Frost & Sullivan: Generics & Biopharma Poised for Growth in Asia
Mergers and acquisitions have been the recurring theme for big pharma as they actively explore opportunities to acquire smaller biotech & generic companies to bolster their pipeline & expand their product portfolio.
Global consolidation left the challenging task for integration at local levels that necessitated portfolio realignment and resulted in retrenchments and pay-cuts. Mature markets such as Australia and Japan with slowing GDP took big hits, whilst price-cutting and lowering of margins were part of the survival strategies necessary to stay competitive in the market.
Simranjit Singh, Director, Frost & Sullivan said, "As markets recover, there will be strong growth in Asia as M & A's and restructuring continue and major patents start to expire." In 2009, the Asia Pacific healthcare revenue stood at USD 247billion, representing approximately 23.2% of the global market, which is expected to grow at a CAGR of 6.6% over the 2009 - 2012 period; whilst by 2012, APAC will contribute 27.2%, with a CAGR of 12.2%. Simranjit said that by 2015, APAC could optimistically contribute up to 40% of the global revenue.
"As 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. Local governments are encouraging foreign investors, not only from US or Europe, but also from other parts of Asia Pacific thus strengthening the economy," Simranjit explains.
"The paradigm shift is also seen in increased Government attention to primary and community based healthcare as well as the increased use of mobile technology in healthcare service delivery," Simranjit elaborated.
According to Simranjit, the pharmaceutical & biotechnology sectors, key contributors to the Asia Pacific healthcare economy, will grow at a CAGR of 12.9% and contribute USD260 billion by 2012, representing 28.5% of the USD909 billion globally.
Simranjit says that 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 management in oncology, cardiovascular, pain etc. Amongst market restraints are unresolved political and regulation issues, quality concern of generics & counterfeits.
"Following the demand and impending expiry of patented drugs globally, local governments have given their support for pharmaceutical companies to produce generics & biopharmaceuticals. Malaysia proves to be an ideal location to manufacture generics due to existing strong base of regional players such as CCM Pharma, Pharmaniaga, Kotrapharma, etc that have raised standards for quality products," Singh states.
"The pharmaceutical & biotechnology industry in Malaysia will grow at a CAGR of 11% from 2009 to 2012, with a market value of USD1.19 million by 2012," says Singh. He explains that driving factors are the growing demand for drugs for lifestyle diseases e.g. cancer, cardiovascular diseases, diabetes, the lack of drug price controls in the private sector, coupled with strong government support for generics. Restraining factors include the large number of counterfeits and concern for quality of generics, the growing use of traditional/herbal medicine and the push of clinical studies for Bioequivalence.
Top growth areas in Malaysia's pharmaceuticals and biotech market are for:
"Given the proper incentives and the right time, Malaysia could present a very viable option for investors to setting up base for their pharmaceutical and biotechnology operations," Simranjit finishes.
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-- 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 -- 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 cancer
SOURCE Frost & Sullivan
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