The Outlook for Pharmaceuticals in North East Asia

Geographically located in North East Asia, these four countries are currently undergoing different phases of development, both in overall terms and, more pertinently, in the growth of their respective pharmaceutical markets.

Japan, South Korea and Taiwan represent highly developed pharmaceutical markets with advanced healthcare systems and high levels of spending, both in the private and public sectors. This has inevitably placed a strain on their respective governments that have in recent years tried to temper escalating spending by introducing various cost-containment strategies, including periodical changes to reimbursement prices and the encouragement of generic substitution.

Despite these measures, spending has continued to rise. Key factors are the ageing population and the high healthcare standards that the population has grown to expect. While governments hope to control healthcare costs, the trend suggests health spending will continue to rise in the long run.

China’s big opportunity

China’s healthcare provision is somewhat lacking when compared to the other three countries, but it remains one of the fastest growing pharmaceutical markets in the world, in tandem with the country’s rapid economic expansion. The influx of foreign multinationals has offered continued investment, and production plants and R&D facilities are being expanded all the time. Improvements in regulatory practices are making the ability to sell imported products quicker and easier, while the lowering of tariffs on imported goods and an increase in transparency of legislation has made a notoriously hard-to-penetrate market a more attractive proposition for overseas companies. These are positive moves, but concerns remain in key areas such as IPR protection.

CHINAEspicom projects that the pharmaceutical market will grow by a high CAGR between 2012 and 2017. China will be the largest pharmaceutical market in the Asia Pacific region, overtaking Japan in 2016. China will represent more than a third of the Asia Pacific region’s total pharmaceutical market in 2017. The top 25 local pharmaceutical manufacturers had combined revenue of around US$16 billion in 2010. There were 14 companies that had annual revenues of over US$500.0 million, and 33 companies that had annual revenues of over US$100.0 million. The top 10 local pharmaceutical manufacturers had collective revenue of around US$10 billion. Four companies, Harbin Pharmaceutical Group, North China Pharmaceutical, Shanghai Pharmaceuticals and China Pharmaceutical Group, reported annual revenues of US$1.0 billion or more in 2010.

JAPAN

Takeda is the largest Japanese pharmaceutical manufacturer in terms of sales, and has been by a considerable margin for some time. Other leading domestic producers include Astellas, Daiichi Sankyo and Eisai. Over the past five years, the fastest growing pharmaceutical companies have been Mitsubishi Tanabe Pharma, Dainippon Sumitomo Pharma, Kyowa Hakko Kirin Company, Shionogi & Co and Otsuka. The leading foreign pharmaceutical companies in terms of sales in Japan are Pfizer, Roche and Novartis. A number of multinational companies are actively seeking to expand their operations in Japan, notably Pfizer, GlaxoSmithKline, Novartis and Bristol-Myers Squibb.

SOUTH KOREAThe total production value of the South Korean biological sector is estimated at 2.0 billion Won (US$1.8 billion). The biological sector witnessed a number of competitive strategies completed in 2011: VaxInnate granted CJ an exclusive licence to manufacture, develop and commercialise its recombinant seasonal and pandemic influenza vaccines; Samsung and Biogen Idec entered into an agreement to invest US$300.0 million to establish a joint-venture (JV) to develop, manufacture and market biosimilars; Dong-A and Japan’s Meiji Seika Pharma announced an agreement for the joint development of biosimilar products; and Binex signed a strategic alliance MOU with Schnell Biopharm for biologicals and also signed an agreement with Hanwha Chemical to produce a biosimilar.

TAIWAN

The pharmaceutical market is projected to grow at a high single-digit CAGR in US dollar and local terms during the forecast period. This will make Taiwan the seventh largest pharmaceutical market in the Asia Pacific region, and the fourth largest in per capita terms. In 2010, there were 292 registered western-style pharmaceutical manufacturers and 130 traditional Chinese medicine (TCM) manufacturers in the country. Many multinationals are active in Taiwan, although the majority of them only have sales and marketing operations as they are deterred from establishing manufacturing operations due to the unequal drug pricing system. Taiwan is heavily dependent on the imports of retail medicaments, which represented 80.6% of the total imports in 2011. With limited pharmaceutical exports of only US$300.6 million in 2011, the balance of pharmaceutical trade will remain considerably negative and the deficit is likely to increase in the forecast period.

Source: Reportlinker

Category: Pharmaceuticals