PHARMACEUTICAL INDUSTRY CHALLENGE

Challenges
Every industry has its own sets of advantages and disadvantages under which they have to work;
the pharmaceutical industry is no exception to this. Some of the challenges the industry faces are:

Regulatory obstacles

Lack of proper infrastructure

Lack of qualified professionals

Expensive research equipments

Lack of academic collaboration

Underdeveloped molecular discovery program

Divide between the industry and study curriculum

Government Initiatives
he Malaysian government has identified the domestic pharmaceutical industry as an industry to
be developed and promoted under its new economic development plan.

Pharmaceutical products manufactured can broadly be classified as:

Prescription Medicine

OTC (over the counter) Medicine

Herbal and Health Supplements

Traditional Medicine

These are produced in almost all possible pharmaceutical dosage forms.

In 1986, drug registration was introduced in Malaysia and the

Drug Control Authority (DCA) established. All drugs/medicine in pharmaceutical dosage forms
and cosmetics have to be registered before sale and marketing is permitted in the country.

Growth
In 2009, the total market size for Prescription and OTC medicine was estimated at RM4.5 billion
while the traditional medicine and health supplements market was estimated at RM3 billion.
Market growth has been fairly consistent atbetween 8% - 10% annually for the past several
years.
Of the 250 DCA licensed manufacturers in 2011, 74 are licensed to manufacture prescription and
OTC medicines while the remaining 176 are licensed traditional medicine manufacturers.

There are a further 207 licensed cosmetic/toiletries manufacturers.

Exports
Malaysian manufacturers currently export to countries in South East Asia, Africa, and the Middle
East with new markets being explored beyond these countries. Growth in exports has been
steady at between 10% to 12% annually.

Research & Development

Strong emphasis is placed on R & D, both in-house and in collaboration with Universities, by
domestic manufacturers. In some instances, collaborative work is also being undertaken with
innovator companies. R & D outcomes in bio-pharmaceutics and traditional medicines have
resulted in several patent filings.

Regulation
The manufacture and marketing of pharmaceutical products in Malaysia is strongly regulated as
is in most developed countries.
Malaysia was admitted a member of PIC/S in 2002 and manufacturers are required to be in
compliance with the CGMP of PIC/S. Please refer to the regulatory agency:
http://www.bpfk.gov.my for more details.
Malaysia is also a member of the WTO and has acceded to the TRIPS agreement. Patents are
registered and Trademarks/Copyrights protected.

Pharma Export
In the recent years, despite the slowdown witnessed in the global economy, exports from the
pharmaceutical industry in Malaysia have shown good buoyancy in growth. Export has become
an important driving force for growth in this industry with more than 50 % revenue coming from
the overseas markets. For the financial year 2008-09 the export of drugs is estimated to be $8.25
billion as per the Pharmaceutical Export Council of Malaysia, which is an organization, set up by
the Government of Malaysia. A survey undertaken by FICCI, the oldest industry chamber in
Malaysia has predicted 16% growth in the export of Malaysia's pharmaceutical growth during
2009-2010.

Key players in Malaysian Pharmaceutical Industry

There are several national and international pharmaceutical companies that operate in Malaysia.
Most of the country's requirements for pharmaceutical products are met by these companies.
Some of them are briefly described below:

Pharmaniaga Berhad the biggest pharmaceutical manufacturing company in Malaysia.

The company is ranked at the 8th position among the global generic pharmaceutical
companies and has presence in 48 countries including world class manufacturing
facilities in 10 countries and serves to customers from over 125 countries.

Bayer co. sdn bhd manufactures and markets a wide range of pharmaceuticals both in
Malaysia and abroad. The company has 60 active pharmaceutical ingredients to
manufacture drugs, critical care products, diagnostic kits and biotechnology products.
The company has 6 FDA plants that produce active pharma ingredients and 7 FDA
inspected and ISO 9001 and ISO 14001 certified plants. Dr. Reddy's Q1 FY10 result
shows the revenues of the company at Rs. 18,189 million which is up by 21%. During
this quarter the company introduced 24 new generic products, applied for 22 new generic
product registrations and filed 4 DMFs.

Roche (M) Sdn Bhd is an Malaysian pharmaceutical company renowned for the
manufacture of low cost anti AIDS drugs. The company's product range comprises of
anthelmintics, oncology, anti-bacterial, cardiovascular drugs, antibiotics, nutritional
supplements, anti-ulcerants, anti-asthmatics and corticosteroids. Cipla also offers other
services like quality control, engineering, project appraisal, plant supply, consulting,
commissioning and know-how transfer, support. For the financial year 2008-09 the
company registered an increase of 22% in sales and other income over the previous year.

Zuellig Pharma is the second largest pharmaceutical healthcare company in Malaysia.

The brands manufactured by the company include Gardenal, Ismo, Stemetil, Rejoint,
Supradyn, Phensedyl and Haemaccel. Nicholas Piramal has entered into join ventures and
alliances with several international corporations like Cheissi, Italy; IVAX Corp; UK, F.
Hoffmann-La Roche Ltd., Allergen Inc., USA etc.

Glaxo Smithkline (GSK) is a United Kingdom based pharma company; it is the world's
second largest pharmaceutical company. The company's portfolio of pharma products
consist of central nervous system, respiratory, oncology, vaccines, anti-invectives and
gastro-intestinal/metabolic products among others. On November 2009, the FDA had
announced that the H1N1 vaccine manufactured by GSK would join the list of the four
vaccines approved.

Malaysia's Domestic Pharmaceutical Market (12 Months Ended January

2009)
Company
Pharmaniaga Berhad
Bayer co. sdn bhd
Roche (M) Sdn Bhd
Glaxo Smithkline
Zuellig Pharma
Zydus Cadila

Size ($ Billion)
6.9
.36
.34
.29
.27
.24

Market Share (%)

100.0
5.3
5.0
4.3
3.9
3.6

Future

Growth Rate (%)

9.9
13.4
11.5
-1.2
11.7
6.8

Scenario

With several companies slated to make investments in Malaysia, the future scenario of the
pharmaceutical industry in looks pretty promising. The country's pharmaceutical industry has
tremendous potential of growth considering all the projects that are in the pipeline. Some of the
future initiatives are:

According to a study by FICCI-Ernst & Young Malaysia will open a probable US$ 8
billion market for MNCs selling expensive drugs by 2015

The study also says that the domestic pharma market is likely to reach US$ 20 billion by
2015

The Minister of Commerce estimates that US$ 6.31 billion will be invested in the
domestic pharmaceutical sector

Public spending on healthcare is likely to raise from 7 per cent of GDP in 2007 to 13 per
cent of GDP by 2015

Dr Reddy's Laboratories has tied up with GlaxoSmithKline to develop and market

generics and formulations in upcoming markets overseas

Zylux, a Perak based pharmaceutical company is looking to tap opportunities of about

US$ 200 million in the US oral contraceptives market

Due to the low cost of R&D, the Malaysian pharmaceutical off-shoring industry is
designated to turn out to be a US$ 2.5 billion opportunity by 2018