This year marks "the steepest point of the so-called patent cliff" as many blockbuster drugs go off-patent, so global pharmaceutical firms are looking to Asia to counter falling revenue streams.

This is one of the key findings of a new report from the Economist Intelligence Unit (EIU), supported by the Singapore Economic Development Board. It notes that the trend of inward investments in Asia’s pharmaceutical sector will continue in the next few years thanks to the continent’s "unique position as a hub for the manufacture of generic drugs, a source of cheaper production costs and a fast-growing pharmaceuticals market".

The analysis notes that factors such as rising incomes, increased government expenditure on healthcare and the growing incidence of chronic developed-world diseases associated with changing lifestyles have all boosted demand in the region. The EIU expects Asia pharmaceutical sales to grow from $214.2 billion in 2010 to $386 billion by 2016, over 13%.

It also notes that "the number of players, homegrown and global, is rising" and the total number of listed companies in the industry rose by 34% between 2004 and 2009, from 276 firms to 370. Combined revenues nearly tripled from $27.4 billion to $73 billion during the same period.

The EIU report goes on to state that "while Asia was once viewed as an attractive destination only for simple outsourced production, the region is increasingly seen as a key R&D hub". It adds that Asia’s pharmaceuticals market "remains highly competitive and extremely fragmented, with thousands of smaller manufacturers", saying there will continue to be opportunities for the latter companies that can provide specific services, such as contract manufacturing or research work for larger players.

"Foreign multinationals are moving headcount from developed markets to Asia,” says Sudhir Vadaketh, editor of the report. “They are also making strategic acquisitions of generics manufacturers in order to diversify their business.”