A combination of demographics, economics and government policies is presenting exciting growth opportunities for generic pharmaceutical manufacturers in Asia, says a new report
Asia's rapidly aging population, limited purchasing power of the region's inhabitants along with governmental curbs on healthcare spending is fuelling demand for less expensive generic drugs.
Imminent patent expirations are expected to further underline the potential of the region.
By 2005, almost a quarter of Asia's population will be above 55 years.
This expanding population segment is anticipated to boost demand for pharmaceutical products.
Here, the relative affordability of generic pharmaceuticals in comparison to their branded counterparts is forecast to bolster their uptake.
Attempts to control government healthcare spending are also creating opportunities for generic products.
For instance, in developed countries like Taiwan, the system is almost insolvent due to liberal policy guidelines for hospitals' pharmaceutical expenditures.
Consequently, governmental cost cutting of hospital reimbursements through strict budgetary controls are likely to push public hospitals toward prescribing less expensive generic drugs.
In countries with inadequate governmental coverage for health insurance, a majority of the population has to shoulder the bulk of their medical costs.
This situation coupled with the low purchasing power of a majority of the population in developing countries such as the Philippines, Vietnam, Indonesia, Thailand, Cambodia, and Myanmar has created conditions ripe for the enhanced uptake of low-priced generic pharmaceuticals. Against this backdrop, the forthcoming patent expirations of 47 blockbuster drugs are anticipated to impact positively on the prospects of generic products.
"These patent expirations will give generic manufacturers a chance to replenish product pipelines with new drugs to expand markets", says Sabrina Cheah, healthcare analyst at Frost and Sullivan.
According to the international marketing consulting company, the total Asian generic pharmaceutical market (excluding China and Japan) was estimated at $3.50 billion in 2001 and is forecast to be worth $6.58 billion in 2007.
Of this, the quartet of Malaysia, the Philippines, Singapore, and Taiwan contributed about $506.9 million in 2001.
With robust double-digit growth projected, the generic pharmaceutical market in these four countries is anticipated to surge to over $1 billion in 2007.
Barring Taiwan, where the market is approaching maturity, markets in Malaysia, the Philippines, and Singapore are in growth stages and are consequently anticipated to enjoy higher growth rates.
In particular the Philippines' market is expected to offer tremendous growth potential.
In the Philippines, an overwhelming 95% of the population belongs to the low-income category. Accordingly, limited purchasing power is likely to stimulate demand for less expensive generic drugs.
The development of high quality, efficient generics is likely to result in physicians increasingly prescribing their use.
This will fold into attempts to make healthcare costs more affordable for lower income patients.
The generic pharmaceutical market in the Philippines is projected to register impressive growth and swell from $173.3 million in 2001 to $510.9 million in 2007.
This growth will receive further boost from mounting local awareness of branded generic drugs.
For generic pharmaceutical manufacturers there is cause for optimism.
Several high growth markets, especially in Indochina, remain unexploited.
Indeed, countries like Cambodia, Myanmar, and Vietnam offer exciting growth prospects for generic pharmaceutical manufacturers.
However, two primary challenges confront manufacturers before they can maximise growth potential. First, intensifying competition is creating pricing rivalry. Second, there is widespread opinion that generic products are inferior in quality.
"Developing products in niche therapeutic areas, emphasizing on brand awareness campaigns to create brand loyalty among end users and adopting good manufacturing practices (GMP) will strengthen competitive edge", notes Ms Cheah.
To dispel doubts about drug quality and efficiency, efforts will have to be made toward acquiring bio-equivalent status for products.
This will enable generic manufacturers to successfully counter the traditional dominance of MNCs in the pharmaceuticals market.
Ultimately, a country-specific approach based on intensive market research will enable manufacturers to leverage on the particular market characteristics of each target country.
With governments being the largest purchasers of pharmaceutical products, nurturing good relations with public officials will be crucial to supporting the expansion of generic drugs in Asia.
