South East Asia Pharmaceutical Markets Jamie Davies October 2014

Pharma Insight Briefings - AsiaDynamics & Trends That Make South East Asia’s Pharma Market

Unique And ChallengingCPhI Worldwide Pre-Connect Conference, Paris, France

Thursday 9th October 2014, 14.15-15.30, Room 520A & 520B

Jamie Davies, Head of Pharmaceuticals, Medical Devices & Healthcare

www.businessmonitor.com

Overview

1 2 3 4 5 6 7 8 9 10

Market Forecasts

Protectionism

Intellectual Property

Pricing & Reimbursement

Universal HealthcarePolitical Risk

Economic Outlook Competitive Landscape

Risk/Reward Index

Case Study

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

0

5

10

15

20

25

30

35

40

45

50

Pharmaceutical Sales In South East Asia (USDbn)

Regional Market Forecast

Indonesia

Thailand

Vietnam

Philippines

BruneiCambodiaMyanmarSingapore

Laos

CAGR = compound annual growth rate. Source: BMI

8.4% CAGR

6.4% CAGR

14.1% CAGR

6.4% CAGR

7.1% CAGR11.9% CAGR9.4% CAGR

14.4% CAGR8.8% CAGR

Malaysia 7.8% CAGR

Protectionism

Image: Indonesia’s National Agency for Drug and Food Control (BPOM; Badan Pengawas Obat dan Makanan)

• Local manufacturing requirements

• Restrictions on foreign investment

• Preferential purchasing

• Local clinical trials

BMI View: Partnerships are key

Intellectual Property

Image: Inspection of the Government Pharmaceutical Organization (GPO)’s new production facility in Pathumthani Province, Thailand.

• Compulsory licences

• Regulatory data protection

• Incremental innovation

• Country-specific rules

BMI View: Regulations will improve

Pricing & Reimbursement

Image: Community groups and organisations from the health sector protesting in Manila, the Philippines, about the lack of lower pharmaceutical prices from the Cheaper Medicine Act.

• Price controls

• Promotion of generic drugs

• National drug lists

• Reference pricing

BMI View: More health economics

Political Risk

Population Muslim Buddhist Christian Folk religion Unaffiliated Hindu Other religion

Brunei 400,000 300,400 34,400 37,600 24,800 1,600 1,200 400

Cambodia 14,140,000 282,800 13,701,660 56,560 84,840 28,280 0 0

Indonesia 239,870,000 209,166,640 1,679,090 23,747,130 719,610 240,000 4,077,790 239,870

Laos 6,200,000 0 4,092,000 93,000 1,903,400 55,800 0 43,400

Malaysia 28,400,000 18,090,800 5,026,800 2,669,600 653,200 198,800 1,704,000 56,800

Myanmar 47,960,000 1,918,400 38,415,960 3,740,880 2,781,680 239,800 815,320 9,920

Philippines 93,260,000 10,329,300 3,453,000 73,758,760 2,398,900 4,193,260 0 93,260

Singapore 5,090,000 727,870 1,725,510 926,380 117,070 834,760 264,680 493,730

Thailand 69,120,000 3,801,600 64,419,840 622,080 60,000 207,360 69,120 0

Vietnam 87,850,000 175,700 14,407,400 7,203,700 39,796,050 26,003,600 0 351,400

Total 592,290,000 244,793,510 146,955,660 112,855,690 48,539,550 32,003,260 6,932,110 1,288,780

Source: The Global Religious Landscape - A Report on the Size and Distribution of the World’s Major Religious Groups as of 2010, Pew Research Center.

High proportion of population

Low proportion of population

Economic Outlook

• ASEAN Economic Community

• Trans-Pacific Partnership

• China rebalancing

• Currency appreciation/depreciation

BMI View: A global outperformer Myanmar kyatIndonesian rupiah

Lao kipCambodia riel

Philippine pesoVietnamese dong

Thai bahtSingapore dollar

Malaysian ringgitBrunei dollar

-20 -15 -10 -5 0 5 10 15 20

Five-Year Forecast For Change In Exchange Rate Versus US Dollar (2013-18)

Source: BMI

Universal Healthcare

Image: Health City Novena, Singapore.

• Economically and politically beneficial

• Minimum wealth threshold

• Different interpretations

• Inevitable delays

BMI View: Increasingly integral to politics

Competitive Landscape

Image: Singapore’s Biopolis, a biomedical R&D centre

• Widespread presence of multinationals

• Emergence of local firms

• More R&D

• Competition from India and China

BMI View: Region-specific strategy vital

Risk/Reward Index

Market expenditure

Spending per capita

Market growth

Urban/rural split

Pensionable population

Population growth

Patent respect

Policy enforcement

Approvals expediency

Economic diligence

Policy continuity

Lack of bureaucracy

Legal diligence

Rewards

Risks

Market Rewards

Country Rewards

Market Risks

Country Risks

Risk/Reward Index

Business transparency

Source: BMI

Risk/Reward Index scores 0 – 100.

O = least attractive market; 100 = most attractive market.

15 20 25 30 355

10

15

20

25

30

Risk/Reward Profile Of South East Asia Pharmaceutical Markets

Rewards

Risk

sRisk/Reward Index

High Reward/High RiskLow Reward/High Risk

Low Reward/Low Risk High Reward/Low Risk

Singapore

Brunei Darussalam

Myanmar

Laos

Cambodia

ThailandPhilippines

Vietnam

Indonesia

Source: BMI

Malaysia

Case Study: Vietnam

Poor

est

2nd

3rd

4th

5th

6th

7th

8th

9th

Hig

hest

0

10

20

30

40

50

60

70

80

90

100

Health Insurance Coverage In Vietnam By Economic Decile In 2010

Source: Estimates based on data from the Vietnam Living Standards Measurement Survey, 2010.

“missing middle”

• Universal healthcare being introduced

• Poor enforcement

• High medicine prices

• Hospital over-crowding

BMI View: Most promising in region

Summary

• Strong growth forecast for South East Asia, but with risks:

o Protectionism, intellectual property, and pricing & reimbursement

• Regional economy to outperform

• Universal healthcare to increasingly become a political tool

• Companies must adopt South East Asia-specific strategies

• A diverse region undergoing economic and regulatory unification