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Current status of pharma industry in South Asia

Gaurav Kaushik
Thursday, January 7, 2021, 08:00 Hrs  [IST]

Asia Pacific region is one of the largest pharmaceutical markets in the world,alongside North America and Europe. Factors such as aging population, impending expiry of patented drugs and growing healthcare expenditure are transforming industry landscape across the region with generic drugs and biopharmaceuticals emerging as key drivers of growth.

The Coronavirus pandemic, meanwhile, has pushed across reforms and opened significant opportunities for the healthcare industry, particularly in the arena of biotechnology, pharmaceuticals, diagnostic medicines and tele-medicine.

Research is another area where Asian countries have an upper hand – China and other advanced Asian countries possess the research capabilities to compete with their Western counterparts while countries like India and other emerging economies have the ability to deliver low-cost healthcare and also simultaneously lead the world with digital health solutions.

According to McKinsey, across the globe, between 2015 and 2017, the pharmaceutical industry generated net positive economic profit in all regions analysed, combining for a total of $105 billion. However, Asia accounted for only six per cent of this figure, which indicates there exists vast untapped potential for improved performance and value creation in the region.

Generics lead
Asian drug manufacturers possess reputable generics production capacitysupported by competitive pricingresulting from lower labour costs and regulatory standards. In terms of revenues too, generic drugs account for a larger chunk of the industry sales in the Asian region. According to a study by German generics lobby Pro Generika, two-thirds of generic drug ingredients are now made in Asia.

Of 565 globally-produced active pharmaceutical ingredients (APIs), 63 per cent of the quality certificates, which grant them suitable for use in medicinal products, were held in Asia as of October 2020. Over 80 per cent of these generic drugs manufacturers were based in India and China, with majority of the producers being concentrated in just a few states and provinces. Moreover, for more than half of the APIs, there are only a handful of manufacturers worldwide.

However, only a small percentage of manufacturers in the Asian region possess the capability to manufacture APIs. As such, countries like Thailand, Indonesia, Vietnam and Malaysia rely heavily on imported ingredients, especially from China and India. This has made the market vulnerable to price fluctuations and accessibility from manufacturers in China and India. In recent times, drug manufacturers have faced acute supply shortages due to factory closures in China as it imposed tighter environmental standards.

Escalating tensions and the resultant trade war between US and China has further compelled drug manufacturers to search for greater geo-diversity within their supply chains. Asian pharma players are looking at redistribution of resources so as to secure networks and reduce dependency on imports of APIs, especially from China. It has also opened opportunities for domestic players to boost production capacities and increase collaboration with research and academia to drive innovation while serving local markets.

Push towardsInnovation
Traditionally, South Asian countries have been behind western countries due to the high investment needed in technology.  Besides, lower prices of generics drugs, which are used widely in the South Asian region, have kept incentives low for pharma players to pursue innovation. However, the situation seems to be rapidly changing with governments in the region beginning to realize the need to drive innovation across the sector.

In India, the government is committed to make the country a global leader in end-to-end drug discovery and development as well as in the production of low-cost generic medicines. A number of initiatives have been undertaken to develop new R&D centres of excellence to promote industry-academia linkages and to build policies and incentives for scientists in order to help them monetize their discoveries.

India’s biotechnology sector has been making rapid strides in recent times and is rated among the top 12 biotechnology destinations in the world. The government has set an ambitious target of $100 billion biotech industry by 2025, with aims to capture five per cent of the global biopharmaceutical market. Several other initiatives have been undertaken to provide impetus to the thriving biotech industry - Industry-Academia Collaborative Mission for Accelerating Discovery Research to Early Development for Biopharmaceuticals - Innovate in India (i3) being one such program to empower biotech entrepreneurs and accelerate inclusive innovation. The National Biopharma Mission has been approved for implementation with a total cost of $250 million. Biotechnology Parks and Incubators are being established across the country, providing the necessary infrastructure to help develop new products and services.

In Singapore, which has a well-developed and mature pharmaceuticals market with innovative manufacturing services, number of schemes have been introduced to drive innovation. In 2020, Singapore committed to invest $2.4billion to improve manufacturing and engineering in pharma as part of its ‘Research, Innovation and Enterprise’ plan. Other than this, the ‘Pharma Innovation Programme Singapore’ was launched to boost competitiveness of the country’s research companies and to help develop continuous manufacturing for API production, among other objectives.

In Indonesia, the pharma industry is expected to see improved revenues on the back of its new universal healthcare scheme, which is the largest free healthcare program in the world. Malaysia, on the other hand, had introduced drug pricing regulations to curb costs in the hands of consumers.

Research in the wings
Across Asia, advanced economies, particularly Japan, have developed significant research capabilities in line with their Western counterparts.

The region is well positioned for not only drug research and development but also digital health solutions. A vast digitally savvy consumer base coupled with the existence major technology giants has immense potential for the growth of innovative solutionssuch as telehealth, disease management, precision medicines, cloud-connected devices, advanced diagnostics and clinical support.

Digital solutions have been at the forefront of all services in the wake of Covid-19 pandemic. Telehealth services were introduced in order to provide contactless/touchless services to patients. Many pharma players in India, Malaysia, Indonesia and other parts of Asia have already started exploring ways to offer digitally powered healthcare services. In fact, India houses 32 per cent of Asia’s recognized health-tech start-ups.

Online medical consultations in Indiagained ground during the nationwide lockdown imposed on the heels of the Covid-19 outbreak. Some large hospital chainshave developed online pharma distribution as well as first-of-its-kind diagnostics platforms to service remote patients via mobile, video call and email. In Indonesia, telehealth firms have joined hands with pharmacies, laboratories and ride-hailing service providers to deliver medicines. In Malaysia, health-tech companies have developed a product that alerts caregivers in case the life of a diabetic patient is in danger. Going forward, digital technology is likely to rule the roost even after the pandemic unfolds. Pharmaceutical players should continue to build on having omni-channel presence and distribution models.

With growing acceptance of biologic drugs and preventive medicine, the demand for biopharmaceuticals is on the rise. Globally, sales of bio-pharmaceuticals are growing at a nearly 12 per cent each year and is presently at $300billion according to CPhI Pharma Industry Rankings & Annual Industry Report 2020.  Bio-similars are generic versions of biopharmaceuticals and can considerably reduce the overall costs of medication for millions of patients.

Among Asian countries, India possesses a well-established biosimilars market with around 100 approved domestic bio-similars (the highest of any country in the world). Currently over 100 Indian biopharma companies are engaged in the manufacturing and marketing of bio-similars. Presently, more than 100 Indian biopharmaceutical companies are engaged in the manufacturing and marketing of bio-similars, and the overall Indian biologics market was valued at an estimated $386billion at the end of 2019.

Elsewhere in the region, Singapore is emerging as a growing hub of biopharma innovation, being home to 50 biopharmaceutical R&D centers and another 50 manufacturing plants. In fact, bio-pharma constituted the second largest contributor to the country’s manufacturing sector, producing over S$ 15 billion worth of exports. In view of the biopharmaceutical sector’s continued contribution to economic growth, the Research Innovation and Enterprise (RIE) 2020 plan had allocated S$4 billion to the health and biomedical sciences sector.

End note
Being one of the largest pharmaceutical markets in the world, Asia has tremendous potential waiting to be tapped. As population grows, the thrust of governments would intensify towards higher healthcare spending. Other demographic factors like an aging population mean there would be significant focus on healthcare in the years to come. Moreover, the region is also building upon its research and development capabilities even as the drive to innovate picks up in the post-Covid scenario. All in all, the prospects for the region’s pharma industry look promising. u

(The author is Managing Director and CEO, Meteoric Biopharmaceuticals)


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MGH Distributors Nov 17, 2021 4:51 PM
A very interesting and captivating blog. There's a lot of details and data provided. We at MGH Distributors are importers distributing world-class quality products along with pharmaceutical products as well making it easier for businesses to operate without any hassle.
PL Global Nov 17, 2021 3:31 PM
The article so precise and well explained. At PL Global we deal with trade and distribution which also consists of pharmaceutical products and understand how the Asian market has faced challenges and to come along so as to push through them.
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