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APAC Healthcare Market Overview
Report by: Shivani Chauhan
Asia-Pacific - Pharma’s New Centre of Gravity?
Report by: Shivani Chauhan
• Asia Pacific (APAC), the third largest pharmaceutical market in the world after North America and Europe, with
generics being the major driver for the pharmaceutical industry.
• In developing countries the pharma sales growth is higher, while the growth for developed countries is lower.
• Countries that will experience strong growth include Vietnam (16.4%), China (15.0%), Sri Lanka (12.4%),
Myanmar (12.2%) and Bangladesh (11.5%).
• Pharmaceuticals mount the lion share in terms of volume, having evolved into a US $1.2 trillion industry that
generates more than 60 percent of the segment with growth expected to reach to 5.3 percent per annum between
2012 and 2017 (IMS 2012).
• Combined sales of prescription drugs and over-the-counter (OTC) medicines are forecast to increase from
USD276.6bn in 2013 to USD384.7bn in 2018, representing a five-year compound annual growth (CAGR) of 7.0%.
Executive Summary
By 2017, the global pharmaceutical market is expected to grow to US$1.2 tn
2012-2017 global pharmaceutical market by region (USD, bn)
United States
2013 size: US$ 347bn
2017 size: US$ 384bn
CAGR 2013-17: 1-3%
Japan
2013 size: US$ 119bn
2017 size: US$ 124bn
CAGR 2013-17: 2-4%
Western Europe
2013 size: US$ 188bn
2017 size: US$ 198bn
CAGR 2013-17: 1-3%
“APAC”
2013 size: US$ 129bn
2017 size: US$ 223bn
CAGR 2013-17: 12–14%
Rest of World
2013 size: US$ 208bn
2017 size: US$ 310bn
CAGR 2013-17: 11%
Most APAC countries are expected to drive global growth
Mature markets expected to see minimal growth
Positive growth expected, as economies recover from the Global Economic Crisis
Aging population and price reforms benefitting patent
brands to drive growth
Healthcare reform and expanded access expected
to drive positive growth
Global Market
2013 Size: US$ 991Bn
2017 Size: US$ 1,240Bn
CAGR 2013-17: 6%
Source: IMS Health Market Prognosis 2012; IMSCG Analysis
APAC: Korea, China, India,, Taiwan, Singapore, Sri Lanka, Malaysia, Thailand, Indonesia, Hong Kong, Philippines, Vietnam, Bangladesh, Pakistan, Australia, New Zealand
Changing disease patterns also will
provide pharmaceutical companies
with additional opportunities to
market their existing and increasingly
global and innovative product
portfolios.
Development of disease patterns Mortality rates, 2008–30
* Disease patterns in 2008 compared to expected pattern by 2030
Development of therapeutic areas in emerging markets within the next five years
Source: Survey results; Strategy & analysis
APAC is expected to be the key driver of global growth
15% 12-14%
12% 11-13%
3% 2-4%
USD BnCAGR %
(2008-2013) (2013-2017)
2%
7%
1-3%
1%
5% 6%
Global Pharmaceutical market by region in USD Billions (2007-2017)
5-7%
1-3%
1,300
0
1,100
1,000
900
800
700
600
500
400
300
200
100
1,200
9%
2008
$787
10%
39%
22%
12%
12%
3%
12%
2011
$937
11%
38%
20%
7%
12%
3%
11%
6%
Other
North America
Western Europe
Latin America
Japan
Middle East & North Africa
APAC*
2017
$1,240
12%
31%
16%
10%
10%
3%
18%
2016
$1,161
12%
32%
17%
9%
2010
$890
10%
38%
21%
6%
12%
2%
10%
2009
$843
10%
11%
3%
17%
2015
$1,099
11%
33%
17%
9%
11%
3%
16%
2014
$1,042
2%
34%
18%
8%
11%
3%
15%
2013
$991
11%
35%
19%
8%
12%
3%
11%
2012
$959
11%
36%
20%
7%
8%
39%
22%
6%
12%
2%
13%
Global
Forecast
Source: IMS Health Market Prognosis, May 2013
10% 8-10%
Note: Other countries include Russia, Eastern Europe, Middle
East, Africa and Oceania; *APAC includes KR, CN, TW, SG, MY, TH, ID, HK, PH, VN, AUS, NZL
Note: Historical pharma market totals may have been revised due to exchange rate adjustments
0
5
10
15
20
25
30
35
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Within APAC, pharma market growth in China and Vietnam will outpace other countries in the medium term
Source: IMS Health Market Prognosis
2013-2017 APAC
CAGR = 14%
2008-2013 APAC CAGR = 15%
APAC* pharmaceutical market size and growth by key countries (2007-2017)
Developed Asia OthersPharmerging Asia
Expansion of private hospital sector with increasing private investment will contribute to Pharma growth in Vietnam
Govt investment in healthcare infrastructure in rural China to drive future growth
Bubble size
= USD Bn 2013
sales12 Bn
USD
Fore
cast C
AG
R (
201
3-2
01
7)
(%)
Historical CAGR (2008-2013) (%)
Singapore
Philippines
Malaysia
Indonesia
Hong Kong
China
Vietnam
Thailand
Taiwan Korea
Key Insights
•Between 2013 and 2017,
APAC is expected to grow
by c.$93 Bn USD to reach
c.$225 Bn USD
•China is expected to form
87% of APAC’s total growth,
with double digit annual
growth
•Indonesia and Vietnam are
also expected to average
double-digit growth
Key Asian Country Forecasts:
Growth prospects in Tier 2 markets, while dwarfed by China, are not insignificant
Source: BMI; sales reported in US$bn at constant exchange rate at consumer prices
CountryUS$bn US$bn US$bn US$bn US$bn US$bn CAGR % CAGR %
2012 2013 2014 2015 2016 2017 2007-2012 2012-2017
China 80,1 94,1 108,2 123,2 138,1 152,8 23,9 13,8
India 18,0 19,8 22,0 24,4 27,1 30,1 17,3 10,9
South Korea 15,8 16,9 18,0 19,0 20,1 21,1 9,0 5,9
Indonesia 6,7 7,3 8,0 8,7 9,5 10,3 11,4 9,0
Taiwan 5,2 5,5 5,7 5,8 5,9 6,1 4,0 3,0
Thailand 4,4 4,7 4,9 5,2 5,5 5,8 4,9 5,6
Vietnam 2,9 3,3 3,9 4,4 5,1 5,7 27,0 14,9
Philippines 3,0 3,1 3,3 3,4 3,6 3,8 3,8 4,7
Malaysia 2,0 2,1 2,3 2,5 2,7 2,8 10,6 7,5
Hong Kong 1,3 1,4 1,5 1,6 1,7 1,8 7,2 6,2
Singapore 0,7 0,8 0,8 0,9 1,0 1,0 4,2 6,3
Total 140,2 159,2 178,5 199,2 220,1 241,4 17,1 11,5
Low per capita drug spending provides pharma companies opportunities to tap into a broad consumer base going forward
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
TaiwanKorea
India
ANZ
China
Japan
2011 pharmaceutical spend per capita** (USD)
Indonesia
5302402302202102001901801701601501406050403020100
Singapore
Philippines
Pakistan
Bangladesh
Vietnam
Thailand
900
2011 GDP per capita (USD)
Bubble size = 0.1 Bn.
2011 population
APAC^ Pharmaceutical and GDP per capita dynamics
Relatively low levels of per capita drug spend imply a large portion of the population has limited access (i.e.
affordability constraints) to drug use.
Source: IMS Market Prognosis, 2012; **2011 Total IMS MIDAS country sales / 2011 IMF population figures;
APAC includes Japan, Korea, China, India, Australia, New Zealand, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Hong Kong, Philippines, Vietnam, Bangladesh, Pakistan
Asia ClusterPharmerging AsiaDeveloped Asia
2011 Asia ex. JP GDP per
capita = 3,800 USD
2011 Asia Ex.JP
pharma
spend per capita =
33 USD
2011 Asia incl. JP GDP per
capita = 5,200 USD
2011 Asia incl. JP pharma
spend per capita = 64 USD
In terms of therapy areas, Pain, Asthma/COPD and Oncology have outpaced the broader APAC market in the past year
Sales and growth of top therapy areas* in APAC (2008-2013)
2008-2013 APAC CAGR = 15%
Source: IMS Health MIDAS, 2013; Note: *Top therapy areas comprise 80% of the APAC market; MAT Q1/2008 – MAT Q1/2013 (MAT - Moving Annual Total)
2012-2013 APAC YoY Growth = 15%
Others
Bubble size
= USD Bn 2013
sales12 Bn
USD
-10
-5
0
5
10
15
20
25
30
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Ophthamology
Anaesthesia
Asthma/COPD
Inflammatory diseases
Dermatology
Pain
Liver
Psychiatry
Rec
ent
Gro
wth
(2
01
2-2
01
3) (
%)
Historical Growth (2008-2013) (%)
Cough & cold
Vitamins & suppl
Oncology / Immunology
Neurology
Vascular disease
Hemotology
Oncology
Hospital solutionsGI
CVM
Infectious diseases
Key industry trends:
Growing trend towards cost-containment and policies supporting generics across Asia
CHINA ● Strengthening of primary care system through
healthcare reform● Expansion of private insurance● New provincial NRLs cover new drugs
● Variable reforms yielding fragmented market● Promotion of low cost Gx in hospitals● Price controls to be extended to all reimbursed
drugs, including patented brands● Increasing role of pharmaco-economics
ASEAN• Strengthening of private health infrastructure in ID• Increase in access to drugs in PH, ID & TH through government
intervention• ASEAN harmonization & stronger GMP norms• MY & SG expected to remain free of price control• Increasing emphasis on branded generics
• Pressure of price controls for EDL expected to continue in PH & TH, and rise in ID & VN
• Increasing level of protectionism• Consolidation of reimbursement schemes in TH• Increasing level of protectionism despite ASEAN harmonization
Positive impact
Negative impact
Source: IMSCG IP and Analysis
Hong Kong • Cost control in drug expenditure in public hospitals leading to
increase in the use of generics• Generic medicines are the fastest growing segment in
Pharmaceutical Industry• Healthcare Coupons for geriatrics• Public Healthcare Insurance under consultation due to ageing
population• Pharmaceutical Trade is a Free Market• No restrictions or price control in private sector
Key regional trends
• Governments promoting higher usage of generics
• Cost containment policies getting enforced stronger• Increasing level of protectionism
Key industry trends:
Growing trend towards cost-containment and policies supporting generics across ASEAN
Thailand● Move towards universal coverage
● NLED de-listings in 2008● CSMBS budget cuts & restrictions on prescribing & reimbursement● Hospital audits
Vietnam• Strong growing market• Expansion of local health insurance• Emphasis on local generics
• Strict price controls• New hospital tender regulations• Conflict of interest between MoH and provincial authorities
Positive impact
Negative impact
Source: IMSCG IP and Analysis;
Malaysia• New Pharmacy Bill (January 2013) proposing to grant
pharmacists an exclusive right to dispense medicine• 10MP plan to expand primary care sector• “1 Care for 1 Malaysia” aiming for universal coverage• Generic emphasis for public sector
• Forerunner in Halal certifications• Government favours locally produced products in both
registrations and tenders• Increasing RA standards (BE studies)
Singapore• Upgrading primary care sector (4 new hospitals and 12 new polyclinics by
2030 & financial support for GP’s) in order to cater to medial demands of ageing population
• Fast tracking of Indian Gx since 2010
Indonesia• Universal Health Coverage by 2014 and beyond• Compulsory prescribing of generics• E-catalogue tendering system since 2013
• Increasing RA hurdles and longer registration timelines• Price or access advantages to companies that manufacture locally
Philippines• KP reform aiming for UC by 2016• Expanded medicines access via Philippines Medicines policy in 2011• Cheaper medicines act & price cuts in 2009 & 2010• Maximum drug retail price (2010)
In Asian emerging markets, the sheer size of the task of improving healthcare have expedited the rise in price pressures
Source: IMS Market Expertise
However, there is a growing trend towards cost-containment and policies supporting generics across Asia
Mandatory price
cuts and pricing
controls
Increasing role of
pharmaco-
economics/DRG
implementation
Generic
penetration/ generic
emphasis
Lack of IP
protection (e.g.
compulsory
licensing)
Examples of Growth
Barriers in APAC
China
• Promotion of low cost
Gx in hospitals
• Price controls for all
reimbursed drugs
Hong Kong
• The trend of use in
generics in hospital
authority switching
from EU /ICH sources
to China /India
sources
ASEAN
• Increasing emphasis
on branded generics
• Pressure of price
controls
Korea
• Price cuts in 2012 for
off-patent, and Gx
• Prescribing controls,
DRG implementation
Source: IMSCG IP and Analysis; IMS Market Prognosis Forecast Period: 2013-2017;
Note: ASEAN includes Indonesia, Philippines, Thailand, Vietnam, Malaysia and Singapore
Low
High
Generics penetration varies across SEA and has increased overall across countries
Expanded SEA Overall Market – Originator vs. Generic Penetration (2011)
Source: IMS Analysis, IMS MIDAS Data
Reform and containment, coupled with strong local generics plays, is making SEA an increasingly difficult turf for MNCs
Expanded SEA Top 10 MNC* Market Share by Country (2010 vs. 2011)
Source: IMS Analysis, IMS MIDAS Data; *TOP-10 MNCs for 2011 comprise Pfizer, Novartis, Merck, Sanofi, AZ, Roche, GSK, J&J, Abbott and Lilly
• MNCs have lost market share to generics firms recently, as patent expiries, pricing pressure and increasingly aggressive generics competitors come into play
The strong Asia growth momentum is driven by favorable macro-economic growth, rising healthcare spend and urbanization
High-Growth Markets
Large,
Steady
Growth
Markets
Small, Steady Growth Markets
CN ID VN KR TW TH PH MY SG HK
Projected pharma
market 2017, ($ Bn)177 9 5 15 6 4 4 2 1 2
Projected 2013-
2017 growth (%)16% 13% 18% 6% 5% 4% 4% 8% 7% 8%
Strong macro-
economic growth
Increasing per
capita HC spend
Increasing wealth
of middle class
Strong population
growth
Population living in
urban centers
Ma
cro
Gro
wth
Dri
ve
rs
Source: IMS Health Market Prognosis 2013, IMSCG Analysis
Low ---- High
Regional Business Risk/Reward
Source: Hong Kong BMI Pharmaceuticals and Healthcare Report 1Q 2013
Industry
Rewards
Country
Rewards Rewards Industry Risks Country Risks Risks
Pharmaceutical
RRR
Regional
Ranking
Japan 80 63 76 80 77 79 77 1
Australia 50 87 59 72 84 77 66.2 2
South Korea 60 67 62 70 69 70 64.9 3
China 67 50 63 67 56 63 62.5 4
Singapore 40 80 50 80 79 80 61.9 5
Taiwan 53 60 55 70 65 68 60.2 6
Hong Kong 47 70 53 67 79 72 60.2 7
Malaysia 50 60 53 70 69 70 59.3 8
India 60 43 56 53 50 52 54.4 9
New Zealand 27 83 41 60 87 71 52.9 10
Vietnam 57 47 54 40 45 42 49.3 11
Indonesia 53 50 53 40 46 42 48.4 12
Thailand 47 47 47 37 58 45 46.1 13
Philippines 43 57 47 43 45 44 45.7 14
Sri Lanka 37 43 38 40 48 43 40.2 15
Pakistan 40 47 42 33 40 36 39.5 16
Bangladesh 37 43 38 40 36 38 38.3 17
Cambodia 33 37 34 30 36 32 33.5 18
Regional
average 49 57 51 55 60 57 53.4
BMI´s Risk/Reward Rating (RRR) tool, provides a globally comparative and numerically based assessment of market´s attractiveness. Scores out of 100, with 100 highest (WE: 67, CEE: 52, AM: 51, MEEA: 44)
Industry Rewards – Market expenditure, market expenditure per capita, sector value growth
Country Rewards – Urban-rural split, pensionable population, population growth
Industry Risks – Intellectual property laws, policy/reimbursements, approvals process
Country Risks – Economic structure, policy continuity, bureaucracy, legal framework, corruption
The strong Asia growth momentum is driven by favorable macroeconomic growth, rising healthcare spend and urbanization
Aggregate macroeconomic snapshot for select countries (2011-2016)
Nominal
GDP (USD Billion)
Pharma Market
growth^
IMF 2011-16
Nominal GDP
growth
2015 Urban
Population Share
(%)
Pharma
Market
(USD Billion)
113
417
5,867
279
300213
284211
494346
190123
662467
846
1,5191,116
1,921
1,593
1,646
6,475
7,29812,020
260322
161
Healthcare spend
per capita(USD)
368
179
2,080
1,438
4,774
4,065
221
1,733Singapore 1.10.8
Bangladesh 1.81.1
Malaysia 1.91.4
Philippines 3.52.8
Pakistan 3.81.9
Thailand 3.93.3
Vietnam 4.21.9
Taiwan 5.34.4
Indonesia 7.84.2
Korea 14.212.1
ANZ 16.414.5
Japan 127.4111.9
China 149.268.2
20162011 20162011
Source: IMS Market Prognosis 2012, IMSCG Analysis;
*APAC includes Japan, Korea, China, India, Australia, New Zealand, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Hong Kong, Philippines, Vietnam, Bangladesh, Pakistan
10%
2%
3%
6%
14%
7%
9%
7%
6%
7%
8%
7%
4%
17%
3%
2%
3%
13%
4%
17%
3%
15%
4%
7%
10%
7%
36%
91%
91%
92%
46%
85%
34%
36%
43%
77%
83%
33%
99%
Key challenges to further growth in emerging markets
Source: Strategy & analysis
Please feel free to contact for further information :
Shivani Chauhan
Direct: +91 9758833730
THANK YOU