The pharmacy channel in Malaysia has been growing faster than other healthcare channels since 2007, with a compound annual growth rate of 12.25% according to IMS Health data. The growth of pharmacies is due to an increasing number of retail outlets, more trained pharmacists, and patients becoming more comfortable obtaining medications directly from pharmacists. However, multinational pharmaceutical companies will need to adapt to Malaysia's changing healthcare landscape which includes a push to separate medication dispensing from physician offices to retail pharmacies. This will increase pressure on brand name drugs that traditionally relied on doctor prescriptions.

1. The Pharmacy Channel Emerges in
Malaysia’s Evolving Pharma Climate
A national cancer strategy has been
implemented, thanks to the HPB.
Health checks for hypertension, high
cholesterol, diabetes, and obesity are
now ongoing in government clinics.
Pharmacists are being prepared to play
a more significant role in improving
the health of the Malaysian people.
All of this is being played out against
the backdrop of a public health sys-
tem and pharmaceutical market that
continues to demonstrate strong fun-
damentals—fast-growing disposable
income levels, for example, as well as
a pharma market still in a growth cy-
cle—in the ASEAN region.
Throughout Malaysia,progress contin-
ues to be made on the upgrade and
construction of some 500 new health
clinics and community clinics, sev-
eral new hospitals, and approximately
100 additional mobile clinics. Medi-
cal tourism, for its part, continues to
benefit from tax incentives,a respected
national accreditation scheme desired
to ensure quality standards, and a re-
cent stipulation in Singapore that al-
lows citizens to use their Medicare
contribution in Malaysia. Private in-
surance, bolstered by favorable new
tax measures, is on the rise. Original
brands, especially in such therapeutic
markets as psycholeptics, antineoplas-
tics, anti-asthma, and cholesterol-low-
ering agents, dominate the Malaysian
pharmaceutical market in which nine
of the top ten manufacturers are mul-
tinational companies.
There are, of course, challenges. The
government has been forced to re-
spond to increasing budgetary pres-
sures, for example, by proposing a
new national health insurance scheme
that will certainly encourage greater
adoption of generics, while private
insurers, for their part, are on parallel
cost containment paths. With formal
price control mechanisms now being
proposed for the Malaysian National
Medicines policy and blockbuster pat-
ents expiring, the Malaysian pharma-
ceutical market is set to grow at 6%
between 2010 and 2014—not the el-
evated pattern of a few years ago, but
a signifier, nonetheless, of continuing
stability.
Optimizing resources
For many reasons, then, Malaysia is a
market in which both local and mul-
tinational organizations are steadily
exploiting a range of new resource
optimization options—moving toward
nuanced initiatives designed to exploit
emerging opportunities in both the
ethical (branded/generics) market and
the OTC/consumer medicines space,
to optimize headquarters and field ac-
tivities, and to realign sales forces and
channel resource allocation in general
so as to increase productivity.
Much interest currently revolves
around the Malaysian pharmacy sec-
tor (~300 Million USD in value),
which, by the MAT/Q3 2010*
with
a 2007-2010 CAGR of 12.25%, was
outperforming both the government
and general practitioner sectors with a
10.60% and 6.43% CAGR respective-
ly, according to the IMS Plus Database
MAT/Q3 2010. Importantly, original
branded drug sales through retail phar-
macies represented more than 15% of
the total pharmaceutical market in
Malaysia in 2009, contributing to over
half the total market growth in the
2008-2009 timeframe.
While the economic downturn may
have partially contributed to the faster
growth in the pharmacy channel,there
have in addition been other sustainable
fundamental shifts as well – increas-
ing number of retail outlets (currently
~3000 in Malaysia), larger number of
available trained pharmacists and a
more educated patient that is comfort-
able by-passing GPs to directly visit
their neighborhood pharmacist for a
variety of ailments.
An increase in the number of trained
pharmacists accounts, in part, for this
development. But so do efforts now
being made to end a long tradition of
general practitioners dispensing medi-
cines from their own offices. Pilot ini-
tiatives in Kuala Lumpur, Penang, and
By Navin Swaroop, Senior Consultant, APAC & Anand Srinivasan, Engagement Manager, APAC
It’s been more than four years since the Malaysian government launched its
Health Promotion Board (HPB),an organization commissioned,among other
things, to promote a healthy lifestyle among Malaysia’s 29 million people and
to help stem the onset of such conditions as diabetes, cardiovascular disease,
infectious diseases, and cancer.
* MAT refers to Moving Annual Total.

3. Johor are testing those waters. Messag-
es are being sent to patients. Greater
scrutiny is being paid to the physicians
who have sought to benefit financially
from overprescribing as well as to pa-
tients, who, by virtue of moving from
doctor to doctor, are confusing their
own treatment plans and getting pre-
scribed more medications than they
should. One Ministry of Health of-
ficial put it this way: “When you go
to this clinic,the doctors will prescribe
you something. You go to another
clinic, you’ll probably get the same
thing [...] they put you on overlapping
prescriptions. We realize that, but un-
til we get a system that can detect the
moment you log in as a patient [you
won’t know] that the patient has been
supplied this. That is an issue we are
trying to address.”
It will, of course, take years—and the
implementation of a national health
insurance scheme that can offset the
loss of general practitioner income—
before a complete separation of dis-
pensing channels can be achieved.
Physicians are strongly opposed to
any legislation that would limit their
dispensing activities. The Malaysian
Pharmaceutical Society, for its part, is
arguing for separation, suggesting that
it is time that community pharmacists
be given more responsibility for pre-
scription monitoring, patient educa-
tion, and medicines management. Fi-
nally, the draft master action plan for
the National Medicines Policy has
proposed a 2011 timeline for such a
separation,except in those geographies
where it is simply not yet feasible.
The potential impact of such legisla-
tion would, of course, be considerable.
Suddenly there would be, in Malaysia,
a new generation of stakeholders op-
erating under different principles than
existing norms—stakeholders invested
with the power to switch prescriptions
based on anticipated pharmacy profit
margins.
Succeeding in the new era
No matter what the timeframe ulti-
mately is, Malaysia is clearly entering a
new era—one in which overprescrib-
ing will diminish as individual hospitals
closely scrutinize prescribing levels and
in which increasing attention will be
paid to the pharmacists employed by
the country’s burgeoning network of
retail and independent pharmacies.
One obvious outcome of this shift-
ing environment is the pressure that
has been placed on branded original
products, which doctors tend to pre-
scribe with greater regularity than do
the pharmacy outlets. Private sector
doctors have not, heretofore, been
bound to a set class of drugs; they have
prescribed what their patients could
afford. Public sector physicians,mean-
while, have worked with an expansive
formulary of both original and ge-
neric products; in 2009, the Ministry
of Health formulary contained 1,432
drugs, many of them innovator prod-
ucts, along with pricing information.
While the public hospital formular-
ies apply some restrictions in terms of
first-line use/specialist-only prescrib-
ing of expensive drug classes, doctors
in the public sector have maintained
a reasonable degree of prescribing
freedom when it came to brands. Pa-
tients have trusted physicians to make
the right choice, and, because co-pay-
ments are either inapplicable or neg-
ligible, have willingly accepted brand
drug prices.
Multinational companies that have re-
lied on the sale of original products
through physician offices must now re-
assess their Malaysia strategy and forge
new paths in the pharmacy channel.
They must recognize, at the outset, the
importance of building meaningful re-
lationships with the right pharmacists.
Turning challenges into opportuni-
ties is vital into today’s pharmaceutical
market place – and that is where the
value of IMS Health lies - proven cli-
ent success not text book theory.
IMS Health-driven re-focusing of sales
teams,identification of product oppor-
tunities, competitive positioning op-
tions and potential commercialization
strategies all have proven successful.
And with IMS Health as a partner,
monitoring the market and reporting
back on the results has been simply
part of the benefit.
PHARMACY CHANNEL HAS OUTPACED OTHER CHANNELS SINCE 2007
Sales Contribution by Sectors in Malaysia
totalsales(consultantusd)(millions)
1400
1200
1000
800
600
400
200
0
MAT/Q3 ‘07
GOVERNMENT CLINIC HOSPITAL PHARMACY
MAT/Q3 ‘08 MAT/Q3 ‘09 MAT/Q3 ‘10
457397
229
179
236227
180
235
410338
202
146
197
243
214
279 18%
CAGR 09-10
20%
6%
15%
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