Business Development Asia LLC

South East Asian Health News

ISSUE 3, OCTOBER 1997



MALAYSIA: AN INCREASINGLY ENTREPRENEURIAL HEALTH SECTOR



Malaysia's health sector has traditionally been dominated by the State. Until recently, rich Malaysians would typically seek private healthcare in Singapore. Now, the middle class has grown sufficiently large to support a domestic private health sector, with several private hospital networks and a well established demand for Western drugs.

Malaysia has a comprehensive public healthcare system, but there exists a growing private healthcare market. Private healthcare providers are more likely to use expensive Western products while public providers tend towards cheaper generic brands, buying in bulk to cut prices.

OTC and generic drugs account for approximately 63% of total consumption with the remainder accounted for by patented drugs. Pharmaceutical companies distribute their drugs mostly through hospitals and pharmacies.

The Malaysia Drug Control Agency (MDCA) oversees the regulation and approval of drugs in the country. Drug approval usually requires one to two years, although the MDCA gives rather less credit than its regional equivalents to US FDA approval. In 1986, the Government passed a strict patent law which is being enforced reasonably stringently.

Pharmaceutical Companies

The Malaysian pharmaceuticals market was valued at US$255m in 1992. BDA expects it to grow to US$470m by 2000. Contributing to this steady expansion are Malaysia's relative political stability, continued economic growth despite recent turmoil in the financial markets as well as low import duties for the pharmaceutical and private healthcare industries.

International companies, including Glaxo Wellcome, Pfizer, Astra and Warner-Lambert, control 75% of Malaysia's pharmaceutical industry. Driven by low import duties on pharmaceutical products, Western drug sales totalled US$190m in 1991 and have experienced an annual growth rate of over 10% since. There are presently 35 local manufacturers licensed by the MDCA and they account for 30% of the total drugs produced in Malaysia. The domestic industry still lacks the necessary technology to produce many advanced drugs.

Selected foreign pharmaceutical companies in Malaysia



Chemical Company of Malaysia (CCM) is a leading player in the pharmaceutical market. In 1995, it acquired UPHA Pharmaceutical Manufacturing, UPHA Corp, and Ho Han Medical Company. In 1997, CCM purchased the rights to some of Warner-Lambert's OTC and consumer pharmaceutical products including Flavettes and Sloan's for the South East Asia region.

Remedi is a pharmaceutical distributor that has its origins in the Government Medical Store, the state-run distributor that was privatized in 1994. Remedi distributes 75% of all drugs in the state sector and currently operates JVs with Cardinal Products and Specialty Laboratories Asia and is also rumored to be planning an imminent regional manufacturing JV with the Australian drug company Fauldings for drugs and drug delivery systems. Remedi is increasingly focusing on technology driven projects.

Selected leading Malaysian pharmaceutical manufacturers

CCM Remedi Safire

Safire Pharmaceutical manufactures 120 products with sales totaling US$15m in 1996. Its US$14m production lines are fully automated with state-of-the-art material handling systems. By 2000, Safire aims to be the main supplier of pharmaceutical products in Malaysia. Safire is currently involved in a JV with Peter Black Toiletries and Cosmetics Ltd. of the UK.

Hospitals Malaysia's rapid economic development has resulted in a strong rise in disposable income, leading to a fast-growing market for private medicine. Private hospitals have increased in number from 50 in 1980 to 278 in 1996. The Malaysian government sees private hospitals as an integral part of the national health service, serving as complementary facilities to public hospitals. Under the Government's sixth plan (1991-1995), US$866m was invested in new public facilities and US$271m in refurbishing existing ones.

Selected hospital chains in Malaysia



The Malaysian Government is aggressively pursuing its plan to liberalize the health care sector. On September 1st, the Health Ministry set up a consortium of three companies, Faber Medi-Serve, Radicare, and Tongkah Medivest, to manage and monitor five support services for 100 Government hospitals and medical institutions for 15 years. Leading players, such as Medi-Serve, Radicare and Tongkah Medivest, as Hospital Pantai, are actively seeking additional sites for future hospitals. However the race to build is increasingly sparking fears of shrinking margins and over-capacity.

Conclusion

The ongoing shift from basic healthcare to private specialized sectors such as radiology, pathology, and rehabilitation reflects a marked change in the attitudes of many Malaysian entrepreneurs. In various recent acquisitions, Malaysian firms have shown a willingness and ability to absorb and adapt advanced foreign technology into systems already in place in Malaysia. In the case of Berjaya Group, its acquisition of Gribbles Pathology of Australia will provide the Group with a strong flow of expertise to its operations in Malaysia, Indonesia, Thailand and the Philippines. This trend will continue as the industry and the country itself develop. Companies will increasingly specialize, seeking to gain an advantage over other domestic and foreign competitors through acquiring unique skills in technologically advanced fields. This shift will offer increased opportunities for participation by Western health sector players in Malaysia.

Recent News:

Indonesia, Malaysia, Singapore, Thailand, Philippines, Vietnam, Regional

Business Development Asia LLC, The Economist Building,
111 West 57th Street, Suite 405, New York, NY 10019
Tel (212) 265 5300 Fax (212) 265 4300 E-mail bdallc@aol.com
A limited liability company incorporated in the State of Delaware
Home | Introduction | Services | Skills | Management | Contact | Newsletters