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.

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 health reforms.

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.