The pharmaceutical industry in Asia is looking to position itself at the centre of the global market and most drugmakers in the region expect this shift to happen pretty quickly, says a new report.
The study, from PricewaterhouseCoopers and entitled Gearing up for a Global Gravity Shift, notes that 58% of companies, both domestic and multinational (MNC), “believe the centre of gravity of the global pharmaceutical market will be in Asia rather than North America and Europe in the near future.”
The report notes that 65% of domestic drugmakers believe increased global market share is important and a third of MNCs have plans to further expand within the region through acquisitions or developing their own 'greenfield' sites within the next 12 months. Matthew Wyborn, Asia Pacific Advisory Leader at PwC, said that “not surprisingly, China and India head the list of target countries for expansion, with Singapore and South Korea next in the sights of MNCs".
However, the study states that capital constraints can be a significant brake on growth for domestic pharmaceutical companies and there are few specialised venture capital funds to support biopharmaceutical start-ups in Asia. The firms are hungry for investment, particularly in R&D, and just over a third (36%) would consider selling all or part of their operations to foreign investors to raise funds and many are also looking towards intial public offerings as a fundraising route; 36% have plans to raise capital on foreign markets.
Outsourcing not seen in a dynamic way
PwC also notes that “outsourcing to lower-cost but highly-effective companies in Asia has become a common response” to generic competition and pricing pressures, while 56% of companies said that most of the industry still does not see outsourcing in a sufficiently dynamic way “and is missing opportunities for shared development, learning and improvement.” So far, much of the focus has been on outsourcing drug manufacturing but increasingly, companies are turning their attention to R&D and are conducting clinical trials in the region.
Beatrijs Van Liedekerke, associate director at PwC Advisory Services, concluded that "a new business model of the MNC is to focus on sales and marketing with other activities outsourced. Not surprisingly, as the industry moves to this future model, strategic partnerships or long-term partnerships are the preferred route,” favoured by 82% of the multinationals surveyed who presently outsource.
The report is based on interviews with 185 senior pharmaceutical executives in China, India, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.