Frost & Sullivan - Generics & Biopharma Poised For Growth In Asia

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1. Generics & Biopharma poised for growth in AsiaThe global recession of 2009 left a deep impact on the healthcare industry in the US andEurope. Asia Pacific suffered…
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  • 1. Generics & Biopharma poised for growth in AsiaThe global recession of 2009 left a deep impact on the healthcare industry in the US andEurope. Asia Pacific suffered similar crisis, but recovered significantly faster than theirwestern counterparts.Mergers and acquisitions have been the recurring theme for big pharma as they activelyexplore opportunities to acquire smaller biotech & generic companies to bolster theirpipeline & expand their product portfolio.Global consolidation left the challenging task for integration at local levels that necessitatedportfolio realignment and resulted in retrenchments and pay-cuts. Mature markets such asAustralia and Japan with slowing GDP took big hits, whilst price-cutting and lowering ofmargins were part of the survival strategies necessary to stay competitive in the market.Frost & Sullivan commented that as markets recover, there will be strong growth in Asia asM & A’s and restructuring continue and major patents start to expire. In 2009, the AsiaPacific healthcare revenue stood at USD 247billion, representing approximately 23.2% ofthe global market, which is expected to grow at a CAGR of 6.6% over the 2009 – 2012period; whilst by 2012, APAC will contribute 27.2%, with a CAGR of 12.2%. APAC couldoptimistically contribute up to 40% of the global revenue by 2015. Global vs. Apac: The New Frontier By 2012 APAC expected to be close to 27% of global market Global & APAC Healthcare Revenues US$ Bn, 2009-2012 CAGR Rest of the World 6.5% APAC CAGR 12.2% 23.2% 23.9% 26.4% 27.2% Note: All figures are rounded; the base year is 2009. Source: Frost and Sullivan • By 2015 APAC could represent ~40% of global market! 8As Asia moves from an export led economy to one that is driven by consumption growth,companies will start actively investing in economically viable Asian countries. Localgovernments are encouraging foreign investors, not only from US or Europe, but also fromother parts of Asia Pacific thus strengthening the economy. 1
  • 2. The paradigm shift is also seen in increased Government attention to primary andcommunity based healthcare as well as the increased use of mobile technology in healthcareservice delivery. The pharmaceutical & biotechnology sectors, key contributors to the AsiaPacific healthcare economy, will grow at a CAGR of 12.9% and contribute USD260 billion by2012, representing 28.5% of the USD909 billion globally.Strong drivers in APAC are the rise of chronic diseases due to the ageing population,government support for generics and biosimilars and enhanced diagnosis and managementin oncology, cardiovascular, pain etc. Amongst market restraints are unresolved politicaland regulation issues, quality concern of generics & counterfeits.Following the demand and impending expiry of patented drugs globally, local governmentshave given their support for pharmaceutical companies to produce generics &biopharmaceuticals. Malaysia proves to be an ideal location to manufacture generics due toexisting strong base of regional players such as CCM Pharma, Pharmaniaga, Kotrapharma,etc that have raised standards for quality products.The pharmaceutical & biotechnology industry in Malaysia will grow at a CAGR of 11% from2009 to 2012, with a market value of USD1.19 million by 2012. Driving factors are thegrowing demand for drugs for lifestyle diseases e.g. cancer, cardiovascular diseases,diabetes, the lack of drug price controls in the private sector, coupled with stronggovernment support for generics. Restraining factors include the large number ofcounterfeits and concern for quality of generics, the growing use of traditional/herbalmedicine and the push of clinical studies for Bioequivalence. Malaysia Pharmaceuticals & Biotechnology Market Growth of cancers and lifestyle diseases propel the market Pharma & Biotech Revenues, US$ Mn, 2009-2012 Market Drivers • Growing demand for lifestyle diseases drugs e.g. cancer, cardiovascular, diabetes • Drug price controls lacking in private sector • Strong government support for generics Market Restraints Large number of counterfeits and concern for quality of generics Government tenders favour domestic manufacturers Note: All figures are rounded; the base year is 2009. Source: Frost and Sullivan Growing usage of traditional/herbal medicine Source: Frost & Sullivan. 12Top growth areas in Malaysia’s pharmaceuticals and biotech market are for: Generics - in a market worth USD416 million in 2010 with an expected CAGR of 8%, there are opportunities for domestic manufacturers of good quality generics to expand or consolidate for greater economies of scale 2
  • 3. Treatment for cardiovascular and metabolic diseases – markets worth USD100 million and USD95 million respectively in 2010, with over 16% of deaths caused by heart and pulmonary circulation diseases. Whilst prevalence of diabetes stands at 1.8 million people, there is large potential for diagnosis and treatment with 80% more still undiagnosed Nutraceuticals - a market worth USD165 million in 2010 in Malaysia and expected to grow at a CAGR of 15%, there is strong potential to develop novel nutraceuticals from inadequately investigated biodiversity, coupled with the push for clinical studies for proof of efficacy Oncology – Worth USD30 million in 2010 in Malaysia, growth in this market will be driven by cancer treatment from early diagnosis of cancers and targeted therapy in top 3 types of cancers: lung cancer, breast cancer and colorectal cancerGiven the proper incentives and the right time, Malaysia could present a very viable optionfor investors to setting up base for their pharmaceutical and biotechnology operations.This article was authored by Simranjit Singh, Director, Healthcare Practice, Asia Pacific,Frost & Sullivan.Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth andachieve best-in-class positions in growth, innovation and leadership. The companys GrowthPartnership Service provides the CEO and the CEOs Growth Team with disciplined researchand best-practice models to drive the generation, evaluation and implementation ofpowerful growth strategies. Frost & Sullivan leverages over 45 years of experience inpartnering with Global 1000 companies, emerging businesses and the investmentcommunity from 40 offices on six continents. To join our Growth Partnership, please visit contact, please email or 3
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