| According
to the recent update to IMS HEALTH's Pharma
Prognosis Asia, 2000-2004 (PPA), the leading pharmaceutical
markets of Asia have shrugged off the effects of the
1998 economic crisis and resumed strong growth, with
further growth expected in the period 2000-2004.
All of the ten Asian countries studied in PPA are
forecast to post positive market growth in the prognosis
period, led by Indonesia, Taiwan and Malaysia. Pharmaceutical
sales for the ten countries combined are expected
to grow from almost $24 billion in 2000 to over $35
billion in 2004, at a compound annual growth rate
(CAGR) of 10.7%, at actual prices.
In
China, the region's largest market after Japan (Japan
is covered in a separate publication, Pharma
Prognosis International, 2000-2004 (PPI)), consumer
confidence is growing with China's impending entry
into the WTO, and the Chinese authorities have begun
to move ahead with reform of both the financing and
delivery of China's healthcare system.
Changes to the pharmaceutical price regulations and
the distribution system are in the pipeline. Continued
price declines are expected between 2000 and 2004,
but this will be outweighed by strong volume growth.
The PPA update predicts pharmaceutical sales growth
of 10.3% in 2000, with the market expected to grow
with a CAGR of 8.4% in 2000-2004 (in US dollar terms),
breaking through the $10 billion mark by 2004.
China is expected to remain the largest Asian market
after Japan, but several others will post significantly
higher growth rates over the next few years, partly
due to their currencies appreciating against the dollar.
The pharmaceutical markets of Indonesia, Taiwan and
Malaysia, in particular, are expected to record growth
rates in the high teens in the period 2000-2004.
In Indonesia, despite the political uncertainties,
unresolved problems in the banking sector and internal
corruption that have severely undermined investor
confidence, economic growth is expected to continue
into 2001. In 2000, the Indonesian pharmaceutical
market was expected to grow by 23.2%, according to
PPA, due in part to a continuing element of "bounceback",
following the market's decline in 1998.
The market is forecast to grow with a CAGR of 16.8%
(in US$ terms) between 2000 and 2004, driven by robust
volume and price growth. According to PPA, the Indonesian
government appears to be considering reform that could
mean, for the first time, health insurance coverage
for a proportion of the population.
Foreign investment in Indonesia's healthcare system
will be encouraged; at least 10 segments of the sector
have already been opened up to overseas investors,
including health insurance and the hospital sector.
This could eventually stimulate the spread of healthcare
insurance and the building of more modern, technologically
advanced hospitals.
As expected, the prices of over 9000 drugs were cut
in Taiwan in April 2000. Given the financial problems
of the National Health Insurance scheme, it looks
certain that price reductions will be part of the
pharmaceutical scene in Taiwan for the next few years,
according to PPA.
However, Taiwan's economic fundamentals are strong,
with growth accelerating somewhat faster than anticipated.
Strong demand for pharmaceuticals is expected to drive
volume growth, which will outweigh the price reductions.
Growth of 14.6% in the value of the Taiwanese market
was expected in 2000, according to PPA, and between
2000 and 2004 continued strong demand is expected
to drive a CAGR of 16.6% (in US$ terms) in Taiwan's
pharmaceutical market.
In Malaysia, still a relatively small market, economic
expansion during the first half of 2000 was stronger
than expected, and a steady GDP growth trajectory
is expected through the forecast period. The basis
for economic growth is expanding, with domestic demand
growing and consumer confidence expected to remain
strong.
Growth of 15.3% in the country's pharmaceutical market
was expected in 2000, and PPA predicts a CAGR of 15.4%
between 2000 and 2004 (in US$ terms), helped by a
strengthening of the Malaysian Ringgit against the
dollar.
Source: IMS HEALTH Pharma Prognosis Asia, 2000-2004
The figure below illustrates how four
markets, namely China, South Korea, India and Taiwan,
dominate the Asian pharmaceutical market. These countries
accounted for over 80% of the total market covered by
PPA in 2000.
Source: IMS HEALTH Pharma Prognosis Asia, 2000-2004
In South Korea, which is Asia's third
biggest pharmaceutical market and the second biggest
covered by PPA, the government has been preoccupied
throughout most of 2000 with the furore over the separation
of prescribing and dispensing, which has put it at loggerheads
with the medical profession.
Doctors' leaders have been placed in detention as industrial
action escalated over the year. According to PPA, the
difficulties are expected to put pressure on the healthcare
budget and on medicine prices, as doctors have been
offered extra concessions to persuade them to accept
separation.
However, PPA expects multinational manufacturers to
benefit from new guidelines on the pricing of imported
new chemical entities (NCEs) which are deemed to offer
significant cost and/or efficacy benefits over existing
therapies. The South Korean market is predicted to grow
at a CAGR of 10.3% between 2000 and 2004 (in US$ terms),
with a strengthening Won compensating for relatively
slow growth in local currency terms.
In India, price and volume growth are forecast to result
in a CAGR in pharmaceutical sales of 8.9% (in US$ terms),
between 2000-2004, with double-digit growth in Rupee
terms being offset by its weakness against the dollar.
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