Thailand: Critical Need for New Investment - Pharmaceutical Executive


Thailand: Critical Need for New Investment

Pharmaceutical Executive

"In the past years a bunch of multinationals have moved manufacturing facilities from Thailand to other countries in the region. It is true that with the globalization trend and the US-Thailand Free Trade Agreement [FTA], MNCs will look to establish their manufacturing facilities in other ASEAN or Asian countries that give better incentives than the Kingdom. As local manufacturers, we are not content with this situation. We hope that the new BOI privilege can encourage MNCs to come back and invest in Thailand," said Chernporn Tengamnuay, president of the Thai Manufacturers Association.

The BOI has grasped the question and sent great incentives towards multinationals. "We have recently widened our policies to include the promotion of finished products," said Satit. "Since we have informed people of our new polices, we have received a number of requests from MNCs to discuss them. We will be eager to see them coming back," he claimed.

But not everyone shares his optimism. For Peter Jager, head of Novartis Thailand, it's the legal framework that needs improvement, as he thoughtfully summarized this relative disaffection of MNCs: "we recently did a survey of Swiss pharmaceutical companies and found that the research and development spends in Thailand are less than two percent of sales," he said.

In manufacturing, no investments at all are seen today. The reason why this investment level is so low is that Thailand still does not offer a proper protection of Intellectual Property [IP] Rights for innovative pharmaceuticals. Also, the process of obtaining patents is lengthy, cumbersome, and exposes the innovator as a result. I strongly believe that investments in research and development in Thailand can be a multiple of what they are today-that is, if the Thai government addresses this issue and sets a clear IP protection environment that is effectively enforced as it is in some other countries in the Asia Pacific Region, such as Singapore."

Greater IP enforcement needed

What is needed to re-attract MNCs is a better and less complicated regulatory system as well as IP enforcement.

"Thailand's pharmaceutical patent laws are generally seen as being up to the standards of many of the world's developed nations, but in one or two areas are clearly deficient. It is in these areas that the competitiveness of Thailand is undermined when compared with its neighbors," said Edward Madden, director of the IP department of Tilleke & Gibbins, a Bangkokbased law firm that serves as external legal council for the Pharmaceutical Research and Manufacturers Association (PReMA). "A lot of the reform that is actually needed relates almost directly to matters of interpretation and implementation of laws which already exist," he added.

Among the principal areas of deficiency are unreasonable delays in obtaining a patent, and the inability to effectively enforce patent rights. While the US-Thai FTA provided the opportunity to create a viable and attractive system of IP laws, which would have made Thailand more attractive to industry, it appears the opportunity may have been lost.

"History has shown that IP laws have only been enacted in the Kingdom as a result of international pressure rather than any sound economic analysis, and this stance is not reassuring for those involved with leading-or cutting-edge technologies," said Madden. Two issues have arisen in favor of enforcement. The first is enforcement against counterfeits, which are endemic in Southeast Asia, fake medicines made out of inert materials like glue and chalk. "WHO has estimated more than 10 percent of medicines worldwide are counterfeit. That's a frightening statistic, like Russian roulette," warned Edward Kelly, a senior partner at Tilleke & Gibbins. The other is enforcement against unfair competition by copy products that are granted market approval by the FDA despite being covered by a patent that would otherwise preclude the drug from being on the market. "In Thailand, this phenomenon occurs because we have no formal patent linkage system," said Kelly. "This is a reform that is urgently needed."


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