5 minute read
Modern medicines face challenges
Thomas Hundt
PHARMACEUTICAL INDUSTRY IN THAILAND - KEY POINTS:
Demand growing: Ageing population and increasing incomes are fueling the demand for pharmaceuticals.
Generics dominance: The industry primarily emphasises generic drugs, while innovative medications receive limited reimbursement.
R&D and investment limited: There is minimal in-house research and development, along with limited investment in the sector.
Thailand has the second-largest pharmaceutical market in Southeast Asia after Indonesia, and sales are expected to increase further. According to the market research company BMI, sales are set to rise from 3.8 billion US dollars (US$) in 2022 to 9.4 billion in 2032. An ageing population, higher incomes and the expansion of healthcare are expected to drive growth.
In 2022, Thailand’s pharmaceutical expenditure per capita was only US$ 53 for its 72 million inhabitants per year. Consequently, the market for costly, innovative drugs remains relatively modest. Therefore, industry representatives emphasise that introducing new medications necessitates thorough market and competition analysis.
ORIGINAL PREPARATIONS MAINLY FOR CIVIL SERVANTS AND HIGH EARNERS
Approximately 4.8 million public servants and their families can benefit from costly imported original medications. These medicines are obtained by public hospitals through the Civil Servant Medical Benefit Scheme (CSMBS) and distributed to the families of civil servants. The Ministry of Finance oversees these public health expenditures and supervises the procurement of medications under the CSMBS.
On the other hand, for the nearly 13 million private sector employees covered by statutory health insurance, reimbursements for medications, especially original preparations, are capped. Consequently, generics are here predominantly prescribed and reimbursed within this group.
The tax-funded healthcare system, known as the Universal Coverage Scheme (UCS), extends care to the 47 million uninsured Thai citizens. Medication administration under the UCS adheres to the National List of Essential Medicines, formulated by the Ministry of Health and the National Health Security Office (NHSO) in consultation with medical experts and pharmaceutical companies. This list predominantly comprises generics.
Additionally, this committee establishes average prices that effectively serve as upper limits for public healthcare organisations when procuring medications. The NHSO may only under exceptional circumstances engage in direct negotiations with pharmaceutical suppliers and procure patented medications.
PRIVATE HOSPITALS ARE ALSO KEY CUSTOMERS
Private healthcare facilities play a significant role, accounting for approximately a tenth of the demand for medicines in terms of value. Within these facilities, in-house pharmacies sell also imported original preparations at premium prices to both affluent domestic and foreign patients. Foreign medicine suppliers approaching private hospitals should be mindful that the decision-making process for purchasing pharmaceuticals undergoes careful evaluation by both medical professionals and purchasing departments.
Thailand also offers opportunities for clinical testing of new drugs. Competent medical faculties, schools, and well-trained doctors are readily available for this purpose. However, the Health and Pharma Working Group of the European Association for Business and Commerce expresses concern about patent protection for newly developed drugs. An improved legal framework could encourage manufacturers to conduct more extensive clinical trials.
GERMANY IS THE LEADING PHARMACEUTIALS SUPPLIER
Total imports of pharmaceutical products barely grew from 2012 to 2020. But in 2021 and 2022, imports of vaccines briefly boosted total imports.
16.5 % of pharmaceutical imports come from Germany
In 2022, Germany even was the most important supplier of pharmaceuticals, especially COVID vaccines.
INDUSTRY FOCUS ON LOCAL MARKET AND AIMS TO REDUCE IMPORTS
Over 80 per cent of pharmaceutical production, which amounted to around 48,000 tonnes in 2022, remains in Thailand. The exports of pharmaceutical products stagnate. The shipments of medicinal and pharmaceutical products (SITC section 54) were around USD 650 million per year from 2018 to 2022.
At the end of 2021, the Food and Drug Administration (FDA) counted a total of 151 pharmaceutical facilities that complied with the Good Manufacturing Practice standards of the pharmaceutical industry (PIC/S GMP), but only 12 of these facilities can manufacture active ingredients.
An important drug manufacturer is the state-owned Government Pharmaceutical Organisation (GPO). The GPO, which belongs to the Ministry of Health, aims to reduce dependency on foreign originator drugs by producing or importing generics. The same mission is shared by pharmaceutical companies such as Siam Bioscience and the Defence Pharmaceutical Factory.
The Board of Investment (BOI) promotes investment in the pharmaceutical industry. The BOI exempts qualified investment projects from corporation tax and grants other privileges to investing companies, albeit recently with limited success in the pharma sector.
Foreign pharmaceutical manufacturers no longer produce locally and are hardly involved in research and development because the market for innovative medicines is too small. More than 20 international pharmaceutical companies and the Swiss trading companies Zuellig Pharma and DKSH are represented through their sales offices. They have joined forces in the Pharmaceutical Research and Manufacturers Association. PReMA promotes understanding the benefits of intellectual property rights in the development of innovative medicines.
TRANSPARENT APPROVAL PROCESS
The drug approval process overseen by the Food and Drug Administration (FDA) is widely acknowledged for its transparency and efficiency. Adhering to international guidelines set forth by the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use, the FDA ensures standards are met.
Moreover, the FDA upholds the international pharmacy standard of Good Pharmacy Practice (GPP) nationwide, stipulating that only licensed pharmacists are authorised to dispense prescription medications.
With approximately 22,000 pharmacies across the country, accounting for roughly 40 percent of total pharmaceutical sales, their majority of transactions involve overthe-counter medications (OTC). They sell only 10 percent of the innovative medicines in the country. Notably, there's a growing trend towards pharmacies franchises and pharmaceutical chains like Boots, Watson, Pure Pharmacy, and Fascino. While online sales have yet to gain traction due to legal constraints, traditional pharmacy outlets remain the primary channel for OTC medicines and
Contact details:
Thomas Hundt
Director Thailand, Cambodia, Myanmar, Laos
GERMANY TRADE & INVEST
