1. Pharma Insight Briefings - Asia
Dynamics & Trends That Make South East Asia’s Pharma Market
Unique And Challenging
CPhI Worldwide Pre-Connect Conference, Paris, France
Thursday 9th October 2014, 14.15-15.30, Room 520A & 520B
Jamie Davies, Head of Pharmaceuticals, Medical Devices & Healthcare
www.businessmonitor.com

2. Overview
Market Forecasts
Intellectual Property
Risk/Reward Index
1 2 3 4 5 6 7 8 9 10
Protectionism
Pricing &
Reimbursement
Universal
Political Risk Healthcare
Economic Outlook Competitive
Landscape
Case Study

3. 50
45
40
35
30
25
20
15
10
5
0
2007
2008
2009
2010
Regional Market Forecast
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Pharmaceutical Sales In South East Asia (USDbn)
Laos
Brunei
Cambodia
Myanmar
Singapore
Malaysia 7.8% CAGR
Philippines
Vietnam
Thailand
Indonesia
14.4% CAGR
8.8% CAGR
9.4% CAGR
11.9% CAGR
7.1% CAGR
6.4% CAGR
14.1% CAGR
6.4% CAGR
8.4% CAGR
CAGR = compound annual growth rate. Source: BMI

4. Protectionism
Image: Indonesia’s National Agency for Drug and Food
Control (BPOM; Badan Pengawas Obat dan Makanan)
• Local manufacturing requirements
• Restrictions on foreign investment
• Preferential purchasing
• Local clinical trials
BMI View: Partnerships are key

5. Intellectual Property
Image: Inspection of the Government Pharmaceutical Organization
(GPO)’s new production facility in Pathumthani Province, Thailand.
• Compulsory licences
• Regulatory data protection
• Incremental innovation
• Country-specific rules
BMI View: Regulations will improve

6. Pricing & Reimbursement
Image: Community groups and organisations from the health
sector protesting in Manila, the Philippines, about the lack of
lower pharmaceutical prices from the Cheaper Medicine Act.
• Price controls
• Promotion of generic drugs
• National drug lists
• Reference pricing
BMI View: More health economics

7. Political Risk
Population Muslim Buddhist Christian Folk religion Unaffiliated Hindu Other religion
Brunei 400,000 300,400 34,400 37,600 24,800 1,600 1,200 400
Cambodia 14,140,000 282,800 13,701,660 56,560 84,840 28,280 0 0
Indonesia 239,870,000 209,166,640 1,679,090 23,747,130 719,610 240,000 4,077,790 239,870
Laos 6,200,000 0 4,092,000 93,000 1,903,400 55,800 0 43,400
Malaysia 28,400,000 18,090,800 5,026,800 2,669,600 653,200 198,800 1,704,000 56,800
Myanmar 47,960,000 1,918,400 38,415,960 3,740,880 2,781,680 239,800 815,320 9,920
Philippines 93,260,000 10,329,300 3,453,000 73,758,760 2,398,900 4,193,260 0 93,260
Singapore 5,090,000 727,870 1,725,510 926,380 117,070 834,760 264,680 493,730
Thailand 69,120,000 3,801,600 64,419,840 622,080 60,000 207,360 69,120 0
Vietnam 87,850,000 175,700 14,407,400 7,203,700 39,796,050 26,003,600 0 351,400
Total 592,290,000 244,793,510 146,955,660 112,855,690 48,539,550 32,003,260 6,932,110 1,288,780
Source: The Global Religious Landscape - A Report on the Size
and Distribution of the World’s Major Religious Groups as of
2010, Pew Research Center.
High proportion of population
Low proportion of population

8. Economic Outlook
• ASEAN Economic Community
• Trans-Pacific Partnership
• China rebalancing
• Currency appreciation/depreciation
BMI View: A global outperformer
Five-Year Forecast For Change In Exchange
Rate Versus US Dollar (2013-18)
-20 -15 -10 -5 0 5 10 15 20
Brunei dollar
Malaysian ringgit
Singapore dollar
Thai baht
Vietnamese dong
Philippine peso
Cambodia riel
Lao kip
Indonesian rupiah
Myanmar kyat
Source: BMI

9. Universal Healthcare
Image: Health City Novena, Singapore.
• Economically and politically beneficial
• Minimum wealth threshold
• Different interpretations
• Inevitable delays
BMI View: Increasingly integral to politics

10. Competitive Landscape
Image: Singapore’s Biopolis, a biomedical R&D centre
• Widespread presence of multinationals
• Emergence of local firms
• More R&D
• Competition from India and China
BMI View: Region-specific strategy vital

11. Risk/Reward Index
Market expenditure
Spending per capita
Market growth
Urban/rural split
Pensionable population
Population growth
Patent respect
Policy enforcement
Approvals expediency
Economic diligence
Policy continuity
Lack of bureaucracy
Legal diligence
Rewards
Risks
Market Rewards
Country Rewards
Market Risks
Country Risks
Risk/Reward Index
Business transparency
Risk/Reward Index
scores 0 – 100.
O = least attractive
market; 100 = most
attractive market.
Source: BMI

12. 30
25
20
15
10
5
Risk/Reward Index
Risk/Reward Profile Of South East Asia Pharmaceutical Markets
Low Reward/Low Risk High Reward/Low Risk
Malaysia
Low Reward/High Risk High Reward/High Risk
15 20 25 30 35
Risks
Rewards
Singapore
Brunei Darussalam
Myanmar
Laos
Cambodia
Thailand
Philippines
Vietnam
Indonesia
Source: BMI

13. Case Study: Vietnam
100
90
80
70
60
50
40
30
20
10
0
Poorest
2nd
3rd
“missing middle”
4th
5th
6th
7th
8th
9th
Highest
Health Insurance Coverage In Vietnam By
Economic Decile In 2010
Source: Estimates based on data from the Vietnam
Living Standards Measurement Survey, 2010.
• Universal healthcare being introduced
• Poor enforcement
• High medicine prices
• Hospital over-crowding
BMI View: Most promising in region

14. Summary
• Strong growth forecast for South East Asia, but with risks:
o Protectionism, intellectual property, and pricing & reimbursement
• Regional economy to outperform
• Universal healthcare to increasingly become a political tool
• Companies must adopt South East Asia-specific strategies
• A diverse region undergoing economic and regulatory unification