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7.
Protection of patented
products after entry into the WTO should boost the pharmaceutical industry
in large potential markets like China and India. With these countries
signing the WTO agreement, which recognizes product patents instead of
process patents, intellectual property protection should be strengthened
in Asia. With the legal system in place, imitation of patent drug would
not be allowed and MNCs may introduce more patented drugs in the market.
With an increase in the sales of patented products, the total market
revenues are expected to increase. Indian companies also have raised their
R&D budget from 1 percent to almost 5 percent of their turnover in an
attempt to gear themselves after 2005 e.g. Cipla (4%), Cadila (4.45%) and
Wockhardt (8%).
8.
Government initiatives to positively shape the healthcare industry have
the potential to drive market revenues. In
India, the DPCO is proposing a reduction of the list of drugs controlled
by the government from 75 to 40. However, the actual impact of this
proposal will be only when the DPCO policy is released. The policy, which
was supposed to be declared in May 2001, has not been released and its
arrival is awaited with interest. In Korea, ethical drugs, which are
primarily supplied by multinational drug developers, should benefit form
several health care policy reforms. In
general, Korean health care policy is becoming more transparent and is
creating a somewhat more level playing field for foreign pharmaceutical
firms. Among the several
positive policy developments in Korea are the separation of the
responsibility for prescribing and dispensing medication.
The
Slowdown – Restraining factors
1.
Government imposed price controls on drugs decrease potential margins, and
affect placing in government formulary listings. This is already existent
in Japan and Australia for example and is coming into place in more Asian
countries like Thailand and the Philippines.
2.
Intellectual property
protection/management: Lack of patent protection in some countries like
India spurs growth of generic manufacturers and places downward pressure
on prices. In China, generic drugs have been a major part of the total
pharmaceutical market. Although the generic market is mature, there are
still many innovations and changes occurring in it. In addition, over 150
branded products will face patent or exclusivity expirations by 2006,
paving the way for generic companies. Most of these are in the three
therapeutic classes: anti-infectives, cardiovascular, and anti-ulcerants.
This will increase generic domination in the market and patent
manufacturers are anticipated to face greater squeezes on profit margins.
3.
Limited purchasing power
restrains people from seeking medical attention, and dependence on
traditional medications or alternative medication affects revenues of
pharmaceutical manufacturers. In India, only
about thirty percent of the Indian population has access to pharmaceutical
drugs. The remaining depends on traditional home remedies or on herbal
medicines. This trend is due to the belief of the people in traditional
medicine, high costs of allopathic medicines and unavailability of products
in rural markets. Traditional medicine is also very widely used in China,
Taiwan and now Singapore and Malaysia are putting money into researching
the medicinal value of these products.
4.
The awareness amongst the masses regarding various diseases is very low
resulting in low detection rates or little initial screening for the
diseases, which affects market penetration for most drugs. For instance,
the majority of Asians are unaware of Juvenile Diabetes, thereby hampering
the penetration of anti-diabetic products. Similar is the case of
osteoporosis. Post-menopausal women are prone to Osteoporosis. However,
women in this age group feel that it is a part of aging and does not
require treatment. Therefore, the myths associated with the diseases;
result in low awareness thus affecting market penetration.
What’s
in store: Looking into the crystal ball?
Genetics
research has the potential to dramatically change the way we treat
disease, and the deciphering of the human genome will drive the drug
discovery process, which will ultimately result in targeted therapeutics.
It is expected that the drug discovery time period could shrink from the
current decade to five to seven years, but this again depend on the
ability of researchers to apply proteomics in targeting the compounds.
Difficult to treat diseases like cancer are expected to witness an
explosive influx of new products and technologies. The efforts put into
genetic and biotechnology research in Asian countries like Japan, Korea,
Singapore and Taiwan could potentially mean that new agents be discovered
in this part of the world rather than as it has been traditionally in the
West.
The
Internet has created a paradigm shift in marketing pharmaceuticals, and
direct to consumer advertising has underscored patients’ increasingly
active role in shaping their healthcare. Patients are more educated in
terms of diseases and medications and this is contributing to the
evolvement of the doctor-patient relationship. Traditionally in Asia,
doctor’s decisions are unchallenged, but patients are increasingly
demanding to be part of the decision-making process and are involved
in personal well being.
The
US is expected to continue domination of the global pharmaceutical market
with 35 potential blockbusters lined up in the next 5 years, Japan will
continue to be the largest market in Asia, but the challenge will come
from China. With the medical and healthcare industry expected to be
fastest growing industry in China in 2001, China will remain largest
pharmaceutical market in Asia after Japan over the forecast period.
Consumer confidence is on the rise with China’s entry into WTO, as well
as reform of both financing and delivery of the healthcare system (New
Pharmaceutical Law). Continued price declines are expected but outweighed
by strong volume growth. China is ahead of the curve of major countries
with the establishment of Gene Valley in Shanghai, which is targeted at
being the second Silicon Valley in biotechnology research. However, the
problem of counterfeit drugs in China continues at epidemic proportions.
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