Business

Tuesday August 25, 2009

Local drug sector to reach RM3.9b

By ELAINE ANG


The industry is expected to grow 10% this year

PETALING JAYA: The local pharmaceutical industry is expected to grow some 10% to US$1.1bil (RM3.9bil) this year versus 2008, fuelled by increased demand for medication due to the Influenza A(H1N1) pandemic, according to the Malaysian Organisation of Pharmaceutical Industries (MOPI).

MOPI president Jimmy Piong said the pharmaceutical industry was recession-proof and was less affected by the economic downturn than other industries.

“Sales of prescription medicine have not been affected as people are still getting sick.

“However, products that consumers buy over the counter such as vitamins and non-prescriptive drugs are growing at a slower rate as they buy less to save cost. Sales of immune boosters have grown because of the influenza (pandemic),” Piong told StarBiz.

Local generic pharmaceutical manufacturers, however, are forecast to have about 15% growth this year and next as more in the medical fraternity and consumers switch to generics to cut costs.

For example, prices of branded/patented drugs are said to have jumped 12% to 15% last year while that of generic medicine increased 3% to 5% due to the rise in raw material costs.

Generic pharmaceuticals currently comprise some 35% or US$350mil (RM1.23bil) of the domestic industry.

In addition to the expected growth in local consumption, Piong also foresees export-driven growth boosting the generic pharmaceutical business.

“There has been a trend of local players expanding overseas recently. Currently, local generic manufacturers such as CCM Duopharma Biotech Bhd and Pharmaniaga Bhd export about RM200mil worth of products annually.

“We expect to see exports grow 15% to 30% in three years,” he said.

Piong said generally, it took about three years to obtain from a target country the marketing approval for a pharmaceutical product.

The catalyst for the expected growth in exports is that Malaysia’s standards and technology have fulfilled Good Manufacturing Practice according to the European Pharmaceutical Inspection Convention Code as the country is a member of its Pharmaceutical Inspection Cooperation Scheme.

At present, generic players export to 43 countries with a focus on the Asean region.

To MOPI first vice-president Leonard Ariff Shatar, contract manufacturing is another growth driver.

“The potential of contract manufacturing is high especially since Malaysia’s standards are now recognised worldwide. Many products are also expected to come off-patent in 2012 and 2013,” he said.

Nevertheless, generic manufacturers also face a host of challenges including rising competition and tighter regulation.

Piong noted that there was an industry shift by multinational pharmaceutical companies towards the manufacture of generic products, thus increasing competition for local players.

Regulatory standards are also anticipated to become more stringent.

Leonard stressed that generic drugs worked as well as patented ones and had to undergo various tests and standards before going to market.

Currently, it takes about 18 months before a new drug can be registered in the country.

Moreover, generic drugs go through clinical testing for bio-equivalency (BE) to ensure that they have the same potency, efficacy, effects and side effects as the original drugs.

Leonard pointed out that it took a minimum RM500,000 to obtain approval to market a generic product and about three to four years before it could go to market.

Pharmaniaga managing director Mohamad Abdullah concurs.

“We conduct BE tests to ensure the safety and efficacy of our products and need to get the necessary approvals from the authorities before they go to market.

The group has a 15-year concession to supply and distribute pharmaceutical and medical products to hospitals and medical institutions under the Health Ministry.


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