechnology company Biocon said it plans to establish an insulin manufacturing
facility in Johor state to produce insulin at an affordable price. The company will invest US$160mn for
the first phase, the largest investment in Malaysia’s biotechnology sector. Chair Kiran Mazumdar-Shaw
Malaysia Pharmaceuticals & Healthcare Report Q4 2012
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said the new facility will be operational by 2014 and will run as a production base to serve South East
Asia and the global market.
In the same month, the National Pharmaceutical Control Bureau of the Ministry of Health in Malaysia
approved Bayer HealthCare’s once-daily drug rivaroxabam, which is used to reduce stroke-risk in
patients with sustained irregular heart rhythm.
In January 2012, US-based Watson Pharmaceuticals acquired Ascent Pharmahealth, the Australia and
South East Asia generic pharmaceutical business of Strides Arcolab, for AU$375mn (US$399mn).
In July 2011, Agila Specialties, a wholly-owned subsidiary of Indian pharmaceutical company Strides
Arcolab, signed an agreement for the establishment of a new manufacturing plant in Malaysia. The
biopharmaceuticals and sterile injectables plant will be located in the Bio-XCell biotechnology park in
Iskander.. Under the deal, the facility will be developed by Bio-XCell and later will be leased to Strides
on a long-term basis. Malaysian Biotechnology and UEM Land Holdings will manage the project.
Halal Medicine
Halal medicines are highly important to the Malaysian market, given that Islam is the country’s official
religion. Halal is an Arabic term meaning ‘permissible’. With respect to pharmaceuticals, it excludes
products derived from blood, animals slaughtered in the name of anyone but God, and swine. As such,
many medicines – for example those compounded in capsules with the animal product gelatine – are not
consumed by many observant Muslims. Pharmaceutical companies have been aware of this niche for
some time, but it is only recently that drugmakers have explicitly targeted this growth area.
In May 2012, Malaysia’s second minister of finance, Husni Mohamed Hanadzlah, and the Tunisian
minister for investment and international cooperation, Riadha Bettaib, discussed prospects for
collaboration between the countries in the halal industry, including pharmaceuticals.
In April 2011, the Technical Committee on Halal Food and Islamic Consumer Goods, which operates
under the auspices of Industry Standards Committee on Halal Standards (ISCI) that brings together
experts from government and industry bodies, released halal pharmaceutical and medicines guidelines.
Compliance with the ‘Malaysian Standard’ document is voluntary, with the Ministry of Health not
sanctioning halal logo stickers or other signs on packaging, although it does require disclosure of porcine
and bovine materials in the medicines for procurement purposes.
Like Pakistan, Malaysia is looking to become the conduit for medicine exports to the Islamic world.
Demonstrating this intent, the country’s Halal Development Corporation (HDC) has agreed to certify as
Halal traditional Chinese medicine manufactured in Ningxia province. Malaysia will then distribute the
products to the consumers globally.
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Other companies concentrating on Halal medicines include Chemical Company of Malaysia (CCM),
which has singled out Halal medicines as a key driver of its future growth.
Traditional Medicine
As with many Asian nations, traditional medicines are frequently used in Malaysia, often in tandem with
modern drugs. This is evidenced by the Kepala Batas Hospital in Penang becoming the first healthcare
facility in Malaysia to offer both modern and complementary (herbal preparations, acupuncture and
traditional massage) medicine. The Kepala Batas Hospital will only employ internationally recognised
traditional medicine practitioners, whose degree components comprise 30-40% modern medicine and 60-
70% traditional medicine expertise to enable them to treat patients accordingly.
As seen in many emerging markets, demand for traditional medicines in Malaysia is high. Liow Tiong
Lai stated in late 2010 that, of the 43,424 products registered by the DCA, 47% were traditional remedies,
followed by prescription drugs (30%) and OTC medicines (23%). However, sampling of more than 1,000
traditional medicines found that 93 products were not compliant with regulations, such as those
containing a microbial infestation (55%) or contamination with heavy metals (30%). Nearly a third of
traditional remedies were imported, predominantly from China
In order to address quality issues, in November 2011, the Malaysian Ministry of Health asked traditional
medicine suppliers and wholesalers to register their products. Liow said registration with the ministry will
enable the National Pharmaceutical Control Bureau to check the suitability of the drugs for public
consumption. Only products that have been registered and checked by the ministry will be allowed to
make claims regarding the treatment of specific diseases or illnesses. The registration procedure includes
laboratory tests to certify whether a product can be used for the purpose it claims. On average, it will take
about 60 working days to test each product.
However, in March 2012, the director of the Ministry of Health pharmacy enforcement department, Mohd
Hatta Ahmad, told the local press that in 2011 approximately 20 types of traditional medicine and health
supplement slimming products, valued at MYR610,581 (US$199,536), were found to contain the illegal
drug sibutramine or the controlled drug phentermine. This was three-times more than the value of
products seized in 2010 (MYR195,365), highlighting the seriousness of the issue. He added that
adulteration was more common in food products and health supplements than traditional medicines as
manufacturers and distributors are not required to register these products with the National
Pharmaceutical Control Bureau (NPCB) or the DCA. Between 2009 and 2011, five cases of registered
traditional medicine products being altered after registration were recorded.
In contrast to Ahmad’s statement, according to the NPCB all pharmaceutical products, health
supplements, traditional medicine products and cosmetics have to be registered with the bureau and tested
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for their safety and quality prior to registration. In addition, the country also has a category called ‘food-
drug interface products’. Depending on the composition of product, it comes under the charge of different
regulatory bodies, namely the NPCB or the Food Safety and Quality Control Division (FQCD), providing
potential loopholes for manufacturers to add illegal substances.
Pharmaceutical Distribution
The main public sector wholesaler is Pharmaniaga Logistics (formerly Remedi Pharmaceuticals). This
subsidiary of leading drug company Pharmaniaga is responsible for around 75% of medicines purchased
by public healthcare institutions. In the private sector, there are a number of prominent distributors. These
include Zuellig Pharma, which has been present in Malaysia since 1939, Apex Healthcare (also a
manufacturer) and Medispec Malaysia. In July 2012, the secretary general of the Democratic Action
Party Liam Guan Eng urged the government to permit the direct sale of pharmaceuticals and medical
devices to the public health sector, rather than through wholesalers, as a means of cutting costs.
In terms of pharmacies, in July 2012 the Malaysian Pharmaceutical Society requested that the government
impose professional charges on consumers for visiting local pharmacists, according to national press
reports. Pharmacists would like to be able to charge MYR5 (US$1.60) per visit. The Federation of
Malaysian Consumers’ Associations’ chief executive rejected these proposals, claiming that the advice
pharmacists give is part of the service they offer, alongside the sale of medicines. BMI believes that if
implemented, such a fee would deter patients, particularly those with minor ailments, from using
pharmacies, and would boost both counterfeit and substandard drugs, as well as herbal and traditional
remedies.
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Company Profiles
Local Companies
Pharmaniaga
Strengths Leading company in the Malaysian market. Concession agreement with the Ministry of Health via its distribution unit. A focus on bioequivalent generic drugs. The plants customised to meet the US Food and Drugs Administration (FDA) standards, in
a bid to improve it share in the contract manufacturing market.
Weaknesses Dependent on one customer, the Ministry of Health, in a 15-year concession agreement. Product prices potentially considered for revision only once every three years. Limited geographic diversification.
Opportunities Government support for local drug manufacturers. Overseas expansion through local manufacture, joint-ventures and product launches. Increasing healthcare costs and consumer awareness boosting demand for cheaper locally
manufactured drugs. Improvement in regulatory environment and approval procedures. Expansion of contract manufacturing capacities. From July 2012, pharmaceutical products not manufactured in PIC/S member countries will
be required to obtain GMP certification prior to sale in Malaysia.
Threats The company’s growth and performance dependent upon economic conditions in Malaysia and other countries, particularly Singapore, the Philippines and Vietnam.
Relatively low barriers to entry, which is creating intense competition from new entrants such as India’s Ranbaxy.
Generic manufacturers competing on price due to weak patent law and wide variety of generic drugs available, further reducing profit margins.
A trend towards the purchase of branded drugs over low-cost locally manufactured generic drugs to benefit importers of products from companies based in the US, UK and Germany.
The company may eventually lose its generic supply agreement with the government or see less favourable conditions in the near term.
Company Overview Pharmaniaga PhD, established in 1998, is Malaysia’s leading integrated local healthcare
company. The company operates through nine business units: Manufacturing, Marketing,
Logistics, Solutions, Pharmaniaga Research Centre, Pharmaniaga Diagnostics, Pharmaniaga
Biomedical and Esteem Interpoint. The company produces through Raza Manufacturing, while
its distribution unit, Pharmaniaga Logistics Sdn Bhd (formerly known as Remedi
Pharmaceuticals) provides pharmacy management services.
Presently, the company has three factories, which churn out more than 400 generic products,
although ideally it is keen to have five or six facilities. The company is estimated to control more
than a quarter of the total market. The group has also reportedly set aside MYR300mn for the
development of more than 90 new products over the coming five years, and by 2013, it is
hoping to become a US$1bn company. Currently accounting for 25% of total sales, exports are
key to Pharmaniaga’s future.
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Strategy Through Pharmaniaga Logistics, the company supplies around 75% of medicines purchased by
Malaysia’s public healthcare institutions. The company’s contract expired in 2009, but was
extended for a further 10 years, subject to conditions that needed to be negotiated over the
course of H109. The firm will supply pharmaceuticals to 3,517 government hospitals and clinics
nationwide. The contract is worth MYR900mn (US$292mn) a year. One government official
proposed in Q212 that the government permits pharmaceutical firms to sell their products
directly to health service providers, and if this proposal is heeded, it would affect Pharmaniaga
Logistics’ role in the wholesale and distribution market.
Pharmaniaga is planning to expand into new markets. The company has already entered
markets with very low barriers to entry, such as neighbouring countries at the early emerging
stage (for example, Papua New Guinea and Myanmar) and those with nascent regulations
(several countries in Africa). Now, it is looking at the larger markets of south-east Asia, the
prosperous Middle East and some other member countries of the Organisation of the Islamic
Conference (OIC) via mergers and acquisitions. Regionally, the company has 38 sites, in
Indonesia and Vietnam, in addition to its home market.
The company’s most significant foreign enterprise is its 55% stake in Indonesian
pharmaceuticals distributor PT Millennium Pharmacon International. Purchased for US$3.2mn
in 2004 from Indonesia’s PT Tigamitra Multikarya, the acquisition gives it control of a unit that
controls 2% of Indonesia’s promising pharmaceutical market. The distributor has 14 principals
and 24 branches and controls 2% of the Indonesian market.
A small-scale Thai venture, worth only MYR54mn (US$14.21mn) over five years, will replicate
the company’s IT systems for a hospital group. Meanwhile, the company is to begin a drug
supply chain JV in South Africa with equal partners Procon Fischer and Corpafrica.
Developments In April 2011, Pharmaniaga launched a new GMP-compliant factory, Pharmaniaga LifeScience,
which will function as a contract manufacturer for the production of injectable medicines. The
output will be destined both for the domestic and export market.
In March 2010, following a routine audit, the Malaysian authorities revoked Pharmaniaga’s
production licence, although the exact reason was not disclosed at the time. The company was
reportedly working to remove the obstacles to further production, which accounts for around
10.8% of the group’s annual turnover, or MYR203.6mn.
Financial
Performance
In Q212, Pharmaniaga reported a 12.8% y-o-y rise in earnings to MRY15.7mn (US$5mn),
boosted by revenues at its new subsidiary, Idaman Pharma Manufacturing.
In FY11 (ending December 2011), group revenues reached MYR1.52bn. Profit before tax came
in at MYR73.2mn, up from MYR45.5mn in FY10.
In FY10, Pharmaniaga Group posted revenues of MYR1.38bn, up on MYR1.30bn posted in
FY09, itself a 0.5% fall on FY08.
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Company Contacts Pharmaniaga Bhd, 7 Lorong Keluli 1B, Kaw. Perindustrian Bukit Raja Selatan, PO Box 2030, Pusat Business Bukit Raja, 40800 Shah Alam, Selangor Darul Ehsan, Malaysia
Tel: +60 (3) 3342 9999 www.pharmaniaga.com
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Prime Pharmaceutical
Strengths Presence in both the prescription and the OTC sector. Strong manufacturing and distribution network. Involved in contract manufacturing.
Weaknesses Competition from other local manufacturers. Pressure on the government to reverse policies biased towards the local industry. Increasing demand for compliance with international IP standards.
Opportunities Government programme for developing the pharmaceutical and biotechnology sectors. Expected increase in regional drug consumption. Rising demand for and encouragement of the generic drugs sector. Strong growth in both the generic and OTC drug markets over next nine years.
Threats Widespread counterfeit industry. Increased competitiveness of local players driven by ASEAN harmonisation and other
regulatory developments. Possible introduction of price ceilings on essential medicines.
Company Overview Prime Pharmaceutical Products Sdn Bhd, established in 1988, is one of the more prominent local
manufacturers of pharmaceuticals. The company produces, markets and distributes a variety of
pharmaceutical products as well as traditional herbal preparations and health foods. Prime
Pharmaceutical Products also deals in vitamins.
Strategy Prime Pharmaceutical Products is one of the regular suppliers and distributors of medicines to
government hospitals as well as private healthcare facilities, including pharmacies. The company
has a factory in Bukit Tengah Industrial Park, which conforms to international GMP standards.
Prime Pharmaceutical Products is also involved in contract manufacturing.
The company’s product range includes analgesics (including paracetamol and acetylsalicyclic
acid), anti-asthmatics, anti-histamines, corticosteroids, gastrointestinal preparations, cough and
cold remedies, antibiotics, antifungals and dermatologicals (such as hydrocortisone), among a few
other therapeutic areas.
Company Contacts Prime Pharmaceutical Products Sdn Bhd, 1505 Lorong Perusahaan Utama 1, Taman Perindustrian Bucket Tengahnda Bukit Mertajam, Penang, Malaysia
Tel: +60 (4) 507 4787 www.primepharma.com.my
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Bumimedic
Strengths Presence in both the prescription and the OTC sector. Strong manufacturing and distribution network. Backed by a large local healthcare group. Involved in contract manufacturing and research on behalf of foreign players.
Weaknesses Competition from other local manufacturers. Pressure on the government to reverse policies biased towards the local industry. Increasing demand for compliance with international IP standards.
Opportunities Government programme for developing the pharmaceutical and biotechnology sectors in the country.
Expected increase in regional drug consumption. Rising demand for and encouragement of the generic drugs sector. Strong growth expected in the generic and OTC drug markets over next nine years.
Threats Widespread counterfeit industry. Possible introduction of price ceilings on essential medicines. Increased competitiveness of local players driven by ASEAN harmonisation and other
regulatory developments.
Company Overview Bumimedic (Malaysia) Sdn Bhd is a subsidiary of privately owned Antah HealthCare Group, which
is controlled by one of the royal families of Malaysia. Bumimedic is one of the largest healthcare
companies in Malaysia, dealing prescription and OTC pharmaceuticals, medical equipment and
consumable supplies for hospitals, medical centres, clinics and pharmacies.
The Antah Group distributes medicines and medical equipment to government, private and
university hospitals, laboratories, health centres, state medical stores, GPs and retail pharmacies.
Rising demand and strong marketing will support growth of the Group and its Bumimedic arm.
Bumimedic’s factory, which complies with international GMP standards, manufactures more than
300 products in the form of tablets, capsules, liquids and ointments. The company supplies local
and overseas customers, and it is engaged in contract manufacturing. At present, Bumimedic is
engaged in the creation of another manufacturing site as a joint-venture.
Developments In early 2006, US-based Amarillo Biosciences (ABI) entered into a distribution agreement with
Bumimedic Malaysia. The Malaysian firm, which markets Amarillo’s low-dose interferon,
manufactures lozenges from ABI’s bulk natural human interferon supplied by Hayashibara
Biochemical Laboratories, and distribute them to local hospitals, clinics and pharmacies.
Antah Bumimedic also recently signed a distribution agreement with Koperasi Doktor Malaysia
Berhad (KDM) Pharma (Pharmaceutical Division of KDM Berhad), with the former serving as a
logistics operator for the latter. KDM, as a doctors’ cooperative, serves some 650 doctors
throughout western Malaysia, having set up KDM Pharma as its dedicated procurement arm.
Company Contacts ABI Bumimedic Antah Pharma Sdn Bhd, 3 Jalan 19/1 Petaling Jaya, 46300 Selango, Malaysia
Tel: +60 (4) 7956 7677 www.ahcg.com.my
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Hovid
Strengths One of the leading local drug producers and exporters. Strong manufacturing and distribution network. Involvement in the herbal supplements business. Considerable in-house R&D.
Weaknesses Competition from other local manufacturers. Pressure on the government to reverse policies biased towards the local industry. Increasing demand for compliance with international IP standards.
Opportunities Government programme for developing the pharmaceutical and biotechnology sectors. Expected increase in local and regional drug consumption. Already present in a number of African and Middle Eastern countries, which are expected to
continue their steady development. Demand for Malaysian pharmaceutical exports is forecast to grow over next four years.
Threats Widespread counterfeit industry. Increased competitiveness of local players driven by ASEAN harmonisation and other
regulatory developments. Potentially detrimental impact of the pending FTA with the US.
Company Overview Hovid (formerly Ho Yan Hor) was established in 1945 as the manufacturer of herbal tea. In the
1980s, the company began engaging in pharmaceutical production. At present, Hovid is also
involved in the manufacture of herbal and dietary supplements, teas and tocotreienols. It is the
leading exporter in Malaysia and one of the largest GMP-certified pharmaceutical companies in
the country. Hovid also owned local biotechnology firm Carotech, the leading supplier of
phytonutrients and biodiesel products, which was divested by mid-2010. Strategy Hovid is already present in several countries, particularly in Asia. Outside Malaysia, where it
operates two plants, its largest market is Nigeria, with annual sales there exceeding MYR16mn
(US$4.6mn). The company is increasingly focusing on foreign markets, with offices in Singapore,
Hong Kong and the Philippines, while planning to set up subsidiaries in Vietnam and India (where
it has a production plant). Hovid has also earmarked China for future expansion.
Hovid was responsible for the construction of the first gelatine encapsulation plant in the country,
as well as the first film-coated analgesic and the development of the first ampitab in dispersible
tablet form. Hovid – which currently holds the right to 12 global patents − became the first global
company to succeed in the processing and extracting carotenes and vitamin E from palm oil.
It also deals in drug delivery systems, nanotechnology research (into liposomes and polymeric
nanoparticles). The drugmaker’s clinical trials are conducted both nationally and internationally, in
collaboration with Japanese and US universities, among others.
Hovid’s portfolio contains in excess of 350 different kinds of products, mostly branded generic
medicines. Other products include health supplements, injectable products and herbal medicines.
Some 100 products are prescription drugs, with a focus on antibiotics, anti-diabetics, anti-
hypertensives, anti-malarials and anti-inflammatory analgesics. The company holds more than
700 marketing authorisations worldwide, launching on average 12 new products per year.
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Developments In April 2012, Hovid indicated that it may build a pharmaceutical factory in the Philippines within
the next two years, at a cost of at least MYR20mn. Hovid markets about 30 products in the
Philippines market, which accounts for around 5% of its annual revenue. Hovid Philippines
employs about 100 people.
In January 2011, Hovid signed a deal with Sanofi-Aventis’s local subsidiary Winthrop, aimed at
the development and manufacture of generic drugs. The products in question include metformin
850mg MR for the diabetes treatment, and tramadol 100mg SR, which is used as a painkiller.
Hovid also reported that the deal may be extended to another 30 products in the coming year,
which are valued at over MYR50mn.
In August 2010, Bernama reported that Hovid intends to set up a new plant overseas by 2013, on
the back of increasing demand for its products. He added that the establishment of the plant will
help the company grow in respective markets and that the company anticipates its revenue
growing 10-20% on the back of increasing demand overseas.
At the start of January 2008, Hovid purchased a controlling stake in Indian Biodeal
Pharmaceuticals. Hovid chose India because of the more relaxed patent laws and lower labour
costs, which will allow it to place cheaper generic products on the Malaysian market. The
transaction will provide Hovid with a 100% increase of its production capacity for the manufacture
of tablets and capsules.
Financial
Performance
For FY11 (ending June), Hovid posted MYR153mn, as Carotech was no longer its subsidiary.
Loss after taxation was in the region of MYR6.1mn.
In FY10, the company posted MYR365.2mn in revenue, up by 46.9% in relation to the previous
year. However, the impairment of Carotech stocks resulted in a loss after tax of MYR90.8mn, up
on the MYR6.8mn suffered the previous year.
In FY09, Hovid posted MYR0.5mn in net profit, including MYR15.6mn in unrealised foreign
exchange (forex) losses at Carotech, due to a weakening ringgit in relation to the US dollar. For
the year, core net profit was MYR16mn – excluding the forex loss – down by 40% on the forecast,
which was attributed to higher depreciation charges and interest expenditure.
FY08 and FY07 revenues came in at MYR214.7mn and MYR186.9mn, respectively. Profit after
taxation stood at MYR18.3mn and MYR29.1mn.
Company Contacts Hovid Bhd, 121, Jalan Tunku Abdul Rahman, 30010 Ipoh, Perak, Malaysia
Tel: +60 (5) 506 0690 www.hovid.com
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Chemical Company of Malaysia
Strengths One of the leading local chemical and pharmaceutical producers. Diverse business portfolio, including herbal supplements. Local leader in small volume injectables. Leading generic drugs player in the country.
Weaknesses Competition from other local manufacturers. Pressure on the government to reverse policies biased towards the local industry. Increasing demand for compliance with international IP standards.
Opportunities Government programme for developing pharmaceutical and biotechnology sectors, including the improvement of the regulatory environment.
Expected increase in local and regional drug consumption. Focus on halal medicine, which is in demand in the Islamic world. Rising demand for OTCs. Recent launch of anti-flu medicine Omniflu, with demand increased following the onset of
swine influenza.
Threats Widespread counterfeit industry. Increased competitiveness of local players driven by ASEAN harmonisation and other
regulatory developments. Potentially detrimental impact of a possible FTA with the US.
Company Overview Chemical Company of Malaysia (CCM) was established in 1930. The company was listed as a
public company in 1966, initially as a subsidiary of UK-based ICI PLC and now as a Malaysian-
owned corporation, controlled by Permodalan Nasional Bhd (PNB), which had shown interest in
the takeover of Pharmaniaga.
CCM Pharmaceuticals is the largest local manufacturer of generic drugs, currently holding a 21%
share. According to the pharmaceuticals division director, the company plans to increase this
share to at least 23%. Its portfolio consists of more than 280 products, including antihistamines,
antibiotics and expectorants. The division is also the leading producer of OTCs, with key brands
being Champs, Proviton and Uphamol.
CCM Duopharma Biotech manufactures oral preparations, sterile injectables, haemodialysis and
sterile irrigation solution. The division is the leading local manufacturer of sophisticated and
specialised small volume injectables.
Strategy The company is focused on chemical products and applications, fertilisers and pharmaceuticals
and healthcare products and services. It has four divisions, namely CCM Chemicals, CCM
Fertilizers, CCM Pharmaceuticals and CCM Duopharma Biotech. CCM Duopharma is raising its
profile in the traditionally low-margin vaccine sector. The company is spending MYR7mn
(US$2mn) on a vaccine fill and finish facility in Klang, Selangor. In H209, the company launched
Omiflu, a generic version of influenza drug Tamiflu (oseltamivir).
CCM is planning to enhance its pharmaceutical, chemical and fertiliser business footprints both
regionally and in the Middle East region. According to Amirul Feisal Wan Zahir, the firm had
undertaken several initiatives in its core businesses that have enabled it to enhance production
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capacity and improve efficiencies, which in turn enhance the company’s competitiveness and
market presence in the region, by focusing on growth opportunities available in Indonesia,
Singapore and Vietnam. The firm is also looking to offer value-added products and services and
transform the business model from a process-driven to a knowledge-based business.
The company already exports its products to a number of regional markets, including Vietnam, the
Philippines, Singapore and Hong Kong, as well as to Pakistan, Yemen, Sudan and Bangladesh.
CCM is also planning to increase its overseas promotional activities, and was targeting a figure of
40% of total sales for exports by 2010, up from 30% previously.
Developments Thai pharmaceutical company The British Dispensary signed a deal with CCM in March 2010 for
developing its manufacturing base and expanding its product range, reports Business Times. With
the MYR50mn (US$15.3mn) collaboration, the Thai company is looking to include halal-based
cosmetic and healthcare products in its existing 18-brand portfolio. The two companies are
capitalising on the ASEAN free trade area to expand their businesses in the region.
In April 2009, CCM inaugurated its new US$2.8mn research and development centre in Malaysia.
The Innovax 63,000ft2 site is used for the manufacture of new and innovative generic drugs.
Innovax is the largest facility of its kind in the country, with CCM planning an additional
US$562,000 investment. Through to 2015, 35 new generic drugs will be launched.
Financial
Performance
In 2011, group revenue fell by 2.8% to MYR1.61bn, with net profit down by 1.3% to MYR58.4mn.
The chemicals business’ revenue fell for the year, although pharmaceutical sales grew by 4.5%,
rising to MYR261.3mn. The group expects a challenging 2012 and aims to enhance its business
processes and improve its reach.
For the full FY10, the group posted a 6% y-o-y increase in revenue, which rose to MYR1.64bn.
Profit for the year came in at around MYR33mn, rising from MYR5mn achieved in FY09. The
group’s pharmaceuticals arm posted MYR250mn in FY10 revenue.
CCM had a challenging 2009. In Q309, the firm posted sales of MYR404mn (US$118mn), a 4.7%
decrease compared with the previous quarter. Encouragingly, CCM returned to profit in Q309,
after posting a net loss of MYR439,000 (US$129,000) in Q209. For the whole of 2009, the group
posted MYR1.6bn in revenue, down by 27.4% (which was partly attributable to one-off write-offs).
Profit before tax was down by 87%, to MYR120.3mn. CCM’s pharmaceutical arm reported a 4.3%
revenue growth, to MYR242.7mn, although its profit before tax was down by 22.9%, to
MYR45.6mn, largely due to the expense on the capacity expansion in Bangi.
Company Contacts Chemical Company of Malaysia, 13th floor, Menara PNB, 201-A Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia
Tel: +60 (3) 2612 3888 www.ccm.com.my
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Kotra Pharma
Strengths One of the leading local drug producers, annually investing 5% of revenue in R&D. Strong OTC portfolio. Ability to expand its manufacturing capacity. Comprehensive and expanding marketing network.
Weaknesses Competition from other local manufacturers. Pressure on the government to reverse policies biased towards the local industry. Increasing demand for compliance with international IP standards. Product portfolio mainly focused on OTCs.
Opportunities Government programme for developing the pharmaceutical and biotechnology sectors. Expected increase in local and regional drug consumption. Expansion of medical provision and infrastructure.
Threats Widespread counterfeit industry. Increased competitiveness of local players driven by ASEAN harmonisation and other
regulatory developments. Rising prominence of Chinese drug makers, which can compete on price. Lawsuit filed against the company in May 2010.
Company Overview Kotra is a wholly owned subsidiary of Kotra Industries Berhad. The company is mainly engaged in
the development, manufacture and sales of pharmaceutical and healthcare products. In 2007,
Kotra was publicly listed on the main market of Bursa Malaysia.
The company had modest beginnings, initially being a family-run enterprise specialising in
traditional Chinese medicine, before evolving into the distribution of pharmaceutical products. In
2002, when Malaysia was admitted as a PIC/S member country, Kotra was selected to be audited
for the quality inspection of its facilities. One year later, the company was awarded the
internationally recognised ISO 9001 accreditation for the Quality Manufacture, Design and
Development of pharmaceutical products.
Strategy Currently, just over a third of Kotra’s business comes from overseas sales to countries such as
Indonesia, Singapore, Brunei, Vietnam, Cambodia, Myanmar, Hong Kong, Mauritius and Sri
Lanka. Mid-way through the firm’s five-year plan, Kotra’s exports should exceed domestic sales.
Kotra is currently constructing a MYR120mn (US$35.3mn) plant in Melaka, which is a
manufacturing centre for products ranging from food and consumer products, through to high-tech
weaponry and automotive components, to electronic and computer parts. Phase 1 of the
35,000m2 production facility was finished in 2009, and total completion is expected in 2012. At full
capacity, the new plant will have 10 times the current output of Kotra’s manufacturing lines.
Kotra has 200 products currently registered with the National Pharmaceutical Controls Board, with
OTCs accounting for the bulk of the portfolio and branded generic products increasing in
importance. In FY09, the company’s prescription medicines range grew by 19% in relation to the
previous financial year, on the back of new product launches, such as antifungal Axcel Ecozalon
cream, and psoriasis and dermatitis cream and ointment Axcel Clobetasol.
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Kotra’s Appeton health supplement range is the firm’s flagship franchise, accounting for 61% of
sales over the past five years. In FY09, Appeton’s share of the market for children’s vitamin C
increased from 48% to 55%, as reported by ACNielsen. Kotra is also aiming to strengthen its
penetration of the adult multivitamin market, with efforts that include the recent introduction of
Appeton Wellness 60+.
Kotra Pharma’s total annual production at its main factory includes sterile and non-sterile items. In
the sterile range, the company manufactures 2mn eye drops and 2mn ampoules, 1.5mn of each
powder vials and dry syrups, and 3mn liquid vials. In the non-sterile range, it produces around
528mn tablets, 139mn capsules, 38mn liquid bottles and 15mn tubes of cream.
Developments Frost & Sullivan nominated Kotra Pharma ‘Malaysian Pharmaceutical Company of the Year’ in
2011 because of its degree of business innovation, growth in revenue and growing international
market penetration.
In May 2010, it was reported that Takaso Rubber Products had taken legal action against Kotra
Pharma for allegedly failing to pay for goods. The company said that it intends to file a
counterclaim.
In January 2009, Danish Leo Pharma won a court case against Malaysia generic manufacturer
Kotra Pharma. The Malacca High Court ruled that Kotra infringed Leo’s trademarks Fucidin
(fucidic acid) and Fucicort (fucidic acid) by adopting trademarks Axcel Fusidic and Axcel Fusi-
Corte back in 2000. The products are used for the treatment of skin infections.
In July 2007, Kotra Pharma unveiled a five-year plan that focuses on exports, initially to
neighbouring ASEAN countries (Thailand and the Philippines in particular), but ultimately to the
lucrative markets of Western Europe and the US. To achieve this goal, the company intends to
expand production capabilities, increase R&D investment and enlarge its product portfolio.
Financial
Performance
In FY11 (ending June), Kotra posted MYR112.8mn in revenue, with domestic sales accounting for
65.8% of this figure. The company, however, posted a loss before tax of MYR2.1mn, due to lower
margins partly caused by the depreciating US dollar. Group R&D expenditure topped MYR681mn,
up from MYR425mn in the previous year.
In FY10, the company posted MYR102.4mn in revenue, up by 13.7% on the previous year. Profit
before tax was up 38.7%, to reach MYR12.5mn, mainly due to increased sales revenues, better
advertising and changes in product mix. Domestic sales, which represented 61% of total
revenues, rose by 6.2% y-o-y, to MYR62.5mn. Exports by 27.9%, with new export destinations
reached during the year including Ethiopia, Sudan, China, Laos, Mongolia, Yemen and Kenya.
In FY09, group revenues were MYR90mn, up by 3.8% y-o-y, with pre-tax profit reaching MYR9mn
− an increase of 17% y-o-y − on the back of stronger domestic sales and exchange gains due to
rising US exports. Exports, however, fell from MYR32.3mn in 2008 to MYR31.1mn in 2009.
Demonstrating its commitment to R&D, the company increased its research expenditure from
MYR1mn (US$293,900) to MYR6.4mn (US$1.9mn) for the fiscal year ended June 30 2008.
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Company Contacts Kotra Pharma, 1 Jalan TTC 12, Cheng Industrial Estate, 75250 Melaka, Malaysia Tel: +60 (6) 336 2222 www.kotrapharma.com
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Multinational Companies
GlaxoSmithKline
Strengths One of the few multinational drugmakers with a direct manufacturing presence in Malaysia, enjoying the benefits available to local producers.
Strong product portfolio covering a wide range of therapeutic areas and the highest market share amongst multinationals.
Diverse local manufacturing portfolio in Malaysia. Involvement in the ED market.
Weaknesses Malaysia’s weak domestic patent law and benefits granted to local generic-based pharmaceutical companies.
Sizeable drug copying and counterfeiting sector. Lack of patent protection for GSK’s anti-AIDS drugs. Lack of IPR protection and enforcement.
Opportunities Expected increase in local and regional drug consumption, driven by demographic and economic changes, as well as by improvements in regulatory standards.
Increase in consumption of patented medicines supported by ASEAN harmonisation effort and pharmaceutical sector modernisation.
Government’s focus on developing the country’s biotechnology sector. The company sees potential for strong growth in Asia. Malaysia may join multilateral trans-Pacific trade agreement with the US.
Threats Resistance to aligning domestic patent law fully with internationally acceptable standards. Government failure to revise its discriminatory pricing policy. Competition from other multinationals wishing to expand its local base. Company’s Avandia drug has been attacked for apparent heart risk links.
Company Overview GSK Malaysia was incorporated in 1958 under the name Glaxo Malaysia Sdn Bhd. The
incorporations of Beecham Products (Far East) Sdn Bhd and Sterling Drug (Malaysia) Sdn Bhd
followed in 1959 and 1962, respectively.
Due to the merger between SmithKline Beckman Corp (USA) and Beecham Group PLC (UK) in
1989, the name changed to SmithKline Beecham Consumer Brands Sdn Bhd. In 1992, the
company moved to new premises in Bangsar Utama and has since moved to Petaling Jaya
Selangor. Glaxo and Wellcome merged to form Glaxo Wellcome in 1995. In December 2000,
Glaxo Wellcome and SmithKline Beecham merged to form GlaxoSmithKline.
Strategy Currently, the company has around 600 employees. Its Malaysian manufacturing operations
export to Singapore, Hong Kong, Thailand, China, the Philippines and Indonesia. GSK
Consumer Healthcare is a fully owned subsidiary in Malaysia.
Malaysia is home to one of GSK’s consumer healthcare manufacturing sites. The facility
produces OTCs for the domestic market, Singapore and Taiwan. Production costs exceed
MYR40mn (US$12mn) a year. The site’s annual output includes 800mn tablets, 400 tonnes of
powder and 150,000kg of cream. Demonstrating its importance, GSK’s consumer healthcare
manufacturing units from Taiwan, Thailand and Venezuela were transferred to Malaysia.
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GSK’s manufacturing portfolio in Malaysia is diverse. In addition to consumer healthcare
products, the company produces a variety of ethical pharmaceuticals and vaccines. In addition,
GSK also distributes a range of OTC medicines, including Eno, Eye-Mo, Oxy, Panadol, Scotts
and Zentel, along with its oral healthcare products and a range of nutritional health drinks. The
company has a distribution agreement with Diethelm Holdings (Malaysia), one of the country’s
largest distribution concerns. GSK’s main non-prescription brands include Horlicks, Ribena,
Panadol, Scotts Emulsion, Menara Lien Hoe Eye-Mo, Eno, Oxy and Aquafresh.
The company’s local subsidiary sells a range of other prescription drugs, such as antibiotics,
anti-asthmatics, anti-diabetics, anti-virals, anti-migraine treatments as well as vaccines for
hepatitis A and B, varicella, meningitis, polio and diphtheria. GSK’s anti-AIDS drugs, zidovudine
and the combination therapy lamivudine, continue to suffer from a lack of patent protection.
Developments In January 2011, GSK launched a new and selective angiogenesis inhibitor, pazopanib, in
Malaysia for the treatment of tumour growth. The drug will add to the existing targeted therapies
in the country, which include a new oral treatment option to treat patients with advanced renal
cell carcinoma (RCC), a leading form of cancer.
In March 2010, the Drug Control Authority (DCA) asked GSK to amend prescription information
for its diabetes drug Avandia (rosiglitazone). The US Senate had previously suggested that GSK
had known of Avandia’s heart risk links for some years before it had become widely known,
which the company denies. The DCA’s request was officially made on the back of 33 adverse
effect reports received by the Ministry of Health.
In October 2009, GSK announced that it was to spend MYR60mn (US$18mn) to upgrade its
global IT facility in Petaling Jaya, Selangor. Funds were used to raise the headcount from 130 to
250 over six months. Malaysia was chosen as the site for the global IT facility because of its
computer-literate, English-speaking workforce. The plant in Petaling Jaya receives tax breaks
due to its MSC (formerly known as the Multimedia Super Corridor) status.
In mid-2009, the price of some of GSK’s drugs in select Asian countries was cut. Its
breakthrough cervical cancer vaccine, Cervarix, is now cheaper in Thailand and Malaysia.
In February 2009, GSK’s avian influenza vaccine Prepandrix was approved in Malaysia, which
became the first country outside Europe to do so. The company was working closely with local
authorities in order to prepare for a possible pandemic.
Financial Performance The company’s own figures put its annual sales from its Malaysian operation in the region of
US$100mn, supported by the growth of prescription drug sales in the country.
Despite the ‘challenging economic scenario’, combined sales of consumer health products and
prescription drugs by GSK in Malaysia were MYR600mn (US$178mn) in 2008. Revenue
generated by prescription and consumer health products grew by 6% and 10%, respectively.
Company Contacts GlaxoSmithKine Pharmaceutical Sdn Bhd, Level 6, Quill 9, 112, Jalan Semangat, 46300 Petaling Jaya, Selangor, Malaysia
Tel: +60 (3) 7495 2600 www.gsk.com.my
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Pfizer
Strengths Largest pharmaceutical company in the world. One of leading providers of ED medicines. Broad portfolio of products including antibiotics, vitamins and OTC pharmaceuticals,
consumer and healthcare products.
Weaknesses Weak domestic patent law and benefits granted to local generic-based companies. No direct manufacturing presence. Lack of IPR protection and enforcement.
Opportunities Drug consumption expected to increase, boosted by demographic and economic factors, as well as by improvements in regulatory standards.
The ASEAN harmonisation effort and pharmaceutical sector modernisation increasing the demand for patented products in the country.
The Malaysian government’s focus on developing the country’s biotechnology sector likely to result in improved investment opportunities, a favourable business environment and a cost-effective R&D proposition.
Threats Government resistance to aligning domestic patent law fully with internationally acceptable standards.
Significant presence of the counterfeit drug industry. Key ED product Viagra (sildenafil citrate) particularly susceptible to competition, of both
genuine (from Eli Lilly and Bayer/GSK) and fake nature. Government failure to revise its discriminatory pricing policy Strong competition from other multinationals.
Company Overview In Asia, Pfizer was incorporated as a private limited company in Singapore in 1964. The company
began its operations modestly, selling only a few products. The Malaysian operation was set up
as a subsidiary of the Singapore-registered company and became a fully registered company in
1978. Today, the company has a strong presence in Malaysia, with around 500 staff, most of who
are engaged in sales operations across 9 offices. In 2009, Pfizer acquired compatriot Wyeth,
which also operates in Malaysia through imports via a local office.
Strategy Pfizer is investing heavily in the Malaysian market, including the expansion of existing
manufacturing assets and the establishment of a new R&D centre. Pfizer Malaysia markets a
wide range of pharmaceuticals and therapeutic products, ranging from vitamin supplements and
nutritionals, to antibiotics and cardiovascular therapies. The company’s portfolio of products
includes cardiovascular, neuroscience, infectious diseases, arthritis/pain, urology, ophthalmology,
oncology and respiratory disease.
Pfizer will continue to be challenged by other multinationals on the one hand, and by local
producers on the other, with Indian Ranbaxy also entering the fray with the 2006 launch of
generic Lipitor (atorvastatin) under the brand name Storvas.
Developments In October 2010, it was announced that Indian biotechnology company Biocon was set to invest
US$161mn in the establishment of a manufacturing and research facility in Malaysia. The new
facility, to be constructed as part of a strategic investment agreement signed between Biocon and
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Malaysia’s Biotechnology Corporation (BiotechCorp), marks the largest FDI in Malaysian biotech
sector. Biocon’s chairperson and managing director Kiran Mazumdar-Shaw said that the new
facility is scheduled to be operational by 2014 and will manufacture insulin for diabetes treatment,
as required under the company’s US$350mn global marketing deal with Pfizer. The new facility
will allow the company to develop antibodies and other biologics during the next phase.
In September 2007, Pfizer Malaysia reported that there were illegal imitations of Aricept
(donepezil), Celebrex, Diflucan, Feldene (piroxicam), Lipitor, Norvasc, Ponstan (mefenamic acid),
Zoloft and Viagra circulating in Asia. Around the same time, Sutent (sunitinib) was launched in
Malaysia for kidney cancer and gastrointestinal stromal tumour.
Company Contacts Pfizer Malaysia Sdn Bhd, 3rd & 4th Floors, Bangunan Palm Grove, No. 14, Jalan Glenmarie
(Persiaran Kerjaya), Section U1, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia Tel: +60 (3) 5568 6688 www.pfizer.com.my
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Novartis
Strengths Diverse manufacturing presence, including a broad portfolio of antibiotics, vitamins and OTC pharmaceuticals, consumer and healthcare products.
Solid financial capability, business portfolio and industry experience. Presence in the generic drugs sector.
Weaknesses Weak domestic patent law and benefits granted to local generic drugmakers. Low purchasing power of much of the population, exacerbated by high out-of-pocket
contribution to pharmaceutical expenditure. Biased drug-pricing policy adopted by the Malaysian government.
Opportunities Increasing health awareness in the Asian region, which will boost overall drug consumption. Potential to expand in the fast-growing generic drugs market. ASEAN harmonisation effort and pharmaceutical sector modernisation boosting demand for
patented products. Improving regulatory standards to stimulate involvement in the market. Government’s focus on developing the country’s biotechnology sector.
Threats Government resistance to aligning domestic patent law fully with international standards. Significant counterfeit drug industry. Government failure to revise its discriminatory pricing policy likely to limit company
expansion, both in terms of activity and investment.
Company Overview Novartis was established in Malaysia following the merger of Sandoz and Ciba-Geigy in 1997.
The company comprises Pharmaceuticals, Consumer Health, Ciba Vision and a generic drugs
sector, with more than 100 staff employed around the country.
Strategy Novartis is among the 10 leading pharmaceutical companies in Malaysia. The company’s
groundbreaking approach to the industry has seen it expand into generic products, in contrast
with global peers such as Pfizer and GSK, which remain focused on high-profit, patented
blockbuster pharmaceutical products. The progressive ageing of the population is increasing the
need for medicines, as well as the need to restrain healthcare costs, and as such, generic
medicines are likely to continue to penetrate the market.
Novartis has expressed interest in locating research centres and conducting clinical trials in
Malaysia, thereby boosting the country’s ambitions to become a biotech rival to Singapore or
Taiwan. Novartis may also invest in Malaysia’s biotechnology industry, and is evaluating
Malaysia’s rich biodiversity with the aim of producing novel treatments.
The company has a broad portfolio of products, including medicines in transplantation and
immunology, cardiovascular diseases, diseases of the CNS, Parkinson’s disease, skin allergies,
OTC and ophthalmic medications. Novartis is present in both branded and generic drugs sectors
in Malaysia and therefore faces competition from both multinational and local producers.
Developments In Q212 Novartis signed a memorandum of understanding with the Ministry of Health to further
enhance the country’s progress in the National Key Economic Area programme for healthcare.
Novartis established a US$700mn fund to support the setting up of new Malaysian companies.
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In November 2009, Novartis signed an agreement with BiotechCorp and Sarawak Biodiversity
Centre in order to discover bioactive compounds. Novartis’s director Alexander Jetzer-Chung said
that the agreement enables the company to leverage capitalise on the country’s biodiversity in the
development of new medical opportunities.
CIBA Vision, the eye care business of Novartis, invested MYR500mn (US$132.45mn) to build an
integrated contact-lens manufacturing plant in Malaysia. The plant, at Johor’s Tanjung Pelepas
Free Trade Zone, was operational by December 2007. The facility now produces one of the most
technologically advanced, high-oxygen transmissible products, O2OPTIX contact lenses. These
‘breathable’ contact lenses are made from a silicone – Lotrafilcon b – the latest material used in
hygrogel contact-lens technology.
Initial production capacity was expected to reach 300,000 contact lenses a day, with output rising
to 500,000 lenses a day by 2008. Investment in the project will be spread over eight years, with
the plant creating 2,000-3,000 jobs in the later stages of operation.
Company Contacts Novartis Corporation (Malaysia) Sdn Bhd, Level 15, The Crest, 3 Two Square, No.2, Jalan 19/1, 46300 Petaling Jaya / Selangor Darul Ehsan, Malaysia
Tel: +60 (3) 7948 1888 www.my.novartis.com
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Merck & Co
Strengths Strong portfolio of prescription pharmaceuticals. Strong regional presence. A leading multinational, with extensive network in South East Asia. Presence in the vaccines segment. Considerable experience in conducting local clinical trials.
Weaknesses Malaysia’s weak domestic patent law and benefits granted to local generic-based pharmaceutical companies.
Biased drug-pricing policy adopted by the Malaysian government. Lack of local manufacturing capacities. Significant contribution of out-of-pocket expenditure to overall drug spending. Lack of IPR protection and enforcement.
Opportunities Increasing health awareness in the Asian region, which will boost overall drug consumption. ASEAN harmonisation and drug sector modernisation boosting patented drug demand. Improving regulatory standards to stimulate involvement in the market. Government’s focus on developing the country’s biotechnology sector. Rising demand for treatments of chronic conditions. Expansion of private sector provision increasing the number of potential clients for Merck. Malaysia may join multilateral trans-Pacific trade agreement with the US.
Threats Government resistance to aligning domestic patent law fully with international standards. Significant threat from the counterfeit drug industry. Failure to revise discriminatory pricing policy likely to limit company expansion, both in terms
of activity and investment. Strong competition from other multinationals. Threat posed by generic companies targeting off-patent medicines.
Company Overview Merck & Co (now incorporating Schering-Plough, following their 2009 merger) operates in
Malaysia, as well as other countries in the region, through its subsidiary Merck Sharpe & Dohme
(MSD) Asia Pacific. The Malaysian sales and marketing section, established in 1997, presently
employs around 300 people. MSD Asia Pacific division is a considerable commercial force in the
region. The company is involved both in local manufacturing and marketing initiatives, with the
regional focus being on Japan, the leading Asian market.
Strategy MSD Malaysia markets and sells a variety of prescription pharmaceuticals in the country. Main
product areas include diabetes (which is reportedly the single key driver of the company’s
potential in the country), allergy and cardiovascular drugs. The merger with Schering-Plough has
allowed MSD to gain access to a considerable portfolio of women’s health products, which have
been heavily promoted.
The company deals with both public and private sectors. MSD’s key customers in the private
sector include private hospitals, pharmacies and general practitioners (GPs). Competition in some
areas, such as HPV vaccines, has forced MSD to reduce the price of its Gardasil vaccine.
Multinationals represent the main challenges to Merck’s Malaysian operations. Additionally, the
counterfeit industry and lax patent protection continue to disadvantage some of its patented
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products’ performance, especially given ongoing patent expirations.
Financial
Performance
The performance of its cardiovascular product Coozar (losartan) in Malaysia came under threat,
following Ranbaxy’s launch of a branded generic competitor in August 2009. According to primary
market research firm IMS Health, Malaysian sales of Cozaar topped US$6.29mn in the 12 months
ending June 2008. MSD’s losartan is reportedly still under patent in Malaysia, which is due to
expire in 2013.
According to officials from MSD Malaysia, the company experienced virtually no sales increase in
the course of 2010, as a result of negative market conditions. In comparison, joint value sales of
prescription drugs achieved by the top 10 companies in the country fell by 5% y-o-y, on average.
In an interview cited on Focus Pharma Reports, MSD Malaysia’s managing director Ewe Kheng
Huat stated that the company’s 2010 revenue fell in the region of US$103mn. In comparison, the
company’s annual sales in the last 1990s were less than US$5mn.
Company Contacts Merck Sharpe & Dohme Malaysia, 9th Floor, Lot 33, No 3, Jln Semangat, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Tel: +60 (3) 7918 1600 www.msd-malaysia.com
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Sanofi
Strengths Third largest drug manufacturer in the world. Among the leading foreign producers in Malaysia. Broad portfolio of products, including antibiotics, vaccines and OTC pharmaceuticals.
Weaknesses Malaysia’s weak domestic patent law and benefits granted to local generic-based pharmaceutical companies.
Biased drug-pricing policy adopted by the Malaysian government. Lacking IPR protection and enforcement.
Opportunities Drug consumption in the Asian region due to rise from increasing health awareness. Potential to expand its presence in the expanding generic drugs market. Improving regulatory standards to stimulate involvement in the market. The ASEAN harmonisation effort and pharmaceutical sector modernisation. The Malaysian government’s focus on developing the country’s biotechnology sector,
improving investment opportunities, providing a favourable business environment for the company, and a cost-effective R&D proposition.
Expansion of private medical provision facilities.
Threats Persistence of counterfeit drug activities. Government failure to revise its discriminatory pricing policy. Focus on cost-containment in public healthcare. Competition from other generic drugs player in the country and region.
Company Overview With a workforce of more than 250 people across eight offices, Sanofi-Aventis Malaysia ranks
among the top five pharmaceutical companies in the country, while also boasting a considerable
regional market presence.
Strategy Sanofi majors in a number of key therapeutic areas, including diabetes,
cardiovascular/thrombosis, CNS, oncology and internal medicine. Leading brands include Plavix
(clopidogrel), Aprovel (irbesartan), Epilim (sodium valproate), Lactacyd (lactoserum atomizate),
Eloxatin (oxaliplatin), Rhinathiol (carbocisteine), Phenergan (promethazine), Stilnox (zolpidem),
Ticlid (ticlopidine) and Tramal (tramadol).
Developments Malaysia was one of Sanofi Pasteur’s locations for Phase III trials of its dengue vaccine, which
showed proof of efficacy according to the firm in July 2012. In June 2012, Sanofi announced its
plans to expand its presence in Malaysia, through bilateral collaboration with the government in
the healthcare sector. The cooperation will focus on R&D, particularly in the vaccine sector.
In January 2011, Malaysian drugmaker Hovid tied a deal with Sanofi’s local subsidiary Winthrop,
aimed at the development and manufacture of generic drugs, namely metformin 850mg MR for
the diabetes treatment and tramadol 100mg SR, which is used as a painkiller. Hovid also reported
that the deal may be extended to another 30 products, which are valued at over MYR50mn.
In January 2012, Minister of Health Liow Tiong Lai stated that a dengue fever vaccine developed
in collaboration with Sanofi will be available in the country by 2014 or 2015. The second phase of
trials, which involved monitoring about 2,000 people from Penang and Putrajaya, was judged to
be a success. A larger population sample will be included during phase III before the vaccine
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becomes available on the market.
Company Contacts Sanofi (Malaysia) Sdn Bhd, 8th Floor PNB Damansara, No. 19, Lorong Dungun Damansara Heights,50490 Kuala Lumpur, Malaysia
Tel: +60 (3) 2089 3333 www.sanofi.com.
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Eli Lilly Malaysia
Strengths One of the leading global pharmaceutical companies. Strong product portfolio. Ability to expand through acquisition.
Weaknesses Competition from government-supported local producers. Government policies biased towards the local industry. Widespread counterfeit industry. Patent expirations negatively impacting on company revenues and product positioning.
Opportunities Government programme for developing the pharmaceutical and biotechnology sectors in the country.
Expected increase in regional drug consumption. Improving regulatory standards to stimulate involvement in the market.
Threats Continued encouragement of the generic drugs sector. Higher level of patient awareness of cost containment. Increased competitiveness of local players driven by ASEAN harmonisation and other
regulatory developments. Rising prominence of China and other regional suppliers of cheaper generic medicines.
Company Overview Eli Lilly is one of the top 20 global pharmaceutical players. In the South East Asia region, Eli’s key
markets include Singapore, Taiwan and the Philippines. In 2010, IMS ranked Eli Lilly as the
fastest growing pharmaceutical company in the markets of China and South Korea.
Strategy The company offers a wide-ranging product portfolio, mostly comprising branded drugs. Key
therapeutic areas covered include cardiology, erectile dysfunction, cancer and diabetes. Patent
expirations and counterfeiting will continue to negatively impact on company performance and the
Lilly brand positioning in Malaysia.
Developments In June 2011, Japanese company Takeda Pharmaceutical and Eli Lilly entered an agreement to
sell Evista (raloxifene HCl tablets) in seven Asian nations – South Korea, Hong Kong, Macau,
Malaysia, the Philippines, Singapore and Thailand. Under the terms of the agreement, Takeda will
assume the rights related to marketing, distribution and trademark, marketing authorisation and
regulatory matters, while Eli, eligible for cash payment from Takeda, will retain the ownership of
the drug patent. Evista is approved and marketed to treat and prevent osteoporosis in
postmenopausal women in all the regions, as well as to reduce the risk of breast cancer in the
Philippines, Singapore and Thailand.
Company Contacts Eli Lilly (Malaysia) Sdn Bhd, Unit 18.1, Level 18, CP Tower, No. 11, Jalan 16/11, Pusat Dagang Seksyen 16, 46350 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Tel: +60 (3) 7957 7837 www.lilly.com
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Ranbaxy Malaysia
Strengths Strong generic portfolio and local production facilities. Nascent global generic player. Ability to expand through acquisition.
Weaknesses Relatively recent entry to the Malaysian market. Competition from government-supported local producers. Government policies biased towards the local industry.
Opportunities Government programme for developing the pharmaceutical and biotechnology sectors. Continued encouragement of the generic drugs sector. Higher level of patient awareness of cost containment.
Threats Widespread counterfeit industry. Increased competitiveness of local players driven by ASEAN harmonisation. Rising prominence of China and other regional suppliers of cheaper generic medicines.
Company Overview Ranbaxy Malaysia is a joint-venture established in 1984 by India’s Ranbaxy Laboratories Limited
(RLL), and has shareholders from India as well as Malaysia. In 1987, the company established a
manufacturing unit in Sungai Petani, Kedah, to supply markets in Malaysia and Singapore.
Malaysia, South Africa, Nigeria, Egypt and Morocco are among its key markets.
Strategy The company manufactures pharmaceutical products for oral use comprising liquid formulations,
tablets, capsules and granules for suspension. Ranbaxy’s portfolio contains around 80 brands,
including those managed through local partnerships. Ranbaxy Malaysia’s top 10 brands account
for around two-fifths of total sales. Ranbaxy has a presence in the therapeutic segments of
cardiovascular, antibiotic, pain management, gastrointestinal and food supplements.
Ranbaxy’s second manufacturing facility in Kuala Lumpur (which is compliant with international
standards) manufactures antibiotics, anti-bacterials, NSAIDS, vitamins, cough and cold remedies,
antacids, anti-spasmodics, anti-fungals, anti-ulcerants and cardiovasculars. The company is the
only foreign manufacturer of anti-retrovirals (ARVs) in Malaysia.
Developments In August 2009, reinforcing its strong position in Malaysia’s cardiovascular drug sector, Ranbaxy
launched Covance (losartan), which is manufactured locally.
In May 2012, Ranbaxy announced that it will set up manufacturing facility in Malaysia, which is
likely to be completed by 2014 and have annual capacity of 2.5bn doses, as a part of its plans to
export to neighbouring countries such as Singapore and Thailand, with another manufacturing
plant to be set up in Nigeria. This move followed the firm’s agreement with its parent
company Daiichi Sankyo to market Cravit (levofloxacin) in Malaysia since January 2012.
Company Contacts Ranbaxy (Malaysia) Sdn. Bhd.,Box 8, Wisma Selangor Dredging, 5th Floor South Block 142-A Jalan Ampang, 50450 Kuala Lumpur, Malaysia
Tel: +60 (3) 2161 4181 www.ranbaxy.com
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Demographic Outlook
Demographic analysis is a key pillar of BMI’s macroeconomic and industry forecasting model. Not only
is the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Malaysia’s population pyramid for 2011, the change in the structure of
the population between 2011 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key data points from these charts, in addition to important metrics such as
the dependency ratio and the urban/rural split.
Source: World Bank, UN, BMI
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Table: Population By Age Group, 1990-2020 ('000)
1990 1995 2000 2005 2010 2012f 2015f 2020f
Total 18,209 20,721 23,415 26,100 28,401 29,322 30,714 32,986
0-4 years 2,445 2,652 2,721 2,953 2,828 2,802 2,897 2,953
5-9 years 2,284 2,460 2,612 2,840 2,948 2,926 2,824 2,894
10-14 years 2,026 2,285 2,469 2,614 2,839 2,908 2,947 2,824
15-19 years 1,830 2,039 2,315 2,483 2,616 2,705 2,840 2,950
20-24 years 1,670 1,856 2,092 2,341 2,487 2,536 2,620 2,845
25-29 years 1,649 1,708 1,934 2,115 2,343 2,413 2,489 2,623
30-34 years 1,411 1,689 1,795 1,942 2,112 2,206 2,341 2,487
35-39 years 1,190 1,444 1,759 1,791 1,935 2,000 2,106 2,334
40-44 years 926 1,208 1,486 1,746 1,779 1,825 1,924 2,094
45-49 years 679 930 1,221 1,467 1,727 1,755 1,763 1,908
50-54 years 617 670 921 1,195 1,440 1,556 1,700 1,738
55-59 years 455 593 646 887 1,155 1,251 1,399 1,656
60-64 years 370 420 549 605 836 939 1,097 1,334
65-69 years 258 322 366 489 545 617 764 1,010
70-74 years 190 210 261 306 417 432 473 671
75+ years 206 235 267 327 392 450 529 663
f = BMI forecast. Source: World Bank, UN, BMI
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Table: Population By Age Group, 1990-2020 (% of total)
1990 1995 2000 2005 2010 2012f 2015f 2020f
0-4 years 13.43 12.80 11.62 11.31 9.96 9.55 9.43 8.95
5-9 years 12.54 11.87 11.16 10.88 10.38 9.98 9.19 8.77
10-14 years 11.13 11.03 10.55 10.02 10.00 9.92 9.59 8.56
15-19 years 10.05 9.84 9.89 9.51 9.21 9.23 9.25 8.94
20-24 years 9.17 8.96 8.93 8.97 8.76 8.65 8.53 8.63
25-29 years 9.05 8.24 8.26 8.10 8.25 8.23 8.11 7.95
30-34 years 7.75 8.15 7.67 7.44 7.44 7.52 7.62 7.54
35-39 years 6.53 6.97 7.51 6.86 6.81 6.82 6.86 7.08
40-44 years 5.09 5.83 6.34 6.69 6.26 6.22 6.26 6.35
45-49 years 3.73 4.49 5.21 5.62 6.08 5.99 5.74 5.78
50-54 years 3.39 3.24 3.94 4.58 5.07 5.31 5.54 5.27
55-59 years 2.50 2.86 2.76 3.40 4.07 4.27 4.55 5.02
60-64 years 2.03 2.03 2.35 2.32 2.94 3.20 3.57 4.04
65-69 years 1.42 1.56 1.56 1.87 1.92 2.11 2.49 3.06
70-74 years 1.04 1.01 1.12 1.17 1.47 1.47 1.54 2.03
75+ years 1.13 1.13 1.14 1.25 1.38 1.54 1.72 2.01
f = BMI forecast. Source: World Bank, UN, BMI
Table: Key Population Ratios, 1990-2020
1990 1995 2000 2005 2010 2012f 2015f 2020f
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Dependent ratio, % of total working age 1 68.6 65.0 59.1 57.5 54.1 52.8 51.5 50.1
Dependent population, total, '000 2 7,411 8,164 8,697 9,529 9,971 10,136 10,435 11,016
Active population, % of total 3 59.3 60.6 62.9 63.5 64.9 65.4 66.0 66.6
Active population, total, '000 4 10,798 12,557 14,718 16,572 18,431 19,186 20,280 21,970
Youth population, % of total working age 5 62.6 58.9 53.0 50.7 46.7 45.0 42.7 39.5
Youth population, total, '000 6 6,755 7,396 7,803 8,406 8,616 8,636 8,668 8,671
Pensionable population, % of total working age 7 6.1 6.1 6.1 6.8 7.3 7.8 8.7 10.7
Pensionable population, '000 8 655 767 894 1,122 1,355 1,500 1,767 2,344
f = BMI forecast; 1 0>15 plus 65+, as % of total working age population; 2 0>15 plus 65+; 3 15-64, as % of total population; 4 15-64; 5 0>15, % of total working age population; 6 0>15; 7 65+, % of total working age population;8 65+. Source: World Bank, UN, BMI
Table: Rural/Urban Population Split, 1990-2020
1990 1995 2000 2005 2010 2012f 2015f 2020f
Urban population, % of total 49.8 55.7 62.0 67.6 72.6 74.3 76.9 80.7
Rural population, % of total 50.2 44.3 38.0 32.4 27.4 25.7 23.1 19.3
Urban population, '000 9,015.5 11,470.8 14,429.6 17,328.2 20,613.5 21,793.1 23,631.4 26,612.7
Rural population, '000 9,087.9 9,123.1 8,844.0 8,305.2 7,787.6 7,528.7 7,082.7 6,372.8
f = BMI forecast. Source: World Bank, UN, BMI
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Glossary
Pharmaceuticals, medicines, drugs: synonym terms used interchangeably.
Pharmaceutical market/sales: the sum of revenues generated by generic, patented, and over-the-
counter (OTC) drugs through hospitals, retail pharmacies and other channels. Unless otherwise stated,
market value is reported at final consumer price including mark-ups, taxes, etc.
Prescription drugs: patented and generic drugs regulated by legislation that requires a physician’s
prescription before they can be sold to a patient.
Patented drug: an innovative medicine granted intellectual property protection by the patent and
trademark office. The patent may encompass a wide range of claims – such as active ingredient,
formulation, mode of action, etc. – giving the patent holder the sole right to sell the drug while the
patent is in effect.
Generic drug: a bioequivalent medicine that contains the same active ingredient as an originator drug.
The originator drug is an innovative medicine that no longer has intellectual property protection due to
patent expiry.
OTC drug: a medicine that does not require a prescription to be sold to patients. Also known as non-
prescription medicines.
Counterfeit drugs: unregistered and illegal medicines which have not been subject to regulatory
assessments to ensure quality, safety, efficacy and manufacturing standards.
Similares: non-bioequivalent alternatives to either an originator patented drug or a generic drug. While
similares and the originator/generic drug have a common indication, similares do not always contain
the same active ingredient as an originator and invariably have a different pharmacokinetic and
pharmacodynamic profile. Prevalent in select South American countries, similares are legal. BMI does
not include their sales in total pharmaceutical market values.
Health expenditure: the sum of the funds mobilised by government and private systems for the
operation of a healthcare system, according to the World Health Organization (WHO). It includes the
purchase of healthcare services and goods by public entities such as ministries and social security
institutions; or by private entities such as non-profit institutions, commercial insurances and
households acting as complementary funders to the previously cited institutions or unilaterally
disbursing health commodities. The revenue base of these entities varies by country and comprises
multiple sources. The inclusion of this in BMI forecasts necessitates taking into account the essential
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attributes of country-specific health accounting such as comprehensiveness, consistency,
standardisation and timeliness.
Government health expenditure: the sum of outlays for health maintenance, restoration or
enhancement paid by government entities such as a Ministry of Health, other ministries, parastatal
organisations and social security agencies, including transfer payments to households to offset medical
care costs and extra-budgetary funds to finance healthcare provision.
Private health expenditure: the sum of outlays for health by private entities such as commercial or
mutual health insurance, households, non-profit institutions serving households, resident corporations
and quasi-corporations not controlled by governments – according to the WHO.
Medical devices: products used for diagnosis or therapy in patients. Whereas pharmaceuticals achieve
their principal action by pharmacological, metabolic or immunological means, medical devices act by
physical or mechanical means. Medical devices include a wide range of products, including syringes,
thermometers, blood-sugar tests, prosthetic limbs, ultrasound scans and X-ray machines, among others.
Burden of Disease Database (BoDD): BMI’s disease database incorporates WHO, World Bank, IMF
and BMI’s own data to create a proprietary dataset. BoDD data are quantified as the sum of disability-
adjusted life years (DALYs) lost to a disease in a particular country.
Disability-Adjusted Life Years: the sum of the years of life lost (YLL) due to premature mortality in
a population and the years lost due to disability (YLD) for incident cases of the health condition. The
DALY is a health gap measure that extends the concept of potential years of life lost due to premature
death (PYLL) to include equivalent years of ‘healthy’ life lost in states of less than full health (broadly
termed ‘disability’). One DALY represents the loss of one year of equivalent full health.
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BMI Methodology
How We Generate Our Pharmaceutical Industry Forecasts
Pharmaceutical sub-sector forecasts are generated using a top-down approach from BMI’s Drug
Expenditure Forecast Model. The semi-automated tool incorporates historic trends, macroeconomic
variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market.
The following elements are fed into the model:
BMI’s historic pharmaceutical market data, which has been collected from a range of sources
including:
– regulatory agencies;
– pharmaceutical trade associations;
– company press releases and annual reports;
– subscription information providers;
– local news sources;
– information from market research firms that is in the public domain.
Data that has been validated by BMI’s pharmaceutical and healthcare analysts using a composite
approach, which scores data sources by reliability in order to ensure accuracy and consistency of
historic data.
Five key macroeconomic and demographic variables, which have been demonstrated, through
regression analysis, to have the greatest influence on the pharmaceutical market. These have been
forecast by BMI’s Country Risk analysts using an in-house econometric model.
The burden of disease in a country. This is forecast in DALYs using BMI’s BoDD, which is based on
the WHO’s burden of disease projections and incorporates World Bank and IMF data.
Subjective input and validation by BMI’s pharmaceutical and healthcare analysts to take into account
key events that have affected the pharmaceutical market in the recent past or that are expected to have
an impact on the country’s pharmaceutical market over the next five years. These may include
policy/reimbursement decisions, new product launches or increased competition from generic drugs.
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Pharmaceuticals Risk/Reward Ratings Methodology
BMI’s approach in assessing the risk/reward balance for Pharmaceutical & Healthcare Industry investors
globally is fourfold. First, we identify factors (in terms of current industry/country trends and forecast
industry/country growth) representing opportunities to would-be investors. Second, we identify country
and industry-specific traits which pose or could pose operational risks to would-be investors. Third, we
attempt, where possible, to identify objective indicators that may serve as proxies for issues/trends to
avoid subjectivity. Finally, we use BMI’s proprietary Country Risk Ratings (CRR), ensuring that only the
aspects most relevant to the Pharmaceutical & Healthcare Industry are incorporated. Overall, the system
offers an industry-leading, comparative insight into the opportunities and risks for companies across the
globe.
Ratings Overview
Ratings System
Conceptually, the ratings system divides into two distinct areas:
Rewards: Evaluation of the sector’s size and growth potential in each state, as well as broader
industry/state characteristics that may inhibit its development.
Risks: Evaluation of industry-specific dangers and those emanating from a state’s political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period.
Indicators The following indicators have been used. Overall, the ratings use three subjectively measured indicators
and 41 separate indicators/datasets.
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Table: Pharmaceutical Business Environment Indicators
Indicator Rationale
Rewards
Industry Rewards
Market expenditure, US$bn Denotes breadth of pharmaceutical market. Large markets score higher than smaller ones
Market expenditure per capita, US$ Denotes depth of pharmaceutical market. High value markets score better than low value ones
Sector value growth, % y-o-y Denotes sector dynamism. Scores based on annual average growth over five-year forecast period
Country Rewards
Urban-rural split Urbanisation is used as a proxy for development of medical facilities. Predominantly rural states score lower
Pensionable population, % of total Proportion of the population over 65 years of age. States with ageing populations tend to have higher per-capita expenditure
Population growth, 2003-2015 Fast-growing states suggest better long-term trend growth for all industries
Overall score for Country Structure is also affected by the coverage of the power transmission network across the state
Risks
Industry Risks
Intellectual property (IP) laws Markets with fair and enforced IP regulations score higher than those with endemic counterfeiting
Policy/reimbursements Markets with full and equitable access to modern medicines score higher than those with minimal state support
Approvals process High scores awarded to markets with a swift appraisal system. Those that are weighted in favour of local industry or are corrupt score lower
Country Risks
Economic structure Rating from CRR evaluates the structural balance of the economy, noting issues such as reliance on single sectors for exports/growth, and past economic volatility
Policy continuity Rating from CRR evaluates the risk of a sharp change in the broad direction of government policy
Bureaucracy Rating from CRR denotes ease of conducting business in the state
Legal framework Rating from CRR denotes the strength of legal institutions in each state. Security of investment can be a key risk in some emerging markets
Corruption Rating from CRR denotes the risk of additional illegal costs/possibility of opacity in tendering/business operations affecting companies’ ability to compete
Source: BMI
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Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. Consequently, the following weight has been adopted.
Table: Weighting Of Components
Component Weighting
Rewards 60%
– Industry Rewards – 75%
– Country Rewards – 25%
Risks 40%
– Industry Risks – 60%
– Country Risks – 40%
Source: BMI
Sources
Sources used include national industry associations, government ministries, global health organisations,
officially released pharmaceutical company results and international and national news agencies.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.