The Asia Pacific (APAC) region’s pharmaceutical and biotechnology industries will grow by an average of 12.9% a year to 2012, when they will be worth $260 billion and account for 28.5% of the S909 billion global market, says a new study.
Last year’s global recession left a deep impact on the healthcare industry in the US and Europe, and while APAC suffered a similar crisis it recovered significantly faster than its western counterparts, notes the report, from Frost & Sullivan.
As markets recover, there will be strong growth in Asia as mergers and acquisitions (M&A) and restructuring continue and major patents begin to expire, forecasts Simranjit Singh, director at Frost & Sullivan.
In 2009, total health care revenues for APAC stood at $247 billion, representing approximately 23.2% of the global market which is expected to grow at an average annual rate of 6.6% during 2009-2012. By 2012, APAC health care industries will be contributing 27.2% of this world total, increasing by an average of 12.2% a year, and by 2015, the region could be accounting for as much as 40% of global revenues, the report forecasts.
“As Asia moves from an export-led economy to one that is driven by consumption growth, companies will start actively investing in economically-viable Asian countries. Local governments are encouraging foreign investors, not only from US or Europe, but also from other parts of Asia Pacific, thus strengthening the economy, comments Mr Singh.
“The paradigm shift is also seen in increased government attention to primary and community-based healthcare, as well as the increased use of mobile technology in healthcare service delivery,” he adds.
Strong business drivers for APAC are the rise of chronic diseases due to the ageing population, government support for generics and biosimilars and enhanced diagnosis and management in oncology, cardiovascular diseases, pain management and other conditions. However, acting to restrain market growth are unresolved political and regulatory issues, plus quality concern over generics and counterfeit drugs.
“Following the demand and impending expiry of patented drugs globally, local governments have given their support for pharmaceutical companies to produce generics and biopharmaceuticals,” says Mr Singh. In particular, he says, Malaysia is “an ideal location” for the manufacture of generics due to its existing strong base of regional players such as CCM Pharma, Pharmaniaga, Kotrapharma and others, which have raised the standards for quality products.
Malaysia’s pharmaceutical and biotechnology industry will increase at a compound annual growth rate (CAGR) of 11% during 200-12 and have a market value of $1.19 million by the end of the period, Mr Singh forecasts. Factors driving growth are the increasing demand for drugs to treat “lifestyle diseases” such as cancer, cardiovascular diseases and diabetes, plus the lack of drug price controls in the private sector and strong government support for generics. However, factors restraining growth include the large number of counterfeit drugs and concern over the quality of generics plus the increasing use of traditional and herbal medicines.
Sectors representing the greatest potential for growth in Malaysia’s pharma/biotech market include:
– generics: in a market worth $416 million in 2010 with an expected CAGR of 8%, there are opportunities for domestic manufacturers of good-quality generics to expand or consolidate for greater economies of scale, says F&S;
– treatments for cardiovascular and metabolic diseases: these markets are worth $100 million and %95 million respectively this year, with over 16% of deaths in the country caused by heart and pulmonary circulation diseases. Diabetes also represents a major opportunity, with 1.8 million of the population having been diagnosed with the condition and 80% not yet tested; and
– oncology: this market in Malaysia is worth $30 million, and growth will be driven by cancer treatment following early diagnosis of cancers and targeted therapy in the three major cancers – lung, breast and colorectal.
Given the proper incentives and the right time, Malaysia could present a “very viable option” for investors setting up bases for pharma/biotech operations, concludes Mr Singh.
