AN 18TH HOLE VICTORY OR LOST IN THE FOREST?
It is all well and good that the government is using healthcare as a mechanism helping to catapult the nation out of the "middle-income
trap" towards becoming a high-income society. However, for the upgrading of the value-offering from its generics industry
and the expansion of clinical trials, Malaysia needs the presence of innovator multinationals.
Unfortunately, the government's promotion of the generics industry has raised eyebrows among the CEOs of innovator companies.
Leonard Shatar of the Malaysian Organization of Pharmaceutical Industries (MOPI), confirms, "The Ministry of Health has an
active generics policy driven primarily by the rising cost of healthcare." Cost-containment measures invariably impact most
heavily on the pharmaceutical industry and to limit Malaysia's US$ 1.3 billion public drugs bill. The government procures
drugs on an open-tender basis, favoring cheaper generics. Unlike its neighbor, Singapore, Malaysia is a substantial reimbursement
market, with government purchases accounting for 35% of the overall market.
There is also the perception of a generics first, intellectual property second attitude in Malaysia's regulatory system among
some of the multinationals. Eu Keng Huat, president of PHAMA, says that at times his company, Merck, was even fighting for
government tenders with companies possessing invalid patents. However, Fui K. Soong, executive director of the American-Malaysian
Chamber of Commerce, says that the current government is increasingly responsive to the concerns of multinationals and a far
cry from the intransigence of previous administrations.
An alternative market entry strategy for small- and medium-sized pharma companies would be to entrust sales to a marketing
company like EP+, which is pioneering an innovative new category of medical marketing, fashioning itself as the "leading medical
edutaintment specialist." Its philosophy is to make marketing events more fun by offering interesting activities such as gallery
walks, cooking classes, and wine tastings following medical lectures. Pang argues, "Now is the time for them [pharma companies]
to enter this market because product registration is becoming increasingly stringent," particularly considering the eventual
THE LOGICAL NEXT STEP
Malaysia has taken a long time to find its feet in the pharmaceutical and healthcare industry, but has now chosen six sectors
to contribute to the country's development. Despite the small size of the market and question marks over patent protection,
Malaysia's profile as an emerging market should mark it out as a strong prospect for innovator multinationals. Sustained growth
in the 17 pharmerging markets is not guaranteed, and Malaysia is therefore a logical next step—the 18th pharmerging market.
According to Minister Liow, the healthcare sector will require US$ 9.3 billion from 2011 to 2020 to fund growth, with the
majority of investment sought in the private sector. Much still depends on foreign investment, and the next few years should
prove just how clear-sighted Malaysia's 20/20 vision truly is.