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Q3 2010www.businessmonitor.com

pharmaceuticals & healthcare report

issN 1748-2038published by Business monitor international ltd.

malaYsia INCLUDES 10-YEAR FORECASTS TO 2019

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MALAYSIA PHARMACEUTICALS & HEALTHCARE REPORT Q3 2010 INCLUDING 5-YEAR AND 10-YEAR INDUSTRY FORECASTS BY BMI

Part of BMI’s Industry Report & Forecasts Series

Published by: Business Monitor International

Copy deadline: June 2010

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

© Business Monitor International Ltd Page 2



CONTENTS

Executive Summary ......................................................................................................................................... 5

SWOT Analysis ................................................................................................................................................. 6

Malaysia Pharmaceuticals And Healthcare Industry SWOT ................................................................................................................................. 6 Malaysia Political SWOT ...................................................................................................................................................................................... 7 Malaysia Economic SWOT .................................................................................................................................................................................... 8 Malaysia Business Environment SWOT ................................................................................................................................................................. 9

Pharmaceutical Business Environment Ratings ........................................................................................ 10

Table: Asia Pacific – Pharmaceuticals & Healthcare Business Environment Ratings For Q310 ........................................................................ 10 Limits Of Potential Returns.................................................................................................................................................................................. 11 Risks To Realisation Of Returns .......................................................................................................................................................................... 11

Malaysia – Market Summary ......................................................................................................................... 13

Regulatory Regime ......................................................................................................................................... 14

Pharmaceutical And Medical Advertising............................................................................................................................................................ 15 Recent Regulatory Developments ........................................................................................................................................................................ 16 Intellectual Property Regime ............................................................................................................................................................................... 18 Counterfeit Pharmaceuticals ............................................................................................................................................................................... 20 Compulsory Licensing ......................................................................................................................................................................................... 21 Free Trade Agreements........................................................................................................................................................................................ 21 Pricing And Reimbursement ................................................................................................................................................................................ 23

Industry Trends And Developments ............................................................................................................ 24

Epidemiology ....................................................................................................................................................................................................... 24 Table: 10 Leading Causes Of Death In Ministry of Health Hospitals, 2005 ........................................................................................................ 25 Non-Communicable Disease ................................................................................................................................................................................ 25 Communicable Disease ........................................................................................................................................................................................ 26 Healthcare Sector ................................................................................................................................................................................................ 28 Healthcare Sector Funding .................................................................................................................................................................................. 29 Medical Tourism .................................................................................................................................................................................................. 29 Biotechnology And Research ............................................................................................................................................................................... 31 Table: Key Points Of The Malaysian National Biotechnology Policy .................................................................................................................. 32 Table: The Benefits Of Conducting Biotechnology Research In Malaysia ........................................................................................................... 34 Recent Biotechnology Developments ................................................................................................................................................................... 34 Clinical Trials ...................................................................................................................................................................................................... 36 Recent Developments in the Clinical Trials Industry ........................................................................................................................................... 38 Medical Devices................................................................................................................................................................................................... 39 Table: Malaysia – Clinical Diagnostics Market, 2006 (US$mn) ......................................................................................................................... 40 Leading Medical Device Players ......................................................................................................................................................................... 40 Recent Developments In The Medical Devices Industry....................................................................................................................................... 42

Industry Forecast Scenario ........................................................................................................................... 43

Overall Market Forecast...................................................................................................................................................................................... 43 Key Growth Factors – Industry............................................................................................................................................................................ 45 Key Growth Factors – Macroeconomic ............................................................................................................................................................... 46 Table: Malaysia – Economic Activity .................................................................................................................................................................. 48 Prescription Drug Market Forecast ..................................................................................................................................................................... 48



Patented Product Market Forecast ...................................................................................................................................................................... 50 Generic Drug Market Forecast ............................................................................................................................................................................ 51 OTC Medicine Market Forecast .......................................................................................................................................................................... 53 Medical Device Market Forecast ......................................................................................................................................................................... 54 Pharmaceutical Trade Forecast .......................................................................................................................................................................... 55 Other Healthcare Data Forecasts ........................................................................................................................................................................ 57 Key Risks To BMI’s Forecast Scenario ................................................................................................................................................................ 58

Competitive Landscape ................................................................................................................................. 59

Domestic Pharmaceutical Industry ...................................................................................................................................................................... 59 Foreign Pharmaceutical Industry ........................................................................................................................................................................ 60 Pharmaceutical Demand ..................................................................................................................................................................................... 61 Recent Company Activities................................................................................................................................................................................... 61 Halal Medicine .................................................................................................................................................................................................... 63 Traditional Medicine ........................................................................................................................................................................................... 64

Company Profiles ........................................................................................................................................... 65

Leading Indigenous Manufacturers .......................................................................................................................................................................... 65 Pharmaniaga ....................................................................................................................................................................................................... 65 Prime Pharmaceutical ......................................................................................................................................................................................... 69 Bumimedic ........................................................................................................................................................................................................... 70 Hovid ................................................................................................................................................................................................................... 71 Chemical Company of Malaysia (CCM) .............................................................................................................................................................. 74 Kotra Pharma ...................................................................................................................................................................................................... 77

Multinational Companies .......................................................................................................................................................................................... 79 GlaxoSmithKline (GSK) ....................................................................................................................................................................................... 79 Pfizer ................................................................................................................................................................................................................... 82 Novartis ............................................................................................................................................................................................................... 84 Merck & Co ......................................................................................................................................................................................................... 86 Sanofi-Aventis ...................................................................................................................................................................................................... 88 Ranbaxy Malaysia ............................................................................................................................................................................................... 90 Eli Lilly Malaysia ................................................................................................................................................................................................ 92

Country Snapshot: Malaysia Demographic Data ........................................................................................ 93

Section 1: Population ........................................................................................................................................................................................... 93 Table: Demographic Indicators, 2005-2030 ........................................................................................................................................................ 93 Table: Rural/Urban Breakdown, 2005-2030 ....................................................................................................................................................... 94 Section 2: Education And Healthcare .................................................................................................................................................................. 94 Table: Education, 2000-2003 .............................................................................................................................................................................. 94 Table: Vital Statistics, 2005-2030 ........................................................................................................................................................................ 94

BMI Methodology ........................................................................................................................................... 95

How We Generate Our Pharmaceutical Industry Forecasts ................................................................................................................................ 95 Pharmaceutical Business Environment Ratings Methodology ............................................................................................................................. 96 Ratings Overview ................................................................................................................................................................................................. 96 Table: Pharmaceutical Business Environment Indicators ................................................................................................................................... 97 Weighting ............................................................................................................................................................................................................. 98 Table: Weighting Of Components ........................................................................................................................................................................ 98 Sources ................................................................................................................................................................................................................ 98

Forecast Tables .............................................................................................................................................. 99



Executive Summary

Leading Malayisan drugmaker Pharmaniaga expects the outlook for the Malaysian pharmaceutical industry to

improve in 2010. This view is in accordance with BMI's Pharmaceutical Expenditure Forecast Model, which shows

that medicine sales in the South East Asian country increased by just 3.4% in 2009 – well below the 2004-2008

compound annual growth (CAGR) of 6.9%. However, driven by an expanding economy and ageing population, we

expect the market to expand by 9.46% in 2010 and 7.96% between 2009 and 2014. Growth will be led by the OTC

and generics markets, which are both growing rapidly from relatively low bases.

Indeed, generics continue to be poorly promoted in Malaysia, with branded drugs generally viewed as superior in

quality. The generics market was accordingly worth just MYR1.11bn (US$316mn) in 2009. The relatively small size

of the market in Malaysia gives it a greater potential for growth in the coming years, however. After the OTC market,

BMI believes the generics market will post the strongest growth over the next nine years. BMI’s forecast shows a

local currency CAGR of 10.34% over 2009-2014, increasing to 10.87% over 2009-2019.

Meanwhile, economic indicators for the country are beginning to look more positive, which should help sustain

growth in the pharmaceuticals sector. BMI has bumped up our 2010 real GDP forecast to 4.9% (from 4.1%) in view

of a stronger export recovery, although fears of a Chinese-led slowdown have forced us to downgrade our economic

outlook for 2011, with growth expected to come in at only 3.5% (revising downwards from 4.7%). Malaysia's Q110

real GDP growth came in at a larger-than-expected 10.1% year-on-year (y-o-y), accelerating from the 4.5%

expansion recorded in Q409. We remain concerned about the looming risk of a severe double-dip slowdown in

China, which would affect for our forecasts for the pharmaceutical sector.

A further drawback to the industry’s prospects came as Malaysia and the US appeared to all but abandon bilateral

free trade agreement (FTA) negotiations. However, the possibility of Malaysia joining an alternative, multilateral

trans-Pacific trade deal remains open. A trade deal would give impetus to Malaysia’s growing pharmaceutical trade

activity. The total value of pharmaceutical exports should grow to US147.7mn in 2010, reaching US184.9mn by

2014. However, growth in the value of imports will continue to outpace exports over the forecast period, as imports

grow at a CAGR of 12%. Imports will be worth US$1.02bn in 2010, taking Malaysia’s pharmaceutical deficit to

US877mn.

In company terms, Pharmaniaga has had a turbulent start to 2010. Following the February release of financial results

that BMI described as 'disappointing', the company's manufacturing licence has been revoked by the Pharmaceutical

Services Division of the Ministry of Health as of March 2010. The firm's majority shareholder, UEM Group

Berhad, has subsequently failed to deny claims that it plans to divest its interest in Pharmaniaga. Despite these

setbacks, the outlook for Pharmaniaga is positive. According to Edge Malaysia, sources suggest the pharmaceutical

company has retained its lucrative 10-year concession for the provision of generic drugs to the Malaysian

government. This deal will provide a steady revenue stream and allow Pharmaniaga to increasingly explore growth

strategies such as ramping up exports to neighbouring countries and producing higher-value medicines.



SWOT Analysis

Malaysia Pharmaceuticals And Healthcare Industry SWOT

Strengths ! Increasingly progressive government policy, aimed at attracting international investment.

! Improving local manufacturing standards, with a commitment to biotech development.

! Robust market growth in recent years.

! Absence of price controls in the private sector.

! Sizeable generics market, given low patient purchasing power and lax patent laws.

! Prescribing and dispensing presently dealt with by general practitioners, boosting overall values of the prescription market.

! Manufacturing of halal medicines improving access to other global Islamic markets.

! OTC and generics markets are set to grow strongly over the next nine years.

Weaknesses ! Markedly behind South Korea, Singapore and Taiwan in terms of pharmaceutical expenditure and foreign direct investment (FDI).

! Lax patent law remains conspicuously below international standards.

! Recent reform aimed at increasing generic product development worsening operating conditions for multinationals.

! Strict government drug pricing policy heavily biased towards local drug producers.

! Local manufacturing output comprising predominantly inexpensive, basic medicines.

! Market reliant on imports, particularly at the hi-tech end of the scale, pressuring government finances.

! Lack of IPR protection and enforcement.

! Talks on a bilateral free trade agreement with the US have been abandoned.

Opportunities ! Generics sector as an integral factor of market growth.

! Exports growing in the face of rising regional and global demand, as well as increasing trade links.

! Increasingly sophisticated pharmaceutical demand.

! Government desire to prevent and contain disease outbreaks.

! ASEAN harmonisation encouraging the adoption of Western regulatory standards and the improvement of intra-regional trade.

! Potential membership of a multilateral trans-Pacific trade agreement.

! Investment in the biotech sector development supported by government initiatives.

! Malaysia becoming an attractive location for medical tourism.

! More transparent legislation and the attraction of foreign investment.

! Increased trade and investment collaboration with China.

! Planned investment in the expansion of medical facilities.

! Malaysia offers a considerable contract manufacturing opportunities.

Threats ! Government resistance to aligning domestic patent law fully with international standards, coupled with encouragement of parallel trade.

! Existence of a significant counterfeit drugs sector.

! Government failure to revise discriminatory pricing policy.

! Increased focus on internationally recognised norms and legislation to disadvantage local players.

! Possible introduction of price ceilings on essential medicines.

! Potentially detrimental impact of the discussed Free Trade Agreement (FTA) with the US.

! Government seeking compulsory licences for patented drugs.



Malaysia Political SWOT

Strengths ! Malaysia is a successful example of a democratic Islamic state. Despite murmurs of discontent

among hard-line Muslims in some states, Malaysia is unlikely to abandon moderate Islam.

! Despite having two other significant minority races (Chinese and Indians), Malaysia has not been

rocked by any major racial unrest since 1969, lending credence to its sustainable multi-racial

society.

Weaknesses ! The Malay half of the population holds a constitutionally enshrined special position in society,

amounting to positive discrimination in not only jobs, but also wealth. Resentment is an obvious by-

product, and the challenge is to produce enough prosperity to reduce tension.

! The controversial Internal Security Act (ISA) - which allows for detention without trial - has been

wielded by the government on several occasions with the explicit reason to quell unrest. However,

some detentions have been viewed as an attempt by the government to suppress the opposition.

Opportunities ! The relatively weak performance by the ruling Barisan Nasional (National Front) in the general

elections held on March 8 2008, has paved the way for the stalled reformist agenda - promised by

former Prime Minister Abdullah Ahmad Badawi back in 2004 - to gather pace. This would help to

open up the country's closed political system and improve transparency and accountability within

key institutions.

! Newly-appointed Prime Minister Najib Razak came into power promising reforms and changes. His

actions have thus far been promising, potentially paving the way for a significant overhaul of

Malaysia's political and economic system.

Threats ! Ethnic tension will remain a non-violent, but simmering, problem, so long as there remains a threat

that the influence of hardline Islam could revive. For now, however, the hardliners have lost much of

their political clout.

! Despite a change of premier in April 2009, the ruling Barisan Nasional coalition will remain under

pressure from a resurgent opposition. Failure to adequately deal with issues such as corruption, a

slowing economy and the divisive affirmative action policy could yet see Anwar Ibrahim's opposition

coalition force the Barisan Nasional from power.



Malaysia Economic SWOT

Strengths ! During the past four decades, Malaysia has transformed itself from a commodities-dependent

economy into a major world source for electronics and computer parts.

! Malaysia is the world's largest producer of rubber, palm oil, pepper and tropical hardwoods, and is

still a net exporter of crude oil. All this provides a solid platform for economic growth.

Weaknesses ! Malaysia's relative insulation from global energy price shocks is being eroded. It is now likely that

within the next few years Malaysia will become a net importer of oil.

! Malaysia's economic openness can be as much of a burden as a benefit, since it confers a high

degree of vulnerability to global growth and capital flows.

Opportunities ! The opportunity for private-sector-led growth will improve as the government continues divestment

of state shareholdings in order to raise funds to narrow the budget deficit.

! Malaysia's majority Muslim population and the government's ongoing efforts to boost Islamic finance

could see Malaysia become a major financial hub over the medium-term horizon.

Threats ! Wages are higher in Malaysia than in a number of its competitors, such as China and Vietnam,

which could be a long-term hindrance to economic expansion. To maintain its competitive edge,

Malaysia needs a steady stream of inward investment.

! Malaysia's dependence on migrant labour, particularly for low-skilled jobs, poses a threat to long-

term economic stability.



Malaysia Business Environment SWOT

Strengths ! Standards of corporate governance in Malaysia have greatly improved since the Asian financial

crisis at the end of the 1990s – more so, in fact, than in many neighbouring countries.

! Foreign companies, or at least foreign manufacturing companies, looking to do business in Malaysia

will continue to be welcomed with open arms – with the government offering lavish tax breaks and

concessions.

Weaknesses ! State subsidisation of prices will remain a peripheral but persistent part of daily economic life in

Malaysia.

! Doing business in Malaysia will always, to some extent, mean dealing with the politically well-

connected.

! Big construction projects – and big contracts for foreign construction firms - are unlikely to be as

much of a priority for Malaysia's government as they were under the administration of former Prime

Minister Mahathir Mohamad.

Opportunities ! The opportunity to invest in Malaysian state assets could improve. The government, if it sticks to its

word, will conduct its biggest ever divestment of state shareholdings.

! Malaysia is eager to compete globally in banking. It currently lacks a domestic champion, but with

10 main institutions in the market, bank consolidation is a strong possibility.

Threats ! The waterways and shipping lanes that surround Malaysia will continue to experience the threat of

piracy and terrorism.

! Malaysia is at risk of losing out to China in the race for foreign investment. Penang, once the pillar of

Malaysia's electronics industry, has seen an exodus of foreign firms, with Seagate, Motorola and

Solectron all shifting production elsewhere in Asia.



Pharmaceutical Business Environment Ratings

Table: Asia Pacific – Pharmaceuticals & Healthcare Business Environment Ratings For Q310

Limits of potential returns Risks to realisation of returns

Pharmaceutical

Market Country

Structure Limits Market

Risks Country

Risk Risks Pharma

Rating Regional

ranking

South Korea 67 60 65 70 69 70 66.9 1

Australia 57 73 61 72 82 76 66.9 2

Japan 60 70 63 73 72 73 66.7 3

China 67 43 61 67 55 62 61.3 4

Singapore 37 67 44 80 88 83 59.8 5

Taiwan 50 53 51 70 64 68 57.6 6

Hong Kong 40 70 48 67 78 71 57.0 7

India 60 40 55 60 53 57 55.9 8

Malaysia 40 57 44 70 68 69 54.2 9

Thailand 60 43 56 37 61 47 52.1 10

Philippines 50 57 52 43 48 45 49.1 11

Indonesia 53 47 52 40 41 40 47.2 12

Vietnam 47 40 45 40 49 43 44.4 13

Bangladesh 43 30 40 43 35 40 40.0 14

Pakistan 27 47 32 33 44 37 34.0 15

Cambodia 33 20 30 30 37 33 31.2 16

Regional Average 49 51 50 56 59 57 52.8

Scores out of 100, with 100 highest. Source: BMI

In BMI’s Business Environment Ratings matrix for Q310, Malaysia dropped from eighth to ninth place,

having already slipped from fifth place in Q110. In the current quarter, the country’s overall score was

54.2, down from 55.7 previously, but there is hope for the remainder of 2010 as the economy slowly

begins to get back on track. In the meantime, key attractions of the Malaysian pharmaceutical market over

the longer term will remain the government’s encouragement of the biotechnology sector and the

country’s economic development, which will improve consumer purchasing power regarding

pharmaceuticals. On the other hand, per-capita pharmaceutical consumption is quite low, especially due

to the high out-of-pocket payment levels, which make the market vulnerable to economic downturns. The

component parts of Malaysia’s ranking are:



Limits Of Potential Returns

Pharmaceutical market and country

structure scores are weighted and

combined to form limits to potential

returns. Malaysia’s score of 44 is a drop

from a Q210 score of 47, and is still

below the average for the 16 regional

markets surveyed by BMI, which

comes in at 50 for the quarter.

Pharmaceutical Market

Malaysia’s pharmaceutical market

receives a score of 40 (out of 100),

illustrating a relatively low per capita

consumption of pharmaceuticals, due to

the low- to middle-income status of the

Malaysian economy, together with the high share of out of pocket payments that makes demand for

pharmaceuticals very income sensitive. Nevertheless, the demand for drugs will rise over the forecast

period due to an increased need for modern medicines, population growth and healthcare service

improvements, as well as developing economic conditions. In addition, the domestic drug industry is

relatively basic, comprising a small number of large domestic producers and an array of small, private

manufacturers, with imports playing an important part, especially in regards to hi-tech medicines.

However, the market remains under threat from one-off factors, such as natural disasters.

Country Structure

Malaysia has been given an unchanged score of 57 (out of 100) for this indicator, on a par with the

Philippines and above the regional average, which stands at 51. The score reflects a low proportion of

pensionable population in comparison to its Asian peers, and well as a vast number of rural dwellers. On

a positive note, Malaysian population is fast growing, which should uphold the development of its

pharmaceutical market.

Risks To Realisation Of Returns

Market and country risks are weighted and combined to form the score for risks to potential returns.

Malaysia’s unchanged score of 69 is considerably above the regional average, which has fallen slightly to

57 for the quarter. The country is considered as posing some risks to multinationals, although presenting a

respectable long-term prospect in the Asian region.

Business Environment Ratings By Sub-Sector Score

Q310

0

100

PharmaceuticalM arket

Country Structure

M arket Risk

Country Risk

M alaysia Scores Regional Scores

Scores out of 100. Source: BMI



Market Risk

Malaysia score remains at 70 for market risk, which refers to a subjective assessment of the country’s IP

laws, policy and reimbursement regimes, as well as to the speed and efficiency of the approvals process.

However, despite the positive prospect of Association of South East Asian Nations (ASEAN)

harmonisation, the significant counterfeit drug industry, the difficulty in applying process patents, the

lack of data exclusivity and generally poor regulatory enforcement will continue to pose major drawbacks

to multinationals.

Country Risk

The Q310 figure for Malaysia’s country risk remains supported by a relatively high level of policy

continuity, but brought down by cumbersome bureaucracy and a patchy legal framework, on the other.

While tourism and some private investment continue to fuel GDP growth, healthcare will continue to be

inadequate in many parts of the country. Overall, however, Malaysia’s score is considerably above the

regional average, which serves to increase its attractiveness as an investment destination.



Malaysia – Market Summary

The Malaysian pharmaceutical market is

relatively underdeveloped by

international standards. The market is

based on a strong domestic generics

sector and imports of branded and

patented medicines (mostly from the US,

Japan and Germany). Pharmaceutical

spending represented an estimated 0.62%

of GDP in 2009, with the figure expected

to hold over the next five years but fall y-

o-y in subsequent four years, as overall

economic growth eventually outstrips that

of pharmaceutical expenditure. The

Malaysian drug market, valued at around

MYR4.29bn (US$1.22bn) in 2009, is

expected to post a CAGR of 7.96% in

local currency terms, to top MYR6.29bn (US$1.81bn) at consumer prices in 2014.

Boosted by considerable encouragement from the government, the generic sector will expand in terms of

volumes, although its value gains against the patented drugs market will be smaller, due to their competitive

prices. On the other hand, high prices of novel treatments on the Malaysia market will ensure the growth of the

patented sector’s revenues, despite their falling share of total market. Over-the-counter (OTC) drugs will gain

in prominence, driven by cost-containment and rising patient awareness. At present, despite being officially

classified as prescription only, a number of drugs are available as OTCs. Better regulation in this area will thus

shape the development of market shares of OTCs over the forecast period, as will the economic situation that

negatively impacted consumer confidence over the past months.

Imports (of patented and hi-tech drugs primarily) will continue to dominate the Malaysian market, with

multinationals taking a lion’s share. The encouragement of the generics sector will provide new opportunities

for the local industry, which will increasingly need to boost its competitiveness in the face of regional

harmonisation and free trade agreements (FTAs) with major trading partners.

The vast majority of local producers concentrate on generics and OTC medicines, with output mainly intended

for domestic consumption. The domestic manufacturers association, the Malaysian Organisation of

Pharmaceutical Industries (MOPI), claims that local manufacturers can produce 80% of the drugs on the

Malaysian Essential Drugs List. In the meantime, exports have also been boosted by rising regional and global

demand as well as increased trade links with other major markets, although the market will remain import-

dependent. Leading domestic producers include Asia Pharmaceutical Products and Pharmaniaga, with the

latter especially increasingly targeting overseas markets.

Pharmaceutical Market By Sub-Sector (US$bn)

2009

OTC medicines,

0.332

Patented products,

0.572

Generic drugs, 0.316

f = forecast. Source: Korea Pharmaceutical Manufacturers Association (KPMA), BMI



Regulatory Regime

The current legal framework covering the regulation and enforcement of quality pharmaceuticals in

Malaysia was put in place during the early 1950s, with the enactment of the relevant pharmacy laws.

Through the legislation, pharmaceutical products, traditional medicines and cosmetics were registered.

Simultaneously, manufacturers, importers, wholesalers and retailers were licensed.

The main regulatory authority in Malaysia is the Drug Control Authority (DCA), under the auspices of

the Ministry of Health. Five items of legislation form the basis for market regulation: The Poisons Act

1952 (Revised 1989); The Sales of Drugs Act 1952 (Revised 1989); The Medicines (Advertisement and

Sales) Act 1956 (Revised 1983); The Registration of Pharmacists Act 1951 (Revised 1989); and The

Dangerous Drugs Act 1952 (Revised 1980). Drug registration processes are lengthy, at up to two years.

Pharmaceuticals are regulated by the DCA, which is managed by the director-general of health, director

of pharmaceutical services, director of the National Pharmaceutical Control Laboratory, and seven other

appointed members. The main responsibility of the DCA is to ensure the safety, quality and efficacy of

pharmaceuticals in Malaysia. DCA-approved locally-made drugs are also accepted in Organisation for

Economic Co-operation and Development (OECD) countries, illustrating the quality of generic medicines

produced in Malaysia.

The DCA’s duties include reviewing registration applications for drugs and cosmetics; licensing

importers, manufacturers and wholesalers; post-marketing safety surveillance; and the monitoring of

adverse drug reactions. Between 1991 and the end of 2008, Malaysia registered some 207,911 medicines

in total, of which 154,507 are imports, according to the Ministry of Health’s figures released in January

2009.

According to the DCA, any drug in a pharmaceutical dosage form for human or animal use must be

registered with the agency. This includes products that alleviate, treat or cure diseases; products that

diagnose a disease; anaesthetics; and products that maintain, modify, prevent, restore or interfere with

normal physiological functions. The regulation does not apply to diagnostic agents and test kits for

laboratory use; non-medicated medical and contraceptive devices; non-medicated bandages and surgical

dressings; and instruments, apparatus, syringes, needles, sutures and catheters.

All local pharmaceutical manufacturers must be licensed by the DCA. Regulations regarding foreign

investment have made the establishment of pharmaceutical joint ventures difficult in the past, though this

process is becoming somewhat easier. Companies wishing to establish manufacturing operations in the

region have tended to choose neighbouring Singapore instead, which offers a wider range of investment

incentives, although the Malaysian government is working to redress this balance.



The regulatory environment in Malaysia has improved markedly over the last decade as the government

has supported the alignment of domestic procedures with international norms. More recent moves to

harmonise procedures within the ASEAN region have furthered this progress. The Malaysian

Pharmaceutical Product Working Group (PPWG) has been in operation since 1999, with a specific aim of

facilitating the process. So far, the 10 ASEAN countries have adopted the common documents on

technical requirements, the dossier on quality, safety and efficacy, administrative data and glossary, and

the guidelines on analytical process validation, among other achievements. However, in Malaysia, certain

regulatory problems remain, in particular regarding patent law.

Meanwhile, the DCA has reminded pharmaceutical companies to inform it of changes to their production

processes. Failure to do so will result in the cancellation of licences and withdrawal of products. It is

BMI's view that this development underlines the steady evolution of the DCA. Standards employed by

the regulatory body are now approaching international levels.

According to the chairman of the DCA, Tan Sri Dr Mohd Ismail Merican, 'stern action' will be taken

against drugmakers that modify manufacturing methods without approval. This policy ensures that the

efficacy, safety and quality of medicines are maintained at all times. If a company wishes to amend its

production process, it must submit data to the DCA and wait for official clearance.

The DCA has also requested that prescribers, healthcare professional and consumers report altered, sub-

standard or unapproved medicines. Under Malaysia's Control of Drugs and Cosmetics Regulations

(1984), all pharmaceutical products must be evaluated by the DCA before they can be manufactured,

imported, distributed or sold in the country.

Despite the clearly-stated regulations, some drugmakers have failed to successfully commercialise their

products in Malaysia. Over the past decade, the DCA has cancelled or suspended 213 generic drug

registrations for failing bioequivalence examinations. In 2008-2009, the authority rejected 66 new product

applications because they did not include the required data.

Strict controls over which medicines can be sold in Malaysia ultimately benefit consumers. Even slight

changes to production processes, especially for biologicals, can results in altered therapeutic outcomes.

These can be manifest in higher or lower efficacy, but also in an increased incidence of adverse effects.

Pharmaceutical And Medical Advertising

In May 2005, the Malaysian Medical Association implemented a guideline permitting doctors and

hospitals to advertise their medical services. While the guideline has a number of restrictions, doctors and

hospitals are able to advertise their medical specialities and any new or technologically advanced medical

equipment. However, the advertisements are limited in their claims, prohibiting medical providers from



exaggerating their abilities, asserting their achievements or ‘overselling’ a product. Nevertheless, some

hospitals have already taken advantage of this new advertising privilege through new product launches.

The Ministry of Health intends to pass new enabling legislation for these advertising rules. Under the new

regulations, the Ministry must first clear claims that any pharmaceutical or medical device prevents or

treats an illness or condition. Approval will also be necessary in order to sell a product commercially in

Malaysia. The Ministry of Health hopes that this proposed regulation will allow for product testing in

order to ensure the safety and effectiveness of products prior to their advertising within the country.

Recent Regulatory Developments

The ongoing controversy regarding GlaxoSmithKline (GSK)’s diabetes drug Avandia (rosiglitazone)

reached Malaysia in March 2010, when the DCA asked the UK firm to amend prescription information

for the drug. The DCA has become increasingly concerned over allegations overseas that Avandia may

increase the likelihood of heart attacks. The US Senate has stated previously that it believed GSK had

known of Avandia’s heart risk links for some years before it had become widely known, which the

company denies. The DCA’s request was officially made on the back of 33 adverse effect reports

received by the Health Ministry.

In January 2010, Malaysia’s DCA reminded pharmaceutical companies to inform it of changes to their

production processes. Failure to do so will result in the cancellation of licences and withdrawal of

products. This development underlines the steady evolution of the DCA, with standards employed by the

regulatory body now approaching international levels.

The DCA has also requested that prescribers, healthcare professionals and consumers report altered, sub-

standard or unapproved medicines. Under Malaysia’s Control of Drugs and Cosmetics Regulations

(1984), all pharmaceutical products must be evaluated by the DCA before they can be manufactured,

imported, distributed or sold in the country.

Despite the clearly-stated regulations, some drugmakers have failed to successfully commercialise their

products in Malaysia. Over the past decade, the DCA has cancelled or suspended 213 generic drug

registrations for failing bioequivalence examinations. In 2008-2009, the authority rejected 66 new product

applications because they did not include the required data.

In July 2009, in a move signalling regulatory maturity (even though the issue had been dealt with in a

more timely manner in developed markets), the DCA limited the use of cough and cold medicines for

children under two years of age. The DCA requested relevant paediatric medicines carry warning labels,

although labelling remains suboptimal in some market segments. In the meantime, parents and carers

were given advice on how to use the medicines in a correct manner.



A topic that has come under discussion in Malaysia in recent years (following the October 2006 passing

of the Malaysia National Medicine Policy) is the separation of prescribing and dispensing in Malaysia, in

line with broader regional trends. All stakeholders – healthcare professionals, patients and the

pharmaceutical industry – have been contributing their opinions on the potential new rules. BMI strongly

welcomes this separation of roles as there is a clear conflict of interest, but acknowledges that it may not

be possible in remote parts of the country.

In Malaysia, general practitioners frequently have a separate business at their clinics that allows them to

sell the medicine they prescribe. This is seen as convenient because patients, who are commonly old and

sometimes physically impaired, do not have to travel to another location to receive their pharmaceuticals.

However, critics of this paradigm point out that the management of dispensing activities distracts doctors

from their core purpose – diagnosing disease and prescribing treatment. Some even claim that GPs purely

prescribe and then dispense branded drugs over generic alternatives, in order to enjoy higher margins.

Supporters of the prescribing/dispensing split concede that changes will take a long time to implement,

with the number of pharmacists and private community pharmacies currently not considered to be

adequate to allow for a smooth transition. Instead, in January 2009, the Malaysian Pharmaceutical Society

(MPS) proposed a ‘zoning’ system that would identify the locations that would require new pharmacies to

ensure adequate access, as chosen by patients themselves through piloting schemes.

In the meantime, President of MOPI called on the Health Ministry to draw up a timeline for the separation

of duties, also adding the change would encourage more rational prescribing by doctors. However, the

change may be followed by a rise in consultation fees – as has recently happened in South Korea – in

order to compensate doctors for the loss of income.

During June 2008, reports were emerging that doctors and pharmacists were not adhering to labelling

requirements. Under Regulation 12(1) of the Poison Regulation 1952, where any poison (prescription and

non-prescription medicines) is sold or supplied as a dispensed medicine, or as an ingredient in a dispensed

medicine, the container of such medicine shall be labelled, in a conspicuous and distinct manner, with: the

name and address of the supplier or seller; the name of the patient or purchaser; the name of the medicine;

adequate directions for the use of such medicine; the date of delivery of such medicine; and where such

medicine is sold or supplied.

Labelling laws for dispensed medicines came under scrutiny in the course of early 2006 for not providing

clear information to patients, especially to those who are receiving more than one medication. At present,

Malaysian private clinics and pharmacies are not required to comply with standard labelling regulations.

In practice, this means that most of the medicines, which are usually taken out of standard packs and

repacked, do not come with appropriate usage and indication information. Additionally, labels for

generics medicines are also thought to be lacking, with professional groups urged to lobby the



government for appropriate changes in legislation, which would complement recent efforts to make drug

monitoring more effective.

In October 2005, the Ministry of Health issued further guidance on the requirement that all registered

pharmaceutical products be labelled with a Meditag, a hologram security patch. The Meditag scheme was

introduced in early 2005 in an effort to combat the prevalence of unregistered copy drugs, counterfeits

and other healthcare products in the domestic pharmaceutical market. All products registered with the

Malaysia DCA, including traditional medicines and health supplements, are required to bear the Meditag

device, with cosmetics and OTC external care items such as anti-bacterial, oral care or anti-acne products

exempt.

Under the guidelines, anyone who fails to abide by this law will be subject to a fine, imprisonment or

both. First-time offenders will be fined up to MYR25,000 (US$6,632) and/or jailed for up to three years.

Any corporate entity failing to abide by this law will also be charged a fine of MYR50,000 (US$13,264)

for first-time offenders, or MYR100,000 (US$26,529) for subsequent offenders. The Meditag scheme

will involve the participation of enforcement officers, who will conduct visual scans of the symbols and

markings on the Meditag device, as well as verify the manufacturer’s serial number. The authenticity of

the hologram can be confirmed by examining it with a special decoder and a microscope.

Demonstrating the evolution of the regulatory environment, rules covering veterinary medicines were

introduced in August 2007 and plans have been drafted for active pharmaceutical ingredient (API) laws.

The API regulations will attempt to combat the usage of sub-standard and un-approved raw ingredients,

thereby minimising the problem of adulterated medicines in the supply chain.

Intellectual Property Regime

Despite a major revision of patent law in 2001 and subsequent amendments in 2003, patent protection

continues to be the cause of friction between the government and international drug manufacturers. While

the government revised the period of protection for pharmaceuticals (increasing it to 20 years) following

pressure from the international pharmaceutical community, it also implemented legal provisions that have

come under heavy criticism from the industry. These include:

! The stipulation that the limited manufacturing, use and sale of a generic drug before the expiry of the

original’s patent should no longer be considered patent infringement;

! Provisions allowing the licensing and production of medicines by the government under certain

conditions, without the patent holder’s consent.

The 2003 amendment attempted to make registering a patent easier and less expensive. Under this system,

international patent applications may be made in any one of the countries of the Patent Co-operation



Treaty, an initiative by the World Intellectual Property Organisation (WIPO). Previously, the applicant

had to make the application in each and every country where the patent was to be applicable. Although

the amendment reflected the trend of liberalisation, with procedures increasingly aligned with regional

and international norms, it did not address the issues at the centre of the debate between government and

industry.

In 2005, the United States Trade Representative (USTR) listed Malaysia as a ‘Watch List’ country in its

Special Report on Intellectual Property Protection, a status backed by Pharmaceutical Research and

Manufacturers of America (PhRMA), the research-based US drug industry association. The country’s

position was unchanged from 2003 and 2004, reflecting a lack of progress with regard to patent law.

The USTR and PhRMA criticised the Malaysian government on a number of points, including the level of

counterfeiting taking place in the country (despite the introduction of holograms on pharmaceutical

packaging), the difficulty in applying process patents, the lack of data exclusivity (which has not been

aligned with the World Trade Organization (WTO)’s TRIPS agreement) and the overall poor standard of

regulatory enforcement. Additionally, the association has criticised the lack of patent linkage as part the

registration process, which has led to instances of generic products being launched while original patents

are still in effect.

In 2007, Malaysia remained on the Watch List, despite showing a solid commitment to strengthening IP

protection and enforcement in 2006. However, the report welcomed the process of establishing a

specialised IP court, which is designed to more effectively handle civil and criminal copyright cases. The

US has indicated that it will continue to work with Malaysia to encourage full implementation of WIPO

Internet Treaties, as well as to provide effective protection against unfair commercial use for data

generated to obtain marketing approval, and create a co-ordination mechanism between the health

authorities and the patent office to prevent the issuance of marketing approvals for patent-infringing

pharmaceutical products.

While international criticism of the current state of patent legislation is expected to continue, the

government is unlikely significantly to amend the law in the short term, not wishing to further pressure

the indigenous industry. In the meantime, financial gains from parallel trade, which is encouraged as a

cheaper option for the state-funded healthcare, will continue to be made almost exclusively by the middle

traders, thus not achieving its aim, but instead serving further to antagonise multinational pharmaceutical

players. Consequently, Malaysia remained featured on the Watch List for 2008 as well as for 2009.

The USTR also kept Malaysia on the Watch List for 2010, pointing to the lack of resources and training

that lead to a backlog at specialised IPR courts in the country. The report also highlighted the absence of

effective protection against unauthorised disclosure or unfair commercial use of test data produced for



product approval in the pharmaceutical market. The report also urged the development of a more effective

and prompt patent system for new pharmaceutical products.

Counterfeit drugs remain a serious problem in Malaysia, and US pharmaceutical association PhRMA is

calling for the country to implement stronger criminal penalties for infringers. Indeed, PhRMA is calling

for closer cooperation between the US and Malaysian governments, which should involve the tightening

of the current legal framework covering counterfeit medicines. Malaysia, however, is moving in the right

direction and the MoH has recently introduced a bill that will be introduced to curb counterfeit drugs,

which will include tougher penalties for criminals manufacturing or distributing fake drugs.

Counterfeit Pharmaceuticals

Despite the introduction of holograms on pharmaceutical packaging, the level of counterfeit trade in

Malaysia remains significant due to lax enforcement and other issues. A small – but not unimportant –

proportion of drugs on the market are counterfeit (a 1997 study by the Ministry of Health found that 5.3%

of sampled drugs fell into this category, although other current estimates are at least double that amount),

which has continued to represent a point of friction between the government and the international

industry. According to the Pharmaceutical Services Division, around 5.28% of all OTCs on sale in

Malaysia were counterfeit in 2008, with slimming products accounting for around 10% of all illegal

medicines seized in 2007.

Enforcement work has become very challenging as the criminals that supply these products use advanced

technologies to avoid detection and cunningly exploit Malaysia’s land and sea borders with Thailand and

Indonesia. Nevertheless, the total number of items seized has risen from 6,233 in 2005 to 20,235 in 2006.

The value of fake medicine confiscated was MYR18.4mn (US$5.3mn) in the same year. In 2007, the

value of seizures of counterfeit medicine was MYR35.8mn (US$10.6mn), which was nearly a 40%

increase on the 2004 figure.

Due to the conservative nature of Malaysian society, erectile dysfunction (ED) therapeutics are the most

frequently copied medicines on the market, estimated to account for between 30 and 40% of all

counterfeits. In March 2007, the Health Ministry seized 1.4mn capsules of counterfeit ED medicines

worth MYR14mn (US$4mn) from a container in Penang. The seizure, the biggest to date by the

ministry’s pharmaceutical enforcement division, was made when enforcement officers detained a

container from Singapore loaded with 142 boxes bearing the ‘Miagra’ trademark. The consignment was

suspected to be for the Malaysian and Thai markets, given the prevalence of counterfeit drugs in both

countries.

In order to deter sale of imitation drugs, the government is looking to hand out more severe punishments

for counterfeiters. Currently, most offences lead to prison sentences of no longer than five years, in

addition to a fine of between MYR2,000 and MYR20,000 per infringement. After consulting with the



Pharmaceutical Association of Malaysia, the Ministry of Domestic Trade and Consumer Affairs initiated

calls for new legislation against the illegal trade.

Specifically, the Malaysian International Chamber of Commerce recommended that the Trade

Descriptions Act 1972, Sales of Drugs Act 1952 and the Poisons Act 1952 be amended so that there is a

minimum fine for each counterfeit item and a mandatory jail sentence. A draft bill was expected in 2009,

although no developments on the issue were reported by early 2010. Nevertheless – and despite the fact

that the country has no legislation that specifically targets online counterfeiting – authorities (through a

dedicated unit) have reportedly been successful with regard to reducing online sales of fake medicines.

Compulsory Licensing

In May 2007, as a sign of its strength in FTA negotiations with the US, Malaysia stated that it is seeking

the right to issue compulsory licences on patented drugs. While Malaysia is legally within its rights, as

permitted by WTO rules, the country will be strongly discouraged to do so by the US, as the profits of

multinational drugmakers will be negatively impacted. Malaysia’s approach could further derail the FTA,

given that the country is already unwilling to compromise on other issues, such as its entrenched

affirmative action policies.

Malaysia has already issued compulsory licences on a set of pharmaceuticals, although some dispute this.

In 2004, the country issued a compulsory licence to Indian drugmaker Cipla for a supply of anti-

retrovirals (ARVs) in the management of HIV/AIDS. The medicines involved were US-based Bristol-

Myers Squibb’s didanosine and UK firm GSK’s zidovudine and lamivudine + zidovudine.

This action has pushed down prices significantly. Previously at MYR1,200 (US$351) per month, the

average cost for patients fell dramatically to MYR200 (US$58) and then to MYR150 (US$44). Given that

the average monthly wage in Malaysia is approximately US$1,000, compulsory licences have made

ARVs affordable to the vast majority of the population.

Free Trade Agreements

Malaysia and the US appear to have abandoned bilateral FTA negotiations in 2010, after discussions

stalled due to mass protests in October 2006 as well as a subsequent lack of agreement on a number of

issues. However, the possibility of Malaysia joining an alternative, multilateral trans-Pacific trade deal

remains open. The proponents of a trade deal maintain that a FTA would generate jobs for Malaysians

and attract more clinical research to the country, encouraged by the enhanced intellectual property

environment. Malaysia is the 10th largest trading partner of the US with US$44bn in two-way trade in

2005, which officials expected to double by 2010 if an FTA is signed. However, consumer and trade

activists are deeply concerned that the pact will deprive citizens of access to cheap generic drugs,

particularly medicines for HIV/AIDS, as well as resulting in higher prices.



The bilateral FTA between Malaysia and the US also stalled in February 2007 over US demands that the

Malaysian government make its procurement policy more transparent, allowing international companies

to compete on a level playing field. The US has been eager to stress that it is not trying to dismantle

Malaysia’s affirmative action programme, which reserves a proportion of government contracts for ethnic

Malay businesspeople.

The agreement discussions received another blow in May 2007, when Malaysia announced that it would

seek to issue compulsory licences for pharmaceuticals, angering the US. At that time, there were still

some 58 unresolved issues, prompting fears that FTA discussions may break down completely. Despite

the obvious benefits an FTA would provide for the Malaysian economy, the country’s authorities are

unwilling to compromise on certain key issues.

The US is pressing Malaysia to open up government contracts to US firms, but this request trespasses on

the politically sensitive issue of affirmative-action policies. These policies, which ensure that a certain

proportion of state contracts are issued to ethnic Malays, are considered to be a political ‘sacred cow,’ but

are extremely unpopular with foreign investors. This is proving to be a major stumbling block in

negotiations, and is causing an increasing feeling of pessimism that a deal can be successfully concluded.

According to October 2008 reports by the Malaysian International Trade and Industry Minister, the FTA

was due to move forward shortly, as the ad hoc committee has been given a new mandate in order to

address contentious issues, which include IP, as well as competition and labour policy and government

procurement. In May 2009, the US Ambassador to Malaysia announced that talks would resume sooner

than expected as the Obama administration strives to make progress on the international front, although

no progress has been made to date. Instead, in February 2010, Business Times reported that Malaysia may

instead be prioritising the signing of a broader agreement, such as the Trans-Pacific Partnership (TPP), of

which Singapore is a founding member.

Other deals signed by Malaysia in recent years include the July 2006 FTA with Japan. Malaysia became

the third country – after Singapore and Mexico – to conclude an FTA with Japan, which will allow the

two countries to scrap tariffs on most industrial goods, improve investment conditions and respect IP

rights. In 2005, Japanese exports to Malaysia reached US$12.6bn, while imports from the country topped

US$14.8bn. Malaysia already has an Economic Partnership Agreement with Japan, aiming to eliminate

tariffs on 93% of products within the first seven years of implementation.

The ASEAN-Australia-New Zealand FTA (AANZFTA) was signed in 2008, envisaging a regional

common market by 2015. Additionally, a feasibility study on a FTA between Malaysia and the EU is

under way, with the country also seeking to increase its co-operation with the Middle East, and especially

Oman, which is Malaysia’s third-largest trading partner among the members of the Gulf Co-operation

Council (GCC), providing healthcare and hospital management expertise, among other services.



Going forward, the recent global financial crisis provided an impetus for an increase in Malaysia-China

trade, as consumers from developed countries such as the US and the eurozone cut back on spending,

turning Malaysian exports towards regional economies to sell their output. Indeed, the fact that Malaysia

was proactive in pushing for the signing in November 2004 of a ASEAN-China Free Trade Agreement

(FTA) – the country is one of the six ASEAN nations that will have their MFN rates on Chinese goods

reduced to 0% by 2010 – signifies the level of confidence and commitment the Malaysian government

has in forging stronger trade relations with China. In tandem, the same trade rules apply to China,

enabling more than 9,000 types of Malaysian goods to be duty-free, serving as a boon to Malaysia’s

export sector. Furthermore, we believe the signing of the ASEAN-China Investment Agreement in June

2009 – the third and last instalment encompassing the three-part ASEAN-China FTA – will cement the

trend, as a common investment area will reduce market risk and uncertainty for Chinese investors to

commit their funds to Malaysia.

Pricing And Reimbursement

Pricing regulations are different for public and private sectors in Malaysia, but the division is becoming

increasingly blurred. Parallel imports have recently been legalised in a bid to cut costs in the public

healthcare sector, undermining revenues on branded products. The practice is angering the multinational

sector, with foreign players critical of the government’s biased approach to regulatory and enforcement

issues.

In the public sector, prices on an essential drugs list (in operation since 1983) are set by the Ministry of

Health following negotiations with its main wholesaler, Pharmaniaga Logistics Sdn Bhd (formerly

known as Remedi Pharmaceuticals). This subsidiary of leading drug company Pharmaniaga is

responsible for around 75% of medicines purchased by public healthcare institutions. The strict policy

results in public prices being set below market prices, which is necessary, given that the government is

responsible for around 60% of reimbursement amounts. Nevertheless, the country is considering price

ceilings for selected essential drugs to improve access. Portending further reform, studies have found

wide variability in the public and private sector prices of both patented drugs and generics.

In the private sector, pricing is free in theory, although the government has increasingly been using the

prices on the Ministry of Health drug list as a guideline when dealing with private companies. A full

proposal for private-sector pricing regulation has yet to emerge. Out-of-pocket spending on drugs

accounts for around 25% of the total, with private insurance covering some 15%. According to reports in

New Strait Times, around 15% of the population has private insurance.



Industry Trends And Developments

Epidemiology

Cancer, hypertension and circulatory problems account for most deaths and cases of hospitalisation in

Malaysia. Heart disease is the number one killer in Malaysia. In 2005, over 3,000 people died from the

condition, while nearly 40,000 were admitted to hospital. In the meantime, diseases – including heart

problems – resulting from unhealthy lifestyle are increasing in prevalence. By December 2007, there were

more obese men than women in the 25-64 age group. The Chronic Disease Risk Factor study by the

Health Ministry showed there were 1mn obese women, compared to 850,000 obese men.

According to the February 2009

statement by the Health Minister, some

43% of all Malaysians aged 30 or above

are at risk of hypertension, with estimates

suggesting that some 4.8mn Malaysians

are already affected by the condition. In

the 1996-2006 period, the National

Health and Morbidity Survey found a

10% increase in the number of patients

suffering from hypertension and related

conditions.

More recent figures, published in October

2009, suggest that heart and circulatory

diseases are the top killers in public hospitals. In 2008, some 16.5% of all deaths in government hospitals

were due to heart disease. Up to 60% of all cases of coronary disease are treated in public facilities.

Osteoporosis is also a growing problem in Malaysia. According to a recent programme conducted by

Anlene based on bone scanning, as many as one in three Malaysians are at risk of developing the

condition. Malaysians of Chinese origin are most at risk of osteoporotic hip fracture, while as many as

71% of women are failing to consume adequate daily dosages of vitamin D.

According to BMI’s Burden of Disease Database (BoDD), Malaysia will experience the next greatest

improvement in disease burden, after Singapore on a regional basis. By 2030, a projected 106.4 disability-

adjusted life years (DALYs) per 1,000 population will be lost to all disease and injuries, which is a 21%

decrease on the 2008 figure of 134.8. The growing economy of Malaysia will result in increased wealth in

the longer term, which will be spent by the state on hi-tech hospitals and clinics, while personal spending

will be directed to goods such as OTC medicines.

Burden Of Disease Projection

2005-2030

0

1

2

3

420

05

2010

f

2015

f

2020

f

2025

f

2030

f

Mill

ion

s

DALYs lost to communicable diseasesDALYs lost to non-communicable diseases

f = forecast. DALYs = disability-adjusted life years. Source: BMI’s Burden of Disease Database (BoDD).



Table: 10 Leading Causes Of Death In Ministry of Health Hospitals, 2005

Rank Description As % of total

1 Septicaemia 16.54

2 Heart disease and diseases of pulmonary circulation 14.31

3 Malignant neoplasms 10.11

4 Cerebrovascular diseases 8.19

5 Accidents 5.67

6 Pneumonia 5.3

7 Diseases of digestive system 4.45

8 Certain conditions originating in the prenatal period 4.37

9 Nephritis, nephrotic syndrome and nephrosis 3.89

10 Ill-defined conditions 2.82

Source: United States Department of Commerce (USDOC), 2007

Non-Communicable Disease

In August 2009, local news source Bernama reported that, according to the Third National Health and

Morbidity Survey 2006, over 1.6mn adults aged 30 years and above are suffering from diabetes in

Malaysia. Director General of Health stated that prevalence of diabetes was 14.9% in 2006, compared

with 8.3% in 1996, an increase of 80% over a period of 10 years, which is a trend that clearly needs to be

tackled.

In May 2009, medical experts in Malaysia highlighted the growing burden of digestive system disorders –

including peptic ulcers, irritable bowel syndrome (IBS) and colon cancer – in the country. In fact, in

2007, such causes were ranked seventh for both the key reasons for hospitalisation and the causes of

morbidity in the country. Colorectal cancer is the most common male cancer in Malaysia, affecting 14.5%

of all cancer sufferers. In female population, it is the third most common, representing 9.9% of all female

cancers, after breast and cervical cancers.

In February 2009, the Public Health Medicine Specialist Association of Malaysia began a year-long study

into the financial burden of cervical cancer in the country, which is supported by GSK Malaysia. The

research will assess the current costs of treating and managing human papillomavirus (HPV)-related

cervical cancer, as well as assess the viability of HPV vaccinations on a national basis. Presently, cervical

cancer is the second most common type of cancer among women, resulting in some 750 deaths per

annum.



Around the same time, the director of the Institute of Respiratory Medicine was quoted as saying that

smoking was responsible for approximately 90% of the chronic obstructive pulmonary disease (COPD)

cases in Malaysia. He added that environmental pollution, chemical and biomass fuel fumes and

workplace exposure to industrial dust were among the other factors that cause this condition.

According to official figures, the cost of three main smoking-related diseases borne by the Malaysian

public health services was US$1bn in 2007. However, while this figure is projected to increase in

absolute terms by 3% y-o-y, it will simultaneously decrease as a percentage of total healthcare

expenditure, largely due to more individuals quitting the habit combined with a greater uptake of

pharmaceutical interventions, which are inherently more cost-effective than palliative care. Consequently,

manufacturers of anti-cancer drugs, inotropic agents and COPD treatments will envisage an opportunity

in Malaysia.

Presently, almost a quarter of the country’s population smoke, which has resulted in many cases of lung

cancer, ischaemic heart disease and COPD. Many more men (49%) than women (5%) are smokers, and

adolescents (14%) appear to be distinctly partial to cigarettes and/or kreteks, cigarettes made with a

complex blend of tobacco, cloves and a flavouring ‘sauce’.

Campaigns to reduce the prevalence of smoking are commonplace. The National Tobacco Board (LTN)

envisages reduced demand and it is urging its members to diversify their operations. One such alternative

crop is the herbal plant safed musli (Pachystome senile), which is a common ingredient in traditional

Ayurvedic preparations. As well as limiting the production of tobacco, there are economic benefits. Safed

musli can be sold for MYR40 (US$11.90) per kg compared to just MYR15 (US$4.50) for the same

quantity of tobacco. Social norms are also being influenced.

In the meantime, according to the Sultan of Perak, Azlan Shah, as quoted in The Star Online, downsizing

psychiatric institutions and preparing additional treatment facilities in general and district hospitals will

improve mental healthcare in Malaysia. According to the WHO, 450mn people worldwide are affected by

mental, neurological or behavioural problems and 873,000 commit suicide every year. BMI’s BoDD

estimates that the number of DALYs lost to neuropsychiatric conditions in Malaysia was 633,769 in

2007. We forecast that this will increase by approximately 1.5% to 643,123 DALYs lost by 2015, and

then decline by 0.7% to 638,745 DALYs lost by 2030.

Communicable Disease

Malaysia is largely free of diseases such as polio, which was eradicated in 1992. Over the past decade,

Malaysia has stepped up efforts to prevent and contain infectious disease outbreaks. In September 2005,

the government announced it would stockpile enough anti-flu drugs to cover at least 30% of the

population, amid fears of a potential bird flu pandemic. In late 2009, Malaysian researchers from the

University Malaysia Sarawak successfully isolated a new – fifth – cause of malaria, in a study funded by



the Wellcome Trust. The malaria parasite P. knowlesi, which had previously been linked only to

monkeys, has been shown to be widespread among humans in the country. Potentially fatal malaria cases

caused by the P. knowlesi parasite are thought to account for around two thirds of the total.

Universiti Sains Malaysia (USM) had commenced a partnership with Italy’s University of Parma in

February 2010 to develop anti-malarial treatments. USM’s facilities and expertise will be used for clinical

trials, according to New Straits Times.

In 2009, the country began grappling with the swine flu virus, the incidence of which rose to over 100 in

the March-June 2009 period. Over 700 people were quarantined at the time. By early August 2009, the

death toll rose to 44, with the Ministry of Health commencing a public education campaign on the spread

of the A (H1N1) virus. At the same time, the stock of antivirals was expected to be supplemented by an

additional MYR20mn worth of medicines. Both private and public healthcare institutions have also been

ordered to utilise rapid influenza screening tests, with the government taking a proactive approach to

tackling the issue. The Health Ministry said in March 2010 that a woman had died after being infected by

the A(H1N1) virus, pushing the total number of deaths from the virus up to 78. Meanwhile, CCM

Duopharma has won a three-year, MYR32mn (US$9.4mn) contract to supply oseltamivir – the active

ingredient in Roche's Tamiflu – to the Malaysian government. To ensure ongoing supply in the event of a

problem at CCM Duopharma's production facility, the state awarded an identical oseltamivir contract to

compatriot firm Royce Pharma.

In March 2009, the Malaysian Health Ministry stated that 33 people had died in 2009 due to dengue

fever, up by 50% compared to 2008. By April 2009, the number rose to 40. The health minister reported

that number of cases of the mosquito-borne disease also increased by 48% y-o-y to 12,179 cases in the

period of January 1 to March 16 in 2009, compared with 8,212 cases registered in the same period in

2008. Between January 1 and April 18 2009, nearly 16,684 cases of dengue fever were recorded, resulting

in the deaths of 40 patients in the country, compared to 11,386 dengue cases and 29 deaths over the same

period in 2008. During the week April 12-18 2009, the number of dengue fever cases had risen by 8% to

859 cases, against 794 cases witnessed in the previous week.

According to most WHO recent figures, Malaysia has around 75,000 HIV-positive patients. The

country’s HIV/AIDS prevalence is the fifth highest in the region. Some 70% of HIV-positive people were

infected through drug injections, with the remainder mostly infected through unprotected sex. The

government has implemented public health programmes targeting a decrease in HIV infections by

providing contraceptives and educating commercial sex workers on dangers of unprotected sex. In the

meantime, the United Nation’s UNICEF programme has been providing care for HIV orphans in

Malaysia.

Malaysia is already on target to achieve the UN Millennium Development Goals on curbing the spread of

HIV/AIDS by 2010, by implementing needle-exchange services and similar harm-reduction measures. In



2007, the government allocated some US$4.2mn for methadone treatment programmes, with an

additional US$2mn supporting needle-exchange services. By 2010, the authorities are planning to have

25,000 methadone treatment patients, up from around 5,000 at present, most of whom are able to keep

their jobs as a result of the treatment, thus continuing to contribute to the overall economy. Over the next

three years, HIV-reduction programmes are expected to receive a further US$88mn in funding.

Healthcare Sector

Malaysia is one of the most ethnically diverse Asian countries. It is comprised of ethnic Malays (the

majority), 30% Chinese immigrants, with the remainder including Indians, Pakistanis and Tamils. As

such, adequate healthcare provision for all demographic characteristics is a complex proposition.

The vast majority of the population is covered by public healthcare insurance, which is particularly

important for the rural poor. Low-cost government services are financed by taxes and other public

revenues, although they continue to suffer staff shortages. The government runs around 130 public

hospitals.

The increasing prosperity has in recent years encouraged the development of the private medical

insurance market and provision. Malaysia boasts more than 250 large private medical facilities, many of

which are privatised public institutions, as well as around 2,000 private clinics. In May 2006, new

regulations introduced mandatory registration of all private medical and dental clinics. Legislation also

stipulates that private clinics must provide minimum basic outpatient emergency care for an occasional

patients that may need it.

Malaysia has managed to significantly reduce child mortality since 1990, according to data from the

Institute for Health Metrics and Evaluation at the University of Washington. The study put Malaysia in

29th place in its global rankings for mortality for children under five years of age in 2010, giving the

country a 5.1 mortality rate (per 1,000 births). The institute estimates a total of 2,852 under-five deaths in

2010 in Malaysia. This is a significant improvement on the country’s 1990 ranking of 42, when Malaysia

had an under-five child mortality rate of 16.43.

Meanwhile, in order to help meet the government’s pharmacist to population ratio of 1:2,000, pharmacy

chain firm Guardian signed a MoU with International Medical University in April 2010 to share industry

and academic knowledge. At current population levels Malaysia would need to double the number of

pharmacists to around 14,000 to meet the government’s target, New Straits Times reported.

Another government initiative to improve public healthcare coverage is the ‘1Malaysia’ clinics

programme, launched in early 2010. Currently, there are around 50 such centres in Malaysia, which are

open during weekends and public holidays, as well as between 10am and 10pm. The programme

primarily aims to reduce overcrowding in town-based public hospitals, although one such facility was



opened in a rural area (in Jeli) in order to improve access to medical services. The government is

investing MYR10mn in assessing the scheme before expanding it further.

However, the programme has been criticised by the Malaysian Medical Association (MAA) over not

being staffed by doctors, but rather by medical assistants (MAs) instead. Patients with more serious

illnesses are still referred by MAs to hospitals and polyclinics. Nevertheless, given the shortages of

medical personnel, many patients have welcomed the initiative that reduces waiting times as well as

consultation costs (which can now be as low as MYR1).

Healthcare Sector Funding

Sultan Azlan Shah of Perak noted in June 2008 that healthcare spending is rising every year, with

significant sums increasingly spent on facilities, personnel, equipment and pharmaceuticals. The

government bears the majority of costs, but this is an unsustainable situation, he says. And we agree, to an

extent. According to the WHO, a total of US$3.1bn was spent on health in Malaysia during 2000, which

equated to 3.30% of GDP. In 2005, the government subsidised MYR8bn (US$2.4bn) towards overall

healthcare spending. However, in 2008, this figure rose to MYR12.2bn (US$3.96bn), while the public

healthcare budget was expected to top US$3.7bn in 2009.

However, the Malaysian government risks further unpopularity if it goes ahead with plans to encourage

individuals to contribute more to public healthcare funds. Due to rising state spending, Sultan Azlan Shah

of Perak called on people to increase their social responsibility and buy more health insurance, receiving

tax rebates in return.

Health Minister Datuk Liow Tiong Lai is taking the Sultan’s suggestion to the cabinet. However, he has

assured the public that they would not have to contribute to the proposed National Health Insurance

Scheme, which has been debated for many years. In addition, he pledged not to introduce any changes to

the current system until later in 2009, with no developments on this front reported by early 2010.

According to a study by the International Islamic University (IIU)’s deputy rector, up to 50% of the

MYR2.2bn (US$650mn) worth of medicines is wasted in Malaysia each year. The deputy rector

suggested that many patients fail to follow prescriptions properly or throw the drugs away if they judge

themselves to be healthy again. He also called for a better programme regarding pharmaceutical care

services, which would provide more information to patients at the point of medicines’ dispensing.

Medical Tourism

Medical tourism is becoming increasingly important to both Malaysia’s travel and healthcare industries.

Indeed, over the past decade, medical tourism has grown to become second largest foreign exchange

earner for the country. To facilitate this trade, the government set up the Health-care Travel Council,



which promotes 35 private hospitals for medical tourism. Meanwhile, tax breaks have been introduced

for hospitals running medical tourism programmes (see below), while incentives have been provided to

help hospitals to expand their facilities. According to the Prime Minister Najib Razak, the medical

tourism revenues of the 35 designated hospitals grew to MYR299bn from MYR59bn in the past five

years. There are now approximately 375,000 foreign patients seeking treatment in the country each year,

up from 100,000 five years ago.

The advantages of the Malaysian medical tourism industry include low-costs, a well developed

infrastructure and high medical standards. For example, an angioplasty that can cost US$57,000 in the

US, and US$13,000 in Thailand, but costs just US$11,000 in Malaysia. Meanwhile, a knee replacement

which costs US$40,000 in the US and US$13,000 in Singapore, comes in at just US$8,000 in Malaysia.

This value offering has helped institutions such as the Pantai Medical Centre (PMC), which now runs

nine hospitals in the country. According to PMC, the majority of foreign patient come from Indonesia,

with other also arriving from the Middle East and Europe.

Additionally, the number of medical tourists from Singapore is expected to increase, as – from the start of

March 2010 – Singapore residents will be allowed to utilise savings held in the national medical savings

scheme (Medisave) for overseas hospitalisation and day surgeries at two hospitals in Johor (Regency,

opened in November 2009) and Malacca (Mahkota Medical Center). The Singapore’s Ministry of Health

(MOH) added that the scheme will be initiated with two providers – Health Management International

(HMI), which runs the two Malaysian hospitals, and Parkway Holdings. The ministry took the decision

after consulting with union leaders, who suggested the scheme to ensure patients a wider choice and take

advantage of the lower cost of hospitalisation overseas. HMI is also planning to apply for Malaysian

physician licences, which would allow Singapore doctors to work in its Malaysian facilities.

In a related development, in April 2009, the Malaysian Health Minister invited registered foreign

professionals to Malaysia, allowing them to treat foreigners residing in the country. He added that many

people prefer to be treated by medical people from their own country, and it will also enable foreign

people to be treated at significantly lower cost in Malaysia. The registered foreign doctors will be allowed

when the services provisions of the ASEAN Free Trade Area agreement comes into force, expected

before the end of the year.

In November 2009, in a bid to boost numbers in the coming years, the government decided to increase tax

incentives for healthcare service providers who serve medical tourists, with the intention of enhancing

medical tourism. The government increased tax rebates to 100% (from 50%) in its 2010 budget as an

endorsement of its healthcare services overseas.

In the meantime, in February 2009, Malaysian KPJ Selangor Specialist Hospital, part of KPJ Healthcare

Bhd Group, stated that it sees potential for growth in its healthcare tourism business in Pekanbaru, Riau,



Indonesia. The hospital’s public relations manager said that a recent survey revealed more than 20,000

patients from Pekanbaru and Medan received medical treatment in Malaysia in 2008. The manager also

stated the private hospital is looking at Medan, Cambodia and Vietnam to grow its healthcare business.

KPJ operates 19 hospitals across Malaysia, as well as six hospitals overseas (in Bangladesh, Saudi Arabia

and Indonesia).

Biotechnology And Research

In regional terms, Malaysia has a small biotechnology sector, dominated by around 35 small and medium-

sized companies. A number of larger players have developed strong R&D sectors within the overall

corporation structure. Most of the activity is recorded in specialist biotechnology (dealing in tissue

culture, diagnostics, vaccines, clinical testing and blood bank collection), bio-pharmaceuticals and

suppliers to the biotech industry.

Malaysian biotechnology and life sciences industries currently employ around 35,000 staff and appear to

be relatively resilient to economic downturn. In April 2009, Malaysian Biotechnology Corporation

(BiotechCorp), the leading development agency in the sector, organised a job fair, the first such event in

the industry. The BioCareer 2009 exhibition was organised in partnership with the Ministry of Science,

Technology and Innovation (MOSTI).

However, news that local firm CCM Duopharma is looking to begin exporting vaccines to regional

markets, could provide a sizeable boost to the market and is a sign that Malaysia pharmaceutical firms are

beginning to move up the value chain. Biopharmaceutical products are subject to stability problems

distinct from traditional sterile pharmaceutical processing and thus require more care in handling and

preservation than classical 'small-molecule' drugs. Most biopharmaceutical formulations are aqueous, and

protein products have limited stability in their liquid state. This results in additional production costs that

can be extrapolated to higher sale prices. However, BMI warns that a limitation on permits from the

government for imports of drug raw materials could hold back CCM’s plans in the short-term.

In an attempt to make Malaysia more attractive to foreign investors, the government unveiled a national

policy in mid-2005, which earmarked biotechnology as the next engine of growth. The new policy was

announced after the disappointment of the Bio-Valley Project venture, which was inaugurated in 2001

inside Malaysia’s new US$3.7bn Multimedia Super Corridor. Despite government aspirations of

attracting US$10bn in foreign and local investment to the biotechnology industry over a 10-year period,

the Bio-Valley Project has proved to be a dismal failure, with only three companies signing up to

establish production facilities by the end of 2005.



Table: Key Points Of The Malaysian National Biotechnology Policy

To transform and enhance value creation of the agricultural sector through biotechnology

To capitalise on the strengths of biodiversity to commercialise discoveries in health-related natural products and bio-generic drugs

To leverage our strong manufacturing sector by increasing opportunities in bio-processing and bio-manufacturing

To establish biotechnology centres of excellence in the country, where we bring together multi-disciplinary research teams in co-ordinated initiatives

To build the nation’s human capital in biotechnology via education and training

To develop financial infrastructure to support biotechnology

To improve Malaysia’s innovation system by reviewing the country’s legal and regulatory framework

To build international recognition for Malaysian biotechnology

To establish a dedicated and professional agency to spearhead the development of Malaysia’s biotechnology sector

Source: Malaysian government

Despite these setbacks, in August 2005, the government proposed a new strategy of purchasing

technology from abroad, with the aim of stimulating production in the domestic pharmaceutical industry.

To this end, the government launched its new directive pertaining to a ‘National Biotechnology Policy’

aimed at developing appropriate infrastructure facilities, as well as attracting foreign investment.

However, Malaysia’s attempts to develop its biotechnology industry could be hampered by competition

from neighbours such as Singapore, as well as inadequate IP protection, although ASEAN harmonisation

and biotechnology sector development plans should facilitate some improvements.

Nevertheless, the government is undeterred in its focus on the development of biotechnology. Authorities

have recently created BioNexus Malaysia. The programme, which will eventually encompass a network

of centres of excellence from existing institutions around the country, presently has three components: a

centre of excellence for agricultural biotechnology will be part of the Malaysian Agriculture Research and

Development Institute (Mardi) and Universiti Putra Malaysia; a centre of excellence for genomics and

molecular biology will be based at the Universiti Kebangsaan Malaysia; and a centre of excellence for

pharmaceuticals and nutraceuticals will be built at the BioValley site.

Investment in BioNexus companies rose from MYR1.1mn in 2007, to MYR1.3bn in 2008, with 92 such

companies being developed by BioCorp in the course of 2008 (up by 119% y-o-y). In 2009, the

authorities are planning to develop a further 50 to 55 companies through the BioNexus scheme. In

November 2009, Bernama reported that the number of BioNexus companies will increase to 185 over the

coming two years, from the current number of 135, as predicted by the Malaysia’s Prime Minister. By

2011, the companies are expected to account for 2.5% of the country’s GDP, up from 2.2% presently.



Previously, in July 2008, Universiti Sains Malaysia (USM) signed a partnership agreement with

BiotechCorp. Under the Advancement of Nanotechnology Research and Collaboration agreement, three

Malaysian researchers from the USM will spend a year in France, in a bid to improve R&D within the

Malaysian biotechnology industry through the development of new technology platforms or applications.

BiotechCorp, established in 2005, seeks to uphold the government’s biotechnology sector initiatives and

is the leading state-owned agency responsible for the growth of the Malaysian biotechnology industry.

The company already has a collaborative agreement with French Nanobiotix, which has provided

BiotechCorp with an exclusive worldwide licence for a nanotechnology platform.

A number of players providing biotech solutions are raising their profile in Malaysia. One such company

is the Malaysia Genomics Resource Centre (MGRC), which went live in July 2005. The centre was set

up with the specific focus of establishing a bioinformatics services for the analysis of biological data.

MGRC collaborates with industry and individual partners, providing specially adapted applications for

online use.

Carotech is the leading supplier of phytonutrients and biodiesel products, with a daily capacity of 45

tonnes of crude palm oil a day. Palm oil can be processed into either biodiesel or vitamin E. Carotech is

owned by Hovid, one of the largest GMP-certified pharmaceutical companies in Malaysia. Hovid, which

boasts over 350 generics, health supplements, injectable products and herbal medicines in its portfolio, is

the leading exporter.

With a paid-up capital of MYR75mn (US$22.1mn), Inno Biologics is a wholly-owned subsidiary of Inno

Bioventures, which is 90% owned by a Ministry of Finance-owned company. The remaining stake in the

company is owned by the Malaysian Industry-Government Group on High Technologies (MiGHT). Inno

Biologics makes generic drugs for other companies and operates Malaysia’s first biopharmaceutical plant

in Nilai, Negri Sembilan.

The sector receives grants from the National Council for Scientific Research and Development (NCSRD)

under the Ministry of Science, Technology and Environment (MOSTE), with further incentives provided

by the Inland Revenue Board and the Malaysian Industrial Development Authority (MIDA), venture

capitals and banks. One of the more prominent funds in the field is the Malaysian Life Sciences Capital

Fund, which was created as a joint project between the government-owned venture capital firm,

Malaysian Technology Development Corp (MTDC), and US Burill & Co, in 2005, with a capital of

only US$40mn. By the end of 2006, the fund swelled to US$200mn, with US$140mn already invested

into over 20 companies.

The Malaysian Chapter of the Federation of Asian Biotech Associations (FABA) was launched in August

2006. FABA aims to encourage biotechnology investment from private sector corporations, as well as to

improve relationship between public and private biotechnology spheres. To this end, the government



offers a number of financial incentives, such as a 100% group tax relief or deduction on qualifying

investments in biotechnology, a 10-year tax-exempt pioneer status, exemption of import duties on

approved equipment and materials, and double tax deductions on qualifying expenses and R&D

investments. Moreover, the Malaysian stock Exchange (MESDAQ) offers benefits in terms of venture

capital consideration to biotech companies, given their higher risk profiles.

Table: The Benefits Of Conducting Biotechnology Research In Malaysia

Strategic location in the heart of Asia

Pro-business government

Political stability

Cost-effective base for business

Excellent transportation and ICT Infrastructure

Located nearby fast-growing markets

Long history in open trade

Strong in outsourcing services

Highly skilled workforce

Presence of several multinationals

Government support

Extensive base and network of R&D

Excellent quality of life

Rich biodiversity

Presence of Multimedia Super Corridor

Knowledge workers

Multi-ethnicity

Source: BiotechCorp

Recent Biotechnology Developments

! In March 2010, India’s Institute of Cellular Therapies (ICT) said that it had accepted an offer from the

Malaysia Health Ministry to establish a cell culture lab in the country to provide a cell-based cancer

immune-therapy, Indo-Asian News Service reported. The new lab will conduct clinical trials for dendritic

cell therapy, which aids recovery in cancer patients and decreases the risk of relapse, and will produce

Denvax.

! Meanwhile, Indian biotechnology company Biocon is exploring expansion opportunities in Malaysia,

considering its potential as a regional biotechnology hub. Chairman and Managing Director Kiran



Mazumdar Shaw said that the company is eager to expand its operations in Malaysia and sees the Bio-

Xcell Ecosystem in Iskandar as an attractive proposal. She added that the company looks forward to

formalising its partnership with Malaysia's Biotechnology Corporation (BiotechCorp)

! In December 2009, Inno Biologics signed a licensing agreement with German CEVEC Pharmaceutical

GmbH, a therapeutic proteins development specialist that uses new technology based on human

amniocytes. Under the terms of the deal, Inno will use the German firm’s technology – CEVEC’s

Amniocyte Production (CAP) – to develop cell lines and produce biopharmaceutical products.

Additionally, Inno is planning to use this collaboration to train local experts in the area of human cell

technology. For its part, the German company has welcomed the agreement as its first foray into Asian

markets.

! In November 2009, CCM Duopharma and Inno Biologics agreed to develop a version of erythropoietin

(EPO) for the treatment of anaemia associated with cancer treatment or kidney failure, thus entering the

high-potential biosimilars field. Inno Biologics will supply bulk EPO to CCM Duopharma, which will

finish the product and market it to healthcare specialists. Given the savings that Malaysia will realise

through domestic manufacturing of the high-tech pharmaceutical, BMI expects companies in other

countries at a similar stage of economic development to emulate this deal. The Malaysian government

currently spends MYR45mn (US$13.3mn) on EPO annually. Transportation from Europe, India and South

America adds to the cost of the already-expensive EPO (due to complex manufacturing). Inno Biologics

and CCM Duopharma estimate their version of EPO will reduce the government’s expenditure on EPO by

40%. The product will be synthesised in Inno Biologic’s 1,000 litre fermentation tank and

commercialisation is expected in 2011. To adapt its production line, Inno Biologics will have to spend

MYR5mn (US$1.5mn).

! In June 2009, a subsidiary of US biotechnology firm Actis Biologics was in the process of securing funds

for the creation of a biotech park (to be named Biocity) in Melaka, Malaysia. Actis Biologics Pvt Ltd was

reportedly close to finalising a US$750mn deal with two international parties. Actis is also looking to

expand in India. Actis Biologics Malaysia is also due to expand through its subsidiaries, namely Telesto

Diagnostics (which is focused on breast cancer detection) and Kohinoor Biotech. Malaysian government

has already approved a 270-acre site for the Biocity construction.

! In March 2009, the chief executive officer of the Malaysian Biotechnology Corporation stated that the

Malaysian biotech industry is expected to contribute 5% to the country’s GDP by 2020, up from the

current 1%, to generate 280,000 jobs. He also added that the industry has a total investment of

MYR1.37bn (US$402mn), which is approximately 1% of the GDP.

! In March 2009, the managing director and chief executive officer of Malaysia Debt Ventures (MDV)

stated that there are adequate funds in the market to support biotechnology companies. He added that

financial assistance can be easily obtained by companies that demonstrate their intentions to develop high-



quality products and initiate projects. MDV is currently reviewing loan applications with a cumulative

value of over MYR300mn (US$88.23mn) for 15 biotech companies.

! In February 2009, continuing the global trend for bio-prospecting, Novartis announced plans to search the

rich ecology of the Malaysian state of Sarawak for new medicines. Given the rewards on offer and the

drop in productivity from synthetic drug discovery, BMI expects other innovative pharmaceutical

companies to engage in similar activities. The Swiss multinational has had talks with the relevant

authorities in the capital Kuala Lumpur to search the forests of Sarawak for unique compounds that may

be useful in the treatment of disease. Malaysia is a good country to invest in as it has excellent

infrastructure, a business-friendly government, and a well-educated, English-speaking population,

according to Switzerland’s ambassador to the country.

! In October 2008, Indian contract manufacturer Malladi Drugs & Pharmaceutical revealed a plan for a

major investment in Malaysia, spending up to US$300mn over the next three to five years on setting up a

global ‘one-stop shop’. As the project was announced at the opening of the BioMalaysia 2008 exhibition,

it is BMI’s view that Malladi’s Malaysian facility will focus on the production of high-value biological

agents rather than low-margin small molecules. Malladi’s speciality is the manufacture of APIs for cough

and cold products, such as ephedrine and pseudoephedrine. However, as these compounds can be used for

the illicit manufacture of methamphetamine, regulators are limiting their use and global sales are

declining, with the company consequently looking at other options.

Clinical Trials

Despite some IP and regulatory shortcomings, the environment for novel pharmaceutical products in

Malaysia is relatively favourable. The fact that the government is willing to fund innovative medicines

has also stimulated the development of locally based clinical research by multinational companies.

Additionally, locally undertaken clinical trials – conducted both in private and public hospitals – are low-

cost.

However, further growth of the sector will be dependent on the government’s willingness to ensure that

bioequivalence data cover all therapeutic areas, as well as ensure a more balanced regulatory environment

that would not discriminate between local and foreign producers. Nevertheless, various estimates suggest

that market capitalisation of publicly listed biotechnology and biotechnology-related healthcare

companies topped US$857mn in 2007. Foreign direct investment (FDI) in the sector in the same year was

almost US$286mn, with biotechnology forecast to generate over US$70bn in revenue by 2020.

The recently launched network of clinical trial centres (CRCs) enables the Ministry of Health to provide a

‘one-stop’ conduit for clinical research organisations (CROs) to test drugs and devices. This results in

reduced costs due to operational efficiencies being realised at every step of the process. There are



currently 14 CRCs, which provide access to 50 district hospitals, and subsequently several hundred

clinics.

Late-stage or phase III studies – which usually enrol several thousand patients across the globe – are the

most common trial in Malaysia. BMI currently estimates that over 100 are currently ongoing in the

country, which is impressive considering that there were just 50 being conducted in 2004. Studies take

place in Ministry establishments, private hospitals and medical teaching facilities. According to

clinicaltrials.gov, some 87 studies were recruiting volunteers in February 2010.

There are some drawbacks that prevent CROs from fully exploiting the potential in Malaysia. A common

internal view is that the country gets ‘overlooked’ as potential investors either go to the large population

centres of India and China, or opt for technological hubs, such as Singapore and Hong Kong. Other

reasons come from negative perceptions surrounding bureaucracy, delayed timelines and long registration

processes.

In fact, contrary to popular conceptions, it only takes six weeks for an investigation to receive approval

from the authorities. Moreover, procedural delays should not be that common as Good Clinical Practice

(GCP) is very much the applied standard. True, a comparatively large amount of paperwork is involved,

but this is fairly standard, and is arguably of benefit to one or more involved parties.

Indeed, the Health Ministry has recently constructed the National Medical Research Register (NMRR),

which helps industry to identify appropriately experienced research to conduct studies. It also brings

Malaysia in line with international practice, which requires medical research, especially clinical trials, to

be published in publicly accessible registers.

In light of the above benefits, in December 2007, US CRO Quintiles identified Malaysia as a key growth

market, after posting an average annual growth of 70% in the country. Accordingly, the firm plans to run

even more trials there, particularly in the field of oncology and other high-value therapeutic areas.

Malaysia is seen as an attractive market due to low costs, a moderately sized population, rapid patient

enrolment, a diverse gene pool and high quality data, as well as government support. The company has

had operations there since the 1990s, but only on a small scale until recently. On behalf of various

multinational clients, Quintiles was involved in a few short-term studies in areas such as flu vaccines and

basic anti-infectives. However, now the CRO is looking into chronic disease trials, evaluating therapeutic

for conditions such as diabetes, cardiovascular complications and central nervous system impairments.

Other foreign companies are also increasingly interested in Asian markets. To this end, in late 2008,

Chinese CRO Tigermed Consulting established a global clinical trials network, in partnership with

Russian OCT and South Korean LSK. The latter is responsible for operations in Malaysia, Taiwan, Japan

and South Korea. Tigermed, one of the leading CRO firms in China, is also showing interest in Europe-



and US-based clinical trials. More recently, one of leading CROs in Australasia, Gleneagles, organised a

May 2009 workshop, which focused on clinical trials’ quality assurance, roles of participants and

coordination of activities. Gleneagles runs a private Intan Medical Hospital in Malaysia.

Recent Developments in the Clinical Trials Industry

! In December 2009, MOSTI was reported to be seeking funds from the government for biotechnology

development in the country under the 10th Malaysia Plan (10MP), to the tune of MYR4bn

(US$1.18bn). The minister of health stated that the Ministry had finalised its submissions to the

government, adding that MYR2bn (US$0.6bn) funds had already been allocated to the development

under the 9MP.

! In November 2009, Australia-based international CRO Novotech set up a new management hub in

Kuala Lumpur, Malaysia. The facility will supervise operations in Malaysia, Singapore, Thailand and

the Philippines. The Kuala Lumpur office, due to be fully operational in the next few months, will

serve as the base for expansion in the Asia-Pacific contract research sector. Other new regional offices

are scheduled to be opened before the end of 2009.

! In the same month, Indian biotechnology company Biocon was reported to be exploring expansion

opportunities in Malaysia, considering its potential as a regional biotechnology hub. Chairman and

Managing Director Kiran Mazumdar Shaw said that the company is eager to expand its operations in

Malaysia and sees the Bio-Xcell Ecosystem in Iskandar as an attractive proposal. She added that the

company looks forward to formalising its partnership with Malaysia’s BiotechCorp.

! In September 2009, according to Bernama, Melaka Chief Minister Datuk Seri Mohd Ali Rustam

announced that the Melaka State Development Corporation, along with India-based Vivo Bio

Tech, had decided to invest MYR150mn (US$42.5mn) in the creation of a monkey laboratory at the

Beribi Industrial Park. The laboratory will facilitate pre-clinical trials to develop drugs for the

treatment of various diseases like diabetes and cancer.

! In June 2009, Indian Veeda Clinical Research announced the creation of its South East Asia office in

Malaysia. At the same time, the company signed a collaborative agreement with the Malaysian

Ministry of Health, with a view to opening an early clinical trials centre within the Ampang Hospital

in Kuala Lumpur, which specialises in haematological oncology. The unit would provide facilities for

phase I studies as well as experimental medicine studies in selected populations.

! In the same month, CRO Kendle created three new units in Asia, namely in Malaysia (in Kuala

Lumpur), Thailand and the Philippines, as its commitment to the region grows. The US-based

company will focus on services for the regional players in the field of biopharmaceutical development

as well as manufacturing.



! In March 2009, Singapore drug firm Innogene, acting on behalf of the biopharma unit of Indonesian

PT Kalbe Farma Tbk, signed a memorandum of understanding (MoU) with Malaysian clinical

research organisation (CRO) Info Kinetics Sdn Bhd. The MoU refers to the provision of accredited

bioavailability and bioequivalence studies in Indonesia, through the creation of a joint venture (JV), to

be named PT Pharma Kinetics, which will act as a clinical trials centre. Pharma Kinetics, which will

be based in Jakarta (Indonesia), is expected to provide clinical trials services to both domestic and

regional markets. In 2005, Innogene created another Indonesian bioequivalence centre, PT Pharma

Metric Labs, in response to rising demand for such services. In Malaysia, Info Kinetics runs the only

good laboratory practice (GLP)-accredited laboratory in Southeast Asia (at Universiti Sains

Malaysia), with the facility also having an accreditation from the Organisation for Economic Co-

operation and Development (OECD).

Medical Devices

An initial draft of Malaysia’s Medical Device Bill was submitted in September 2005. One of the

requirements contained in the proposed legislation is the registration of all healthcare equipment with the

Ministry of Health. The enforcement of the Medical Device was due to begin 2007, and the voluntary

registration of healthcare equipment commenced at the end of 2005. The proposed bill will apply for all

medical devices within Malaysia.

At present, Malaysia does not have a medical device regulatory authority, and as such, the government is

eager to implement a system that will be in line with the standards of other Asian countries. Under the

bill, a supervisory body would be established within the Ministry of Health to ensure the safety of all

healthcare equipment. The main responsibilities of the new governing body would be to oversee the

registration, enforcement and monitoring of all laser and healthcare equipment in the country.

In 2005, members of the Association of Malaysian Medical Industries (AMMI) jointly posted US$9mn in

revenue from medical devices. Estimates put forward by the Third Industrial Master Plan (IMP3) put the

revenue of the entire industry at around US$1.3bn. The market is dominated by imports (at around 90%),

especially at the hi-tech end of the scale, although there is room for contract manufacturing as local

demand increase in the face of demographic, economic and healthcare technology improvements.

More recently, the Malaysia External Trade Development Corporation (Matrade) released figures

showing that exports of healthcare services and low-end medical devices, such as surgical gloves, reached

a value of MYR3bn (US$937mn) in 2007. In the previous year, the market for clinical diagnostics was

worth around US$418mn, according to the figures published by the US Commercial Service. US

companies supplied around 58% of this total. In 2008, total medical devices exports were around

US$2bn.



Table: Malaysia – Clinical Diagnostics Market, 2006 (US$mn)

HS codes Description US$

30062000 Blood Grouping Reagents 1.15

300630 Opacifying preparations for x-ray 3.93

382200 Diagnostic Laboratory Reagents 41.29

842119000 Centrifuge 12.62

8419200 Medical, surgical, laboratory sterilizers 4.78

90121000 Microscopes 9.70

90129000 Microscope parts and accessories 1.77

901600 Balances of a sensitivity of 5cg or better 0.85

902720 Chromatographs and electrophoresis instruments 15.71

902730 Spectrometers 17.08

902750 Other instruments using optical radiations 11.67

902780 Other instruments 260.16

90279000 Microtomes, parts and accessories 10.96

9011 Compound optical microscopes 17.70

902214 Apparatus based on the use of x-rays for medical purposes 5.24

902221000 Apparatus based on the use of alpha, beta or gamma 3.44

Total 418.05

Source: US Department of Commerce (USDOC), 2007

Malaysia exports a number of items, with a focus on surgical and examination gloves, catheters (the

country manufactures 80% of the total global supply of rubber-based catheters) and condoms, which

accounted for 85% of exports in 2005. The domestic industry is also active in the production of needles,

medical and surgical instruments and appliances, and orthopaedic appliances. Malaysia supplies some

60% of the global demand for surgical gloves, according to 2005 figures by AMMI, although the

competition in this field from other regional players has intensified in recent years, pushing local

manufacturers to increase their role in the production of non-rubber catheters, surgical drapes and gowns

and medical tubing, among other items.

Leading Medical Device Players

Malaysia has around 180 small and medium-size manufacturers of medical devices. However, the number

of companies involved in the industry may increase during economic downturn, as players from

automation equipment, engineering and product packaging turn to medical devices to combat falling

demand for their products. The key driver of such a trend will be the fact that most manufacturing



undertaken in the industry is still semi-automated, leaving room for further growth, according to Wong

Engineering Corp Bhd.

One of the more prominent local medical device manufacturers is Ambu Sdh Bhd, which is active in the

cardiology and neurology segments. The company is expecting to continue strong growth over the

coming years, due to the conducive environment provided by various governments’ incentives and

various other changes. In fact, according to the 2006 report by the AMMI, the Malaysian medical devices

industry is expected to continue posting an average annual growth of 8% through until 2010. Other more

prominent local players include WRP Asia Pacific and Supermax Corp.

Established in 1991, Malaysia’s Top Glove is the world’s largest producer of rubber gloves. Its 20

factories churn out nearly 15bn pairs of gloves annually and export goods to 180 countries. The company

posted Q408 net profit of MYR25.1mn (US$7.0mn), which was an 87% increase compared with same

period in the previous year. A spokesperson said that the slowdown in the world economy is unlikely to

have an impact on sales because gloves are a ‘necessity item in the healthcare industry’.

Top Glove is looking to capitalise on the favourable market conditions. The number of centrifuge

machines at its two latex plants in Thailand will be increased to meet rising demand for concentrate from

other facilities. Top Glove’s newest factory in Klang, Selangor, has just been fitted out with the latest

technology, which will allow it to produce gloves for less money and using fewer technicians.

Meanwhile, the firm’s plant in China has been expanded to include an additional vinyl glove production

line.

In terms of foreign medical device players, medical technology company B Braun Medical Industries

has a considerable interest in Malaysia, which also acts as its Asia Pacific regional office. Since

establishing a presence in 1972, to 2008, the company invested a total of MYR1bn (US$287mn) in the

South East Asian country. A total of 4,700 people are employed and over 10% are engaged in the

manufacturing of pharmaceuticals.

B Braun is currently investing a further MYR103mn to expand its business for intravenous safety canals

in Penang, including R&D and regulatory affairs. The investment was to double the production output of

the intravenous safety canals from the current 140mn pieces to 290mn a year by the end of 2009. As part

of its strategy to become a leading supplier of medical products in the Asia Pacific region, B Braun is also

building two factories in Suzhou province, China, designed to manufacture infusion solutions and surgical

instruments. In 2008, B Braun posted US$5.4mn in Malaysian sales, up on US$5.1mn achieved in the

previous year. Consolidated net profit was US$364mn, down from US$311mn in 2007.

However, in a May 2009 announcement, the company suggested it may move some of its Penang

operations to Indonesia, in a bid to cut expenditure. B Braun has indicated that the fact that they cannot



compete through open tenders is one of the reason for the potential relocation of its pharmaceutical

business elsewhere. Currently, the company must operate through local agents. Final decision is expected

by the end of 2009, although a November 2009 announcement that the company will invest EUR100mn

in R&D in the Penang facility should mean that the plant is safe. According to official estimates, hospital

supplies are 30% more expensive due to the activities of the middlemen, with Malaysia losing around

MYR10.45bn per annum as a result of the situation.

Other foreign companies active in Malaysia include Japanese Japan Medical Products, Australian

Ansell, and US-based Sharp-Roxy (which provides ioniser systems to hospitals, among other products),

Tyco, Rusch and CR Bard. Sharp-Roxy recently revealed that it expected lower growth during 2009 (of

just 10%, compared to 30% previously), due to worsening economic conditions. In 2008, the company

posted a turnover of MYR500mn (US$148mn).

Recent Developments In The Medical Devices Industry

! In March 2009, Zecotec Photonics announced the receipt of grants from the Malaysian Industrial

Development Authority (MIDA), which offers financial assistance to foreign companies willing to

establish facilities in the country, as well as the Singapore Economic Development Board (EDB). In

2007, Zecotec forged a partnership with the Malaysian Institute for Micro-electronics Systems (MIMOS),

which aimed to complete the development of the manufacturing process of Zecotek’s MAPD solid-state

photo detectors.

! In the same month, GE Healthcare IT (Asia Pacific) revealed that the company is co-operating with the

Ministry of Health on establishing online diagnostic solutions. GE stated that one of the main problems is

the incompatibility of devices from different vendors, although the eventual integration of rural and urban

hospital systems will provide a considerable boost to healthcare provision.

! Also in March 2009, Australian medical diagnostics company HealthLinx finalised the commercial terms

for the launch of its OvPlex device in Singapore, Malaysia and a number of other Asian countries, over

the next decade. OvPlex, which is used to detect early-stage ovarian cancer, will be distributed by

Singapore’s Inex, a specialist distributor working in the field of women’s health and disease.

! In February 2009, Latexx Partners Bhd announced an investment of MYR70mn in the upgrade of its

production capacity for latex and nitrile gloves, starting next year. In 2011, the company is targeting

output of 9bn, with the current capacity at 4bn. The decision was based on rising demand, despite the

global economic downturn. In the course of the current year, the company is expanding its factories by 16

production lines. In financial year 2008 (ending December), Latexx posted MYR223mn in revenue and

MYR15.5mn in pre-tax profit, up on MYR150mn and MYR4.9mn, respectively, in the previous year.



Industry Forecast Scenario

Overall Market Forecast

Leading healthcare company

Pharmaniaga expects the outlook for

the Malaysian pharmaceutical industry

to improve in 2010. This view is in

accordance with BMI's Pharmaceutical

Expenditure Forecast Model, which

shows that medicine sales in the South

East Asian country increased by just

3.4% in 2009 – well below the 2004-

2008 compound annual growth

(CAGR) of 6.9%. But driven by an

expanding economy and an ageing

population, we expect the market to

expand by 9.46% in 2010 and 7.96%

between 2009 and 2014.

Indeed, economic indicators for the country are beginning to look more positive. BMI has bumped up our

2010 real GDP forecast to 4.9% (from 4.1%) in view of a stronger export recovery, although fears of a

Chinese-led slowdown have forced us to downgrade our economic outlook for 2011, with growth

expected to come in at only 3.5% (revising downwards from 4.7%). Malaysia's Q110 real GDP growth

came in at a larger-than-expected 10.1% y-o-y, accelerating from the 4.5% expansion recorded in Q409.

Notably, the headline figure has been boosted tremendously the recovery of global trade, where exports

roared ahead with 19.3% y-o-y growth, much faster than the 6.0% rise in the preceding quarter. With the

improved, economic outlook in 2010, we have bumped up Malaysia's economic growth forecast to 4.9%

for the year, from 4.1%.

However, we are concerned at the looming risk of a severe double-dip slowdown in China, where the

recent spate of monetary tightening measures introduced by Beijing to stem the Chinese property bubble

could eventually strangle the region's economic recovery, which would affect for our forecasts for the

pharmaceutical sector.

As a focal point of regional sector development, BMI expects the Malaysian drug market to grow y-o-y

through to 2019, from an estimated MYR4.29bn (US$1.22bn) in 2009. By 2014, BMI expects the market

to grow to MYR6.29bn (US$1.81bn) at consumer prices, with a somewhat lower local currency CAGR of

7.09% expected over our longer, ten-year forecast period. Key drivers of growth are medical tourism,

Pharmaceutical Market Forecast

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2

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f

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f

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f

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f

2015

f

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f

2017

f

2018

f

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f

0.0

0.2

0.4

0.6

0.8

Drug expenditure (US$bn), LHSDrug expenditure as % o f GDP, RHS

f = forecast. Source: IMS Health Asia, AC Nielsen, BMI. For data, see Forecast Tables section below.



growing reputation of Malaysian pharmaceuticals, the encouragement of the generics and specialist

segments, as well as the rising demand for and supply of halal medicines, although the economic

downturn will negatively impact shorter-term market development. By 2019 we expect the market to be

worth MYR8.51bn (US$2.66bn).

The public sector will continue to provide the bulk of demand, especially with the planned improvement

and expansion of medical services. The government has made the healthcare industry a priority,

implementing schemes to boost the sector. Growth should also be supported by an ageing and expanding

population, as consumers becomes increasingly aware of alternative products, and government priorities

remain favourable.

As purchasing power and private insurance increase and the government shifts more drug costs to

patients, per-capita drug expenditure will rise significantly in US dollar terms (at a CAGR of 8.21%

through to 2014), despite dipping in value in 2009, due to adverse economic conditions and exchange rate

considerations. OTC manufacturers are particularly well placed to exploit this trend, encouraged by the

recent and future finalisation of a number of FTAs. Traditional medicine is expected to post strong gains,

due to rising awareness of self-medication and cost containment.

Regional drug export potential remains strong, particularly in countries like Vietnam and Myanmar,

whose markets are growing, but the area continues to rely on cheaper products such as antibiotics and

painkillers. Halal medicine is being developed with a view to boosting Middle Eastern exports. Local

manufacturers are being encouraged to improve R&D, and the steady growth of exports has started to

attract foreign investment – especially in the field of biotechnology.



Key Growth Factors – Industry

Economic growth and the development

of the healthcare sector – and the

consequent increase in sector spending

– are expected to play a key role in the

growth of the pharmaceutical market

and the industry. Further development

will be driven by a greater knowledge

of disease and better access to modern

medicines, especially in rural areas

where healthcare is based on traditional

remedies.

Improving regulatory and trade

conditions should continue to attract

investment from multinationals, aiding

market development. Closely tied in with this advance is the harmonisation of procedures within the

ASEAN region, with alignment providing better market access for multinationals looking to establish or

expand operations in an increasingly lucrative regional market. The recent strengthening of regional

cooperation and collaboration with respect to significant healthcare areas suggests that the harmonisation

initiative is developing successfully.

Another factor aiding market growth is the stabilisation and strengthening of the ringgit against the US

dollar, with spending power rising as a result. However, controversies over the Malaysia’s FTA

negotiations with the US will act as a barrier to foreign involvement in the country’s pharmaceutical

sector, although Malaysia is still seeking to join regional trade initiatives.

Meanwhile, a serious risk to the sector would be a sharper-than-expected Chinese slowdown, precipitated

by a bursting of the property bubble that has been forming in large urban cities such as Beijing and

Shanghai. Indeed, Chinese demand for Malaysian exports make up about 20% of total outbound

shipments for Malaysia.

The Malaysian drug manufacturing and clinical trial industry will continue to develop as an increasingly

attractive option for international pharmaceutical firms, since the country has a large pool of highly

trained but inexpensive research professionals. The government has been making concerted efforts to

reinforce this trend, focusing on the development of the pharmaceutical and biotech hub around the

capital, Kuala Lumpur. Malaysia is a member of the European Pharmaceutical Inspection Co-operation

(PIC) Scheme, which is intended to ensure mutual confidence in manufacturing standards.

Healthcare Expenditure Forecast

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02468

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4

5

6

Health expenditure (US$bn), LHSHealth expenditure as % of GDP, RHS

f = forecast. Source: Department of Statistics Malaysia, World Health Organization (WHO), Ministry of Health (MoH), BMI. For data, see Forecast Tables section below.



While ASEAN co-operation is improving regional operating conditions, international co-operation is

evident further afield. India’s government is welcoming joint venture collaborations with Malaysian

pharmaceutical firms. The development follows a higher degree of involvement of Indian pharmaceutical

firms in the Malaysian pharmaceutical sector, most notably leading generics manufacturer Ranbaxy,

which has constructed a new manufacturing plant in the country. Malaysian pharmaceutical firms have

also expanded abroad, with leading local manufacturer Pharmaniaga being the most active.

Key Growth Factors – Macroeconomic

Recovery Expected, But Beware Chinese Risks

BMI View: The lower-than-expected 1.7% decline in real GDP in 2009 suggests that a V-shaped

recovery is currently in the works. However, a Chinese double-dip slowdown remains a key risk; and, in

view of still-weak global trade flows and an impending reduction in fiscal expenditures, we have revised

our 2010 real GDP growth forecast downwards slightly to 4.1% (from 4.3%).

The Malaysian economy performed better than expected in Q409, increasing by 4.5% y-o-y compared

with the -1.2% y-o-y registered in the previous quarter. The latest improvement in the fourth quarter

helped shrink the annual real GDP decline to 1.7%, bettering our -2.1% estimate. Latest data suggest that

a V-shaped recovery is at hand, as private consumption and investments have rebounded strongly from

the previous quarters, supporting growth.

That said, we emphasise that the external sector expansion is expected to remain lacklustre due to still-

weak global trade flows. Moreover, we expect the government's drive to slash official spending in order

to reduce the fiscal deficit to lead to a slowing in government consumption growth in 2010 and 2011. As

such, BMI is forecasting that the Malaysian economy will expand by 4.1% (down slightly from our

forecast of 4.3% previously), before accelerating to 4.7% in 2011 as the recovery gathers pace.

Private Consumption Key To Growth

As expected, private consumption – which made up 52.7% of the economy in Q409 – continued to play

an important role in buffering the decline in the broader economy, and we expect this trend to persist into

2010 and 2011. Private consumption rose 1.7% y-o-y in the fourth quarter of 2009, accelerating from the

1.5% figure registered in the preceding quarter.

A closer look at the GDP by sector numbers reveal that the services sector – which made up 57.4% of the

economy – grew 5.1% y-o-y, which was considerably faster than Q309's 3.5% expansion. We attribute

such growth to the recovery in consumer-driven industries - particularly the wholesale and retail trade,

which comprise about one-fourth of the services sector – where local buyers played a significant role in

propping up the economy while exporters languished due to the steep drop in global demand following

the onset of the global financial crisis. Given the local economy's size and sustained growth, we expect



such domestic consumption to play an increasing role in the coming years, serving as a 'shock absorber' in

the event of a global double-dip downturn.

As such, we are pencilling in 5.8% growth in private consumption in 2010, followed by a stronger 7.8%

in 2011 as consumer confidence returns. Such growth figures imply that the expenditure component will

form the largest contributor to headline growth, boosting the real GDP growth figure by 3.1pp and 4.3pp

in 2010 and 2011 respectively.

Capital Formation To Resume Expansion

Gross fixed capital formation grew by 8.2% y-o-y in Q409, after sustaining four consecutive quarters of

declines. The encouraging rebound in private investments added 1.6pp to headline growth, which was in

stark contrast to the 1.8pp subtraction in Q309.

Going forward, we believe capital formation will continue its pace of recovery in 2010, reclaiming the

losses registered in 2009 as investors regain confidence in Asian developing economies such as Malaysia.

Our view is consistent with the investment growth patterns registered by the Malaysian economy in the

past, where sharp rebounds were common following major crises, as was the case following the Asian

financial crisis and an earlier recession in the mid-1980s. In short, we believe that gross fixed capital

formation will grow by 5.8% in 2010, contributing 1.2pp to headline growth.

Government Spending To Take Back Seat

The MYR67bn (US$20bn) worth of fiscal pump-priming unveiled by the Barisan Nasional (BN)-led

government early in 2009 – which made up about 10% of GDP – has continued to support the broader

economy throughout the downturn. Government consumption grew by 1.3% y-o-y in Q409, which,

considering the high base effects from the whopping 12.7% seen in Q408, is a substantial increase. The

Sun newspaper reported that 113,000 projects had been included in the official spending binge, and

MYR14bn out of the MYR17bn slated to be disbursed already spent. Consequently, this has led to a 9.2%

y-o-y rise in construction activity in Q409, accelerating from 7.9% for Q309, according to sectoral GDP

data.

Over the next few years, however, Prime Minister Najib Razak's administration will progressively reduce

spending in order to bring down the large budget deficit which is estimated to have reached 7.9% of GDP

in 2009. That said, government consumption is still expected to grow, and we are forecasting growth of

5.9% in 2010, before decelerating to 4.8% the following year.

Factoring In Chinese Double-Dip On External Sector

In line with our global view, Malaysia's trade with other nations is expected to be lacklustre relative to the

past, with the total value of outbound goods expected to remain below its 2008 high until at least 2012. In

addition, we have factored in the heightened risk of a Chinese double-dip slowdown, hampering export



growth over the next few years. Therefore, we are expecting only a mild expansion in exports in 2011 –

when the impact of a Chinese slowdown is expected to be maximised – growing by 1.7%, which is

considerably lower than the 5.4% growth forecast for 2010. In 2009, exports shrank by 10.1%.

Table: Malaysia – Economic Activity

2007 2008 2009e 2010f 2011f 2012f 2013f 2014f

Nominal GDP, MYRbn 1 641.9 698.3 693.9 747.7 807.7 879.3 959.5 1,031.7

Nominal GDP, US$bn 1 187.4 209.4 197.0 229.1 252.4 256.7 272.2 296.9

Real GDP growth, % change y-o-y 1 6.2 4.6 -1.7 4.1 4.7 5.8 6.1 5.6

GDP per capita, US$ 1 6,897 7,552 6,959 7,936 8,570 8,559 8,912 9,550

Population, mn 2 27.2 27.7 28.3 28.9 29.5 30.0 30.5 31.1

Industrial production index, % y-o-y, ave 1 2.3 0.7 -7.6 2.0 2.7 3.9 4.6 4.7

Unemployment, % of labour force, eop 3 3.0 3.1 3.5 3.3 3.4 3.3 3.2 3.1

Notes: e BMI estimates. f BMI forecasts. Sources: 1 Bank Negara Malaysia, BMI; 2 OEF; 3 Department of Statistics, BMI.

Prescription Drug Market Forecast

The market for prescription drugs was

valued at MYR3.12bn (US$887mn) in

2009. market modernisation continues,

the use of doctors and hospitals will

encourage higher consumption of

prescription medicines, although the

higher uptake of generics and the

expected separation of prescribing and

dispensing will act as barriers to

growth. Indeed, the prescription drug

market will make up a smaller share of

the total market going forward as its

percentage falls – albeit slightly – y-o-

y. In January 2009, the Malaysian

Pharmaceutical Society (MPS)

proposed the creation of a zoning system to facilitate the transition, with those areas with sufficient

numbers of pharmacists to be the first to start dispensing. However, to date, no major changes have been

Prescription Drug Market Forecast

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Prescription drug market (US$bn), LHS

Prescription drug sales as % of to tal market, RHS

f = forecast. Source: IMS Health Asia, BMI. For data, see Forecast Tables section below.



implemented in this area. BMI expects the prescription market to grow y-o-y over our 10-year forecast.

After dipping in 2009 we expect to see the market to resume growth to MYR3.38bn (US$1.04bn) in

2010.

Additionally, the majority of the pharmaceutical expenditure will continue to be recorded in the private

sector, which is vulnerable to economic fluctuations. Moreover, the government is seeking compulsory

licences for some patented products, which could dent the values of the prescription sector over the

coming years. Therefore, its five- and ten-year CAGRs of 6.21% and 5.88%, respectively, in local

currency terms will be lower than that for the overall market as well as the OTC segment, despite the

latter suffering in the short-term due to economic downturn. Once the separation of prescribing and

dispensing is fully enforced, BMI will change the forecasts accordingly. In the meantime, we expect the

market to strengthen to MYR4.35bn (US$1.25bn) in 2014.

Presently, the distinction between OTC and prescription market is blurred, as doctors can both prescribe

and dispense, which has – in the past – made market estimations difficult to make. The private sector

accounts for 60-70% of the prescription market. Much of this is informal, with prescription drugs often

available OTC. As in many Asian countries, physicians often sell the drugs they prescribe. Around 45%

of non-OTC drugs are sold by dispensing medical practitioners, with a further 30% being sold through

public/private healthcare institutions. Dispensing pharmacies account for the remaining 25%.

Presently, the leading prescription category is cardiovascular drugs, followed by nervous system

treatments, in line with the country’s demographic and epidemiological profile. Producers of cancer drugs

will also benefit from rising demand for oncology treatments over the coming years, with the threat of

avian and swine influenza boosting the commercial potential of treatments against such viral infections.

According to a 2006 Ministry of Health survey, the leading therapeutic classes were diabetes treatments,

beta blockers, angiotensin agents, drugs for pulmonary obstruction disorders, anti-histamines and serum

anti-lipidaemia products. These categories were followed by calcium channel blockers, systemic anti-

bacterials, anti-inflammatories and anti-rheumatics and diuretics. As part of its cost-containment drive

(and due to antibiotic resistance concerns), however, the government may wish to limit the use of

antibiotics, which would have a negative impact on the sector’s value.

According to the Health Ministry, some MYR150-200mn (US$43-58mn) is spent on medicines for

diabetes, high blood pressure and elevated cholesterol levels each year. There is an increasing mortality

and morbidity from diabetes mellitus, which varies due to the culturally diverse population. The

proportion of the population with diabetes has increased from 6% to 10% over the past 20 years and this

figure is expected to reach 13% by 2020. The highest prevalence of diabetes, for example, is recorded

among Indians.



However, officials have noted that as the data indicate that less than 2% of the population use

hypolipaemics on a regular basis, it is likely that related conditions are under-diagnosed. The relative

expense of patented cholesterol reducers has been blamed as a disincentive for their use. Figures obtained

from the Malaysian National Renal Registry show that, as of 2006, a total of 14,647 kidney patients were

on dialysis.

Patented Product Market Forecast

The demand for advanced medicines

should fall over the coming years, due

to patent expirations, possible issuing

of compulsory licences, and focus on

generics, despite high demand for

cardiovascular and central nervous

system therapies growing notably and

providing substantial opportunities for

foreign players in particular. Overall,

the five- and ten-year growth of the

patented market is expected to be at a

level of 4.73% and 3.47%, respectively,

in local currency CAGR terms,

therefore trailing that of the overall and

generics markets. Moreover, patented

drugs will lose market share y-o-y through to 2019 as generics take a greater share of the total market.

BMI estimates that the patented market held 46.9% of the total market in 2009, which we see falling to

45.6% in 2010 as the sector grows to MYR2.14bn (US$657mn). By 2014, patented products will be

worth MYR2.54bn (US$728mn), making up 40.3% of the total market and dropping to 33.3% by 2019.

Diabetes treatments, beta blockers, angiotensin agents, drugs for pulmonary obstruction disorders,

antihistamines and serum anti-lipidaemia products remain some of the best-sellers, followed by drugs in a

number of other categories, including calcium channel blockers, systemic anti-bacterials, anti-

inflammatories and anti-rheumatics and diuretics. The present levels of under-diagnosis and under-

treatment will boost the growth of the above therapeutic areas, although the relatively high price of novel

patented medicines represents a hindrance.

‘Lifestyle drugs’ have gained prominence in recent years. Growth prospects for the ED segment are

especially strong given the social stigma attached to the condition, which the companies aim to overturn

through intensive marketing campaigns. The global ED market was also expected to expand significantly

over the next four to five years, reaching US$5bn in 2009, up from US$3bn in 2006.

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Overall, main drivers of the patented segment will include higher healthcare expectations, demographic

changes and the availability of new drugs on the market, boosted by improved operating conditions, made

possible by rising international collaboration and FTAs. However, high prices for patented drugs will be

targeted by the government, while they are also likely to lose out to generics in terms of volume.

On a positive note for manufacturers of patented drugs, according to a GfK HealthCare Asia survey

conducted for the first time in Malaysia in October 2008, pharmaceutical sales representatives remain a

major force in terms of market penetration. The RepOtimiser Study, involving around 350 Malaysian

physicians and over 1,500 companies, found that doctors are receptive to information provided by sales

representatives, with such marketing and promotional investment thus judged to be worth the effort and

money.

The survey, published n May 2009, found that – in addition to journals – continuing medical education

(CME) is the most popular information source for practicing physicians. Broken down by specialties,

some 90% psychiatrists and 69% of general practitioners report reliance on sales representatives, in

contrast with only 44% of ear-nose-throat (ENT) specialists. Overall, however, around 70% of doctors

use sales representatives to gain up-to-date information on new drugs and diseases in general.

Generic Drug Market Forecast

Government efforts to lower healthcare

spending, which prompted new

regulations, will stimulate the generics

market, which has so far been growing

at a very modest pace. Efforts to create

a genuine generics sector have been

patchy, but the expiry of patents on 47

drugs with high sales figures in the next

five years is a chance for manufacturers

to produce generic versions. Presently,

generics are poorly promoted in

Malaysia, with branded drugs generally

viewed as superior in quality. The

market was accordingly worth just

MYR1.11bn (US$316mn) in 2009. The

relatively small size of the market in Malaysia gives it a greater potential for growth in the coming years,

however. Indeed, after the OTC market, BMI believes the generics market will post the strongest growth

over the next nine years. BMI’s forecast shows a local currency CAGR of 10.34% over 2009-2014,

accelerating to 10.87% over 2009-2019. Generic products, along with OTC products, were the only

categories that did not register a decline in 2009 as generics took a greater share of the total market.

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Generic drug market (US$bn), LHS

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Generics are expected to make up 26.4% of the total market in 2010, which will grow y-o-y through to

2019. BMI expects the market to be worth MYR1.24bn (US$381mn) in 2010.

Other growth drivers are the rising quality of generics, cost-containment needs and implementation of the

ASEAN Free Trade Area (AFTA) agreement, with products from signatory countries to be exempt from

import barriers and tariffs. The flow of imports is expected to increase, tightening competition and

pushing local manufacturers to create competitive advantages.

A study published in March 2009 by the School of Pharmaceutical Sciences at the Universiti Sains

Malaysia (USM) indicates that the substitution of branded drugs with generic equivalents has the

potential to substantially reduce healthcare costs. The research states that patients using private hospitals

could slash their bills by between 60 and 90% if they used generics. According to the USM team, up to

80% of all essential drugs marketed in Malaysia have generic equivalents.

A survey conducted by the Universiti Sains Malaysia on community pharmacists’ perception of generic

substitution published in March 2010 found that attitudes were mostly favourable. As many as 93.6% of

the respondents agreed that pharmacists ought to have generic substitution rights, the survey found. While

96.8% thought that pharmacy-only medicine was the most appropriate drug category for generic

substitution, 51.6% showed a preference for universal substitution for any prescription, Biotech Week

reported. Although the response rate was fairly limited, the survey shows the overwhelmingly favourable

attitudes of community pharmacists in Malaysia towards a generic substitution policy the future, which

could have a positive impact on sales for the sector.

However, doctors are still unwilling to prescribe generics in large amounts, as most are engaged in the

lucrative practice of dispensing patented and branded prescriptions. In addition, the plans to introduce

price ceilings on essential drugs would be negatively reflected in the value of the generics segment.

Nevertheless, through to 2014, generics are expected to grow at a CAGR of 10.34% in local currency

terms, beating the patented as well as the overall market growth, to reach MYR1.82mn (US$522mn) in

value at consumer prices, while also gaining market share at the expense of patented drugs, despite the

former’s lower prices. Over our longer, ten-year forecast, generics will maintain most of this momentum,

with their value expected to grow by a CAGR of 9.82%. In 2019, generics are likely to account for over a

third of the total market in terms of value.



OTC Medicine Market Forecast

Malaysia’s OTC market will see the strongest growth of the country’s drugs markets over the 2009-2014

period. The value of the market is expected to record an impressive 10.95% local currency CAGR over

the period, which dips only slightly to 10.36% over BMI’s longer 10-year forecast. The value of OTC

products reached an estimated MYR1.17bn (US$332mn) in 2009 (27.2% of the total market) and is

forecast to expand to MYR1.32bn (US$404mn) in 2010.

A steady absolute value growth is

attributed to several factors, but mainly

to importance of branding, greater

health awareness among consumers and

greater willingness to self-medicate.

Additionally, the expected separation of

prescribing and dispensing has the

potential to improve OTC values and

volumes beyond the forecast, if and

when implemented. By 2014 we expect

the market to grow to MYR1.94bn

(US$557mn) as its share of the total

market edges up to 30.8%.

In the meantime, the value of herbal

medicines will also increase, supported by the government’s backing for R&D in the area of medicinal

plants. Having been worth around MYR300mn (US$82mn) in 2006, the herbal medicines market is likely

to top MYR1bn (US$330mn) at consumer prices by 2013.

Growth in vitamins and dietary supplements and stable demand for cough, cold and allergy remedies,

analgesics and medicated skincare treatments should be among the main contributors to overall growth in

the sector. Digestive remedies will in particular perform strongly over the forecast period, while the

government anti-smoking drive expected to benefit the nicotine replacement segment of OTC medicines.

Additionally, traditional medicines are also expected to make notable gains over the coming years, as the

population seeks to lower its healthcare costs.

Most of the OTC medicines are imported, illustrating future commercial potential for foreign

manufacturers. Vitamins and dietary supplements are an exception, with Malaysia exporting such

products to over 30 countries worldwide, including Singapore, Vietnam, Brunei, Hong Kong, Taiwan,

Japan and Germany, as well as Africa and Central America.

OTC Medicine Market Forecast

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2018

f

2019

f

05

1015

20253035

40

OTC medicine market (US$bn), LHSOTC medicine sales as % of to tal market, RHS

f = forecast. Source: AC Nielsen, BMI. For data, see Forecast Tables section below.



The widespread availability of most OTC medications via direct sales, pharmacies, supermarkets or

traditional medicine stalls will continue to encourage self-medication sales. Pharmacists, however, remain

the main source of OTCs, having accounted for some 38% of total pharmaceutical sales in 2004. Their

efforts to increase their revenues will support the future development of the OTC market, although the

segment’s performance remains vulnerable to economic fluctuations.

Medical Device Market Forecast

By 2014, we expect the value of

Malaysia’s medical devices market to

have reached MYR3.61bn

(US$1.02bn), growing at a CAGR of

4.2% in local currency terms, which is

considerable, but which falls below the

level of development forecast for the

pharmaceutical spending. Healthcare

modernisation efforts are currently

focused on expanding access to

medicines rather than to expensive

medical diagnostics, which will remain

the case for some years to come.

Although the demand is rising, given

the epidemiological profile in the country, medical devices are expected to account for a sharply falling

percentage of the overall healthcare expenditure over the coming five years. Additionally, the high

percentage of out-of-pocket expenditure as a proportion of total healthcare spending will continue to act

as a brake on the development of medical devices values in Malaysia, where much of the rural population

(especially) has no means of accessing expensive medical services.

In the meantime, the local medical devices industry remains focused on lower-end scale, in terms of

product mix. Although the demand is mostly met through imports, Malaysia does have a significant

export activity in the field of surgical gloves, catheters and similar low-tech devices. Local manufacturing

standards are expected to improve once Malaysia implements a new medical device regulatory authority,

which should harmonise regulations in line with those of other Asian countries. The economic crisis has,

however, thrown a shadow over the shorter term development of the sector, with some smaller

manufacturers folding.

Medical Device Market Forecast

2005-2014

f = forecast. Source: Ministry of Health (MoH), trade press, BMI. For data, see Forecast Tables section below.



Pharmaceutical Trade Forecast

In the 2009-2014 period, the

pharmaceutical export sector is forecast

to grow at a medium pace (at a CAGR

of 5.62% in US dollar terms, and by a

similar rate in local currency, given the

relative stability of exchange rates).

Factors driving growth at a specific

pharmaceutical trade level are the

modernisation of the local

manufacturing industry, increased

ability to produce biotechnology-driven

products, an influx of foreign

investment in manufacturing units –

which are serving both the domestic

market and other key regional markets

– and ASEAN harmonisation.

Furthermore, although bilateral FTA negotiations with the US appear to have been abandoned partly

because of public pressure, both parties will be aiming to include Malaysia in a multilateral trans-Pacific

agreement. The wider agreement, along with deals with a number of other trade partners are set to

improve export figures, albeit at some risk to local manufacturers if they fail to be competitive. The total

value of pharmaceutical exports should grow to US147.7mn in 2010, reaching US184.9mn by 2014.

However, growth in the value of imports will continue to outpace exports over the forecast period, as

imports will grow at a CAGR of 12%. Imports will be worth US$1.02bn in 2010, taking Malaysia’s

pharmaceutical deficit to US877mn.

On a broader scale, exports have also benefited from the strong growth in the global economy, especially

in the US, and the further opening of China’s economy following WTO entry, which led to a drop in

import tariffs from 7.8% in 2003 to 7.2% in 2004. The ongoing elimination of tariffs under the Japan-

Malaysia Economic Partnership Agreement and the consequent FTA will serve to further boost trade

between the two countries. In January 2009, China authorised Malaysian companies certified by the

Malaysian Ministry of Health to export their products to China, although export performance will suffer

from a demand slowdown in regional and wider global economies.

To boost sales and profit, Malaysian drugmaker CCM Duopharma was looking to export high-value

products to neighbouring countries as of February 2010. Given the relatively limited size and growth of

the company's domestic market, BMI believes this is a sound strategic move. However, we would warn

of competition from larger rivals operating from lower-cost bases.

Pharmaceutical Trade Forecast (US$mn)

2005-2014

-2,200

-1,700

-1,200

-700

-200

300

2005

2006

2007

2008

2009

f

2010

f

2011

f

2012

f

2013

f

2014

f

Exports Imports Balance

f = forecast. Source: International Trade Centre (ITC), United Nations (UN) Commodity Trade Statistics Database, Malaysian External Trade Development Organisation (MATRADE), BMI. For data, see Forecast Tables section below.



CCM Duopharma intends to construct a 'fill and finish' plant that will package vaccines from bulk form

into small dosage packs. A total capacity of 12mn doses per annum is anticipated and distribution to

Indonesia, Thailand and Vietnam is planned. The attraction of these countries is clear. Last year, sales of

pharmaceuticals in Malaysia, Vietnam, Indonesia and Thailand were US$1.24bn, US$1.53bn, US$2.79bn

and US$3.79bn, respectively. Over the 2009-2014 period, the respective medicine markets' CAGRs will

be 8.21%, 15.77%, 8.17% and 7.41%, according to BMI's Pharmaceutical Expenditure Forecast Model.

Meanwhile, a new deal struck in March 2010 between the Health Ministry and India’s Institute of

Cellular Therapies will see the establishment of a cell culture lab in Malaysia to produce cancer drug

Denvax. This could help the pharmaceutical trade balance as Malaysia currently imports the drug from

India.

By the end of 2006, Malaysia, Singapore, Thailand, Indonesia and Vietnam succeeded in harmonising

their pharmaceutical exports as part of the ASEAN Common Technical Dossiers (ACTD) programme.

The decision to harmonise dossiers eliminated some of the cumbersome bureaucracy that had previously

been responsible for delays in pharmaceutical trade. Other ASEAN members were due to adopt common

standards by the end of 2008.

BMI expects more drugmakers in South East Asia to attain Good Manufacturing Practice (GMP)

accreditation after a major trade agreement was signed in April 2009. Upgrading facilities and processes

will require considerable investment in the short term, but producers of pharmaceuticals will eventually

see a significant upside, both domestically and abroad. This is because consumers, especially those on

those low incomes, will increasingly appreciate the quality of medicines made in the region.

The Sectoral Mutual Recognition Arrangement for GMP Inspection of Manufacturers of Medicinal

Products is designed to remove barriers that impede the trade of pharmaceuticals between ASEAN

member states. A country’s drug regulator will approve a drugmaker’s plant and this certification will be

accepted by fellow ASEAN states, thereby reducing a duplication of effort. Full implementation is

expected by January 2011.

In addition to adhering to GMP standards, the agreement states that medicine producers must also meet

Pharmaceutical Inspection Co-operation Scheme (PIC/S) guidelines. Conceived by the EU authorities,

PIC/S is proving increasingly popular as it seeks to encourage dialogue between regulatory authorities. As

of November 2009, there were 37 participating agencies.

More than 65% of Malaysia’s pharmaceuticals and medical equipment are imported (mostly from the US,

Japan and Germany), partly because most doctors are reluctant to switch to local brands as they perceive

imported drugs as being of the higher quality, especially novel and specialist treatments. Most drugs

produced by local companies are basic medicines, such as painkillers and antibiotics, since it is not



economically feasible to target a specialised segment. However, there are signs that domestic players

looking to move up the value chain and are investigating advanced therapeutics.

Increasing domestic demand, a significant proportion of which the local manufacturing industry will be

unable to meet, will stimulate the growth of pharmaceutical imports over the next five years. The market

will remain receptive to foreign products, particularly at the hi-tech end of the scale. The overall trade

balance will increasingly shift further in favour of imports throughout the forecast period, indicating

sizeable business opportunities for foreign companies.

Other Healthcare Data Forecasts

The number of private hospitals in Malaysia proliferated in the 1980s, driven by increased affluence of

the country’s population, the demand for better services and the government privatisation programme,

which witnessed a number of state-owned healthcare facilities become for-profit enterprises. The number

of private hospitals is likely to increase over the coming years, as the country attempts to attract foreign

patients, not just from the region but also from further afield. The demand for services will also be driven

by a growing – as well as ageing (an increase of 200% is expected in the coming years, putting a strain on

public sector provision) – population, although the boost in the private sector is likely to cause further

shortages of both personnel and facilities in the public sphere.

In fact, the country is already facing shortages of certain medical professionals, due to its changing

demographics and epidemiological profile and emigration. To this end, in November 2008, the Malaysian

Minister of Health was quoted by The Star as stating that the country needs at least 200 oncologists as

cancer cases in the country are rising. Presently, official figures indicate that the country has only 39

oncologists for a population of 26mn, which is clearly insufficient. In late 2008, the government unveiled

various initiatives to increase the number of doctors – including dentists, pharmacists and specialists – in

the country, which include employment of foreigners – mainly from Indonesia and India – as a temporary

measure.

As of recently, the number of complaints filed against doctors and nurses has been rising, with the

Ministry of Health receiving over 30 such grievances in the first two months of 2009. The Public

Complaints Bureau reports that the complaints are primarily related to a lack of communication skills.

The minister added that to sort out such complaints it will undertake a number of initiatives, including

compulsory communication skills training for medical employees.



Key Risks To BMI’s Forecast Scenario

While generics play a major part in the Malaysian market, the development of a genuine sector has been

slow. However, the government continues to encourage their use and its perseverance could see a sizeable

increase in the generics market above the level already forecast, especially given the recent legalisation of

parallel trade and the challenging economic situation.

The prescription of generics in the public sector is becoming increasingly popular, indicating a greater

willingness to use low-cost medicines, but it is the changes in the private sector that remain crucial to

market development. In the meantime, the private sector, which favours patented products, as they bring

higher revenues for healthcare providers, would have also felt the pinch of the economic downturn.

Nevertheless, physicians’ reliance on sales representatives for up-to-date product information bodes well

for market penetration by research-based companies.

Given the notable level of counterfeit pharmaceuticals in the country, the difficulties in applying process

patents, a lack of data exclusivity and an overall poor standard of enforcement of regulations,

multinationals’ revenues over the forecast period may be lower than predicted for certain products.

Additionally, some companies may reconsider or delay launching products on the Malaysian market,

which would have a further negative effect on the sector’s value.

The situation above is likely to improve in a longer term, as Malaysia embraces ASEAN harmonisation

procedures. The standardisation of requirements will also serve to improve Malaysia’s export potential, as

already witnessed by a surge in exports following China’s accession into the WTO. Exports should

further benefit from an increase in trade partnership within the region and wider, potentially pushing the

figures above the forecast levels. However, global economic difficulties are already resulting in lower

overall exports from Malaysia, which will threaten forecast export figures, despite the positives brought

about by the nascent biotechnology industry’s potential.

Moreover, regional competition, especially from Singapore and China, will hamper Malaysia’s efforts to

increase pharmaceutical exports. Nevertheless, the recently signed FTA between ASEAN states and

Australia and New Zealand, and the expected FTA agreements with the US and a number of other

countries should boost trade activities somewhat, although the main benefits are likely to be felt in terms

of increased FDI inflows.

Malaysia is presently debating the separation of prescribing and dispensing, with the implementation of

changes likely in the short to medium term, in line with wider Asia Pacific trends. When the change is

actioned, BMI will adjust its prescription and OTC forecasts accordingly.



Competitive Landscape

Domestic Pharmaceutical Industry

The local industry remains focused on the production of generics and lower-tech medicines. The local

drug industry is dominated by one company, Pharmaniaga, which controls around 30% of the total

market. In the future, domestic sector development is likely to remain centred on the operations of the

industry’s larger producers, as these look to benefit from the onset of ASEAN harmonisation, which has

brought marked growth in the private sector and opened up export markets. The modernisation of the

sector is also likely to see many smaller drug companies disappear as a result of the tightening of

regulations, with the costs of the required upgrading being a major problem.

Pharmaniaga has had a turbulent start to 2010. Following the February release of financial results that

BMI described as 'disappointing', the company's manufacturing licence has been revoked by the

Pharmaceutical Services Division of the Ministry of Health as of March 2010. The firm's majority

shareholder, UEM Group Berhad, has subsequently failed to deny claims that it plans to divest its interest

in Pharmaniaga.

Despite these setbacks, the outlook for Pharmaniaga is positive. According to Edge Malaysia, sources

suggest that the pharmaceutical company has retained its lucrative 10-year concession for the provision of

generic drugs to the Malaysian government. This deal will provide a steady revenue stream and allow

Pharmaniaga to increasingly explore growth strategies such as ramping-up exports to neighbouring

countries and producing higher-value medicines. The revocation of the manufacturing licence followed a

routine audit of Pharmaniaga's Bangi plant. Inspectors found 'a few' non-compliance issues, according to

the firm's managing director, Mohammed Abdullah. He believed that the problems could be rectified

within a week and ministry officials would return 'very soon'. If the facility shutdown exceeds seven days,

customers will be affected, added Abdullah.

Medicine manufacturing accounted for approximately 10% of Pharmaniaga's turnover, or US$38.2mn, in

2009. However, it is the firm's most profitable division. It is BMI's view that a significant delay to the

resumption of production at the Bangi factory will have two main effects. Sales and profitability will drop

due to a lack of products reaching the market. Demand for Pharmaniaga services, such as distribution

activities, will also decline as result of lower stakeholder confidence in the Shah Alam-based firm.

The uncertainty over the future involvement of UEM Group Berhad in Pharmaniaga is a moderate

concern. The drugmaker’s parent company is in negotiations with several parties to dispose of its entire

86.31% equity stake. UEM Group Berhad has until March 29 to ensure it meets the 'public spread

requirement' – a 25% public shareholding in Pharmaniaga. BMI believes a merger between Pharmaniaga

and compatriot drugmaker CCM Duopharma remains a distinct possibility.



At the end of 2007, there were approximately 235 GMP-compliant manufacturers in Malaysia licensed by

the DCA, some of which act as sales agents for international pharmaceutical companies. Around 30 are

licensed to manufacture prescription medicines, while the rest produce OTC medicines. Some 140

manufacturers are licensed to produce traditional and herbal medicines, with such products integrated into

the mainstream healthcare system. Malaysian companies’ market share rose to 20-30% in recent years, in

comparison to the 1995 figures of only 10-15%.

In January 2009, the health ministry of China allowed the importation of medicines from Malaysia that

had been certified by the Malaysian government. Malaysia’s membership of the Pharmaceutical

Inspection Convention and Pharmaceutical Inspection Co-operation/Scheme (PIC/S) puts local

manufacturers in a good position to export to developed markets.

Foreign Pharmaceutical Industry

Due to their strength in innovative products, multinationals control about 70% of the pharmaceutical

market, especially in terms of innovative and specialised products. All of the major multinational drug

companies are represented in Malaysia, although only a small number have a direct manufacturing

presence, largely as a result of restrictive regulatory practices. Companies with significant local

production facilities are B Braun, GSK, Johnson & Johnson (J&J) and Ranbaxy. Multinationals, which

are primarily represented by the Pharmaceutical Association of Malaysia (PhAMA), are gradually getting

involved in the fields of local biotechnology, clinical trials and bio-equivalence studies, illustrating the

rising market potential as well as an improvement in operating conditions.

Malaysia represents a major – and very competitive – market for ED treatments, with the condition

affecting estimated 2.2mn men in the country. The main players in the field include US major Eli Lilly,

which launched its ED drug Cialis (tadalafil) in January 2004. German pharmaceutical company Bayer

and GlaxoSmithKline Malaysia (a subsidiary of British GSK) entered the market with the introduction

of Levitra (vardenafil). The drugs also compete directly with Pfizer’s Viagra (sildenafil). However, the

ED treatments have also been a frequent target of counterfeiting activities.

Other multinationals are also making more concerted efforts to capture higher market shares in Malaysia,

outside the ED segment. German drug giant Schering AG (now part of Bayer), leading Indian drugmaker

Ranbaxy and Belgium-based Agfa have made known their intentions to expand activities in the country,

with the latter planning to create a regional R&D centre in Malaysia, and Ranbaxy intending to establish

its Malaysian operations as a regional manufacturing base. Other companies present through imports

include Swiss Roche, US-based Bristol-Myer Squibb (BMS) and German Boehringer Ingelheim,

which employs around 60 staff in Malaysia. Roche is also active in the diagnostic segment.



Aside from the above, recent multinational sector activity in Malaysia has been relatively low key. The

situation reflects the decision of many companies to focus more on other Asian markets, such as China,

Taiwan and Singapore, which offer greater opportunities and more favourable business climates. In the

future, multinational activity is likely to reflect sector modernisation and the proliferation of FTAs, but at

a pace of development slower than, for example, Singapore, which holds greater investment potential and

offers a more favourable regulatory environment. In the current year, market activities will be dictated by

negative economic conditions, which are likely to boost the use of cheaper generic products across the

board.

Pharmaceutical Demand

A survey carried out by the Ministry of Health, which was published in May 2006 and aimed to be the

first independent study of its kind, indicated that the pharmaceutical market is at a comparatively early

stage of development. The research confirms the fundamental role played by older, mainly generic, drugs

and copies. Significantly, sales of the top 40 drugs available in 2004 were only equivalent to around 10%

of the country’s total pharmaceutical market. Furthermore, in all but the most life-saving and inexpensive

drugs for chronic disease – such as metformin in diabetes – the private market continues to account for

the overwhelming majority of sales. Moreover, the data indicate that true prescription drugs account for a

less substantial share of overall demand than in advanced markets. This is unsurprising in light of the

availability of powerful OTC pharmaceuticals, and the low-cost focus of public sector reimbursement.

Recent Company Activities

! In February 2010, CCM Duopharma was reportedly looking to export high-value products to

neighbouring countries to boost sales and profit. Given the relatively limited size and growth of the

company's domestic market, BMI believes this is a sound strategic move. However, we would warn of

competition from larger rivals operating from lower-cost bases. CCM Duopharma intends to construct a

'fill and finish' plant that will package vaccines from bulk form into small dosage packs. A total capacity

of 12mn doses per annum is anticipated and distribution to Indonesia, Thailand and Vietnam is planned.

! Pakistani generic pharmaceutical company Getz Pharma is planning to invest more than US$45mn in

Malaysia through subsidiary Getz Pharma Malaysia. The company said in May 2010 that it will invest

in R&D, production and commercialisation of sterile injectables and other biopharmaceutical products.

The announcement was made by the Malaysian Biotechnology Corp at the Malaysian Pavilion at the

BIO International Convention.

! Australian pharmaceutical company Genepharm announced in April 2010 that it will carry out its

operations under the new name of Ascent Pharmaceuticals, reports Pharmacy News. Ascent

Pharmahealth CEO Dennis Bastas said the company had established the Ascent brand in 2008 when it



launched its Australian generic portfolio into Asia. The company said that re-branding will help align its

business more closely with its fast-growing international brand.

! Thai pharmaceutical company The British Dispensary signed a deal with Chemical Company of

Malaysia (CCM) in March 2010 for developing its manufacturing base and expanding its product range,

reports Business Times. With the MYR50mn (US$15.3mn) collaboration, the Thai company is looking to

include halal-based cosmetic and healthcare products in its existing 18-brand portfolio. The two

companies are capitalising on the ASEAN free trade area to expand their businesses in the region

! In August 2009, reinforcing its strong position in Malaysia’s cardiovascular drug sector, Ranbaxy

launched Covance (losartan), which will be manufactured locally. Given the low cost of the product and

the unmet medical need, BMI expects prescribers’ uptake of the drug to be rapid. The Drug Control

Authority approved standard (50mg) and high doses (100mg), but not the low dose recommended for

those taking diuretics or with liver problems. In addition to cannibalising sales of the originator product –

Merck & Co’s Cozaar – Covance will gain market share at the expense of Diovan (valsartan), Aprovel

(irbesartan) and Micardis (telmisartan). According to market research firm IMS Health, sales of Cozaar

in Malaysia reached US$6.29mn in the twelve months ending June 2008. In September 2006, Ranbaxy

launched a generic version of atorvastatin under the brand name Storvas in Malaysia. The product – a

copy of Pfizer’s Lipitor – was made available to all general practitioners, pharmacies and hospitals in the

country. At that time, Malaysia’s statin sector was calculated to be valued at MYR100mn (US$27.12mn)

and expanding by 25% a year.

! In March 2009, Carotech, a subsidiary of Malaysian drugmaker Hovid, was awarded a certificate of

excellence by the Minister of International Trade and Industry. Carotech was honoured for its export

excellence on a global scale, with the award taking into consideration factors such as market penetration,

product development and reduced usage of imported components. Carotech has sales offices overseas,

namely in the UK and the US.

! In April 2009, Indian pharmaceutical company Marck Biosciences, which specialises in sterile dosage

therapeutics, commenced an export of medicines to Malaysia. The move was recently authorised by

Malaysia’s National Pharmaceutical Control Bureau (NPCB). In the first year of exports, the company is

targeting sales of US$1mn, with a focus on ophthalmic and injectable medicines. Over the longer term,

March has hinted that it would create a local manufacturing base, which would also be used as a regional

export centre.

! In March 2009, psoriasis product Raptiva (efalizumab), marketed by Merck Serono, was suspended by

the Malaysian Ministry of Health. The decision was made on the basis of its risks outweighing its

benefits, with the company requested to stop all imports of Raptiva, effective immediately. The product,



manufactured in partnership with US firm Genentech, had recently also been voluntarily withdrawn from

both the European and US markets.

! In March 2009, US-based generics specialist SOHM Inc. revealed that it will expand its distribution to

South East Asia, namely to Malaysia, Thailand, Indonesia and the Philippines. The company is targeting

the rapid development of pharmaceutical demand in those countries. SOHM has manufacturing plants in

the US as well as in India, with the latter likely to be the source of South East Asia distribution network.

! In January 2009, Denmark-based global leader in dermatology and critical care Leo Pharma won a court

case against Malaysia generic manufacturer Kotra Pharma. The Malacca High Court ruled that Kotra

infringed Leo Pharma’s trademarks Fucidin (fucidic acid) and Fucicort (fucidic acid) by adopting

trademarks Axcel Fusidic and Axcel Fusi-Corte back in 2000. The products are used for the treatment of

skin infections. Consequently, Kotra will be permanently restrained from further infringing Leo Pharma’s

trademarks, while it may also need to pay compensation to the Danish company.

Halal Medicine

Halal medicines are highly important to the Malaysian market, given that Islam is the country’s official

religion. Halal is an Arabic term meaning ‘permissible’. With respect to pharmaceuticals, it excludes

products derived from blood, animals slaughtered in the name of anyone but God, and swine. As such,

many medicines – for example those compounded in capsules with the animal product gelatin – cannot be

consumed by many observant Muslims. Pharmaceutical companies have been aware of this niche for

some time, but it is only recently that drugmakers have explicitly targeted this growth area.

Like Pakistan, Malaysia is looking to become the conduit for medicine exports to the Islamic world.

Demonstrating this intent, the country’s Halal Development Corporation (HDC) has agreed to certify as

Halal traditional Chinese medicine manufactured in Ningxia province. Malaysia will then distribute the

products to the consumers globally.

Other companies concentrating on Halal medicines include Chemical Company of Malaysia (CCM),

which has singled out Halal medicines as a key driver of its future growth. BMI strongly endorse this

approach as the firm’s other divisions – fertilisers and chemicals – will always return lower margins. To

achieve increased profit, which has been falling in recent years despite booming revenues, CCM is

expanding domestic manufacturing capabilities with a US$17.6mn plant. The factory’s annual capacity

will be 1bn tablets of generic drugs and vitamins.

The company is simultaneously ramping up recruitment of agents in markets where the Muslim

population is large, such as in the Middle East. CCM is aggressively registering all of its products in

countries such as Jordan, Syria, Vietnam, Thailand and Indonesia. In addition to all these countries having

significant Muslim populations, the values of the pharmaceutical markets are increasing y-o-y.



Chinese firm Shanghai Al-Amin Biotech recently unveiled a comprehensive Halal product range that is

intended for global distribution. Given its low-cost manufacturing base, BMI believes that it has a distinct

advantage over CCM. However, because CCM is headquartered in one of the most orthodox Muslim

states – compared to China where the practicing of religion is suppressed – Shanghai Al-Amin Biotech

will be frequently operating in unfamiliar territory, limiting its favourable fundamental.

Traditional Medicine

As with many Asian nations, traditional medicines are frequently used in Malaysia, often in tandem with

modern drugs. This is evidenced by the Kepala Batas Hospital in Penang becoming the first healthcare

facility in Malaysia to offer both modern and complementary (herbal preparations, acupuncture and

traditional massage) medicine. If the scheme is successful it will be extended to other hospitals. The

Kepala Batas Hospital will only employ internationally recognised traditional medicine practitioners,

whose degree components comprise 30-40% modern medicine and 60-70% traditional medicine expertise

to enable them to treat patients accordingly.

In March 2007, Malaysian scientists reportedly succeeded in the development of a breakthrough antiviral

dengue fever drug. The product, based on extracts of Artemisia and eight other local herbs, is potentially

the world’s first dengue treatment of its kind. The herbs were supplied to the University Malaya Medical

Centre (UMMC) by Autoimmune Sdn Bhd, as part of an ongoing collaboration between the two.



Company Profiles

Leading Indigenous Manufacturers

Pharmaniaga

Strengths ! Leading company in the Malaysian market.

! Concession agreement with the Ministry of Health via its distribution unit.

! A focus on bioequivalent generics.

! The plants customised to meet the US Food and Drugs Administration (FDA) standards and acquire FDA certification, in a bid to improve it share in the contract manufacturing market.

Weaknesses ! Dependent on one customer, the Ministry of Health, in a 15-year concession agreement.

! Product prices potentially considered for revision only once every three years.

! Little in-house R&D.

! Limited geographic diversification.

! Sales revenue dropped in 2009.

Opportunities ! Government support for local drugmakers.

! Expected growth in Malaysia’s pharmaceutical industry and the biotech sector.

! Overseas expansion through local manufacture, joint ventures and product launches.

! Increasing healthcare costs and consumer awareness boosting demand for cheaper locally-manufactured drugs.

Threats ! The company’s growth and performance dependent upon economic conditions in Malaysia and other countries, particularly Singapore, the Philippines and Vietnam.

! Relatively low barriers to entry, which is creating intense competition from new entrants such as India’s Ranbaxy.

! Generic manufacturers competing on price due to weak patent law and wide variety of generics available, further reducing profit margins.

! The government’s policy of tariff-free imports of pharmaceutical products.

! A trend towards the purchase of branded drugs over low-cost locally manufactured generic drugs to benefit importers of products from companies based in the US, UK and Germany.

! The company may eventually lose its generic supply agreement with the government or see less favourable conditions in the near term.

Company Overview Pharmaniaga Bhd, established in 1998, is Malaysia’s leading integrated local healthcare

company. The company operates through nine business units: Manufacturing, Marketing,

Logistics, Solutions, Pharmaniaga Research Centre, Pharmaniaga Diagnostics, Pharmaniaga

Biomedical and Esteem Interpoint. The company produces through Raza Manufacturing, while its

distribution unit, Pharmaniaga Logistics Sdn Bhd (formerly known as Remedi Pharmaceuticals)

provides pharmacy management services.

Through Pharmaniaga Logistics, the company supplies around 75% of medicines purchased by

Malaysia’s public healthcare institutions. The company’s contract run out in 2009, but was

extended in December 2009 for a further 10 years, subject to conditions that need to be

negotiated over the course of H109. In the meantime, the previous contract’s requirements will

remain operational.



Presently, the company has three factories, which churn out more than 400 generic products,

although ideally it is keen to have five or six facilities. The company is estimated to control over a

quarter of the total market.

In late 2005, UEM World, which forms part of the UEM Group, the country’s leading conglomerate

in infrastructure development (including healthcare), completed its general offer to acquire the

remaining 70% of shares of Pharmaniaga. The company’s core business involves generic

pharmaceuticals manufacture and supply, R&D, warehousing and distribution of pharmaceutical

and medical products, sales and marketing, hospital equipment, and contract manufacturing for

multinational pharmaceutical companies.

Recent Activities A massive risk to Pharmaniaga's short-term prospects was the potential failure to retain its

lucrative generic drug supply agreement with the Malaysian government. However, sources now

suggest that the company has managed to retain the contract.

During mid-2008, Malaysian state investment firm Kazanah Nasional Bhd was in talks to sell its

72.5% stake in Pharmaniaga and its 54.6% share of Chemical Company of Malaysia (CCM). A

merger between Pharmaniaga and CCM is a distinct possibility.

In July 2008, Pharmaniaga announced its intention to acquire a manufacturing plant in Indonesia.

To this end, Pharmaniaga has set aside MYR300mn (US$93mn) for the purchase. The news

comes against a backdrop of an expanding Indonesian drug market. Pharmaniaga already has

distribution arm in Indonesia, PT Millennium Pharmacon International, but is keen is produce

locally, thereby eliminating transport costs and import duties.

In September 2007, Pharmaniaga was in talks with the Kazakh government over a deal to supply

medicine and equipment to over 200 hospitals in the country. The majority of Pharmaniaga’s key

products are antibiotics and the leading Anatomical Therapeutic Chemical (ATC) class in

Kazakhstan’s hospital sector is J01 – Anti-bacterials for Systemic Use, accounting for 22.1% of

purchases.

Pharmaniaga is also preparing to enter the domestic small-volume injectable (SVI) drugs market,

following the construction of a production plant in Puchong, Selangor. The MYR90mn SVI facility

was to become operational by the end of 2009. The plant will produce a new and important

dosage form or drug-delivery method, which will help expand the group’s existing product range,

mainly in sterile liquid formulations in vials and ampoules.

In October 2005, Pharmaniaga Pegasus (Seychelles) Co, a wholly-owned subsidiary of

Pharmaniaga, entered into an equity JV agreement with Shanghai Worldbest Treeful

Pharmaceutical Group Company (SWTP) for the production of pharmaceutical products in China.

SWTP is a member of the China Worldbest Group, a government-affiliated company that is

currently one of the largest pharmaceutical manufacturers in China.

The new company, Wuxi Worldbest Pharma Pharmaceutical Company, manufactured large-

volume intravenous (LVI) soft bottles and bags at Wuxi Huishan Life Science and Technology

Park in China’s Jiangsu province. However, escalating costs and less than acceptable sales been

attributed to changes in China’s regulatory environment and maturation of distribution channels

forced the Malaysian company to pull out of China in mid-2007.



Product Portfolio Pharmaniaga manufactures about 280 generic products. Under a concession agreement valid for

the 1994-2010 period, the company supplies and distributes pharmaceutical and medical

products to government hospitals. It manufactures about 16% of all drugs supplied to the

Malaysian Ministry of Health. The company is a buying agent of the Ministry of Health, and

sources about 80% of the drugs from third-party suppliers. It also has an estimated 30% market

share in the supply of pharmaceuticals to hospitals.

At present, it is estimated that the SVI market for the government sector alone is worth some

MYR119mn a year. The company has a 15-year government concession that ends in December

2009. The ratio of government to private sector contracts currently stands at 56:44, compared to

61:39 in March 2005.

Currently, the market’s local SVI leader is Duopharma Biotech, which is also a contract

manufacturer for over 30 of Pharmaniaga’s products. However, it is unclear at this stage whether

Duopharma will remain as Pharmaniaga’s manufacturer in the future.

The firm registered seven new products in 2005, with three bioequivalent generics approved in

the year. The company has 50 products registered in international markets. In the course of 2009,

the company was planning to launch a total of 14 new products.

Key Competitors The company is mainly in competition with local producers. The pending ASEAN harmonisation

and other regulatory changes and improvements will push the local industry to increase its

competitiveness, with Pharmaniaga consequently feeling more pressure.

Regional Operations Pharmaniaga states that it wants to become a regional player, but it is only additionally present in

Indonesia and Vietnam. Since these countries have impressive five-year CAGRs for

pharmaceutical sales (+8.2% and +15.8% respectively), the company is clearly not exploiting the

opportunities on offer.

Currently accounting for 25% of total sales, exports are key to Pharmaniaga’s future. The

drugmaker has already entered markets with very low barriers to entry, such as neighbouring

countries at the early emerging stage (for example, Papua New Guinea and Myanmar) and those

with nascent regulations (several countries in Africa). Now it is looking at the larger markets of

South East Asia, the prosperous Middle East and some other Organisation of the Islamic

Conference (OIC) member countries. Regionally, the company has 38 sites, in Indonesia and

Vietnam, in addition to its home market.

The company’s most significant foreign enterprise is its 55% stake in Indonesian pharmaceuticals

distributor PT Millenium Pharmacon International. Purchased for US$3.2mn in 2004 from

Indonesia’s PT Tigamitra Multikarya, the acquisition gives it control of a unit that controls 2% of

Indonesia’s promising pharmaceutical market. The distributor has 14 principals and 24 branches

and controls 2% of the Indonesian market.

A small-scale Thai venture, worth only MYR54mn (US$14.21mn) over five years, will replicate the

company’s IT systems for a hospital group. Meanwhile, the company is to begin a drug supply

chain JV in South Africa with equal partners Procon Fischer and Corpafrica.



Financial Performance The company expected MYR1.8bn in sales, in 2009 boosted by the rising demand for generic

drugs. By 2013, it is hoping to become a US$1bn company. Pharmaniaga released disappointing

2009 financial results, however. Sales and profit before tax both decreased compared with the

previous year. In the twelve months ending December 31 2009, Pharmaniaga posted sales of

MYR1.301bn (US$382mn), a 0.5% decrease compared with the previous year's figure of

MYR1.306bn (US$384mn). The 10% decline in profit before tax to MYR81mn (US$24mn) was

mainly attributed to lower gross profit. Q409 financial results were indicative of the whole year.

Sales decreased from MYR328mn (US$96mn) in the same period of 2008 to MYR324mn

(US$95mn) in Q409 – a drop of 1%, mainly due to lower sales from its Indonesian operation.

Profit before tax increase by 12% to MYR28mn (US$8mn). However, had the divestment of two

plots of lands for MYR7mn (US$2mn) been excluded from the income statement, a loss would

have been recorded for the quarter.

In Q309, Pharmaniaga posted a 5% revenue increase, to MYR333mn, due to improvements in

sales by its Indonesian subsidiary (up by 15.1%), as well as the 9.3% increase in its concession

sales. Year-to-date revenues stood at MYR976.9mn, stable on the same period of 2008, but profit

contracted by 18.4%, to MYR53.9mn, as a result of lower gross profit margins.

In Q308, the company posted a 6.1% decrease in its revenue, to MYR314.29mn. Its net profit was

down by over 50%, to MYR10.59mn. For the full-year 2008 however, Pharmaniaga forecasts

MYR1.4bn in revenues, up from MYR1.18bn in the previous year. It posted MYR1.31bn, up by

10.3% y-o-y.

Pharmaniaga was expecting three of its core businesses – pharmaceuticals, health logistics and

medical equipment – to experience double-digit growth in 2007. Total sales were in the region of

US$347mn, up from around US$310mn in the previous year.

Pharmaniaga incurred an impairment loss of MYR21.5mn (US$6.3mn) from its Chinese

operations. Consequently, in 2006, Pharmaniaga’s net profit dropped more than 100% to

MYR14mn (US$4.1mn), despite a 13% increase in revenue to MYR100mn (US$29.5mn).

Leading Products ! Bromocriptine

! Ticlopidine

! Clarithromycin

! Salbutamol

! Citrex

Company Address ! Pharmaniaga Bhd , 7 Lorong Keluli 1B Kaw. Perindustrian Bukit Raja Selatan, PO Box 2030 Pusat Business Bukit Raja, 40800 Shah Alam, Selangor Darul Ehsan Malaysia

! Tel: +60 (3) 3342 9999

! Fax: +60 (3) 3341 7777

! www.pharmaniaga.com



Prime Pharmaceutical

Strengths ! Presence in both the prescription and the OTC sector.

! Strong manufacturing and distribution network.

! Involved in contract manufacturing.

Weaknesses ! Competition from other local manufacturers.

! Pressure on the government to reverse policies biased towards the local industry.

! Increasing demand for compliance with international IP standards.

Opportunities ! Government programme for developing the pharmaceutical and biotechnology sectors in the country.

! Expected increase in regional drug consumption.

! Rising demand for and encouragement of the generics sector.

! Strong growth in both the generics and OTC markets over next nine years.

Threats ! Widespread counterfeit industry.

! Increased competitiveness of local players driven by ASEAN harmonisation and other regulatory developments.


! Potentially detrimental impact of an FTA with the US.

Company Overview Prime Pharmaceutical Products Sdn Bhd, established in 1988, is one of the more prominent local

manufacturers of pharmaceuticals. The company produces, markets and distributes a variety of

pharmaceutical products as well as traditional herbal preparations and health foods. Prime

Pharmaceutical Products also deals in vitamins.

Prime Pharmaceutical Products is one of the regular suppliers and distributors of medicines to

government hospitals as well as private healthcare facilities, including pharmacies. The company

has a factory in Bukit Tengah Industrial Park, which conforms to international GMP standards.

Prime Pharmaceutical Products is also involved in contract manufacturing.

Product Portfolio The company’s product range includes the following: analgesics (including paracetamol and

acetylsalicyclic acid), anti-asthmatics, anti-histamines, corticosteroids, gastrointestinal

preparations, cough and cold remedies, anti-biotics, anti-fungals and dermatologicals (such as

hydrocortisone), among a few other therapeutic areas.

Company Address ! Prime Pharmaceutical Products Sdn Bhd, 1505 Lorong Perusahaan Utama 1 Taman Perindustrian Bucket TengahndaBukit Mertajam, Penang, Malaysia

! Tel: +60 (4) 507 4787

! Fax: + 60 (4) 507 1862

! www.primepharma.com.my



Bumimedic

Strengths ! Presence in both the prescription and the OTC sector.


! Backed by a large local healthcare group.

! Involved in contract manufacturing.






! Rising demand for and encouragement of the generics sector.

! Strong growth expected in the generics and OTC markets over next nine years.





Company Overview ABI Bumimedic (Malaysia) Sdn Bhd is a subsidiary of privately owned Antah HealthCare Group,

which is controlled by one of the royal families of Malaysia. Bumimedic is one of the largest

healthcare companies in Malaysia, dealing prescription and OTC pharmaceuticals, medical

equipment and consumable supplies for hospitals, medical centres, clinics and pharmacies.

The Antah Group distributes medicines and medical equipment to government, private and

university hospitals, laboratories, health centres, state medical stores, GPs and retail pharmacies.

Rising demand and strong marketing will support growth of the Group and its Bumimedic arm.

Recent Activities In early 2006, US-based Amarillo Biosciences (ABI) entered into a distribution agreement with

Bumimedic Malaysia. The Malaysian firm, which markets Amarillo’s low-dose interferon,

manufactures lozenges from ABI’s bulk natural human interferon supplied by Hayashibara

Biochemical Laboratories, and distribute them to local hospitals, clinics and pharmacies.

Product Portfolio Bumimedic’s factory, which complies with international GMP standards, manufactures over 300

products in the form of tablets, capsules, liquids and ointments. The company supplies local and

overseas customers, and it is engaged in contract manufacturing. At present, Bumimedic is

engaged in the creation of another manufacturing site as a JV.

Company Address ! ABI Bumimedic Antah Pharma Sdn Bhd3 Jalan 19/1 Petaling Jaya 46300 Selango,Malaysia

! Tel: +60 (4) 7956 7677

! Fax: +60 (4) 7955 2007

! www.ahcg.com.my/companies_bme.htm



Hovid

Strengths ! One of the leading local drug producers and exporters.


! Involvement in the herbal supplements business.

! Considerable in-house R&D.





! Expected increase in local and regional drug consumption.

! Already present in a number of African and Middle Eastern countries, which are expected to continue their steady development.

! Demand for Malaysian pharmaceutical exports is forecast to grow over next four years.



! Potentially detrimental impact of the pending FTA with the US.

Company Overview Hovid (formerly Ho Yan Hor) was established in 1945 as the manufacturer of herbal tea. In the

1980s, the company began engaging in pharmaceutical production. At present, Hovid is also

involved in the manufacture of herbal and dietary supplements, teas and tocotreienols. Hovid is

the leading exporter in Malaysia and one of the largest GMP-certified pharmaceutical companies

in the country.

The company was responsible for the construction of the first gelatine encapsulation plant in the

country, as well as the first film-coated analgesic manufacture and the development of the first

ampitab in dispersable tablet form. More recently, Hovid became the first global company to

succeed in the processing and extracting carotenes and vitamin E from palm oil.

Hovid also deals in drug delivery systems, nanotechnology research (into liposomes and

polymeric nanoparticles). Its clinical trials are conducted both nationally and internationally, in

collaboration with Japanese and US universities, among others.

Hovid also owns local biotechnology firm Carotech, which is the leading supplier of phytonutrients

and biodiesel products.

Recent Activities At the start of January 2008, Hovid purchased a controlling stake in Indian Biodeal

Pharmaceuticals. Hovid chose India because of the more relaxed patent laws and lower labour

costs, which will allow it to place cheaper generics on the Malaysian market. The transaction will

provide Hovid with a 100% increase of its production capacity for the manufacture of tablets and

capsules, although regulatory delays mean that Biodeal will only be used for the production of

Hovid’s products from 2010.

In September 2009, the company announced that it would consider acquisitions of foreign firms,

as part of its expansion programme. By the end of 2010, Hovid plans to extend its sales network



to between three and five new countries, with a focus on Africa (particularly western parts) and the

Middle East. Currently, Hovid is active in South Africa, Sudan and Jordan, among other countries

in the two regions of interest.

Product Portfolio Hovid’s portfolio contains in excess of 350 different kinds of pharmaceutical products, mostly

branded generics. Other products include health supplements, injectable products and herbal

medicines. Some 100 products are prescription drugs, with a focus on antibiotics, anti-diabetics,

anti-hypertensives, anti-malarials and anti-inflammatory analgesics. The company holds over 700

marketing authorisations worldwide, launching on average 12 new products per year. The

company currently holds the right to 12 global patents.

Carotech is the only Malaysian company with a GMP certificate for the manufacturing of full-

spectrum tocotrienol complex (Tocomin), natural mixed carotenoids (Caromin), phytosterol

complex (Stelessterol) and high quality refined and molecularly distilled palm methyl ester

(CaroDiesel) from virgin crude palm oil. Carotech exports a significant proportion of its CaroDiesel

output.

In October 2009, the company’s Carotech unit initiated human clinical trials on tocotrienols,

namely the patented and bioenchanced palm complex. The product – Tocomin SupraBio – will be

evaluated for its neuroprotective and anti-atherogenic abilities. The 400-people trial is funded by

the Ministry of Science and the Malaysian Palm Oil Board.

Regional Operations Hovid is already present in several countries, particularly in Asia. Outside Malaysia, its largest

market is Nigeria, with annual sales there exceeding MYR16mn (US$4.6mn).

In January 2007, Hovid signed a distribution agreement with William & Friends Pharmaceuticals

(Thailand) covering 30 products. It hopes to realise annual sales of MYR7mn (US$2mn) in

Thailand.

The company is increasingly focusing on foreign markets, with offices in Singapore, Hong Kong

and the Philippines, while planning to set up subsidiaries in Vietnam and India. Hovid has also

earmarked China for future expansion.

Financial Performance In 2007, the company posted around US$54mn in revenue, up by 31% on the previous year.

Hovid revealed that its efficiency drive had succeeded in increasing its margin on pharmaceutical

products from 4% to 18%. In FY08 (ending June), Hovid reported MYR214.7mn in revenue, and

MYR15.3bn in net profit.

For H209 (ending December), the company posted a loss of MYR5.89mn, as compared to the

MYR8.44mn profit in H208, as European demand for carotene and other products decelerated. In

FY09, Hovid posted MYR0.5mn in net profit, including MYR15.6mn in unrealised forex losses at

Carotech, due to a weakening ringgit in relation to US dollar. For the year, core net profit was

MYR16mn – excluding the forex loss – down by 40% on the forecast, which was attributed to

higher depreciation charges and interest expenditure.

In March 2009, Hovid indicated that it is aiming for a 50% revenue increase during 2009. The

company recently completed the construction of its second Carotech plant in Lumut, which will

increase its production capacity to 120,000 tonnes per annum and underpin this growth.



Leading Products ! Amoxicap (amoxycillin)

! Clamovid (co-amoxiclav)

! Doxycap (doxycycline)

! Ho Yan Hor (herbal tea)

! Quicklean (anti-bacterial hand gel)

Company Address ! Hovid Bhd, 121, Jalan Kuala Kangsar 30010 Ipoh, Perak, Malaysia

! Tel: +60 (5) 506 0690

! Fax: +60 (5) 506 1215

! www.hovid.com



Chemical Company of Malaysia (CCM)

Strengths ! One of the leading local chemical and pharmaceutical producers.

! Diverse business portfolio.

! Involvement in the herbal supplements business.

! Local leader in small volume injectables.

! Strong OTC portfolio.

! Leading generics player in the country.

! Exploiting ASEAN free trade area.

! Growth in profit in 2009.




Opportunities ! Government programme for developing pharmaceutical and biotechnology sectors.


! Focus on halal medicine, which is in demand in the Islamic world.

! Rising demand for OTCs.

! Recent launch of anti-flu medicines Omniflu, with demand increased following the onset of swine influenza.




Company Overview Chemical Company of Malaysia (CCM) was established in 1930. The company was listed as a

public company in 1966, initially as a subsidiary of UK-based ICI PLC and now as a Malaysian

owned corporation. The company is focused on chemical products and applications, fertilisers and

pharmaceuticals and healthcare products and services. It has four divisions, namely CCM

Chemicals, CCM Fertilizers, CCM Pharmaceuticals and CCM Duopharma Biotech.

Launches of new products will be fuelled by a new 63,000 sq foot research and development

facility that cost MYR10.0mn (US$2.7mn) to build. The firm also intends to spend MYR2mn

(US$550,000) on advanced analytical equipment in 2009 to facilitate the testing of pipeline

products. Through to 2015, a total of 35 new generic drugs will be introduced to the marketplace.

The company already exports its products to a number of regional markets, including Vietnam, the

Philippines, Singapore and Hong Kong, as well as to Pakistan, Yemen, Sudan and Bangladesh.

CCM is also planning to increase its overseas promotional activities, targeting a figure of 40% of

total sales for exports by 2010, up from 30% presently.

Recent Activities In March 2010, Thai pharmaceutical company The British Dispensary signed a deal with CCM for

developing its manufacturing base and expanding its product range, Business Times reported.

With the MYR50mn (US$15.3mn) collaboration, the Thai company is looking to include halal-

based cosmetic and healthcare products in its existing 18-brand portfolio. The two companies are

capitalising on the ASEAN free trade area to expand their businesses in the region.



In November 2009, CCM’s Duopharma arm and Inno Biologics agreed to develop a version of

erythropoietin (EPO) for the treatment of cancer-related anaemia, thus entering the high-potential

biosimilars field. Inno Biologics will supply bulk EPO to CCM Duopharma, which will finish the

product and market it to healthcare specialists. Inno Biologics and CCM Duopharma estimate their

version of EPO will reduce the government’s expenditure on EPO by 40%.

In April 2009, CCM inaugurated its new US$2.8mn research and development centre in Malaysia.

The Innovax 63,000 sq ft site will be used for the manufacture of new and innovative generic

drugs. Innovax will be the largest facility of its kind in the country, with CCM planning an additional

US$562,000 investment in the course of 2010.

Around the same time, the company won two government contracts. The MYR20mn deal will

mean that CCM will supply the government with an HIV drug (SLN 30) and methadone over the

next two years. The company is also in the process of setting up a manufacturing base for inert

vaccines fill and finish, which would be the first such venture in ASEAN.

In June 2007, the company singled out Halal medicines as a key driver of its future growth. CCM

is ramping up recruitment of agents in markets where the Muslim population is large, such as in

the Middle East. CCM is aggressively registering all of its products in countries such as Jordan,

Syria, Vietnam, Thailand and Indonesia. In addition to all these countries having significant

Muslim populations, the values of the pharmaceutical markets are increasing y-o-y.

In April 2007, CCM revealed that was set to strengthen its position in the OTC market through the

acquisition of Malayan Pharmaceutical’s brands and assets for MYR22mn (US$6.4mn). Malayan

is involved in the OTC sector and owns established brands such as Chewies children’s chewable

vitamins, Milidon analgesics, Cosmos dietary supplements and Cosmoplast plasters and

dressings. CCM’s acquisition of Malayan Pharmaceutical’s brands would enrich CCM’s OTC

product pipeline and enable the company to leverage the combined strengths of both companies.

Product Portfolio CCM Pharmaceuticals is the largest local manufacturer of generics. Its portfolio consists of over

280 products, including anti-histamines, anti-biotics and expectorants. The division is also the

leading producer of OTCs, with key brands being Champs, Proviton and Uphamol.

CCM is the largest producer of generic drugs in Malaysia, currently holding a 21% share.

According to the pharmaceuticals division director, the company plans to increase this share to at

least 23% over the next twelve months.

In 2007, the consumer health division extended its portfolio to include Chewies (children’s

chewable vitamins), Milidon (paracetamol) and Cosmos dietary supplements, following the

Group’s acquisition of Malayan Pharmaceutical’s brands and assets.

CCM Duopharma Biotech manufactures oral preparations, sterile injectables, haemodialysis and

sterile irrigation solution. The division is the leading local manufacturer of sophisticated and

specialised small volume injectables.

CCM Duopharma is raising its profile in the traditionally low-margin vaccine sector. The company

is spending MYR7mn (US$2mn) on a vaccine fill and finish facility in Klang, Selangor. In H209,

the company launched Omiflu, a generic version of Tamiflu (oseltamivir), for the treatment of

influenza virus.



Financial Performance CCM had a challenging 2009. In Q309, the firm posted sales of MYR404mn (US$118mn), a 4.7%

decrease compared with the previous quarter. Encouragingly, CCM returned to profit in Q309,

after posting a net loss of MYR439,000 (US$129,000) in Q2.

Meanwhile, CCM Duopharma Biotech (CCMD) registered an 8% y-o-y increase in profit before tax

to MYR38.21mn (US$11.21mn) in 2009, compared with MYR35.34mn (US$10.37mn) in 2008. In

the same period, the company also recorded a slight increase in revenue to MYR123.77mn

(US$36.32mn) from MYR122.87mn (US$36.05mn) in 2008. CCMD's pre-tax profit jumped 138.4%

y-o-y to MYR8.61mn (US$2.53mn) in Q409, compared with MYR3.61mn (US$1.06mn) in Q408.

Company Address ! Chemical Company of Malaysia 13th floor, Menara PNB 201-A Jalan Tun Razak 50400 Kuala Lumpur Malaysia

! Tel: +60 (3) 2612 3888

! Fax: +60 (3) 2691 9901

! www.ccm.com.my



Kotra Pharma

Strengths ! One of the leading local drug producers.

! Strong OTC portfolio.

! Ability to expand its manufacturing capacity.

! Comprehensive and expanding marketing network.




! Product portfolio mainly focused on OTCs.






! Rising prominence of Chinese drugmakers, which can compete on price.

! Lawsuit filed against the company in May 2010.

Company Overview Kotra is a wholly-owned subsidiary of Kotra Industries Berhad. The company is mainly engaged in

the development, manufacture and sales of pharmaceutical and healthcare products.

The company had modest beginnings, initially being a family-run enterprise specialising in

traditional Chinese medicine, before evolving into the distribution of pharmaceutical products. In

2002, when Malaysia was admitted as member country for Pharmaceutical Inspection Convention

Scheme, Kotra was selected to be audited for the quality inspection of its facilities. One year later,

the company was awarded the internationally recognised ISO 9001 accreditation for the Quality

Manufacture, Design and Development of pharmaceutical products.

Recent Activities In May 2010, it was reported that Takaso Rubber Products had taken legal action against Kotra

Pharma for allegedly failing to pay for goods. The company said that it intends to file a

counterclaim.

In July 2007, Kotra Pharma unveiled a five-year plan that focuses on exports, initially to

neighbouring ASEAN countries (Thailand and the Philippines in particular), but ultimately to the

lucrative markets of Western Europe and the US. To achieve this goal, the company intends to

expand production capabilities, increase R&D investment, attract world-class talent and enlarge

its product portfolio.

Currently, just over a third of Kotra’s business comes from overseas sales to countries such as

Indonesia, Singapore, Brunei, Vietnam, Cambodia, Myanmar, Hong Kong, Mauritius and Sri

Lanka. Mid-way through the firm’s five-year plan, Kotra’s exports should exceed domestic sales.

Kotra is currently constructing a MYR120mn (US$35.3mn) plant in Melaka, which is a

manufacturing centre for products ranging from food and consumer products, through high-tech



weaponry and automotive components, to electronic and computer parts. Phase 1 of the

35,000m2 production facility is scheduled to be finished in 2009, and total completion is expected

in 2012. At full capacity, the new plant will have ten times the current output of Kotra’s

manufacturing lines.

Demonstrating its commitment to R&D, the company upped its research expenditure from

MYR1mn (US$293,900) to MYR6.4mn (US$1.9mn) for the fiscal year ended June 30 2008.

In January 2009, Danish Leo Pharma won a court case against Malaysia generic manufacturer

Kotra Pharma. The Malacca High Court ruled that Kotra infringed Leo Pharma’s trademarks

Fucidin (fucidic acid) and Fucicort (fucidic acid) by adopting trademarks Axcel Fusidic and Axcel

Fusi-Corte back in 2000. The products are used for the treatment of skin infections.

Product Portfolio Kotra has 163 products currently registered with the National Pharmaceutical Controls Board, with

OTCs accounting for the bulk of the portfolio and branded generics increasing in importance. In

FY09, the company’s prescription medicines range grew by 19% in relation to the previous

financial year, on the back of new product launches, which include antifungal Axcel Ecozalon

cream, psoriasis and dermatitis cream and ointment Axcel Clobetasol and osteoarthritis treatment

Axcel Glucosamine.

Kotra’s Appeton health supplement range is the firm’s flagship franchise, accounting for 61% of

sales over the last five years. In FY09, Appeton’s share of the market for children’s vitamin C

increased from 48% to 55%, as reported by ACNielsen. Kotra is also aiming to strengthen its

penetration of the adult multivitamin market, with efforts that include the recent introduction of

Appeton Wellness 60+.

Kotra Pharma’s total annual production at its main factory includes sterile and non-sterile items. In

the sterile range, the company manufactures 2mn eyedrops and 2mn ampoules, 1.5mn of each

powder vials and dry syrups and 3mn liquid vials. In the non-sterile range, it produces around

528mn tablets, 139mn capsules, 38mn liquid bottles, and 15mn tubes of cream.

Financial Performance In 2007, the company achieved an estimated MYR83mn in sales. Its net profit reached MYR2bn

in Q307, down from MYR2.75bn in the previous quarter. In FY09, group revenues were

MYR90mn, up by 3.8% y-o-y, with pre-tax profit reaching MYR9mn, an increase of 17% y-o-y, on

the back of stronger domestic sales and exchange gains due to rising US exports. Overall

exports, however, fell from MYR32.3mn in 2008 to MYR31.1mn in 2009.

Company Address ! Kotra Pharma, 1 Jalan TTC 12 Cheng Industrial Estate, 75250 Melaka, Malaysia

! Tel: +60 (6) 336 2222

! Fax: +60 (6) 336 6122

! www.kotrapharma.com



Multinational Companies

GlaxoSmithKline (GSK)

Strengths ! One of the few multinationals drugmakers with a direct manufacturing presence in Malaysia, enjoying the benefits available to local producers.

! Strong product portfolio covering a wide range of therapeutic areas and the highest market share amongst multinationals.

! Diverse local manufacturing portfolio in Malaysia.

! Involvement in the ED market.

Weaknesses ! Malaysia’s weak domestic patent law and benefits granted to local generic-based pharmaceutical companies.

! Sizeable drug copying and counterfeiting sector.

! Biased drug pricing policy adopted by the government.

! Lack of patent protection for GSK’s anti-AIDS drugs.


Opportunities ! Expected increase in local and regional drug consumption, driven by demographic and economic changes.

! Increase in consumption of patented medicines supported by ASEAN harmonisation effort and pharmaceutical sector modernisation.

! Government’s focus on developing the country’s biotechnology sector.

! The company sees potential for strong growth in Asia.

! Malaysia may join multilateral trans-Pacific trade agreement with the US.

Threats ! Government resistance to aligning domestic patent law fully with internationally acceptable standards.

! Government failure to revise its discriminatory pricing policy.

! Competition from other multinationals wishing to expand its local base.

! Company’s Avandia drug has been attacked for apparent heart risk links.

Company Overview GSK Malaysia was incorporated in 1958 under the name Glaxo Malaysia Sdn Bhd. The incorporations

of Beecham Products (Far East) Sdn Bhd and Sterling Drug (Malaysia) Sdn Bhd followed in 1959 and

1962, respectively.

Due to the merger between SmithKline Beckman Corp (USA) and Beecham Group PLC (UK) in 1989,

the name changed to SmithKline Beecham Consumer Brands Sdn Bhd. In 1992, the company moved

to new premises in Bangsar Utama. Glaxo and Wellcome merged to form Glaxo Wellcome in 1995. In

December 2000, Glaxo Wellcome and SmithKline Beecham merged to form GSK.

Currently, the company has around 600 employees. Its Malaysian manufacturing operations export to

Singapore, Hong Kong, Thailand, China, the Philippines and Indonesia. GSK Consumer Healthcare is a

fully-owned subsidiary in Malaysia.

In fact, Malaysia is home to one of GSK’s 24 consumer healthcare manufacturing sites. The facility

produces OTC medicines for the domestic market as well as Singapore and Taiwan. Production costs

exceed MYR40mn (US$12mn) per annum. The site’s annual output includes 800mn tablets, 400 tonnes

of powder and 150,000kg of cream. Demonstrating its importance, GSK’s consumer healthcare

manufacturing in Taiwan, Thailand and Venezuela is to be transferred to Malaysia.



Recent Activities In March 2010 the DCA asked the GSK to amend prescription information for its diabetes drug

Avandia. The US Senate had previously suggested that GSK had known of Avandia’s heart risk

links for some years before it had become widely known, which the company denies. The DCA’s

request was officially made on the back of 33 adverse effect reports received by the Health

Ministry.

In October 2009, GSK announced that it is to spend MYR60mn (US$18mn) to upgrade its global

IT facility in Petaling Jaya, Selangor. Funds will be used to raise the headcount from 130 to 250

over six months. Malaysia was chosen as the site for the global IT facility because of its

computer-literate, English-speaking workforce. The plant in Petaling Jaya receives tax breaks due

to its MSC (formerly known as the Multimedia Super Corridor) status.

In February 2009, the Public Health Medicine Specialist Association of Malaysia began a year-

long study into the financial burden of cervical cancer, which is supported by GSK Malaysia. The

research will assess current costs of treating and managing human papilloma virus (HPV)-related

cervical cancer, as well as assess the viability of HPV vaccinations on a national basis. Presently,

cervical cancer is the second most common type of cancer among women, resulting in some 750

deaths per annum.

In February 2004, the Malaysian government abolished the patent rights on two of GSK’s anti-

AIDS drugs (zidovudine and the combination therapy lamivudine). Instead, a two-year compulsory

licence was issued to India’s Cipla for the export and supply of generic versions of the drugs to

state-run or public hospitals in Malaysia under fixed ceiling prices.

Product Portfolio GSK’s manufacturing portfolio in Malaysia is diverse. The company produces a variety of ethical

pharmaceuticals, consumer healthcare products and vaccines. In addition, GSK also distributes a range

of OTC medicines, including Eno, Eye-Mo, Oxy, Panadol, Scotts and Zentel, along with its oral

healthcare products and a range of nutritional health drinks. The company has a distribution agreement

with Diethelm Holdings (Malaysia), one of the country’s largest distribution concerns. GSK’s main non-

prescription brands include Horlicks, Ribena, Panadol, Scotts Emulsion, Menara Lien Hoe Eye-Mo,

Eno, Oxy and Aquafresh.

The company’s local subsidiary sells a range of other prescription drugs, such as antibiotics, anti-

asthmatics, anti-diabetics, anti-virals, anti-migraine treatments as well as vaccines for hepatitis A and B,

varicella, meningitis, polio and diphtheria. GSK’s anti-AIDS drugs, zidovudine and the combination

therapy lamivudine, continue to suffer from lack of patent protection.

In mid-2009, the price of some of GSK’s drugs in select Asian countries had been cut. Its breakthrough

cervical cancer vaccine, Cervarix, is now cheaper in Thailand and Malaysia. In some Asian countries,

the firm will combine price cuts on its branded drugs with the introduction of more low-cost generic

medicines. To achieve this goal, GSK has entered into an agreement with Dr Reddy’s, with the regions

that will be targeted including Africa, the Middle East, Asia Pacific and Latin America.

In February 2009, GSK’s avian influenza vaccine Prepandrix was approved in Malaysia, which became

the first country outside Europe to do so. The company announced that it is working closely with local

authorities in order to prepare for a possible pandemic.



In 2004, GSK and Germany’s Bayer launched Levitra (vardenafil) on the Malaysian market, marking the

last of the ‘big three’ ED drugs to be commercialised in the country. Panadol ActiFast was also

launched early in the same year, boosting revenue growth.

Research &

Development

GSK formed a vaccines joint venture with Neptunus Bioengineering in November 2008. Total

investment in Shenzen GSK-Neptunus Biologicals exceeded US$140mn.

Key Competitors In the ED market, GSK competes directly with Pfizer and Eli Lilly. Local manufacturers and parallel

imports compete with its branded products. Other multinational-produced brands will continue to

challenge GSK in its four main areas of expertise, namely anti-infectives, CNS, respiratory and gastro-

intestinal/metabolic medication, in which GSK has emerged as a leader.

Regional Operations GSK has a strong regional network of operations, comprising both manufacturing and sales and

marketing operations. In South East Asia, the company has offices in Vietnam, Thailand, Singapore,

the Philippines, Cambodia, Indonesia and Myanmar.

It was announced in July 2008 that GSK planned to double its R&D capabilities in China. At that time,

the company employed 170 research staff and planned to boost the number to 200 by the end of 2008,

and to 350 over 2009-2010.

Financial Performance Despite the ‘challenging economic scenario’, combined sales of consumer health products and

prescription drugs recorded by GSK in Malaysia were MYR600mn (US$178mn) in 2008. Revenue

generated by prescription drugs and consumer health products increased by 6% and 10%, respectively.

GSK expects to match its competitors in Malaysia’s prescription drug sector during 2010 by posting

sales growth of 6-8% through the launch of new drugs and increased promotion of established

products. Francis Del Val, VP and managing director of GSK Pharmaceutical Malaysia, Singapore and

Brunei, says demand for prescription medicines is growing in Malaysia, on the back of the increasing

prevalence of chronic diseases, such as obesity, heart conditions and diabetes.

Leading Products ! Panadol (paracetamol)

! Levitra (vardenafil)

! Seretide (fluticasone propionate + salmeterol)

! Avandia (rosiglitazone)

! Paxil (paroxetine)

Company Address ! GlaxoSmithKine Malaysia Sdn Bhd7th & 8th Floor Menara Lien Hoe ,47410 Petaling Jaya Selangor Malaysia

! Tel: +60 (3) 7806 5911 Fax: +60 (3) 7806 5912

! www.gsk.com.my

! Glaxo SmithKine Consumer Healthcare & Global Manufacturing Supply, Lot 89, Jalan Enggang , Ampang/Ulu Kelang Industrial Estate 54 200 Selangor , Malaysia

! Tel: +60 (3) 7491 2020 Fax: +60 (3) 4253 2111



Pfizer

Strengths ! Largest pharmaceutical company in the world.

! One of leading providers of ED medicines.

! Financial capability, business portfolio and industry experience to exploit the Malaysian pharmaceutical market.

! Broad portfolio of products including antibiotics, vitamins and OTC pharmaceuticals, consumer and healthcare products.

Weaknesses ! Weak domestic patent law and benefits granted to local generic-based pharmaceutical companies.

! The biased drug-pricing policy adopted by the Malaysian government.

! No direct manufacturing presence.


Opportunities ! Drug consumption expected to increase.


! Plans to launch 15 new products by the end of 2009.

! The ASEAN harmonisation effort and pharmaceutical sector modernisation increasing the demand for patented products in the country.

! The Malaysian government’s focus on developing the country’s biotechnology sector likely to result in improved investment opportunities, a favourable business environment and a cost-effective R&D proposition.


! Significant presence of the counterfeit drug industry.

! Key ED product Viagra particularly susceptible to competition, of both genuine and fake nature.


! Strong competition from other multinationals.

Company Overview In Asia, Pfizer was incorporated as a private limited company in Singapore in 1964. The company

began its operations modestly, selling only a few products. The Malaysian operation was set up

as a subsidiary of the Singapore-registered company and became a fully registered company in

1978. Today, the company has a strong presence in Malaysia, with around 400 staff, most of who

are engaged in sales operation across ten offices. In 2009, Pfizer acquired compatriot Wyeth,

which also operates in Malaysia through imports via a local office.

Recent Activities Pfizer is investing heavily in the Malaysian market, including the expansion of existing

manufacturing assets and the establishment of a new R&D centre. The company hoped to launch

15 new medicines by 2009.

In 2005, Pfizer voluntarily withdrew Bextra (valdecoxib) from the Malaysian market, following

global warnings of adverse side effects. Bextra, which was registered as a total of five products

since 2003, was indicated for short-term treatment of post-operative pain. The withdrawal of the

product had a short-term negative effect on the company’s image and sales of the related

products.



Product Portfolio Pfizer Malaysia markets a wide range of pharmaceuticals and therapeutic products, ranging from

vitamin supplements and nutritionals, to antibiotics and cardiovascular therapies.

The company’s portfolio of products includes cardiovascular, neuroscience, infectious diseases,

arthritis/pain, urology, ophthalmology, oncology and respiratory disease. Pfizer’s key products

include Aromasin (exemestane), Celebrex, Detrusitol (tolteridine), Diflucan, Lipitor, Neurontin,

Norvasc, Viagra, Xalatan (latanoprost), and Zoloft.

Damaging the company’s bottom line, counterfeits are a problem in the region. In September

2007, Pfizer Malaysia reported that there were illegal imitations of Aricept (donepezil), Celebrex,

Diflucan, Feldene (piroxicam), Lipitor, Norvasc, Ponstan (mefenamic acid), Zoloft and Viagra

circulating in Asia.

In August 2007, Sutent (sunitinib) was launched in Malaysia for kidney cancer and gastrointestinal

stromal tumour.

Key Competitors Pfizer will continue to be challenged by other multinationals, on the one hand, and by local

producers, on the other, with Indian Ranbaxy also entering the fray with the 2006 launch of

generic Lipitor – Storvas. Its direct competitors in the ED market in Malaysia are GSK/Bayer and

Eli Lilly.

Leading Products ! Celebrex (celecoxib)

! Lipitor (atorvastatin)

! Diflucan (fluconazole)

! Viagra (sildenafil citrate)

! Sutent (sunitinib)

! Zoloft (sertraline)

! Neurontin (gabapentin)

! Norvasc (amlodipine)

Company Address ! Pfizer Malaysia Sdn Bhd, 3rd & 4th Floor Bangunan Palm Grove,No. 14 Jalan Glenmarie (Persiaran Kerjaya) Section U1 ,40150 Shah Alam ,Selangor Darul Ehsan, Malaysia

! Tel: +60 (3) 5568 6688

! Fax: +60 (3) 5568 6600

! www.pfizer.com.my



Novartis

Strengths ! Diverse manufacturing presence, including a broad portfolio of antibiotics, vitamins and OTC pharmaceuticals, consumer and healthcare products.

! Solid financial capability, business portfolio and industry experience.

! Presence in the generics sector.

Weaknesses ! Weak domestic patent law and benefits granted to local generic-based pharmaceutical companies.

! Low purchasing power of much of the population, exacerbated by high out-of-pocket contribution to pharmaceutical expenditure.

! Biased drug-pricing policy adopted by the Malaysian government.


Opportunities ! Increasing health awareness in the Asian region, which will boost overall drug consumption.

! Potential to expand in the fast-growing generics market.

! ASEAN harmonisation effort and pharmaceutical sector modernisation boosting demand for patented products.




! Significant counterfeit drug industry.

! Government failure to revise its discriminatory pricing policy likely to limit company expansion, both in terms of activity and investment.

Company Overview Novartis was established in Malaysia following the merger of Sandoz and Ciba-Geigy in 1997.

The company comprises Pharmaceuticals, Consumer Health, Ciba Vision and a generics sector,

with more than 100 staff employed around the country.

Novartis is among the 10 leading pharmaceutical companies in Malaysia. The company’s

groundbreaking approach to the industry has seen it expanding into generics, in contrast with

global peers such as Pfizer and GSK, which remain focused on high-profit, patented blockbuster

pharmaceutical products. The progressive ageing of the population is increasing the need for

medicines, as well as the need to restrain healthcare costs, and as such, generics are likely to

continue to penetrate the market.

Recent Activities Novartis has expressed interest in locating research centres and conducting clinical trials in

Malaysia, thereby boosting the country’s ambitions to become a biotech rival to Singapore or

Taiwan. Novartis may also invest in Malaysia’s biotechnology industry, and is evaluating

Malaysia’s rich biodiversity with the aim of producing novel treatments.

In November 2009 Novartis signed an agreement with BiotechCorp and Sarawak Biodiversity

Centre in order to discover bioactive compounds. Novartis director Alexander Jetzer-Chung said

that the agreement enables the company to leverage capitalise on the country’s biodiversity in the

development of new medical opportunities, Pharmaceutical Business Review reported.

CIBA Vision, the eye care business of Novartis, invested MYR500mn (US$132.45mn) to build an

integrated contact-lens manufacturing plant in Malaysia. The plant, at Johor’s Tanjung Pelepas



Free Trade Zone, was operational by December 2007. The facility now produces one of the most

technologically advanced high-oxygen transmissible products, O2OPTIX contact lenses. These

‘breathable’ contact lenses are made from a silicone hygrogel – Lotrafilcon b – the latest material

used in contact-lens technology.

Initial production capacity was expected to reach 300,000 contact lenses a day, with output rising

to 500,000 lenses per day by 2008. Investment in the project will be spread over eight years, with

the plant creating 2,000-3,000 jobs in the later stages of operation.

Product Portfolio The company has a broad portfolio of products, including medicines in transplantation and

immunology, cardiovascular diseases, diseases of the central nervous system, Parkinson’s

disease, skin allergies, OTC and ophthalmic medications.

With regard to central nervous system disorders, recent introductions include an

acetylcholinesterase inhibitor for Alzheimer’s disease and a COMT-inhibitor for Parkinson’s

disease.

In the field of transplantation, the company’s cyclosporin microemulsion is the world’s most

prescribed product, and is regarded as the gold-standard immuno-suppressant.

In the case of oncology, Gleevec (imatinib) is the first of a new generation of highly selective anti-

cancer drugs for chronic myelogenous leukaemia. The company produces Femara (letrozole) as

a first-line therapy for advanced breast cancer in post-menopausal women.

Key Competitors Novartis is present in both branded and generics sectors in Malaysia and therefore faces

competition from both multinational and local producers. Globally speaking, its generics sales

represent some 15% of total business (up from 11% in 2004), while consumer healthcare

accounts for around one-quarter of the total.

Regional Operations Novartis has a considerable presence in Asia, and particularly in China, Hong Kong, Indonesia,

South Korea and Japan.

Leading Products ! Tegrital (carbamazepine)

! Exelon (rivastigmine)

! Lopresor (metoprolol tartrate)

Company Address ! Novartis Corporation (Malaysia) Sdn Bhd, Lot 9 Jalan 26/1 Seksyen 26 Kawansan Perindustrian Hicom ,40400 Shah Alam, Malaysia

! Tel: +60 (3) 5192 6666

! Fax: +60 (3) 5191 6514

! www.my.novartis.com



Merck & Co

Strengths ! Strong portfolio of prescription pharmaceuticals.

! Strong regional presence.

! A leading multinationals, with extensive network in South East Asia.

! Presence in the vaccines segment.


! Biased drug-pricing policy adopted by the Malaysian government.

! Lack of local manufacturing capacities.

! Significant contribution of out-of-pocket expenditure to overall drug spending.


Opportunities ! Increasing health awareness in the Asian region, which will boost overall drug consumption.

! ASEAN harmonisation effort and pharmaceutical sector modernisation boosting demand for patented products.


! Rising demand for treatments of chronic conditions.

! Prescription drug market is set to grow y-o-y through to 2019.



! Significant threat from the counterfeit drug industry.

! Failure to revise discriminatory pricing policy likely to limit company expansion, both in terms of activity and investment.

! Strong competition from other multinationals.

! Threat posed by generic companies targeting off-patent medicines.

Company Overview Merck & Co operates in Malaysia, as well as other countries in the region, through Merck Sharpe

& Dohme (MSD) Asia Pacific. The Malaysian sales and marketing section, established in 1997,

employs over 240 people.

Product Portfolio MSD Malaysia markets and sells a variety of prescription pharmaceuticals in the country. Main

product areas include osteoporosis, asthma, cardiovascular and cancer drugs.

The performance of its cardiovascular product Coozar (losartan) in Malaysia is under threat,

following Ranbaxy’s launch of a branded generic competitor in August 2009. According to market

research firm IMS Health, Malaysian sales of Cozaar topped US$6.29mn in the 12 months ending

June 2008.

Key Competitors Multinationals represent the main challenges to Merck’s Malaysian operations. Additionally, the

counterfeit industry and lax patent protection continue to disadvantage some of its patented

products’ performance. Merck’s products that are coming off-patent are facing generic

competitors.



Regional Operations MSD Asia Pacific division is a considerable commercial force in the region. The company is

involved both in local manufacturing and marketing initiatives, with the regional focus being on

Japan, the leading Asian market.

Leading Products ! Fosamax (alendronate)

! Zocor (simvastatin)

Company Address ! Merck Sharpe & Dohme Malaysia, Level 15-15A Menara Merais, No 1 Jalan 19/3 ,46300 Petaling Jaya Selangor, Malaysia

! Tel: +60 (3) 7955 0707

! Fax: +60 (3) 7957 8363

! www.msd-malaysia.com



Sanofi-Aventis

Strengths ! Third-largest drug manufacturer in the world.

! Among the leading foreign producers in Malaysia.

! Broad portfolio of products, including antibiotics, vitamins and OTC pharmaceuticals.


! Biased drug-pricing policy adopted by the Malaysian government having a negative impact on the market conditions for the company and restricting its market growth potential.


Opportunities ! Drug consumption in the Asian region due to rise from increasing health awareness.

! Potential to expand its presence in the expanding generics market.

! The ASEAN harmonisation effort and pharmaceutical sector modernisation.

! The Malaysian government’s focus on developing the country’s biotechnology sector improving investment opportunities, and providing a favourable business environment for the company, and a cost-effective R&D proposition.

! Drugs market is set to expand y-o-y through to 2019.


Threats ! Country’s significant counterfeit drug industry.

! Continued government resistance to aligning domestic patent laws with international standards.


! Focus on cost-containment in public healthcare.

! Competition from other generics player in the country and region.

Company Overview Following the merger with Aventis in 2004, the integration and reorganisation of the company’s

assets will take some time. In the meantime, the company is represented in Malaysia by both

Aventis and Sanofi-Synthélabo subsidiaries. Sanofi-Synthélabo (Malaysia) was formerly known as

Sanofi (Malaysia). The company was incorporated in March 1987, employing more than 100 staff.

Product Portfolio Sanofi-Aventis majors in a number of key therapeutic areas, including diabetes,

cardiovascular/thrombosis, central nervous system, oncology and internal medicine.Leading

brands include Plavix, Aprovel, Epilim (sodium valproate), Lactacyd (lactoserum atomizate),

Eloxatin (oxaliplatin), Rhinathiol (carbocisteine), Phenergan (promethazine), Stilnox, Ticlid

(ticlopidine) and Tramal. Aprovel is one of the brands facing generic competition, in the shape of

Ranbaxy’s Covance.

Regional Operations Sanofi-Aventis boasts a considerable regional market presence. Its Japanese operations include

a number of licensing deals with local companies. Given the epidemiological profile of the region,

Sanofi-Aventis is also highly present through vaccines.

Leading Products ! Plavix (clopidogrel)

! Aprovel (irbesartan)

! Stilnox (zolpidem)

! Tramal (tramadol)



Company Address ! Sanofi-Synthelabo (Malaysia) Sdn Bhd 8th Floor PNB Damansara, No. 19, Lorong Dungun Damansara Heights,50490 Kuala Lumpur, Malaysia

! Tel: +60 (3) 2089 3333

! Fax: +60 (3) 2089 3338

! www.sanofi-synthelabo.com.my



Ranbaxy Malaysia

Strengths ! Strong generic portfolio and local production facilities.

! Nascent global generic player.

! Ability to expand through acquisition.

Weaknesses ! Relatively recent entry to the Malaysian market.

! Competition from government-supported local producers.

! Government policies biased towards the local industry.

! The company has seen sales contract in Asia in Q110.


! Continued encouragement of the generics sector.

! Higher level of patient awareness of cost containment.


! Malaysia’s drugs market is set to expand y-o-y through to 2019.



! Rising prominence of China and other regional suppliers of cheaper generic medicines.

Company Overview Ranbaxy Malaysia is a joint venture established in 1984 by India’s Ranbaxy Laboratories Limited

(RLL), and has shareholders from India as well as Malaysia. In 2006, Ranbaxy held around 4.5%

of the ethical market in Malaysia, according to IMS Health data.

The company manufactures pharmaceutical products for oral use comprising liquid formulations,

tablets, capsules and granules for suspension. In 1987, the company established a manufacturing

unit in Sungai Petani, Kedah, to supply markets in Malaysia and Singapore.

Recent Activities In August 2009, reinforcing its strong position in Malaysia’s cardiovascular drug sector, Ranbaxy

launched Covance (losartan), which will be manufactured locally. Given the low cost of the

product and the unmet medical need, prescribers’ uptake of the drug should be rapid.

In September 2006, Ranbaxy Malaysia launched a generic version of atorvastatin under the

brand name Storvas. The product – a copy of Pfizer’s Lipitor – will be made available to all

general practitioners, pharmacies and hospitals in the country. The company is targeting the fast-

growing statins market in the country, presently estimated to be worth around MYR100mn

(US$27.12mn) and rising by 25% a year. Ranbaxy already holds a leadership in the

cardiovascular drugs segment through its brand Cascor XL (ditiazen HCL), although its two top

products in the country are antibiotics Enhancin (co-amoxyclav) and Vercef (cefaclor).

A few months prior to that, Ranbaxy Malaysia launched the first generic oseltamivir (the active

ingredient in Roche’s anti-flu drug Tamiflu) in the field of infectious disease. Malaysia has been

stepping up its efforts to contain avian flu, with the government announcing that it would provide

enough anti-influenza drugs to cover 30% of the population.



Product Portfolio Ranbaxy’s portfolio contains around 80 brands, including those managed through local

partnerships. Ranbaxy Malaysia’s top 10 brands account for around two-fifths of total sales.

Ranbaxy has a presence in the therapeutic segments of cardiovascular, antibiotic, pain

management, gastrointestinal and food supplements. Its second manufacturing facility in Kuala

Lumpur (which is compliant with international standards) manufactures antibiotics, anti-bacterials,

NSAIDS, vitamins, cough and cold remedies, antacids, anti-spasmodics, anti-fungals, anti-

ulcerants and cardiovasculars. The company is the only foreign manufacturer of ARVs in

Malaysia.

Regional Operations Regionally Ranbaxy also has business in China, Thailand, Vietnam, Myanmar, Australia and New

Zealand.

Ranbaxy Malaysia has sales and marketing agreements with foreign firms such as Schwarz

Pharma and Desitin in Germany, Pharmascience in Canada, Penwest Pharmaceuticals in the US,

Knoll and Ajanta pharmaceuticals in India, and Almirall Prodesfarma in Spain, to cater to the

markets in Malaysia, Singapore and Brunei.

Financial Performance In 2008, the company posted US$25mn in sales from its Malaysian operations. Of this figure,

88% was accounted for by sales in Malaysia itself, with the remainder sourced from regional

exports (mainly to Singapore).

Leading Products ! Enhancin (co-amoxyclav)

! Storvas (atorvastatin)

! Vercef (cefaclor)

Company Address ! Ranbaxy (Malaysia) Sdn. Bhd.,Box 8 Wisma Selangor Dredging ,5th Floor South Block 142-A Jalan Ampang, 50450 Kuala Lumpur, Malaysia

! Tel: +60 (3) 2161 4181

! Fax: +60 (3) 2162 7593

! www.ranbaxy.com



Eli Lilly Malaysia

Strengths ! One of leading multinationals in the world.

! Strong patented product portfolio.

! Involvement in the ED market.

Weaknesses ! No local manufacturing base.

! Competition from government-supported local producers as well as other multinationals.

! Government policies biased towards the local industry.



! Relatively favourable environment for novel treatments.





! Rising prominence of China and other regional suppliers of cheaper generic medicines.

Company Overview Eli Lilly Malaysia is a local marketing arm of the US-based major. In 2004, the company launched

an ED treatment Cialis (tadalafil), which captured a 35% of the market by the end of the same

year. Other products include anti-biotic Mandol (cephalosporin) and Evista (raloxifene

hydrochloride), indicated for the prevention of non-traumatic vertebral fractures in post-

menopausal women at increased risk of osteoporosis.

Regional Operations Eli Lilly is active in most leading Asian markets, largely through imports. The company has also

created a Clinical Pharmacology Centre at the National University of Singapore and carries out

over 15 drug trials a year.

Key Competitors In the ED field, Eli Lilly is competing with two other leading multinationals, namely Pfizer (with

Viagra) and GSK (with Levitra). In the wider prescription market, multinationals again are its main

competitors.

Company Address ! Eli Lilly Sdn BhdSuite 7/4, 7th Floor Menara Cold Storate Section 1746100 Jalan Semangat, Malaysia

! Tel: +60 (3) 7955 1286

! Fax: +60 (3) 7957 9144

! www.lilly.com



-1.5 -1.0 -0.5 0.0 0.5 1.0 1.5

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75+

Population by age, 2005

Male Female

-3.0 -2.0 -1.0 0.0 1.0 2.0 3.0

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75+

Population by age, 2005:2030 (total)

2030 2005

Country Snapshot: Malaysia Demographic Data

Section 1: Population

Figures in millions. Source: UN Population Division

Table: Demographic Indicators, 2005-2030

2005 2010f 2020f 2030f

Dependent population, % of total 36.9 34.3 32.5 32.2

Dependent population, total, ‘000 9,473 9,526 10,408 11,371

Active population, % of total 63.0 65.6 67.5 67.7

Active population, total, ‘000 16,132 18,175 21,612 23,898

Youth population*, % of total 32.3 29.3 25.3 21.7

Youth population*, total, ‘000 8,291 8,135 8,130 7686

Pensionable population, % of total 4.6 5.0 7.1 10.4

Pensionable population, total, ‘000 1,182 1,391 2,278 3,685

f = forecast. * Youth = under 15. Source: UN Population Division



Table: Rural/Urban Breakdown, 2005-2030

2005 2010f 2020f 2030f

Urban population, % of total 65.1 68.2 78.5 82.2

Rural population, % of total 34.9 31.8 21.5 17.8

Urban population, total, ‘000 16,494 18,781 25130 28994

Rural population, total, ‘000 8,854 8,751 6889 6276

Total population, ‘000 25,348 27,532 32,019 35,270

f = forecast. Source: UN Population Division

Section 2: Education And Healthcare

Table: Education, 2000-2003

2000/01 2002/03

Gross enrolment, primary 100 93

Gross enrolment, secondary 69 70

Gross enrolment, tertiary 23 29

Adult literacy, male, % 92.0 na

Adult literacy, female, % 85.4 na

na = not available. Gross enrolment is the number of pupils enrolled in a given level of education regardless of age expressed as a percentage of the population in the theoretical age group for that level of education. Source: UNESCO

Table: Vital Statistics, 2005-2030

2005 2010f 2020f 2030f

Life expectancy at birth, males (years) 70.80 71.9 73.8 75.3

Life expectancy at birth, females (years) 75.5 76.5 78.5 80.0

f = forecast Life expectancy estimated at 2005. Source: UNESCO



BMI Methodology

How We Generate Our Pharmaceutical Industry Forecasts

Pharmaceutical sub-sector forecasts are generated using a top-down approach from BMI’s Drug

Expenditure Forecast Model. The semi-automated tool incorporates historic trends, macroeconomic

variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market.

The following elements are fed into the model:

! BMI’s historic pharmaceutical market data, which has been collected from a range of sources including:

– regulatory agencies;

– pharmaceutical trade associations;

– company press releases and annual reports;

– subscription information providers;

– local news sources;

– information from market research firms that is in the public domain.

! Data that has been validated by BMI’s pharmaceutical and healthcare analysts using a composite

approach, which scores data sources by reliability in order to ensure accuracy and consistency of historic

data.

! Five key macroeconomic and demographic variables, which have been demonstrated, through regression

analysis, to have the greatest influence on the pharmaceutical market. These have been forecast by BMI’s

Country Risk analysts using an in-house econometric model.

! The burden of disease in a country. This is forecast in disability-adjusted life years (DALYs) using BMI’s

Burden of Disease Database, which is based on the World Health Organization’s burden of disease

projections and incorporates World Bank and IMF data.

! Subjective input and validation by BMI’s pharmaceutical and healthcare analysts to take into account key

events that have affected the pharmaceutical market in the recent past or that are expected to have an

impact on the country’s pharmaceutical market over the next five years. These may include

policy/reimbursement decisions, new product launches or increased competition from generics.



Pharmaceutical Business Environment Ratings Methodology

Our approach in assessing the Pharmaceutical Business Environment Ratings is threefold. First, we have

defined the risks rated to capture the operational dangers to companies operating in this industry. Second,

we attempt where possible to identify objective indicators that may serve as proxies for issues/trends.

Finally, we use BMI’s proprietary Country Risk Ratings (CRR) to ensure only the aspects most relevant

to the industry are included. Overall, the system, which is integrated with all the industries covered by

BMI, offers an industry-leading insight into the prospects/risks for companies across the globe.

Ratings Overview

Ratings System

Conceptually, the new ratings system divides into two distinct areas:

Limits of potential returns: Evaluation of sector’s size and growth potential in each state, and also broader

industry/state characteristics that may inhibit its development.

Risks to realisation of those returns: Evaluation of industry-specific dangers and those emanating from

the state’s political/economic profile that call into question the likelihood of anticipated returns being

realised over the assessed time period.

Indicators The following indicators have been used. Overall, the rating uses three subjectively measured indicators,

and 41 separate indicators/datasets.



Table: Pharmaceutical Business Environment Indicators

Indicator Rationale

Limits to potential returns

Market structure

Market expenditure, US$bn Denotes breadth of pharmaceutical market. Large markets score higher than

smaller ones

Market expenditure per capita, US$ Denotes depth of pharmaceutical market. High value markets score better than

low value ones

Sector value growth, % y-o-y Denotes sector dynamism. Scores based on annual average growth over five-year

forecast period

Country structure

Urban-rural split Urbanisation is used as a proxy for development of medical facilities.

Predominantly rural therefore states score lower

Pensionable population, % of total Proportion of the population over 65 years of age. States with aging populations

tend to have higher per-capita expenditure

Population growth, 2003-2015 Fast-growing states suggest better long-term trend growth for all industries

Overall score for country structure is also affected by the coverage of the power transmission network across the state

Risks to potential returns

Market risks

Intellectual property (IP) laws Markets with fair and enforced IP regulations score higher than those with

endemic counterfeiting

Policy/reimbursements Markets with full and equitable access to modern medicines score higher than

those with minimal state support for healthcare

Approvals process High scores awarded to markets with a swift appraisal system. Those that are

weighted in favour of local industry or are corrupt score lower

Country risk

Economic structure Rating from CRR evaluates the structural balance of the economy, noting issues

such as reliance on single sectors for exports/growth, and past economic volatility

Policy continuity Rating from CRR evaluates the risk of a sharp change in the broad direction of

government policy

Bureaucracy Rating from CRR denotes ease of conducting business in the state

Legal framework Rating from CRR denotes the strength of legal institutions in each state. Security

of investment can be a key risk in some emerging markets

Corruption Rating from CRR denotes the risk of additional illegal costs/possibility of opacity in

tendering/business operations affecting companies’ ability to compete

Source: BMI



Weighting

Given the number of indicators/datasets used, it would be wholly inappropriate to give all sub-

components equal weight. Consequently, the following weight has been adopted.

Table: Weighting Of Components

Component Weighting

Limits of potential returns 60%

– Pharmaceutical market 75%

– Country structure 25%

Risks to realisation of potential returns 40%

– Market risks 60%

– Country risk 40%

Source: BMI

Sources

Sources used include national industry associations, government ministries, global health organisations,

officially-released pharmaceutical company results and international and national news agencies.



Tabl

e: M

alay

sia

– D

rug

Expe

nditu

re In

dica

tors

, His

toric

al D

ata

and

Fore

cast

s

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f20

15f

2016

f20

17f

2018

f20

19f

Dru

g m

arke

t exp

endi

ture

(US

$bn)

0.8

4 0

.93

1.0

6 1

.22

1.2

2 1

.44

1.5

9 1

.59

1.6

6 1

.81

1.9

6 2

.12

2.3

3 2

.53

2.6

6 D

rug

mar

ket e

xpen

ditu

re (M

YR

bn)

3.1

7 3

.42

3.6

4 4

.06

4.2

9 4

.70

5.0

8 5

.46

5.8

7 6

.29

6.7

2 7

.18

7.6

3 8

.09

8.5

1 P

er c

apita

dru

g m

arke

t exp

endi

ture

(US

$) 3

2.02

3

5.14

3

9.13

4

4.04

4

3.07

4

9.89

5

3.81

5

3.10

5

4.56

5

8.14

6

1.99

6

5.94

7

1.13

7

5.91

7

8.65

D

rug

mar

ket e

xpen

ditu

re a

s %

GD

P 0

.61

0.6

0 0

.57

0.5

8 0

.62

0.6

2 0

.63

0.6

3 0

.62

0.6

2 0

.62

0.6

1 0

.61

0.6

0 0

.60

f= fo

reca

st. S

ourc

e: IM

S H

ealth

Asi

a, A

C N

iels

en, B

MI r

esea

rch

Tabl

e: M

alay

sia

– H

ealth

Exp

endi

ture

Indi

cato

rs, H

isto

rical

Dat

a an

d Fo

reca

sts

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f

Hea

lth e

xpen

ditu

re (U

S$b

n)

5.7

3 6

.69

8.1

5 9

.35

9.0

0 1

0.77

1

1.98

1

2.26

1

3.10

1

4.57

H

ealth

exp

endi

ture

(MY

Rbn

) 2

1.72

2

4.48

2

7.88

3

1.13

3

1.66

3

5.12

3

8.33

4

2.05

4

6.25

5

0.69

H

ealth

exp

endi

ture

(% G

DP

) 4

.15

4.2

7 4

.35

4.4

5 4

.55

4.6

5 4

.75

4.8

5 4

.90

5.0

0 H

ealth

exp

endi

ture

per

cap

ita (U

S$)

219

.60

251

.49

299

.70

337

.53

317

.86

372

.80

406

.08

408

.69

429

.59

468

.33

Pub

lic s

ecto

r hea

lth e

xpen

ditu

re (U

S$b

n) 2

.57

3.0

2 3

.59

4.0

2 3

.78

4.4

2 4

.79

4.7

8 5

.04

5.5

3 P

ublic

sec

tor h

ealth

exp

endi

ture

(%)

44.

77

45.

22

44.

00

43.

00

42.

00

41.

00

40.

00

39.

00

38.

50

38.

00

Pub

lic s

ecto

r hea

lth e

xpen

ditu

re (%

) 4

4.77

4

5.22

4

4.00

4

3.00

4

2.00

4

1.00

4

0.00

3

9.00

3

8.50

3

8.00

f =

fore

cast

. Sou

rce:

Dep

artm

ent o

f Sta

tistic

s M

alay

sia,

Wor

ld H

ealth

Org

aniz

atio

n (W

HO

), M

inis

try o

f Hea

lth (M

oH),

BM

I

Tabl

e: M

alay

sia

– O

ther

Hea

lthca

re In

dica

tors

, His

toric

al D

ata

and

Fore

cast

s

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f

Hos

pita

ls 4

04.0

0 4

08.0

0 4

12.0

0 4

16.0

0 4

20.0

0 4

23.0

0 4

26.0

0 4

27.0

0 4

28.0

0 4

29.0

0 B

eds

per 0

00 p

opul

atio

n 1

.07

1.0

6 1

.05

1.0

4 1

.03

1.0

6 1

.04

1.0

4 1

.04

1.0

3 H

ospi

tal a

dmis

sion

s pe

r 000

pop

ulat

ion

62.

07

64.

14

66.

14

68.

23

70.

40

72.

19

74.

34

74.

69

76.

24

77.

49

Doc

tors

per

000

pop

ulat

ion

0.8

5 0

.91

0.8

7 0

.86

0.8

8 0

.88

0.8

9 0

.89

0.9

0 0

.90

Birt

hs p

er 0

00 p

opul

atio

n 1

8.40

1

8.00

1

7.60

1

7.30

1

7.00

1

6.80

1

6.60

1

6.40

1

6.20

1

6.00

D

eath

s pe

r 000

pop

ulat

ion

4.5

0 4

.50

4.4

0 4

.40

4.4

0 4

.30

4.3

0 4

.30

4.3

0 4

.20

f = fo

reca

st. S

ourc

e: D

epar

tmen

t of S

tatis

tics

Mal

aysi

a, W

orld

Hea

lth O

rgan

izat

ion

(WH

O),

Min

istry

of H

ealth

(MoH

), B

MI



Tabl

e: M

alay

sia

– Pr

escr

iptio

n M

arke

t Ind

icat

ors,

His

toric

al D

ata

And

For

ecas

ts (U

S$m

n un

less

oth

erw

ise

stat

ed)

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f20

15f

2016

f20

17f

2018

f20

19f

Pre

scrip

tion

drug

mar

ket (

US

$bn)

0.6

3 0

.70

0.8

0 0

.89

0.8

9 1

.04

1.1

3 1

.12

1.1

6 1

.25

1.3

4 1

.44

1.5

7 1

.69

1.7

7 P

resc

riptio

n dr

ug m

arke

t (M

YR

bn)

2.3

8 2

.58

2.7

2 2

.97

3.1

2 3

.38

3.6

2 3

.85

4.1

0 4

.35

4.6

1 4

.88

5.1

5 5

.42

5.6

7 P

resc

riptio

n dr

ug m

arke

t as

% to

tal m

arke

t 7

5.13

7

5.32

7

4.70

7

3.11

7

2.80

7

1.98

7

1.21

7

0.49

6

9.81

6

9.17

6

8.58

6

8.02

6

7.51

6

7.03

6

6.60

Alim

enta

ry tr

act a

nd m

etab

olis

m

72.

59

81.

38

91.

90

10

3.11

102.

56

11

9.96

130.

67

12

9.79

134.

28

14

4.57

-

--

--

Blo

od a

nd b

lood

form

ing

orga

n dr

ug s

ales

5

9.35

6

6.53

7

5.13

8

4.30

8

3.85

9

8.08

106.

83

10

6.12

109.

79

11

8.20

-

--

--

Car

diov

ascu

lar s

yste

m d

rug

sale

s

123.

05

13

7.94

155.

77

17

4.78

173.

85

20

3.34

221.

49

22

0.02

227.

63

24

5.06

-

--

--

Der

mat

olog

ical

dru

g sa

les

15.

30

17.

15

19.

37

21.

73

21.

62

25.

28

27.

54

27.

36

28.

30

30.

47

--

--

-G

enito

-urin

ary

syst

em a

nd s

ex h

orm

one

sale

s 2

4.61

2

7.59

3

1.15

3

4.95

3

4.77

4

0.66

4

4.29

4

4.00

4

5.52

4

9.01

-

--

--

Sys

tem

ic h

orm

onal

pre

para

tion,

exc

ludi

ng

sex

horm

ones

and

insu

lins,

sal

es

16.

53

18.

53

20.

93

23.

48

23.

36

27.

32

29.

76

29.

56

30.

58

32.

92

--

--

-

Ant

i-inf

ectiv

e fo

r sys

tem

ic u

se s

ales

6

7.83

7

6.04

8

5.87

9

6.35

9

5.83

112.

09

12

2.10

121.

28

12

5.48

135.

09

--

--

-

Ant

ineo

plas

tic a

nd im

mun

omod

ulat

ing

agen

t sa

les

60.

24

67.

53

76.

26

85.

57

85.

11

99.

55

10

8.44

107.

72

11

1.44

119.

98

--

--

-

Mus

culo

skel

etal

sys

tem

dru

g sa

les

30.

93

34.

67

39.

15

43.

93

43.

69

51.

11

55.

67

55.

30

57.

21

61.

59

--

--

-

Ner

vous

sys

tem

dru

g sa

les

87.

78

98.

40

11

1.12

124.

68

12

4.01

145.

06

15

8.00

156.

95

16

2.38

174.

82

--

--

-

Ant

ipar

asiti

c pr

oduc

t, in

sect

icid

e an

d re

pel-

lent

sal

es

0.7

7 0

.86

0.9

7 1

.09

1.0

8 1

.27

1.3

8 1

.37

1.4

2 1

.53

--

--

-

Res

pira

tory

sys

tem

dru

g sa

les

49.

53

55.

52

62.

70

70.

35

69.

98

81.

85

89.

15

88.

56

91.

62

98.

64

--

--

-S

enso

ry o

rgan

dru

g sa

les

10.

26

11.

50

12.

99

14.

58

14.

50

16.

96

18.

47

18.

35

18.

98

20.

44

--

--

-Va

rious

dru

g sa

les

9.2

3 1

0.35

1

1.69

1

3.11

1

3.04

1

5.26

1

6.62

1

6.51

1

7.08

1

8.39

-

--

--

f = fo

reca

st. S

ourc

e: IM

S H

ealth

Asi

a, B

MI



Tabl

e: M

alay

sia

– Pa

tent

ed D

rug

Mar

ket I

ndic

ator

s, H

isto

rical

Dat

a an

d Fo

reca

sts

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f20

15f

2016

f20

17f

2018

f20

19f

Pat

ente

d pr

oduc

ts (U

S$b

n) 0

.42

0.4

7 0

.53

0.5

9 0

.57

0.6

6 0

.70

0.6

8 0

.69

0.7

3 0

.76

0.8

0 0

.84

0.8

8 0

.88

Pat

ente

d pr

oduc

ts (M

YR

bn)

1.6

1 1

.74

1.8

2 1

.95

2.0

1 2

.14

2.2

5 2

.35

2.4

5 2

.54

2.6

2 2

.70

2.7

6 2

.81

2.8

3 P

aten

ted

mar

ket a

s %

tota

l mar

ket

50.

83

50.

72

49.

90

48.

11

46.

90

45.

59

44.

27

42.

95

41.

63

40.

29

38.

94

37.

56

36.

16

34.

74

33.

27

f = fo

reca

st. S

ourc

e: IM

S H

ealth

Asi

a, B

MI

Tabl

e: M

alay

sia

– Pr

escr

iptio

n M

arke

t Ind

icat

ors,

His

toric

al D

ata

And

For

ecas

ts (M

YRm

n)

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f

Alim

enta

ry tr

act a

nd m

etab

olis

m

275

.12

297

.84

314

.28

343

.35

361

.01

391

.07

418

.13

445

.20

474

.02

503

.11

Blo

od a

nd b

lood

form

ing

orga

n dr

ug s

ales

2

24.9

4 2

43.5

2 2

56.9

6 2

80.7

3 2

95.1

6 3

19.7

4 3

41.8

7 3

64.0

0 3

87.5

7 4

11.3

4 C

ardi

ovas

cula

r sys

tem

dru

g sa

les

466

.36

504

.87

532

.74

582

.01

611

.94

662

.90

708

.78

754

.65

803

.52

852

.82

Der

mat

olog

ical

dru

g sa

les

57.

98

62.

77

66.

24

72.

36

76.

09

82.

42

88.

13

93.

83

99.

90

106

.03

Gen

ito-u

rinar

y sy

stem

and

sex

hor

mon

e sa

les

93.

26

100

.96

106

.54

116

.39

122

.38

132

.57

141

.74

150

.92

160

.69

170

.55

Sys

tem

ic h

orm

onal

pre

para

tion,

exc

ludi

ng

sex

horm

ones

and

insu

lins,

sal

es

62.

65

67.

82

71.

57

78.

19

82.

21

89.

06

95.

22

101

.38

107

.95

114

.57

Ant

i-inf

ectiv

e fo

r sys

tem

ic u

se s

ales

2

57.0

8 2

78.3

1 2

93.6

7 3

20.8

3 3

37.3

3 3

65.4

2 3

90.7

1 4

16.0

0 4

42.9

4 4

70.1

1 A

ntin

eopl

astic

and

imm

unom

odul

atin

g ag

ent

sale

s 2

28.3

2 2

47.1

8 2

60.8

2 2

84.9

5 2

99.6

0 3

24.5

5 3

47.0

1 3

69.4

7 3

93.3

9 4

17.5

3 M

uscu

losk

elet

al s

yste

m d

rug

sale

s 1

17.2

1 1

26.8

9 1

33.8

9 1

46.2

8 1

53.8

0 1

66.6

0 1

78.1

4 1

89.6

6 2

01.9

5 2

14.3

4 N

ervo

us s

yste

m d

rug

sale

s 3

32.6

8 3

60.1

5 3

80.0

3 4

15.1

8 4

36.5

3 4

72.8

8 5

05.6

1 5

38.3

3 5

73.1

9 6

08.3

6 A

ntip

aras

itic

prod

uct,

inse

ctic

ide

and

repe

l-le

nt s

ales

2

.90

3.1

4 3

.32

3.6

2 3

.81

4.1

3 4

.41

4.7

0 5

.00

5.3

1 R

espi

rato

ry s

yste

m d

rug

sale

s 1

87.7

2 2

03.2

1 2

14.4

3 2

34.2

7 2

46.3

1 2

66.8

2 2

85.2

9 3

03.7

6 3

23.4

2 3

43.2

7 S

enso

ry o

rgan

dru

g sa

les

38.

90

42.

11

44.

43

48.

54

51.

04

55.

29

59.

11

62.

94

67.

02

71.

13

Vario

us d

rug

sale

s 3

4.99

3

7.88

3

9.97

4

3.67

4

5.91

4

9.74

5

3.18

5

6.62

6

0.29

6

3.99

f =

fore

cast

. Sou

rce:

IMS

Hea

lth A

sia,

BM

I



Tabl

e: M

alay

sia

– G

ener

ics

Dru

gs M

arke

t Ind

icat

ors,

His

toric

al D

ata

and

Fore

cast

s

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f20

15f

2016

f20

17f

2018

f20

19f

Gen

eric

s m

arke

t (U

S$b

n) 0

.20

0.2

3 0

.26

0.3

1 0

.32

0.3

8 0

.43

0.4

4 0

.47

0.5

2 0

.58

0.6

5 0

.73

0.8

2 0

.89

Gen

eric

s m

arke

t (M

YR

bn)

0.7

7 0

.84

0.9

0 1

.02

1.1

1 1

.24

1.3

7 1

.50

1.6

6 1

.82

1.9

9 2

.19

2.3

9 2

.61

2.8

3 G

ener

ics

mar

ket a

s %

tota

l mar

ket

24.

30

24.

60

24.

80

25.

00

25.

90

26.

40

26.

94

27.

54

28.

18

28.

88

29.

64

30.

46

31.

34

32.

30

33.

32

f = fo

reca

st. S

ourc

e: IM

S H

ealth

Asi

a, B

MI

Tabl

e: M

alay

sia

– O

TC D

rug

Mar

ket I

ndic

ator

s, H

isto

rical

Dat

a an

d Fo

reca

sts

(US$

mn

unle

ss o

ther

wis

e st

ated

)

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f20

15f

2016

f20

17f

2018

f20

19f

OTC

mar

ket (

US

$bn)

0.2

1 0

.23

0.2

7 0

.33

0.3

3 0

.40

0.4

6 0

.47

0.5

0 0

.56

0.6

2 0

.68

0.7

6 0

.83

0.8

9 O

TC m

arke

t (M

YR

bn)

0.7

9 0

.84

0.9

2 1

.09

1.1

7 1

.32

1.4

6 1

.61

1.7

7 1

.94

2.1

1 2

.29

2.4

8 2

.67

2.8

4 O

TC m

arke

t as

% to

tal m

arke

t 2

4.87

2

4.68

2

5.30

2

6.89

2

7.20

2

8.02

2

8.79

2

9.51

3

0.19

3

0.83

3

1.42

3

1.98

3

2.49

3

2.97

3

3.40

Ana

lges

ics

51.

39

57.

04

66.

57

81.

10

81.

97

99.

87

112

.98

116

.24

124

.23

13

7.82

-

--

--

Cou

gh &

col

d dr

ugs

38.

80

43.

06

50.

25

61.

22

61.

88

75.

39

85.

29

87.

74

93.

78

10

4.04

-

--

--

Dig

estiv

es

40.

37

44.

81

52.

30

63.

71

64.

39

78.

45

88.

75

91.

31

97.

58

10

8.27

-

--

--

Ski

n tre

atm

ents

3

0.67

3

4.03

3

9.72

4

8.39

4

8.91

5

9.59

6

7.41

6

9.35

7

4.12

8

2.23

-

--

--

Vita

min

s an

d m

iner

als

36.

23

40.

21

46.

93

57.

17

57.

78

70.

40

79.

64

81.

93

87.

57

97.

15

--

--

-O

ther

OTC

sal

es

10.

39

11.

53

13.

46

16.

40

16.

58

20.

20

22.

85

23.

50

25.

12

27.

87

--

--

-f =

fore

cast

. Sou

rce:

AC

Nie

lsen

, BM

I



Tabl

e: M

alay

sia

– M

edic

al D

evic

e M

arke

t Ind

icat

ors,

His

toric

al D

ata

And

For

ecas

ts

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f

Med

ical

dev

ice

mar

ket (

US

$bn)

0

.70

0.7

2 0

.76

0.8

0 0

.83

0.8

7 0

.91

0.9

4 0

.98

1.0

2 M

edic

al d

evic

e m

arke

t (M

YR

bn)

2.6

4 2

.64

2.6

1 2

.74

2.7

8 3

.06

2.9

5 3

.02

3.3

7 3

.61

Med

ical

dev

ice

mar

ket a

s %

of t

otal

hea

lthca

re m

arke

t 1

2.16

1

0.78

9

.37

8.5

6 9

.27

8.0

6 7

.56

7.6

9 7

.50

7.0

3 f =

fore

cast

. Sou

rce:

Min

istry

of H

ealth

(MoH

), tra

de p

ress

, BM

I

Tabl

e: M

alay

sia

– Ph

arm

aceu

tical

Tra

de In

dica

tors

, His

toric

al D

ata

and

Fore

cast

s (U

S$m

n)

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f

Exp

orts

(US

$mn)

8

7.05

9

7.08

1

63.9

7 1

33.9

7 1

40.6

7 1

47.7

0 1

55.9

7 1

64.8

6 1

74.4

2 1

84.8

9 Im

ports

(US

$mn)

566

.33

655

.57

775

.31

816

.85

914

.87

1,0

24.6

5 1

,147

.61

1,2

85.3

2 1

,439

.56

1,6

12.3

1 B

alan

ce (U

S$m

n)-4

79.2

8 -5

58.4

9 -6

11.3

5 -6

82.8

8 -7

74.2

0 -8

76.9

5 -9

91.6

4 -1

,120

.46

-1,2

65.1

4 -1

,427

.42

f = fo

reca

st. S

ourc

e: In

tern

atio

nal T

rade

Cen

tre (I

TC),

Uni

ted

Nat

ions

(UN

) Com

mod

ity T

rade

Sta

tistic

s D

atab

ase,

Mal

aysi

a E

xter

nal T

rade

Dev

elop

men

t Cor

pora

tion

(MAT

RA

DE

), B

MI

Tabl

e: M

alay

sia

– O

TC D

rug

Mar

ket I

ndic

ator

s, H

isto

rical

Dat

a an

d Fo

reca

sts

(MYR

mn)

2005

2006

2007

2008

2009

2010

f20

11f

2012

f20

13f

2014

f

Ana

lges

ics

194

.79

208

.76

227

.68

270

.08

288

.53

325

.59

361

.55

398

.69

438

.52

479

.63

Cou

gh &

col

d dr

ugs

147

.04

157

.59

171

.87

203

.87

217

.81

245

.78

272

.93

300

.96

331

.03

362

.06

Dig

estiv

es

153

.01

163

.99

178

.85

212

.16

226

.65

255

.76

284

.01

313

.19

344

.47

376

.76

Ski

n tre

atm

ents

1

16.2

2 1

24.5

6 1

35.8

5 1

61.1

4 1

72.1

6 1

94.2

7 2

15.7

2 2

37.8

8 2

61.6

5 2

86.1

7

Vita

min

s an

d m

iner

als

137

.30

147

.15

160

.49

190

.38

203

.39

229

.51

254

.86

281

.04

309

.11

338

.09

Oth

er O

TC s

ales

3

9.39

4

2.21

4

6.04

5

4.61

5

8.34

6

5.84

7

3.11

8

0.62

8

8.67

9

6.98

f =

fore

cast

. Sou

rce:

AC

Nie

lsen

, BM

I

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