Economic Growth - The Association of Southeast Asian Nations (ASEAN) - comprised of Malaysia, Burma, the Philippines, Singapore, Thailand, Vietnam, Brunei, Cambodia, Indonesia, Laos - is carrying out harmonization due to be completed by 2015. The goal of this harmonization is to create an integrated, open market across the ASEAN with uniform pharmaceutical regulation and quality control across the region. Reformation of government policies to support pharmaceutical production and a large, increasingly affluent consumer base make the ASEAN markets a pertinent pharmaceutical growth area projected to be worth US$80 billion by 2017.

In particular, the Indonesian and Thai pharma industries are growing - driven by large population expansion with strong demand for pharmaceutical products and robust, stable GDP growth. In tandem, the smaller pharmaceutical markets of Vietnam and Malaysia are rapidly growing due to increased foreign investment and governmental support. In the past the ASEAN region has been hampered by the circulation of counterfeit medicines and those with inadequate efficacy. However, manufacturing standards, increased commitment to standardized regulation, and improved packaging technologies such as track and trace are combating these problems. There has also been the introduction of legislation protecting intellectual property - crucial to safeguarding innovation - and improving safety standards.

 Specialization and Diversification

Interestingly, some of the Southeast Asian pharmaceutical markets are beginning to specialize. The Malaysian government has specifically targeted the acceleration of the biotechnology sector with the aim of positioning the country as a leader by 2020. The region's established economic standard bearer, Singapore has attracted strong investment from multinational companies establishing biological facilities and the government is to invest robustly in biomedical research going forward - with western standards, the country will continue to attract investment however, other countries in the region will be bigger drivers of growth.

Healthcare systems and services in the area are hugely diverse with countries at different stages of healthcare development. The increasingly politically open states of Southeast Asia, such as Thailand, have a growing urbanized middle class population demanding good quality healthcare serviced by a booming private sector. The detrimental effect the global recession had on these countries has put a renewed political emphasis on social security and essential healthcare. All countries in the region are striving to fund basic healthcare for those on low incomes and poor access to healthcare, such as the health fund for the poor scheme in Vietnam. Though tax-funded centralized schemes do show stability, there is rising pressure from the public to increase quality and efficiency of healthcare.

 Country by Country Analysis

Although not currently a problem, the inevitable onset of an aging population in Southeast Asia will reinforce the need for long-term healthcare financing. Compulsory savings for medical care and social insurance are being introduced to address this. There has been politically motivated decentralization of healthcare systems in a number of Southeast Asian nations such as Vietnam and Indonesia, delivering power to local governments which will make standardization of care more difficult. Universal healthcare is the ultimate goal for Southeast Asia, but there are still many challenges to be overcome including finance and infrastructure.

Indonesia

Of the ASEAN, Indonesia is particularly well placed as a center of pharmaceutical market growth. The country along with Thailand weathered the global economic downturn well and has an impressive projected GDP growth rate of 6% in the upcoming years, due to robust domestic consumption and primary exports. By 2016 the pharmaceutical market of Indonesia is projected to be the sixth largest of the Asian pacific region, and the economy has become conducive to long-term investment (Foreign Direct Investment US$ 20 billion in 2011) with inflation kept in check at 4.5% and low interest rates. Coupled with this, the current government has demonstrated stability and a political will to reform the economy whilst implementing measures to fight corruption.

Indonesia possesses substantial pharmaceutical manufacturing capabilities, with 240 domestic pharmaceutical manufacturers and there is increased scope for research and development domestically. Legislation requiring all drugs that are sold on the Indonesian market to be manufactured domestically will provide a boost to national investment and lower the long term costs of production.

Thailand

The pharma market in Thailand is in need of some structural reforms as although it is predicted to grow at double digit pace over the next few years, it has a significant trade imbalance and relies very heavily on imports. That said, Thailand remains a very open marketplace and its growth and investment potential still remains largely untapped by big pharma, with just two contract manufacturers operating in the region, which handle much of the repackaging requirements of international firms. With the Government's commitment to its 30 Baht healthcare scheme the domestic market will be dominated by generics, however, AEC membership for Thailand means increasingly it will become a good base to export pharmaceuticals to the wider ASEAN region. In addition, the removal of GPO (Government Pharmaceutical Organisation) privileges, the harmonization of the ASEAN region (with GMP standards) and the Thai universal healthcare system bodes well for the private sector - with Indonesia and Malaysia the main regional competitors.

Vietnam

Historically local drug production has accounted for half of the country's overall needs, and the Government has set an ambitious target of raising this figure to closer to 70% by 2015. IMS data shows that the pharmaceutical economy is growing apace at an annual rate of between 18-19% over the next few years; however, demand is predominantly being led by the purchasing of generics. Due to recent price rises there is likely to be a sustained effort by the government to manufacture essential drugs locally and decrease its import dependence. With a growing healthcare insurance and self-pay market a growth in the portfolio of pharmaceuticals products and services offered in the country is likely.

Malaysia

The Malaysian pharmaceutical market is relatively small compared to the other ASEAN nations, with a heavy dependency on medical imports. However, the sector is forecast to grow at a strong compounded annual growth rate. There are approximately 250 domestic licenced pharmaceutical manufacturers, with the majority servicing local markets. Tight regulation has limited the presence of multinational companies in Malaysia; however, relaxation of legislation will attract large multinationals determined to tap into this potentially lucrative market.

Martin Wilson, CPhI Southeast Asia Event Manager at UBM Live, provides the inside track on the region ahead of this month's CPhI Southeast Asia event. In light of the rapid pharma sector growth in Southeast Asia, the new co-located events - P-MEC and InnoPack, representing innovative pharmaceutical technology and packaging, respectively, will be launched.