Emerging markets are currently under heavy pressure due to adjustments in growth expectations. Over the last decade or so, the structure and composition of healthcare markets in major South-east and East Asian countries have gone through a tremendous change and these markets have become major growth contributors for the pharmaceutical industry (as highlighted below).
With tides of change flowing on the shores of these markets, we decided to take a snapshot of 17 countries in South-east and East Asia to provide a glimpse of the current healthcare environment and the progress so far in these countries.
The 3.09% increase in government healthcare budget to USD 385.1 million from the present USD 373.2 million along with a set of seven new strategic reforms in the next two decades, is set to revolutionize the healthcare system. These strategies aim at achieving long-term sustainable higher quality of healthcare through the use of IT, better infrastructure, policy implementation and regulation. A pioneer in research and development as well as regulatory affairs of halal medicines, Brunei could very soon emerge as a key player in halal pharmaceuticals in Muslim markets across Asia.
The major reform in Cambodian health care landscape is the impending passage of Health Financing Policy, which seeks to establish a universal health care system with better access, quality infrastructure and a regulated drug market. To further address the acute problem of the lack of medical personnel and doctors in this economically backward nation, the government has taken key steps in May 2015 to increase partnership with China in ushering collaborated healthcare reforms.
The pilot reform of scrapping mark-up prices on drug sales is set to spread to 100 big cities this year, further disrupting the monopoly of local hospitals in prescription drug sales, cracking the whip on corruption and illicit pricing practices, and legalizing online prescription drug sales. The Chinese Government has abolished price caps on all drugs, with the exception of anesthetic products and class-1 psychoactive drugs, in effect from June 2015 aimed at competitive pricing and tackling drug shortage issues and affordability. The new wave of reforms is set to transform the drug market landscape in the next decade with mass generics set to capture 75% market share and patented drugs, incentivized by new price negotiation mechanisms, to blossom to 20% market share.
In a move to revamp the health insurance industry, the government plans to introduce the Voluntary Health Insurance Scheme (VHS), which is now in the public consultation stage, set to promote amalgamation of the public and private healthcare sectors. In July 2015, the government allocated an additional USD 150.9 million to the allocated USD 7.03 billion for 2015-16 to expand health infrastructure and manpower as well as financially strengthen initiatives of the Hospital Authority aimed at addressing the needs of the aging population. This year, the Department of Health has initiated the establishment of a testing center to develop upon the Hong Kong Chinese Materia Medica Standards (HKCMMS) as an effort to formulate benchmarks and develop local drugs which can sell in global markets.
The revolutionary Jaminan Kesehatan Nasional (JKN) reform of providing a universal healthcare system to all citizens continues to rapidly transform the healthcare landscape and draw in continued and increasing investments, with the healthcare market poised to touch USD 21 Billion by 2019. The pharmaceutical market is expected to continue its expansion at a sustained annual growth rate of 12.5% through 2018. Rapid growth is expected particularly in diagnostics and IT health solutions throughout 2015 as large masses come into the fray and the Indonesian healthcare market will continue to be a magnet for investments in the coming years.
To address the challenging issue of rising drug costs, policy makers in Japan are adopting a strategy aimed at increasing market share of generics to 60% by 2017 and targeting 80% by 2021.The pharmaceutical market in Japan is pegged to reach USD 79.8 billion by 2020 at a compound annual growth rate (CAGR) of 1.3%. In April 2015, the government established the Agency for Medical Research and Development (AMED), an organizational reform geared towards transforming Japan’s progress in healthcare research and development into competitive marketable products. To combat the impending economic burden of healthcare of an aging population, Japan legislated a reform in the system of health insurance in May 2015 to increase cost sharing by the working population coupled with lowering of premiums for those aged 75 and over.
The major healthcare policy reforms in Laos are the ongoing implementation of the National Health Sector Reform Strategy (2013-2015), the impending Eighth Five Year Health Sector Development Plan (2016-2020) and the National Free Maternal and Child Health Policy. The poverty-stricken nation remains heavily dependent on funding from world organizations to achieve better health facilities and plans to introduce the Investment Policy Review by mid-2016 to increase the financial stability of such plans, in the continuing mission to achieve universal health coverage by 2025.
The main development in Macau healthcare is from a research standpoint in the ongoing efforts of establishing the Guangdong-Macau Traditional Chinese Medicine Scientific Industrial Park aimed at standardizing indigenous medicines and creating a nascent market space for introduction of marketable pharmaceutical products.
The health care expenditure is expected to grow at a compound annual growth rate (CAGR) of 11% in the next five years. It is estimated that the total healthcare spending is expected to surpass USD 20 billion mark by 2025 from the current allocation of USD 5.49 billion. The government is keen to build on Malaysia’s emergence as a key global player in the medical device manufacturing space, and continues to favor investments both domestic as well as foreign with recent approvals of over USD 120 million. In an effort to curb the rapid rise of drug costs in the aftermath of implementation of the Goods and Services Tax (GST), the government will target increasing access to cost-effective interventions among low-income groups and implement the e-Health strategy towards better delivery and management as a part of the 11th Malaysia Plan (2016-2020).
In Jan 2015, Mongolian National Medicines Policy established the new Drug Regulatory Authority primarily to combat widespread sales of illicit substandard drugs providing an impetus for manufacturers to enter this market. Committed to realizing universal health coverage, the government revised the Health Insurance Law in effect from July 2015, making financial risk-sharing compulsory irrespective of the insured’s contributions. This is to ensure unified safe, fair and accessible interventions as well as providing discounts on prescription drugs.
The government has stepped up its spending in healthcare with a 6.8% year-on-year increase to USD 587.1 million with two-thirds allocation for expanding treatment and the rest for improving medical infrastructure across the country. A recent campaign called the Black Ribbon Movement saw a large number of medical doctors, nurses and other personnel protest and ultimately force the government to drop its plans to appoint 300 military personnel in management roles in the healthcare system. In a move seen largely as a human rights violation, the Population Control Health Care Bill has been signed, forcing a three-year gap period between child conceptions. This could negatively impact pediatric hospital revenues as well as anesthetic and other birth related drug sales.
Channelizing revenues from the implementation of the Sin Tax Law, the Department of Health has been able to rapidly increase its health care budget with an allocated 38% rise in allocation for 2016 to USD 2.86 billion. It has also provided free insurance coverage for poor families under an amendment to the National Insurance Act, with a target to achieve universal health coverage by the end of 2015.
In order to further extend health care infrastructure, expand public and community hospital capacities, transform delivery mechanisms and boost the development of new medical devices, the government will increase healthcare spending from USD 6.44 billion (of the total budget of USD 48.84 billion) this year to USD 9.31 billion by 2020.
In an effort to keep a check on rising insurance premiums in a largely privatized health insurance landscape, the government has doubled the co-payment ratio from 10% to 20% from April 2015, on all indemnity health plans (IHPs) and reimbursement-backed medical insurance plans. South Korea plans to capitalize on the looming patent cliff in the drug market by implementing its manufacturing models in production of biosimilars, targeting pharmaceutical exports of USD 20.5 billion by 2020, a key reason for its push to join the Trans-Pacific Partnership (TPP).
With Taiwan set to cross the aged society threshold of 17% of the population by 2018, the drug market is expected to reach USD 8.4 billion and the medical device market USD 3.1 billion by 2020. The Taiwan Food and Drug Administration in July introduced major reforms in the approval system for medical devices as it pushes to create international standards in manufacturing and draw in investments from Big pharma in the backdrop of being accepted into the Pharmaceutical Inspection Co-operation Scheme (PIC/S). Under the ongoing national 10-year Long-term Care Plan, the government is set to introduce a new insurance program in 2018, which will change the premium rate to 1.19% during the first three years and recalculate the same triennially. The new plan will require employers to pay 40% of the premium along with an equal contribution of 30% each from the individual, and the government and provide subsidies to people with disabilities.
The government established the National Commission on Health Professional Education in Feb 2015 together with the setting up of 13 health zones across the country to reduce regional disparities and promote equitable access to medical interventions. Thailand continues to draw private investments in medical infrastructure and high-end medical technologies under the second strategic five-year plan (2012-2016) set to further boost inbound medical tourism and transform it into an international health center for excellence. A key transformation in the drug market landscape would be the impending passage of the Thailand Drugs Bill, which would require pharmaceutical firms to disclose pricing strategies and establish direct price controls in an effort to combat the soaring drug prices.
Vietnam is poised to become a hub for generics drug manufacturing with the government welcoming in foreign investments and state-owned manufacturers going public. Pharmaceutical market is expected to reach USD 8 billion by 2020, with a strong effort to reduce sky-rocketing drug costs due to mark-ups and heavy dependence on imports. The Decree 93/NQ-CP legislated at the end of 2014 will facilitate public and private cooperation in health care infrastructure, technology, skill training and patient sharing and help increase the overall standards of care. To address the issue of lack of access to healthcare, interventions like Project 1816 to provide healthcare in mountainous regions and Project Satellite Hospital to better equip local clinics are being incentivized.