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As Asia's recovery from the economic crisis of 1997/1998
gains pace, the outlook for the region's pharmaceutical
markets is positive. According to a new report from IMS
HEALTH, Pharma
Prognosis Asia 2000-2004, the ten major Asian markets
(excluding Japan) are expected to grow by a compound annual
growth rate of 10.9% during the five-year period 1999-2004,
up from a CAGR of 7.3% during the period 1994-1999. By 2004,
the total pharmaceutical market will be worth approximately
twice its value in 1994, in US$ terms.
Source: IMS HEALTH
1999 was an unexpectedly good year for many
of the ten Asian pharmaceutical markets studied in Pharma
Prognosis Asia 2000-2004. Several of the economies hit by
the 1997/1998 crisis experienced a stronger rebound than
predicted at the start of the year, and growth in two of
the largest economies in the region, India and China, was
stable. As a result, the combined pharmaceutical market
in the region grew by nearly 16%, after declining by nearly
10% in 1998.
Continuing economic recovery will help to
drive market growth during the forecast period. Exchange
rate trends will have a significant impact on market growth
rates in US$ terms, as growth will be boosted by the appreciation
of the local currencies against the US$.
Several of those countries whose currencies were hit hard
by the economic crisis are expected to show high growth
in US$ terms during the forecast period. Indonesia is predicted
to show the strongest US$ growth, at 17.5%, although this
mostly reflects a rebound after the severe contraction in
its market after 1997.
The picture is different in local currency terms. China
and India, where growth is expected to lag behind most other
markets in US$ terms, fare much better in local currency
terms. India in particular will show strong market growth
in local currency terms (+12.9%), while growth in China
is forecast to be +10.4%.
Despite the overall positive outlook for the region, however,
there is likely to be increasing attention to cost containment,
in contrast to the years prior to the economic crisis, when
few cost containment measures were effectively implemented.
China, the largest market in the Asia region after Japan,
has seen healthcare costs skyrocket over the past decade
and is now in the process of implementing reforms to the
state insurance system, as well as a variety of stringent
cost containment measures.
The main objectives of insurance reform are the reduction
of pressure on the state healthcare budget and the provision
of basic healthcare coverage to a larger portion of the
population. Full reimbursement of pharmaceuticals will be
available for a limited list of essential, mainly generic
drugs only. China has also begun to control and cut the
prices of imported and joint venture products previously
exempt from price controls.
Market growth in South Korea, the second largest market
in the region, will be impacted by the implementation of
the separation of prescribing and dispensing, scheduled
to begin from 1 July 2000. Separation is expected to result
in a massive redistribution of market share from the clinics
and hospital sector to the retail sector. Some doubts remain
over the availability of the necessary infrastructure to
implement the policy, but it is expected that overall market
growth will be lower than it has been historically as a
result (+6.3% in local currency terms).
India recently announced an important reform to its healthcare
system. At the end of 1999, legislation on ending the state
monopoly on insurance was passed, allowing private and foreign
companies to compete in the health insurance market. The
main target for private health insurance will be the corporate
sector, with health insurance offered as a benefit of work,
as the number of individuals who can afford private insurance
is small.
In another important move, India is expected to introduce
product patent protection by 2005, the prospect of which
is already having a profound effect on the local pharmaceutical
industry. Many local companies are racing to register and
market as many new copies as possible, and aggressive price
competition is being driven by the desire to win substantial
market shares before competitive conditions change.
Find information on Pharmaceutical Corporations operating
in these countries in: Pharmaceutical
Company Directory
IMS HEALTH's MIDAS
service can provide you with a more detailed understanding
of the Asian markets, including; China,
South Korea, Taiwan, Philippines, Indonesia, Thailand, Hong
Kong, Malaysia, Singapore.
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