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Future prospects of pharma industry in South Asia

Mayuri Mathur
Thursday, January 7, 2021, 08:00 Hrs  [IST]

The healthcare and pharmaceutical manufacturing industry is highly dynamic.  The pharmaceutical business is witnessing a paradigm shift from a fully integrated company structure towards a future where companies are creating networks of wide range of outsourcing projects, partnership initiatives and other contractual arrangements. New challenges constantly emerge to face up to organizations which are always looking to become more efficient and effective in this present critical and competitive business environ. As demographics move, the industry is also undergoing transformation to keep pace with the changing needs and demands of the consumers.

COVID-19 has fuelled investments in digital R&D and customer engagement and has also accelerated the transformation of health care delivery system. Increased investment and deployment of home-based health technologies are creating new opportunities for biopharma companies to create value. While it is expected that many opportunities will open in the upcoming years, recent reports forecast that the global pharmaceutical market will exceed $1.5 trillion by 2023 growing at a 3-6 per cent compound annual growth rates over the next five years which is observed to be a notable slowdown from the 6.3 per cent seen over the past five years.

Trends and predictions
The south Asian pharma market fragment consists of the countries such as India, Bangladesh, Sri Lanka, Pakistan, Afghanistan, Bhutan, Nepal and Maldives. Among these, Indian sub-continent is the prominent market player for pharmaceuticals followed by the growing markets of Bangladesh, Sri Lanka and Pakistan. The remaining countries i.e. Nepal, Afghanistan, Bhutan and Maldives are mainly dependent on imports from India and other global marketplaces.

Aging population and growing healthcare needs are transforming the pharmaceutical markets in South Asia creating multi-dimensional opportunities coupled with new complexities and challenges for the pharma market players. Wider competition in pharma manufacturing across the region adds to the mix building a dynamic environment to which industry players are bound to adapt. Governments of the respective countries have recognized the need for pharmaceutical advancements across key sectors and are taking effective measures to sustain their countries’ economic growth.
Pharmaceutical is one of the most prominent as well as flourishing sectors of Bangladesh. Bangladesh pharmaceutical market had been largely dependent on the imports from multinational companies for meeting the needs of the local population. However, in recent times local pharmaceutical companies have emerged as the game-changer by contributing more than 90 per cent of the overall available medicines in the market. Bangladesh pharma industry has made amazing strides over the last decade, and the domestic market has almost doubled all through 2011-2019.

All the associated factors are in favour for the rapid growth of Bangladesh pharmaceutical market and hence it is expected to grow with a CAGR of more than 12 per cent during the forecast period from 2019-2025. The share of generic drugs is expected to surpass 85 per cent by the 2025, which will further strengthen the dominance of local pharmaceutical companies in the market. In addition to this, the increasing penetration of leading multinational pharmaceutical companies signifies towards the competitive landscape in upcoming years. The government of Bangladesh will play a major role in the rapid growth of the pharmaceutical market by providing favourable policies for easy drug approval, production and marketing of new products. Government is focusing to reduce the imports and to establish API Park which will act as a turning point for the pharmaceutical industry in Bangladesh.
Sri Lanka
Lanka’s pharmaceutical market is likely to expand over the coming years. Reports have predicted that the pharmaceutical market in Sri Lanka will reach a value of $ 625 million, which would involve a five-year compound annual growth rate (CAGR) of 1.6 per cent by 2024 and will cross $710 million by 2029, observing a 10-year CAGR of 2.2 per cent. The country’s growing and ageing population will act as key drivers of market growth. Government’s pro-generic medicines policies, as well as low per-capita spending on medicines, will be an added advantage to generic producers like India.

The government is now aiming to localise the pharmaceutical production to meet half of local medicine demand by 2024. In line with the decision, the Sri Lankan government has created a new State Ministry dedicated to pharmaceutical manufacturing and has established a number of new manufacturing zones with the pharmaceutical sector being a key focus. The government’s emphasis on reducing imports thus poses a risk, particularly for low value treatments. More complex pharmaceuticals are unlikely to face a significant threat, given that Sri Lanka will not have the capabilities to manufacture such products in the medium term. Till date, the pharmaceutical market in Sri Lanka largely depends on imports for their requirement of bulk drugs and local industry is yet to catch up with the needs of the country.

Today, the pharmaceutical sector is one of the most developed hi-tech sectors within the country’s economy. Pakistan pharmaceutical industry is a growing market which is fast paced than other emerging markets like Bangladesh, Brazil, Russia and Vietnam. Pakistan’s domestic pharmaceutical sales have grown 13.1per cent compounded annually in the last four years, outperforming multinational companies (MNCs), which saw global growth of 9.34per cent CAGR.  The pharmaceutical market in Pakistan is dominated by locally manufactured pharmaceuticals, predominantly generic drugs, which meets around 90 per cent of the country’s needs. Imported retail medicaments account for the remainder of the market, although manufacturers rely heavily on imported raw materials for production. Multinational companies account for around half of the market by value, although local producers have a far greater share in terms of volume. Pakistan has four geographic pharmaceutical clusters, Karachi, Lahore, Islamabad and Peshawar, in which the trade is carried out according to the nature of each clusters. As per a research report, medicine spending growth continues to be slow compared to the past five years and is projected to grow at 5-8 per cent through 2023. Pakistan is also forecast to have the greatest growth between 2019 and 2023.

The pharmaceutical market of Afghanistan has always been dominated by imported drugs and medicines from all around the world. Along with the good quality imported pharmaceuticals a large number of illicit medicines, spurious drugs and smuggled vaccines are circulating in the marketplace. Moreover, the pharmaceutical factories in the country are unable to manufacture high quality medicines to fulfil the healthcare requirements in whole country. But as per latest reports, Afghanistan has made good progress toward self-reliance in pharmaceuticals and accordingly, a number of home-based pharmaceutical manufacturers have now started to make significant gains. The Afghan government is focusing on indigenous products and is taking necessary measures to build healthcare and medicines within the expanse. So far 56 pharmaceutical manufacturers have obtained working permits for pharmaceuticals located in Kabul, Herat, Nangarhar, Kandahar and Mazar-e-Sharif provinces. However, still 95% of Afghanistan’s pharmaceutical needs are still being met by imported medicines, most of them imported from India, Pakistan, Bangladesh, Iran and European countries.
The pharmaceutical market in Bhutan is completely dependent on imports the bulk of which are imported from generic companies in India. Bhutan has an effective EDP with more than 90 per cent of its people having access to high quality medicines. The health care is free in Bhutan and the Essential Drugs Programme under the Ministry of Health has been able to provide high quality effective medicines for the people. Bhutan’s medicine regulatory system has evolved over decades. The mandate to ensure the quality, safety and efficacy of the medicinal products is achieved through pre-marketing and post-marketing control of medicines. However, it faces several challenges in maintain the quality of the drugs and medicines within the country. The porous borders provide an easy access for entry of unregistered drugs and the risks of counterfeited medicines is high.

Lack of testing laboratories, inadequate infrastructure and regulatory aspects create further hindrances in upholding the quality requirements of the medicines and heath care facilities.
Prospects of growth in India
Indian pharma industry has a significant presence in the South Asian pharmaceutical market. Indian firms have established themselves as leaders of the global pharmaceutical landscape depicting a growth rate of about 14 per cent per annum. This growth is chiefly driven by the expanding economy and increasing per capita GDP. The country has a well-established domestic pharmaceutical industry, with a strong network of over 3,000 drug companies and about 10,500 manufacturing units. It is the only country with largest number of pharma plants that are US-FDA compliant.

Considered to be a high-quality generic manufacturer across the globe, India exports half of its total production of pharmaceuticals to more than 200 countries in the world. India’s pharmaceutical industry is among the leading global producers of cost-effective generic medicines and vaccines, supplying 20 per cent of the total global demand by volume and 62 per cent of the global demand for vaccines. India ranks third worldwide for pharmaceutical production by volume and 14th by value with its exports contributing to 3.5 per cent of the total pharmaceutical exports globally.

India’s pharmaceuticals industry looks set for a solid long-term growth and the domestic market seems promising for global market players looking for expansion, diversification and launch of new products. It has long been a formidable player in pharmaceutical manufacturing, but its socio-economic strengths provide even greater grounds for optimism. The country’s growing capabilities in contract manufacturing, R&D and clinical trials also make it a preferred outsourcing partner for global pharma at every stage of the value chain. India is capable of exploring these prospects and can become a global base for outsourcing of pharmaceuticals since it has certain distinct advantages over many other countries of the world. As a result, India’s appeal is growing rapidly in a number of respects and several foreign companies are viewing India as a potential significant contributor of future sales and are ramping up their investments in the country accordingly. The current transformation and upcoming transitions in the global pharma market is offering immense opportunity for Indian drug industry to flourish in near future.

(The author is freelance pharma consultant)


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