Navigating Emerging Markets: Southeast Asia

A unique demographic and payer mix make ASEAN an increasingly attractive region.
Jun 01, 2013
Volume 26, Issue 6

Jill E. Sackman
Southeast Asia is a growing pharmaceutical market. Much like Latin America, the countries of southeast Asia, especially the members of the Association of Southeast Asian Nations (ASEAN: Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam), have taken initial steps towards seeking more harmonized regulation of pharmaceutical and medical-device industries. There are still significant differences, however, in how these markets are regulated, and these countries vary widely in their stage of development.


Healthcare has been designated a priority sector for the ASEAN countries for several years. With a population of more than 600 million, this market represents another rapidly growing emerging market. In general, the market has become more attractive in recent years as wages have risen and country governments have made healthcare sector growth a priority. Country governments are actively courting investments in the sector, and opportunities for contract manufacturing abound. Regional sales of pharmaceuticals in Asia have more than doubled from $97 billion in 2001 to $214.2 billion in 2010. It is predicted that sales will reach $386 billion by 2016 (1).

Photo Credit: Travelstock44 - Juergen Held/Getty Images
Variation between countries within the region, however, greatly impacts the opportunities for pharmaceutical companies. The Indonesian pharmaceutical industry, for example, has experienced high growth in recent years. There are a number of reasons for this. The market has a large (and growing) population (237 million according to a 2011 census), a steadily growing economy, and rising rates of chronic diseases like diabetes, obesity, and cardiovascular disease. Increasingly, we are seeing rates of chronic diseases in developing economies that have historically plagued more developed countries. Estimates for India and China, for example, suggest that these countries have the largest diabetic populations in the world (2). In addition, the Indonesian market has grown in part through the government's efforts to provide a system of universal healthcare. In its 2010 announcement, the government said that it would allow 100% foreign ownership of pharmaceutical companies. As a result, the pharmaceutical sector sales have experienced nearly twice the growth rate of gross domestic product (GDP).

In contrast, the Philippines' pharmaceutical industry has grown more slowly in recent years. The Philippines also has a large population (92 million according to its 2010 census) and is experiencing similar trends in the rate of chronic disease as Indonesia. But since the passage of the Universally Accessible Cheaper and Quality Medicines Act of 2008, the market for pharmaceuticals has noticeably changed. The law affected the market in several key ways. First, it set a maximum drug retail price that represented a 50% decrease for more than 100 drugs. It also accelerated the process for bringing generic drugs to market and disqualified drug makers from being able to patent new uses of previously existing drugs.

Other countries in the region possess unique characteristics that pharmaceutical companies should understand as well. Singapore, Brunei, Malaysia, and Thailand, for example, all have greater GDP per capita than Indonesia or the Philippines. Even though these countries contain fewer people than some of the others in the region, their demographics (e.g., higher incomes and increased life expectancy) may still make them attractive markets. In addition, characteristics like the fact the Singapore promotes itself as a center for medical tourism can impact the market as well.

Despite all the market potential, Asia remains a fiercely competitive region for pharmaceuticals. Part of the source of competition comes from the highly fragmented industry with literally thousands of smaller manufacturers. Many of the larger firms have been able to grow their market share partly through intensive competitive pricing (1).

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