Malaysia Pharmaceuticals and Healthcare Report Q3 2010

Q3 2010
www.businessmonitor.com
malaYsia
pharmaceuticals & Healthcare Report

INCLUDES 10-YEAR FORECASTS TO 2019
ISSN 1748-2038
Published by Business Monitor International Ltd.
MALAYSIA
PHARMACEUTICALS &
HEALTHCARE
REPORT Q3 2010
INCLUDING 5-YEAR AND 10-YEAR INDUSTRY FORECASTS BY BMI
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International
Copy deadline: June 2010
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Malaysia Pharmaceuticals & Healthcare Report Q3 2010
Business Monitor International Ltd
Page 2
CONTENTS
Executive Summary ......................................................................................................................................... 5
SWOT Analysis ................................................................................................................................................. 6
Malaysia Pharmaceuticals And Healthcare Industry SWOT ................................................................................................................................. 6
Malaysia Political SWOT ...................................................................................................................................................................................... 7
Malaysia Economic SWOT .................................................................................................................................................................................... 8
Malaysia Business Environment SWOT ................................................................................................................................................................. 9
Pharmaceutical Business Environment Ratings ........................................................................................ 10

Table: Asia Pacific Pharmaceuticals & Healthcare Business Environment Ratings For Q310 ........................................................................ 10
Limits Of Potential Returns.................................................................................................................................................................................. 11
Risks To Realisation Of Returns .......................................................................................................................................................................... 11
Malaysia Market Summary ......................................................................................................................... 13

Regulatory Regime ......................................................................................................................................... 14
Pharmaceutical And Medical Advertising............................................................................................................................................................ 15
Recent Regulatory Developments ........................................................................................................................................................................ 16
Intellectual Property Regime ............................................................................................................................................................................... 18
Counterfeit Pharmaceuticals ............................................................................................................................................................................... 20
Compulsory Licensing ......................................................................................................................................................................................... 21
Free Trade Agreements........................................................................................................................................................................................ 21
Pricing And Reimbursement ................................................................................................................................................................................ 23
Industry Trends And Developments ............................................................................................................ 24

Epidemiology ....................................................................................................................................................................................................... 24
Table: 10 Leading Causes Of Death In Ministry of Health Hospitals, 2005 ........................................................................................................ 25
Non-Communicable Disease ................................................................................................................................................................................ 25
Communicable Disease........................................................................................................................................................................................ 26
Healthcare Sector ................................................................................................................................................................................................ 28
Healthcare Sector Funding .................................................................................................................................................................................. 29
Medical Tourism .................................................................................................................................................................................................. 29
Biotechnology And Research ............................................................................................................................................................................... 31
Table: Key Points Of The Malaysian National Biotechnology Policy .................................................................................................................. 32
Table: The Benefits Of Conducting Biotechnology Research In Malaysia ........................................................................................................... 34
Recent Biotechnology Developments ................................................................................................................................................................... 34
Clinical Trials ...................................................................................................................................................................................................... 36
Recent Developments in the Clinical Trials Industry ........................................................................................................................................... 38
Medical Devices................................................................................................................................................................................................... 39
Table: Malaysia Clinical Diagnostics Market, 2006 (US$mn) ......................................................................................................................... 40
Leading Medical Device Players ......................................................................................................................................................................... 40
Recent Developments In The Medical Devices Industry....................................................................................................................................... 42
Industry Forecast Scenario ........................................................................................................................... 43

Overall Market Forecast...................................................................................................................................................................................... 43
Key Growth Factors Industry............................................................................................................................................................................ 45
Key Growth Factors Macroeconomic ............................................................................................................................................................... 46
Table: Malaysia Economic Activity .................................................................................................................................................................. 48
Prescription Drug Market Forecast..................................................................................................................................................................... 48
Page 3
Patented Product Market Forecast ...................................................................................................................................................................... 50

Generic Drug Market Forecast............................................................................................................................................................................ 51
OTC Medicine Market Forecast .......................................................................................................................................................................... 53
Medical Device Market Forecast ......................................................................................................................................................................... 54
Pharmaceutical Trade Forecast .......................................................................................................................................................................... 55
Other Healthcare Data Forecasts........................................................................................................................................................................ 57
Key Risks To BMIs Forecast Scenario ................................................................................................................................................................ 58
Competitive Landscape ................................................................................................................................. 59

Domestic Pharmaceutical Industry ...................................................................................................................................................................... 59
Foreign Pharmaceutical Industry ........................................................................................................................................................................ 60
Pharmaceutical Demand ..................................................................................................................................................................................... 61
Recent Company Activities................................................................................................................................................................................... 61
Halal Medicine .................................................................................................................................................................................................... 63
Traditional Medicine ........................................................................................................................................................................................... 64
Company Profiles ........................................................................................................................................... 65

Leading Indigenous Manufacturers .......................................................................................................................................................................... 65
Pharmaniaga ....................................................................................................................................................................................................... 65
Prime Pharmaceutical ......................................................................................................................................................................................... 69
Bumimedic ........................................................................................................................................................................................................... 70
Hovid ................................................................................................................................................................................................................... 71
Chemical Company of Malaysia (CCM) .............................................................................................................................................................. 74
Kotra Pharma ...................................................................................................................................................................................................... 77
Multinational Companies.......................................................................................................................................................................................... 79
GlaxoSmithKline (GSK) ....................................................................................................................................................................................... 79
Pfizer ................................................................................................................................................................................................................... 82
Novartis ............................................................................................................................................................................................................... 84
Merck & Co ......................................................................................................................................................................................................... 86
Sanofi-Aventis ...................................................................................................................................................................................................... 88
Ranbaxy Malaysia ............................................................................................................................................................................................... 90
Eli Lilly Malaysia ................................................................................................................................................................................................ 92
Country Snapshot: Malaysia Demographic Data ........................................................................................ 93

Section 1: Population........................................................................................................................................................................................... 93
Table: Demographic Indicators, 2005-2030 ........................................................................................................................................................ 93
Table: Rural/Urban Breakdown, 2005-2030 ....................................................................................................................................................... 94
Section 2: Education And Healthcare .................................................................................................................................................................. 94
Table: Education, 2000-2003 .............................................................................................................................................................................. 94
Table: Vital Statistics, 2005-2030 ........................................................................................................................................................................ 94
BMI Methodology ........................................................................................................................................... 95

How We Generate Our Pharmaceutical Industry Forecasts ................................................................................................................................ 95
Pharmaceutical Business Environment Ratings Methodology ............................................................................................................................. 96
Ratings Overview ................................................................................................................................................................................................. 96
Table: Pharmaceutical Business Environment Indicators ................................................................................................................................... 97
Weighting............................................................................................................................................................................................................. 98
Table: Weighting Of Components ........................................................................................................................................................................ 98
Sources ................................................................................................................................................................................................................ 98
Forecast Tables .............................................................................................................................................. 99
Page 4
Executive Summary
Leading Malayisan drugmaker Pharmaniaga expects the outlook for the Malaysian pharmaceutical industry to
improve in 2010. This view is in accordance with BMI's Pharmaceutical Expenditure Forecast Model, which shows
that medicine sales in the South East Asian country increased by just 3.4% in 2009 well below the 2004-2008
compound annual growth (CAGR) of 6.9%. However, driven by an expanding economy and ageing population, we
expect the market to expand by 9.46% in 2010 and 7.96% between 2009 and 2014. Growth will be led by the OTC
and generics markets, which are both growing rapidly from relatively low bases.
Indeed, generics continue to be poorly promoted in Malaysia, with branded drugs generally viewed as superior in
quality. The generics market was accordingly worth just MYR1.11bn (US$316mn) in 2009. The relatively small size
of the market in Malaysia gives it a greater potential for growth in the coming years, however. After the OTC market,
BMI believes the generics market will post the strongest growth over the next nine years. BMIs forecast shows a
local currency CAGR of 10.34% over 2009-2014, increasing to 10.87% over 2009-2019.
Meanwhile, economic indicators for the country are beginning to look more positive, which should help sustain
growth in the pharmaceuticals sector. BMI has bumped up our 2010 real GDP forecast to 4.9% (from 4.1%) in view
of a stronger export recovery, although fears of a Chinese-led slowdown have forced us to downgrade our economic
outlook for 2011, with growth expected to come in at only 3.5% (revising downwards from 4.7%). Malaysia's Q110
real GDP growth came in at a larger-than-expected 10.1% year-on-year (y-o-y), accelerating from the 4.5%
expansion recorded in Q409. We remain concerned about the looming risk of a severe double-dip slowdown in
China, which would affect for our forecasts for the pharmaceutical sector.
A further drawback to the industrys prospects came as Malaysia and the US appeared to all but abandon bilateral
free trade agreement (FTA) negotiations. However, the possibility of Malaysia joining an alternative, multilateral
trans-Pacific trade deal remains open. A trade deal would give impetus to Malaysias growing pharmaceutical trade
activity. The total value of pharmaceutical exports should grow to US147.7mn in 2010, reaching US184.9mn by
2014. However, growth in the value of imports will continue to outpace exports over the forecast period, as imports
grow at a CAGR of 12%. Imports will be worth US$1.02bn in 2010, taking Malaysias pharmaceutical deficit to
US877mn.
In company terms, Pharmaniaga has had a turbulent start to 2010. Following the February release of financial results
that BMI described as 'disappointing', the company's manufacturing licence has been revoked by the Pharmaceutical
Services Division of the Ministry of Health as of March 2010. The firm's majority shareholder, UEM Group
Berhad, has subsequently failed to deny claims that it plans to divest its interest in Pharmaniaga. Despite these
setbacks, the outlook for Pharmaniaga is positive. According to Edge Malaysia, sources suggest the pharmaceutical
company has retained its lucrative 10-year concession for the provision of generic drugs to the Malaysian
government. This deal will provide a steady revenue stream and allow Pharmaniaga to increasingly explore growth
strategies such as ramping up exports to neighbouring countries and producing higher-value medicines.
Page 5
SWOT Analysis
Malaysia Pharmaceuticals And Healthcare Industry SWOT
Strengths
Weaknesses
Opportunities
Threats
!
!
!
!
!
!
Increasingly progressive government policy, aimed at attracting international investment.
!
!
Manufacturing of halal medicines improving access to other global Islamic markets.
Markedly behind South Korea, Singapore and Taiwan in terms of pharmaceutical expenditure and foreign
direct investment (FDI).
!
!
Lax patent law remains conspicuously below international standards.
!
!
!
!
!
Strict government drug pricing policy heavily biased towards local drug producers.
!
!
!
!
!
Generics sector as an integral factor of market growth.
!
!
!
!
!
!
!
Potential membership of a multilateral trans-Pacific trade agreement.
Government resistance to aligning domestic patent law fully with international standards, coupled with
encouragement of parallel trade.
!
!
!
!
!
!
Existence of a significant counterfeit drugs sector.
Improving local manufacturing standards, with a commitment to biotech development.

Robust market growth in recent years.
Absence of price controls in the private sector.
Sizeable generics market, given low patient purchasing power and lax patent laws.
Prescribing and dispensing presently dealt with by general practitioners, boosting overall values of the
prescription market.
OTC and generics markets are set to grow strongly over the next nine years.
Recent reform aimed at increasing generic product development worsening operating conditions for
multinationals.
Local manufacturing output comprising predominantly inexpensive, basic medicines.

Market reliant on imports, particularly at the hi-tech end of the scale, pressuring government finances.
Lack of IPR protection and enforcement.
Talks on a bilateral free trade agreement with the US have been abandoned.
Exports growing in the face of rising regional and global demand, as well as increasing trade links.
Increasingly sophisticated pharmaceutical demand.
Government desire to prevent and contain disease outbreaks.
ASEAN harmonisation encouraging the adoption of Western regulatory standards and the improvement of
intra-regional trade.
Investment in the biotech sector development supported by government initiatives.

Malaysia becoming an attractive location for medical tourism.
More transparent legislation and the attraction of foreign investment.
Increased trade and investment collaboration with China.
Planned investment in the expansion of medical facilities.
Malaysia offers a considerable contract manufacturing opportunities.
Government failure to revise discriminatory pricing policy.

Increased focus on internationally recognised norms and legislation to disadvantage local players.
Possible introduction of price ceilings on essential medicines.
Potentially detrimental impact of the discussed Free Trade Agreement (FTA) with the US.
Government seeking compulsory licences for patented drugs.
Page 6
Malaysia Political SWOT
Strengths
Malaysia is a successful example of a democratic Islamic state. Despite murmurs of discontent

among hard-line Muslims in some states, Malaysia is unlikely to abandon moderate Islam.
Despite having two other significant minority races (Chinese and Indians), Malaysia has not been
rocked by any major racial unrest since 1969, lending credence to its sustainable multi-racial
society.
Weaknesses
The Malay half of the population holds a constitutionally enshrined special position in society,
amounting to positive discrimination in not only jobs, but also wealth. Resentment is an obvious byproduct, and the challenge is to produce enough prosperity to reduce tension.
The controversial Internal Security Act (ISA) - which allows for detention without trial - has been
wielded by the government on several occasions with the explicit reason to quell unrest. However,
some detentions have been viewed as an attempt by the government to suppress the opposition.
Opportunities
The relatively weak performance by the ruling Barisan Nasional (National Front) in the general
elections held on March 8 2008, has paved the way for the stalled reformist agenda - promised by
former Prime Minister Abdullah Ahmad Badawi back in 2004 - to gather pace. This would help to
open up the country's closed political system and improve transparency and accountability within
key institutions.
Newly-appointed Prime Minister Najib Razak came into power promising reforms and changes. His
actions have thus far been promising, potentially paving the way for a significant overhaul of
Malaysia's political and economic system.
Threats
Ethnic tension will remain a non-violent, but simmering, problem, so long as there remains a threat
that the influence of hardline Islam could revive. For now, however, the hardliners have lost much of
their political clout.
Despite a change of premier in April 2009, the ruling Barisan Nasional coalition will remain under
pressure from a resurgent opposition. Failure to adequately deal with issues such as corruption, a
slowing economy and the divisive affirmative action policy could yet see Anwar Ibrahim's opposition
coalition force the Barisan Nasional from power.
Page 7
Malaysia Economic SWOT
Strengths
During the past four decades, Malaysia has transformed itself from a commodities-dependent
economy into a major world source for electronics and computer parts.
Malaysia is the world's largest producer of rubber, palm oil, pepper and tropical hardwoods, and is
still a net exporter of crude oil. All this provides a solid platform for economic growth.
Weaknesses
Malaysia's relative insulation from global energy price shocks is being eroded. It is now likely that
within the next few years Malaysia will become a net importer of oil.
Malaysia's economic openness can be as much of a burden as a benefit, since it confers a high
degree of vulnerability to global growth and capital flows.
Opportunities
The opportunity for private-sector-led growth will improve as the government continues divestment
of state shareholdings in order to raise funds to narrow the budget deficit.
Malaysia's majority Muslim population and the government's ongoing efforts to boost Islamic finance
could see Malaysia become a major financial hub over the medium-term horizon.
Threats
Wages are higher in Malaysia than in a number of its competitors, such as China and Vietnam,
which could be a long-term hindrance to economic expansion. To maintain its competitive edge,
Malaysia needs a steady stream of inward investment.
Malaysia's dependence on migrant labour, particularly for low-skilled jobs, poses a threat to longterm economic stability.
Page 8
Malaysia Business Environment SWOT
Strengths
Standards of corporate governance in Malaysia have greatly improved since the Asian financial
crisis at the end of the 1990s more so, in fact, than in many neighbouring countries.
Foreign companies, or at least foreign manufacturing companies, looking to do business in Malaysia

will continue to be welcomed with open arms with the government offering lavish tax breaks and
concessions.
Weaknesses
State subsidisation of prices will remain a peripheral but persistent part of daily economic life in
Malaysia.
Doing business in Malaysia will always, to some extent, mean dealing with the politically wellconnected.
Big construction projects and big contracts for foreign construction firms - are unlikely to be as
much of a priority for Malaysia's government as they were under the administration of former Prime
Minister Mahathir Mohamad.
Opportunities
The opportunity to invest in Malaysian state assets could improve. The government, if it sticks to its
word, will conduct its biggest ever divestment of state shareholdings.
Malaysia is eager to compete globally in banking. It currently lacks a domestic champion, but with
10 main institutions in the market, bank consolidation is a strong possibility.
Threats
The waterways and shipping lanes that surround Malaysia will continue to experience the threat of
piracy and terrorism.
Malaysia is at risk of losing out to China in the race for foreign investment. Penang, once the pillar of
Malaysia's electronics industry, has seen an exodus of foreign firms, with Seagate, Motorola and
Solectron all shifting production elsewhere in Asia.
Page 9
Pharmaceutical Business Environment Ratings

Table: Asia Pacific Pharmaceuticals & Healthcare Business Environment Ratings For Q310
Limits of potential returns

Pharmaceutical Country
Market Structure
Risks to realisation of returns
Limits
Market
Risks
Country
Risk
Risks
Pharma Regional
Rating ranking
South Korea
67
60
65
70
69
70
66.9
Australia
57
73
61
72
82
76
66.9
Japan
60
70
63
73
72
73
66.7
China
67
43
61
67
55
62
61.3
Singapore
37
67
44
80
88
83
59.8
Taiwan
50
53
51
70
64
68
57.6
Hong Kong
40
70
48
67
78
71
57.0
India
60
40
55
60
53
57
55.9
Malaysia
40
57
44
70
68
69
54.2
Thailand
60
43
56
37
61
47
52.1
10
Philippines
50
57
52
43
48
45
49.1
11
Indonesia
53
47
52
40
41
40
47.2
12
Vietnam
47
40
45
40
49
43
44.4
13
Bangladesh
43
30
40
43
35
40
40.0
14
Pakistan
27
47
32
33
44
37
34.0
15
Cambodia
33
20
30
30
37
33
31.2
16
Regional Average
49
51
50
56
59
57
52.8
Scores out of 100, with 100 highest. Source: BMI
In BMIs Business Environment Ratings matrix for Q310, Malaysia dropped from eighth to ninth place,
having already slipped from fifth place in Q110. In the current quarter, the countrys overall score was
54.2, down from 55.7 previously, but there is hope for the remainder of 2010 as the economy slowly
begins to get back on track. In the meantime, key attractions of the Malaysian pharmaceutical market over
the longer term will remain the governments encouragement of the biotechnology sector and the
countrys economic development, which will improve consumer purchasing power regarding
pharmaceuticals. On the other hand, per-capita pharmaceutical consumption is quite low, especially due
to the high out-of-pocket payment levels, which make the market vulnerable to economic downturns. The
component parts of Malaysias ranking are:
Page 10
Limits Of Potential Returns

Pharmaceutical market and country
structure scores are weighted and
combined to form limits to potential
Business Environment Ratings By

Sub-Sector Score
Q310
returns. Malaysias score of 44 is a drop
P harmaceutical
M arket
from a Q210 score of 47, and is still
100
below the average for the 16 regional

markets surveyed by BMI, which
comes in at 50 for the quarter.
Co untry Risk
Co untry Structure
Pharmaceutical Market
Malaysias pharmaceutical market
M arket Risk
receives a score of 40 (out of 100),
M alaysia Sco res
illustrating a relatively low per capita

consumption of pharmaceuticals, due to
Regio nal Sco res
Scores out of 100. Source: BMI
the low- to middle-income status of the

Malaysian economy, together with the high share of out of pocket payments that makes demand for
pharmaceuticals very income sensitive. Nevertheless, the demand for drugs will rise over the forecast
period due to an increased need for modern medicines, population growth and healthcare service
improvements, as well as developing economic conditions. In addition, the domestic drug industry is
relatively basic, comprising a small number of large domestic producers and an array of small, private
manufacturers, with imports playing an important part, especially in regards to hi-tech medicines.
However, the market remains under threat from one-off factors, such as natural disasters.
Country Structure
Malaysia has been given an unchanged score of 57 (out of 100) for this indicator, on a par with the
Philippines and above the regional average, which stands at 51. The score reflects a low proportion of
pensionable population in comparison to its Asian peers, and well as a vast number of rural dwellers. On
a positive note, Malaysian population is fast growing, which should uphold the development of its
pharmaceutical market.
Risks To Realisation Of Returns

Market and country risks are weighted and combined to form the score for risks to potential returns.
Malaysias unchanged score of 69 is considerably above the regional average, which has fallen slightly to
57 for the quarter. The country is considered as posing some risks to multinationals, although presenting a
respectable long-term prospect in the Asian region.
Page 11
Market Risk
Malaysia score remains at 70 for market risk, which refers to a subjective assessment of the countrys IP
laws, policy and reimbursement regimes, as well as to the speed and efficiency of the approvals process.
However, despite the positive prospect of Association of South East Asian Nations (ASEAN)
harmonisation, the significant counterfeit drug industry, the difficulty in applying process patents, the
lack of data exclusivity and generally poor regulatory enforcement will continue to pose major drawbacks
to multinationals.
Country Risk
The Q310 figure for Malaysias country risk remains supported by a relatively high level of policy
continuity, but brought down by cumbersome bureaucracy and a patchy legal framework, on the other.
While tourism and some private investment continue to fuel GDP growth, healthcare will continue to be
inadequate in many parts of the country. Overall, however, Malaysias score is considerably above the
regional average, which serves to increase its attractiveness as an investment destination.
Page 12
Malaysia Market Summary

The Malaysian pharmaceutical market is
relatively underdeveloped by
international standards. The market is
Pharmaceutical Market By Sub-Sector

(US$bn)
2009
based on a strong domestic generics

Generic
drugs,
0.316
sector and imports of branded and

patented medicines (mostly from the US,
OTC
medicines,
0.332
Japan and Germany). Pharmaceutical

spending represented an estimated 0.62%
of GDP in 2009, with the figure expected
to hold over the next five years but fall yo-y in subsequent four years, as overall
economic growth eventually outstrips that
of pharmaceutical expenditure. The
Malaysian drug market, valued at around
MYR4.29bn (US$1.22bn) in 2009, is
expected to post a CAGR of 7.96% in
Patented
products,
0.572
f = forecast. Source:Korea Pharmaceutical Manufacturers Association
(KPMA), BMI
local currency terms, to top MYR6.29bn (US$1.81bn) at consumer prices in 2014.

Boosted by considerable encouragement from the government, the generic sector will expand in terms of
volumes, although its value gains against the patented drugs market will be smaller, due to their competitive
prices. On the other hand, high prices of novel treatments on the Malaysia market will ensure the growth of the
patented sectors revenues, despite their falling share of total market. Over-the-counter (OTC) drugs will gain
in prominence, driven by cost-containment and rising patient awareness. At present, despite being officially
classified as prescription only, a number of drugs are available as OTCs. Better regulation in this area will thus
shape the development of market shares of OTCs over the forecast period, as will the economic situation that
negatively impacted consumer confidence over the past months.
Imports (of patented and hi-tech drugs primarily) will continue to dominate the Malaysian market, with
multinationals taking a lions share. The encouragement of the generics sector will provide new opportunities
for the local industry, which will increasingly need to boost its competitiveness in the face of regional
harmonisation and free trade agreements (FTAs) with major trading partners.
The vast majority of local producers concentrate on generics and OTC medicines, with output mainly intended
for domestic consumption. The domestic manufacturers association, the Malaysian Organisation of
Pharmaceutical Industries (MOPI), claims that local manufacturers can produce 80% of the drugs on the
Malaysian Essential Drugs List. In the meantime, exports have also been boosted by rising regional and global
demand as well as increased trade links with other major markets, although the market will remain importdependent. Leading domestic producers include Asia Pharmaceutical Products and Pharmaniaga, with the
latter especially increasingly targeting overseas markets.
Page 13
Regulatory Regime
The current legal framework covering the regulation and enforcement of quality pharmaceuticals in
Malaysia was put in place during the early 1950s, with the enactment of the relevant pharmacy laws.
Through the legislation, pharmaceutical products, traditional medicines and cosmetics were registered.
Simultaneously, manufacturers, importers, wholesalers and retailers were licensed.
The main regulatory authority in Malaysia is the Drug Control Authority (DCA), under the auspices of
the Ministry of Health. Five items of legislation form the basis for market regulation: The Poisons Act
1952 (Revised 1989); The Sales of Drugs Act 1952 (Revised 1989); The Medicines (Advertisement and
Sales) Act 1956 (Revised 1983); The Registration of Pharmacists Act 1951 (Revised 1989); and The
Dangerous Drugs Act 1952 (Revised 1980). Drug registration processes are lengthy, at up to two years.
Pharmaceuticals are regulated by the DCA, which is managed by the director-general of health, director
of pharmaceutical services, director of the National Pharmaceutical Control Laboratory, and seven other
appointed members. The main responsibility of the DCA is to ensure the safety, quality and efficacy of
pharmaceuticals in Malaysia. DCA-approved locally-made drugs are also accepted in Organisation for
Economic Co-operation and Development (OECD) countries, illustrating the quality of generic medicines
produced in Malaysia.
The DCAs duties include reviewing registration applications for drugs and cosmetics; licensing
importers, manufacturers and wholesalers; post-marketing safety surveillance; and the monitoring of
adverse drug reactions. Between 1991 and the end of 2008, Malaysia registered some 207,911 medicines
in total, of which 154,507 are imports, according to the Ministry of Healths figures released in January
2009.
According to the DCA, any drug in a pharmaceutical dosage form for human or animal use must be
registered with the agency. This includes products that alleviate, treat or cure diseases; products that
diagnose a disease; anaesthetics; and products that maintain, modify, prevent, restore or interfere with
normal physiological functions. The regulation does not apply to diagnostic agents and test kits for
laboratory use; non-medicated medical and contraceptive devices; non-medicated bandages and surgical
dressings; and instruments, apparatus, syringes, needles, sutures and catheters.
All local pharmaceutical manufacturers must be licensed by the DCA. Regulations regarding foreign
investment have made the establishment of pharmaceutical joint ventures difficult in the past, though this
process is becoming somewhat easier. Companies wishing to establish manufacturing operations in the
region have tended to choose neighbouring Singapore instead, which offers a wider range of investment
incentives, although the Malaysian government is working to redress this balance.
Page 14
The regulatory environment in Malaysia has improved markedly over the last decade as the government
has supported the alignment of domestic procedures with international norms. More recent moves to
harmonise procedures within the ASEAN region have furthered this progress. The Malaysian
Pharmaceutical Product Working Group (PPWG) has been in operation since 1999, with a specific aim of
facilitating the process. So far, the 10 ASEAN countries have adopted the common documents on
technical requirements, the dossier on quality, safety and efficacy, administrative data and glossary, and
the guidelines on analytical process validation, among other achievements. However, in Malaysia, certain
regulatory problems remain, in particular regarding patent law.
Meanwhile, the DCA has reminded pharmaceutical companies to inform it of changes to their production
processes. Failure to do so will result in the cancellation of licences and withdrawal of products. It is
BMI's view that this development underlines the steady evolution of the DCA. Standards employed by
the regulatory body are now approaching international levels.
According to the chairman of the DCA, Tan Sri Dr Mohd Ismail Merican, 'stern action' will be taken
against drugmakers that modify manufacturing methods without approval. This policy ensures that the
efficacy, safety and quality of medicines are maintained at all times. If a company wishes to amend its
production process, it must submit data to the DCA and wait for official clearance.
The DCA has also requested that prescribers, healthcare professional and consumers report altered, substandard or unapproved medicines. Under Malaysia's Control of Drugs and Cosmetics Regulations
(1984), all pharmaceutical products must be evaluated by the DCA before they can be manufactured,
imported, distributed or sold in the country.
Despite the clearly-stated regulations, some drugmakers have failed to successfully commercialise their
products in Malaysia. Over the past decade, the DCA has cancelled or suspended 213 generic drug
registrations for failing bioequivalence examinations. In 2008-2009, the authority rejected 66 new product
applications because they did not include the required data.
Strict controls over which medicines can be sold in Malaysia ultimately benefit consumers. Even slight
changes to production processes, especially for biologicals, can results in altered therapeutic outcomes.
These can be manifest in higher or lower efficacy, but also in an increased incidence of adverse effects.
Pharmaceutical And Medical Advertising

In May 2005, the Malaysian Medical Association implemented a guideline permitting doctors and
hospitals to advertise their medical services. While the guideline has a number of restrictions, doctors and
hospitals are able to advertise their medical specialities and any new or technologically advanced medical
equipment. However, the advertisements are limited in their claims, prohibiting medical providers from
Page 15
exaggerating their abilities, asserting their achievements or overselling a product. Nevertheless, some
hospitals have already taken advantage of this new advertising privilege through new product launches.
The Ministry of Health intends to pass new enabling legislation for these advertising rules. Under the new
regulations, the Ministry must first clear claims that any pharmaceutical or medical device prevents or
treats an illness or condition. Approval will also be necessary in order to sell a product commercially in
Malaysia. The Ministry of Health hopes that this proposed regulation will allow for product testing in
order to ensure the safety and effectiveness of products prior to their advertising within the country.
Recent Regulatory Developments

The ongoing controversy regarding GlaxoSmithKline (GSK)s diabetes drug Avandia (rosiglitazone)
reached Malaysia in March 2010, when the DCA asked the UK firm to amend prescription information
for the drug. The DCA has become increasingly concerned over allegations overseas that Avandia may
increase the likelihood of heart attacks. The US Senate has stated previously that it believed GSK had
known of Avandias heart risk links for some years before it had become widely known, which the
company denies. The DCAs request was officially made on the back of 33 adverse effect reports
received by the Health Ministry.
In January 2010, Malaysias DCA reminded pharmaceutical companies to inform it of changes to their
production processes. Failure to do so will result in the cancellation of licences and withdrawal of
products. This development underlines the steady evolution of the DCA, with standards employed by the
regulatory body now approaching international levels.
The DCA has also requested that prescribers, healthcare professionals and consumers report altered, substandard or unapproved medicines. Under Malaysias Control of Drugs and Cosmetics Regulations
(1984), all pharmaceutical products must be evaluated by the DCA before they can be manufactured,
imported, distributed or sold in the country.
Despite the clearly-stated regulations, some drugmakers have failed to successfully commercialise their
products in Malaysia. Over the past decade, the DCA has cancelled or suspended 213 generic drug
registrations for failing bioequivalence examinations. In 2008-2009, the authority rejected 66 new product
applications because they did not include the required data.
In July 2009, in a move signalling regulatory maturity (even though the issue had been dealt with in a
more timely manner in developed markets), the DCA limited the use of cough and cold medicines for
children under two years of age. The DCA requested relevant paediatric medicines carry warning labels,
although labelling remains suboptimal in some market segments. In the meantime, parents and carers
were given advice on how to use the medicines in a correct manner.
Page 16
A topic that has come under discussion in Malaysia in recent years (following the October 2006 passing
of the Malaysia National Medicine Policy) is the separation of prescribing and dispensing in Malaysia, in
line with broader regional trends. All stakeholders healthcare professionals, patients and the
pharmaceutical industry have been contributing their opinions on the potential new rules. BMI strongly
welcomes this separation of roles as there is a clear conflict of interest, but acknowledges that it may not
be possible in remote parts of the country.
In Malaysia, general practitioners frequently have a separate business at their clinics that allows them to
sell the medicine they prescribe. This is seen as convenient because patients, who are commonly old and
sometimes physically impaired, do not have to travel to another location to receive their pharmaceuticals.
However, critics of this paradigm point out that the management of dispensing activities distracts doctors
from their core purpose diagnosing disease and prescribing treatment. Some even claim that GPs purely
prescribe and then dispense branded drugs over generic alternatives, in order to enjoy higher margins.
Supporters of the prescribing/dispensing split concede that changes will take a long time to implement,
with the number of pharmacists and private community pharmacies currently not considered to be
adequate to allow for a smooth transition. Instead, in January 2009, the Malaysian Pharmaceutical Society
(MPS) proposed a zoning system that would identify the locations that would require new pharmacies to
ensure adequate access, as chosen by patients themselves through piloting schemes.
In the meantime, President of MOPI called on the Health Ministry to draw up a timeline for the separation
of duties, also adding the change would encourage more rational prescribing by doctors. However, the
change may be followed by a rise in consultation fees as has recently happened in South Korea in
order to compensate doctors for the loss of income.
During June 2008, reports were emerging that doctors and pharmacists were not adhering to labelling
requirements. Under Regulation 12(1) of the Poison Regulation 1952, where any poison (prescription and
non-prescription medicines) is sold or supplied as a dispensed medicine, or as an ingredient in a dispensed
medicine, the container of such medicine shall be labelled, in a conspicuous and distinct manner, with: the
name and address of the supplier or seller; the name of the patient or purchaser; the name of the medicine;
adequate directions for the use of such medicine; the date of delivery of such medicine; and where such
medicine is sold or supplied.
Labelling laws for dispensed medicines came under scrutiny in the course of early 2006 for not providing
clear information to patients, especially to those who are receiving more than one medication. At present,
Malaysian private clinics and pharmacies are not required to comply with standard labelling regulations.
In practice, this means that most of the medicines, which are usually taken out of standard packs and
repacked, do not come with appropriate usage and indication information. Additionally, labels for
generics medicines are also thought to be lacking, with professional groups urged to lobby the
Page 17
government for appropriate changes in legislation, which would complement recent efforts to make drug
monitoring more effective.
In October 2005, the Ministry of Health issued further guidance on the requirement that all registered
pharmaceutical products be labelled with a Meditag, a hologram security patch. The Meditag scheme was
introduced in early 2005 in an effort to combat the prevalence of unregistered copy drugs, counterfeits
and other healthcare products in the domestic pharmaceutical market. All products registered with the
Malaysia DCA, including traditional medicines and health supplements, are required to bear the Meditag
device, with cosmetics and OTC external care items such as anti-bacterial, oral care or anti-acne products
exempt.
Under the guidelines, anyone who fails to abide by this law will be subject to a fine, imprisonment or
both. First-time offenders will be fined up to MYR25,000 (US$6,632) and/or jailed for up to three years.
Any corporate entity failing to abide by this law will also be charged a fine of MYR50,000 (US$13,264)
for first-time offenders, or MYR100,000 (US$26,529) for subsequent offenders. The Meditag scheme
will involve the participation of enforcement officers, who will conduct visual scans of the symbols and
markings on the Meditag device, as well as verify the manufacturers serial number. The authenticity of
the hologram can be confirmed by examining it with a special decoder and a microscope.
Demonstrating the evolution of the regulatory environment, rules covering veterinary medicines were
introduced in August 2007 and plans have been drafted for active pharmaceutical ingredient (API) laws.
The API regulations will attempt to combat the usage of sub-standard and un-approved raw ingredients,
thereby minimising the problem of adulterated medicines in the supply chain.
Intellectual Property Regime

Despite a major revision of patent law in 2001 and subsequent amendments in 2003, patent protection
continues to be the cause of friction between the government and international drug manufacturers. While
the government revised the period of protection for pharmaceuticals (increasing it to 20 years) following
pressure from the international pharmaceutical community, it also implemented legal provisions that have
come under heavy criticism from the industry. These include:
!
The stipulation that the limited manufacturing, use and sale of a generic drug before the expiry of the
originals patent should no longer be considered patent infringement;
Provisions allowing the licensing and production of medicines by the government under certain
conditions, without the patent holders consent.
The 2003 amendment attempted to make registering a patent easier and less expensive. Under this system,
international patent applications may be made in any one of the countries of the Patent Co-operation
Page 18
Treaty, an initiative by the World Intellectual Property Organisation (WIPO). Previously, the applicant
had to make the application in each and every country where the patent was to be applicable. Although
the amendment reflected the trend of liberalisation, with procedures increasingly aligned with regional
and international norms, it did not address the issues at the centre of the debate between government and
industry.
In 2005, the United States Trade Representative (USTR) listed Malaysia as a Watch List country in its
Special Report on Intellectual Property Protection, a status backed by Pharmaceutical Research and
Manufacturers of America (PhRMA), the research-based US drug industry association. The countrys
position was unchanged from 2003 and 2004, reflecting a lack of progress with regard to patent law.
The USTR and PhRMA criticised the Malaysian government on a number of points, including the level of
counterfeiting taking place in the country (despite the introduction of holograms on pharmaceutical
packaging), the difficulty in applying process patents, the lack of data exclusivity (which has not been
aligned with the World Trade Organization (WTO)s TRIPS agreement) and the overall poor standard of
regulatory enforcement. Additionally, the association has criticised the lack of patent linkage as part the
registration process, which has led to instances of generic products being launched while original patents
are still in effect.
In 2007, Malaysia remained on the Watch List, despite showing a solid commitment to strengthening IP
protection and enforcement in 2006. However, the report welcomed the process of establishing a
specialised IP court, which is designed to more effectively handle civil and criminal copyright cases. The
US has indicated that it will continue to work with Malaysia to encourage full implementation of WIPO
Internet Treaties, as well as to provide effective protection against unfair commercial use for data
generated to obtain marketing approval, and create a co-ordination mechanism between the health
authorities and the patent office to prevent the issuance of marketing approvals for patent-infringing
pharmaceutical products.
While international criticism of the current state of patent legislation is expected to continue, the
government is unlikely significantly to amend the law in the short term, not wishing to further pressure
the indigenous industry. In the meantime, financial gains from parallel trade, which is encouraged as a
cheaper option for the state-funded healthcare, will continue to be made almost exclusively by the middle
traders, thus not achieving its aim, but instead serving further to antagonise multinational pharmaceutical
players. Consequently, Malaysia remained featured on the Watch List for 2008 as well as for 2009.
The USTR also kept Malaysia on the Watch List for 2010, pointing to the lack of resources and training
that lead to a backlog at specialised IPR courts in the country. The report also highlighted the absence of
effective protection against unauthorised disclosure or unfair commercial use of test data produced for
Page 19
product approval in the pharmaceutical market. The report also urged the development of a more effective
and prompt patent system for new pharmaceutical products.
Counterfeit drugs remain a serious problem in Malaysia, and US pharmaceutical association PhRMA is
calling for the country to implement stronger criminal penalties for infringers. Indeed, PhRMA is calling
for closer cooperation between the US and Malaysian governments, which should involve the tightening
of the current legal framework covering counterfeit medicines. Malaysia, however, is moving in the right
direction and the MoH has recently introduced a bill that will be introduced to curb counterfeit drugs,
which will include tougher penalties for criminals manufacturing or distributing fake drugs.
Counterfeit Pharmaceuticals
Despite the introduction of holograms on pharmaceutical packaging, the level of counterfeit trade in
Malaysia remains significant due to lax enforcement and other issues. A small but not unimportant
proportion of drugs on the market are counterfeit (a 1997 study by the Ministry of Health found that 5.3%
of sampled drugs fell into this category, although other current estimates are at least double that amount),
which has continued to represent a point of friction between the government and the international
industry. According to the Pharmaceutical Services Division, around 5.28% of all OTCs on sale in
Malaysia were counterfeit in 2008, with slimming products accounting for around 10% of all illegal
medicines seized in 2007.
Enforcement work has become very challenging as the criminals that supply these products use advanced
technologies to avoid detection and cunningly exploit Malaysias land and sea borders with Thailand and
Indonesia. Nevertheless, the total number of items seized has risen from 6,233 in 2005 to 20,235 in 2006.
The value of fake medicine confiscated was MYR18.4mn (US$5.3mn) in the same year. In 2007, the
value of seizures of counterfeit medicine was MYR35.8mn (US$10.6mn), which was nearly a 40%
increase on the 2004 figure.
Due to the conservative nature of Malaysian society, erectile dysfunction (ED) therapeutics are the most
frequently copied medicines on the market, estimated to account for between 30 and 40% of all
counterfeits. In March 2007, the Health Ministry seized 1.4mn capsules of counterfeit ED medicines
worth MYR14mn (US$4mn) from a container in Penang. The seizure, the biggest to date by the
ministrys pharmaceutical enforcement division, was made when enforcement officers detained a
container from Singapore loaded with 142 boxes bearing the Miagra trademark. The consignment was
suspected to be for the Malaysian and Thai markets, given the prevalence of counterfeit drugs in both
countries.
In order to deter sale of imitation drugs, the government is looking to hand out more severe punishments
for counterfeiters. Currently, most offences lead to prison sentences of no longer than five years, in
addition to a fine of between MYR2,000 and MYR20,000 per infringement. After consulting with the
Page 20
Pharmaceutical Association of Malaysia, the Ministry of Domestic Trade and Consumer Affairs initiated
calls for new legislation against the illegal trade.
Specifically, the Malaysian International Chamber of Commerce recommended that the Trade
Descriptions Act 1972, Sales of Drugs Act 1952 and the Poisons Act 1952 be amended so that there is a
minimum fine for each counterfeit item and a mandatory jail sentence. A draft bill was expected in 2009,
although no developments on the issue were reported by early 2010. Nevertheless and despite the fact
that the country has no legislation that specifically targets online counterfeiting authorities (through a
dedicated unit) have reportedly been successful with regard to reducing online sales of fake medicines.
Compulsory Licensing
In May 2007, as a sign of its strength in FTA negotiations with the US, Malaysia stated that it is seeking
the right to issue compulsory licences on patented drugs. While Malaysia is legally within its rights, as
permitted by WTO rules, the country will be strongly discouraged to do so by the US, as the profits of
multinational drugmakers will be negatively impacted. Malaysias approach could further derail the FTA,
given that the country is already unwilling to compromise on other issues, such as its entrenched
affirmative action policies.
Malaysia has already issued compulsory licences on a set of pharmaceuticals, although some dispute this.
In 2004, the country issued a compulsory licence to Indian drugmaker Cipla for a supply of antiretrovirals (ARVs) in the management of HIV/AIDS. The medicines involved were US-based BristolMyers Squibbs didanosine and UK firm GSKs zidovudine and lamivudine + zidovudine.
This action has pushed down prices significantly. Previously at MYR1,200 (US$351) per month, the
average cost for patients fell dramatically to MYR200 (US$58) and then to MYR150 (US$44). Given that
the average monthly wage in Malaysia is approximately US$1,000, compulsory licences have made
ARVs affordable to the vast majority of the population.
Free Trade Agreements

Malaysia and the US appear to have abandoned bilateral FTA negotiations in 2010, after discussions
stalled due to mass protests in October 2006 as well as a subsequent lack of agreement on a number of
issues. However, the possibility of Malaysia joining an alternative, multilateral trans-Pacific trade deal
remains open. The proponents of a trade deal maintain that a FTA would generate jobs for Malaysians
and attract more clinical research to the country, encouraged by the enhanced intellectual property
environment. Malaysia is the 10th largest trading partner of the US with US$44bn in two-way trade in
2005, which officials expected to double by 2010 if an FTA is signed. However, consumer and trade
activists are deeply concerned that the pact will deprive citizens of access to cheap generic drugs,
particularly medicines for HIV/AIDS, as well as resulting in higher prices.
Page 21
The bilateral FTA between Malaysia and the US also stalled in February 2007 over US demands that the
Malaysian government make its procurement policy more transparent, allowing international companies
to compete on a level playing field. The US has been eager to stress that it is not trying to dismantle
Malaysias affirmative action programme, which reserves a proportion of government contracts for ethnic
Malay businesspeople.
The agreement discussions received another blow in May 2007, when Malaysia announced that it would
seek to issue compulsory licences for pharmaceuticals, angering the US. At that time, there were still
some 58 unresolved issues, prompting fears that FTA discussions may break down completely. Despite
the obvious benefits an FTA would provide for the Malaysian economy, the countrys authorities are
unwilling to compromise on certain key issues.
The US is pressing Malaysia to open up government contracts to US firms, but this request trespasses on
the politically sensitive issue of affirmative-action policies. These policies, which ensure that a certain
proportion of state contracts are issued to ethnic Malays, are considered to be a political sacred cow, but
are extremely unpopular with foreign investors. This is proving to be a major stumbling block in
negotiations, and is causing an increasing feeling of pessimism that a deal can be successfully concluded.
According to October 2008 reports by the Malaysian International Trade and Industry Minister, the FTA
was due to move forward shortly, as the ad hoc committee has been given a new mandate in order to
address contentious issues, which include IP, as well as competition and labour policy and government
procurement. In May 2009, the US Ambassador to Malaysia announced that talks would resume sooner
than expected as the Obama administration strives to make progress on the international front, although
no progress has been made to date. Instead, in February 2010, Business Times reported that Malaysia may
instead be prioritising the signing of a broader agreement, such as the Trans-Pacific Partnership (TPP), of
which Singapore is a founding member.
Other deals signed by Malaysia in recent years include the July 2006 FTA with Japan. Malaysia became
the third country after Singapore and Mexico to conclude an FTA with Japan, which will allow the
two countries to scrap tariffs on most industrial goods, improve investment conditions and respect IP
rights. In 2005, Japanese exports to Malaysia reached US$12.6bn, while imports from the country topped
US$14.8bn. Malaysia already has an Economic Partnership Agreement with Japan, aiming to eliminate
tariffs on 93% of products within the first seven years of implementation.
The ASEAN-Australia-New Zealand FTA (AANZFTA) was signed in 2008, envisaging a regional
common market by 2015. Additionally, a feasibility study on a FTA between Malaysia and the EU is
under way, with the country also seeking to increase its co-operation with the Middle East, and especially
Oman, which is Malaysias third-largest trading partner among the members of the Gulf Co-operation
Council (GCC), providing healthcare and hospital management expertise, among other services.
Page 22
Going forward, the recent global financial crisis provided an impetus for an increase in Malaysia-China
trade, as consumers from developed countries such as the US and the eurozone cut back on spending,
turning Malaysian exports towards regional economies to sell their output. Indeed, the fact that Malaysia
was proactive in pushing for the signing in November 2004 of a ASEAN-China Free Trade Agreement
(FTA) the country is one of the six ASEAN nations that will have their MFN rates on Chinese goods
reduced to 0% by 2010 signifies the level of confidence and commitment the Malaysian government
has in forging stronger trade relations with China. In tandem, the same trade rules apply to China,
enabling more than 9,000 types of Malaysian goods to be duty-free, serving as a boon to Malaysias
export sector. Furthermore, we believe the signing of the ASEAN-China Investment Agreement in June
2009 the third and last instalment encompassing the three-part ASEAN-China FTA will cement the
trend, as a common investment area will reduce market risk and uncertainty for Chinese investors to
commit their funds to Malaysia.
Pricing And Reimbursement

Pricing regulations are different for public and private sectors in Malaysia, but the division is becoming
increasingly blurred. Parallel imports have recently been legalised in a bid to cut costs in the public
healthcare sector, undermining revenues on branded products. The practice is angering the multinational
sector, with foreign players critical of the governments biased approach to regulatory and enforcement
issues.
In the public sector, prices on an essential drugs list (in operation since 1983) are set by the Ministry of
Health following negotiations with its main wholesaler, Pharmaniaga Logistics Sdn Bhd (formerly
known as Remedi Pharmaceuticals). This subsidiary of leading drug company Pharmaniaga is
responsible for around 75% of medicines purchased by public healthcare institutions. The strict policy
results in public prices being set below market prices, which is necessary, given that the government is
responsible for around 60% of reimbursement amounts. Nevertheless, the country is considering price
ceilings for selected essential drugs to improve access. Portending further reform, studies have found
wide variability in the public and private sector prices of both patented drugs and generics.
In the private sector, pricing is free in theory, although the government has increasingly been using the
prices on the Ministry of Health drug list as a guideline when dealing with private companies. A full
proposal for private-sector pricing regulation has yet to emerge. Out-of-pocket spending on drugs
accounts for around 25% of the total, with private insurance covering some 15%. According to reports in
New Strait Times, around 15% of the population has private insurance.
Page 23
Industry Trends And Developments

Epidemiology
Cancer, hypertension and circulatory problems account for most deaths and cases of hospitalisation in
Malaysia. Heart disease is the number one killer in Malaysia. In 2005, over 3,000 people died from the
condition, while nearly 40,000 were admitted to hospital. In the meantime, diseases including heart
problems resulting from unhealthy lifestyle are increasing in prevalence. By December 2007, there were
more obese men than women in the 25-64 age group. The Chronic Disease Risk Factor study by the
Health Ministry showed there were 1mn obese women, compared to 850,000 obese men.
According to the February 2009
Burden Of Disease Projection
statement by the Health Minister, some
2005-2030
43% of all Malaysians aged 30 or above

4
are at risk of hypertension, with estimates

suggesting that some 4.8mn Malaysians
Millions
are already affected by the condition. In

the 1996-2006 period, the National
Health and Morbidity Survey found a
2
1
10% increase in the number of patients

2030f
2025f
2020f
2015f
2005
conditions.
2010f
suffering from hypertension and related
DALYs lost to communicable diseases

DALYs lost to non-communicable diseases
More recent figures, published in October

2009, suggest that heart and circulatory
f = forecast. DALYs = disability-adjusted life years. Source: BMIs

Burden of Disease Database (BoDD).
diseases are the top killers in public hospitals. In 2008, some 16.5% of all deaths in government hospitals
were due to heart disease. Up to 60% of all cases of coronary disease are treated in public facilities.
Osteoporosis is also a growing problem in Malaysia. According to a recent programme conducted by

Anlene based on bone scanning, as many as one in three Malaysians are at risk of developing the
condition. Malaysians of Chinese origin are most at risk of osteoporotic hip fracture, while as many as
71% of women are failing to consume adequate daily dosages of vitamin D.
According to BMIs Burden of Disease Database (BoDD), Malaysia will experience the next greatest
improvement in disease burden, after Singapore on a regional basis. By 2030, a projected 106.4 disabilityadjusted life years (DALYs) per 1,000 population will be lost to all disease and injuries, which is a 21%
decrease on the 2008 figure of 134.8. The growing economy of Malaysia will result in increased wealth in
the longer term, which will be spent by the state on hi-tech hospitals and clinics, while personal spending
will be directed to goods such as OTC medicines.
Page 24
Table: 10 Leading Causes Of Death In Ministry of Health Hospitals, 2005
Rank
Description
As % of total
Septicaemia
16.54
Heart disease and diseases of pulmonary circulation
14.31
Malignant neoplasms
10.11
Cerebrovascular diseases
8.19
Accidents
5.67
Pneumonia
Diseases of digestive system
4.45
Certain conditions originating in the prenatal period
4.37
Nephritis, nephrotic syndrome and nephrosis
3.89
10
Ill-defined conditions
2.82
5.3
Source: United States Department of Commerce (USDOC), 2007
Non-Communicable Disease
In August 2009, local news source Bernama reported that, according to the Third National Health and
Morbidity Survey 2006, over 1.6mn adults aged 30 years and above are suffering from diabetes in
Malaysia. Director General of Health stated that prevalence of diabetes was 14.9% in 2006, compared
with 8.3% in 1996, an increase of 80% over a period of 10 years, which is a trend that clearly needs to be
tackled.
In May 2009, medical experts in Malaysia highlighted the growing burden of digestive system disorders
including peptic ulcers, irritable bowel syndrome (IBS) and colon cancer in the country. In fact, in
2007, such causes were ranked seventh for both the key reasons for hospitalisation and the causes of
morbidity in the country. Colorectal cancer is the most common male cancer in Malaysia, affecting 14.5%
of all cancer sufferers. In female population, it is the third most common, representing 9.9% of all female
cancers, after breast and cervical cancers.
In February 2009, the Public Health Medicine Specialist Association of Malaysia began a year-long study
into the financial burden of cervical cancer in the country, which is supported by GSK Malaysia. The
research will assess the current costs of treating and managing human papillomavirus (HPV)-related
cervical cancer, as well as assess the viability of HPV vaccinations on a national basis. Presently, cervical
cancer is the second most common type of cancer among women, resulting in some 750 deaths per
annum.
Page 25
Around the same time, the director of the Institute of Respiratory Medicine was quoted as saying that
smoking was responsible for approximately 90% of the chronic obstructive pulmonary disease (COPD)
cases in Malaysia. He added that environmental pollution, chemical and biomass fuel fumes and
workplace exposure to industrial dust were among the other factors that cause this condition.
According to official figures, the cost of three main smoking-related diseases borne by the Malaysian
public health services was US$1bn in 2007. However, while this figure is projected to increase in
absolute terms by 3% y-o-y, it will simultaneously decrease as a percentage of total healthcare
expenditure, largely due to more individuals quitting the habit combined with a greater uptake of
pharmaceutical interventions, which are inherently more cost-effective than palliative care. Consequently,
manufacturers of anti-cancer drugs, inotropic agents and COPD treatments will envisage an opportunity
in Malaysia.
Presently, almost a quarter of the countrys population smoke, which has resulted in many cases of lung
cancer, ischaemic heart disease and COPD. Many more men (49%) than women (5%) are smokers, and
adolescents (14%) appear to be distinctly partial to cigarettes and/or kreteks, cigarettes made with a
complex blend of tobacco, cloves and a flavouring sauce.
Campaigns to reduce the prevalence of smoking are commonplace. The National Tobacco Board (LTN)
envisages reduced demand and it is urging its members to diversify their operations. One such alternative
crop is the herbal plant safed musli (Pachystome senile), which is a common ingredient in traditional
Ayurvedic preparations. As well as limiting the production of tobacco, there are economic benefits. Safed
musli can be sold for MYR40 (US$11.90) per kg compared to just MYR15 (US$4.50) for the same
quantity of tobacco. Social norms are also being influenced.
In the meantime, according to the Sultan of Perak, Azlan Shah, as quoted in The Star Online, downsizing
psychiatric institutions and preparing additional treatment facilities in general and district hospitals will
improve mental healthcare in Malaysia. According to the WHO, 450mn people worldwide are affected by
mental, neurological or behavioural problems and 873,000 commit suicide every year. BMIs BoDD
estimates that the number of DALYs lost to neuropsychiatric conditions in Malaysia was 633,769 in
2007. We forecast that this will increase by approximately 1.5% to 643,123 DALYs lost by 2015, and
then decline by 0.7% to 638,745 DALYs lost by 2030.
Communicable Disease
Malaysia is largely free of diseases such as polio, which was eradicated in 1992. Over the past decade,
Malaysia has stepped up efforts to prevent and contain infectious disease outbreaks. In September 2005,
the government announced it would stockpile enough anti-flu drugs to cover at least 30% of the
population, amid fears of a potential bird flu pandemic. In late 2009, Malaysian researchers from the
University Malaysia Sarawak successfully isolated a new fifth cause of malaria, in a study funded by
Page 26
the Wellcome Trust. The malaria parasite P. knowlesi, which had previously been linked only to
monkeys, has been shown to be widespread among humans in the country. Potentially fatal malaria cases
caused by the P. knowlesi parasite are thought to account for around two thirds of the total.
Universiti Sains Malaysia (USM) had commenced a partnership with Italys University of Parma in
February 2010 to develop anti-malarial treatments. USMs facilities and expertise will be used for clinical
trials, according to New Straits Times.
In 2009, the country began grappling with the swine flu virus, the incidence of which rose to over 100 in
the March-June 2009 period. Over 700 people were quarantined at the time. By early August 2009, the
death toll rose to 44, with the Ministry of Health commencing a public education campaign on the spread
of the A (H1N1) virus. At the same time, the stock of antivirals was expected to be supplemented by an
additional MYR20mn worth of medicines. Both private and public healthcare institutions have also been
ordered to utilise rapid influenza screening tests, with the government taking a proactive approach to
tackling the issue. The Health Ministry said in March 2010 that a woman had died after being infected by
the A(H1N1) virus, pushing the total number of deaths from the virus up to 78. Meanwhile, CCM
Duopharma has won a three-year, MYR32mn (US$9.4mn) contract to supply oseltamivir the active
ingredient in Roche's Tamiflu to the Malaysian government. To ensure ongoing supply in the event of a
problem at CCM Duopharma's production facility, the state awarded an identical oseltamivir contract to
compatriot firm Royce Pharma.
In March 2009, the Malaysian Health Ministry stated that 33 people had died in 2009 due to dengue
fever, up by 50% compared to 2008. By April 2009, the number rose to 40. The health minister reported
that number of cases of the mosquito-borne disease also increased by 48% y-o-y to 12,179 cases in the
period of January 1 to March 16 in 2009, compared with 8,212 cases registered in the same period in
2008. Between January 1 and April 18 2009, nearly 16,684 cases of dengue fever were recorded, resulting
in the deaths of 40 patients in the country, compared to 11,386 dengue cases and 29 deaths over the same
period in 2008. During the week April 12-18 2009, the number of dengue fever cases had risen by 8% to
859 cases, against 794 cases witnessed in the previous week.
According to most WHO recent figures, Malaysia has around 75,000 HIV-positive patients. The
countrys HIV/AIDS prevalence is the fifth highest in the region. Some 70% of HIV-positive people were
infected through drug injections, with the remainder mostly infected through unprotected sex. The
government has implemented public health programmes targeting a decrease in HIV infections by
providing contraceptives and educating commercial sex workers on dangers of unprotected sex. In the
meantime, the United Nations UNICEF programme has been providing care for HIV orphans in
Malaysia.
Malaysia is already on target to achieve the UN Millennium Development Goals on curbing the spread of
HIV/AIDS by 2010, by implementing needle-exchange services and similar harm-reduction measures. In
Page 27
2007, the government allocated some US$4.2mn for methadone treatment programmes, with an
additional US$2mn supporting needle-exchange services. By 2010, the authorities are planning to have
25,000 methadone treatment patients, up from around 5,000 at present, most of whom are able to keep
their jobs as a result of the treatment, thus continuing to contribute to the overall economy. Over the next
three years, HIV-reduction programmes are expected to receive a further US$88mn in funding.
Healthcare Sector
Malaysia is one of the most ethnically diverse Asian countries. It is comprised of ethnic Malays (the
majority), 30% Chinese immigrants, with the remainder including Indians, Pakistanis and Tamils. As
such, adequate healthcare provision for all demographic characteristics is a complex proposition.
The vast majority of the population is covered by public healthcare insurance, which is particularly
important for the rural poor. Low-cost government services are financed by taxes and other public
revenues, although they continue to suffer staff shortages. The government runs around 130 public
hospitals.
The increasing prosperity has in recent years encouraged the development of the private medical
insurance market and provision. Malaysia boasts more than 250 large private medical facilities, many of
which are privatised public institutions, as well as around 2,000 private clinics. In May 2006, new
regulations introduced mandatory registration of all private medical and dental clinics. Legislation also
stipulates that private clinics must provide minimum basic outpatient emergency care for an occasional
patients that may need it.
Malaysia has managed to significantly reduce child mortality since 1990, according to data from the
Institute for Health Metrics and Evaluation at the University of Washington. The study put Malaysia in
29th place in its global rankings for mortality for children under five years of age in 2010, giving the
country a 5.1 mortality rate (per 1,000 births). The institute estimates a total of 2,852 under-five deaths in
2010 in Malaysia. This is a significant improvement on the countrys 1990 ranking of 42, when Malaysia
had an under-five child mortality rate of 16.43.
Meanwhile, in order to help meet the governments pharmacist to population ratio of 1:2,000, pharmacy
chain firm Guardian signed a MoU with International Medical University in April 2010 to share industry
and academic knowledge. At current population levels Malaysia would need to double the number of
pharmacists to around 14,000 to meet the governments target, New Straits Times reported.
Another government initiative to improve public healthcare coverage is the 1Malaysia clinics
programme, launched in early 2010. Currently, there are around 50 such centres in Malaysia, which are
open during weekends and public holidays, as well as between 10am and 10pm. The programme
primarily aims to reduce overcrowding in town-based public hospitals, although one such facility was
Page 28
opened in a rural area (in Jeli) in order to improve access to medical services. The government is
investing MYR10mn in assessing the scheme before expanding it further.
However, the programme has been criticised by the Malaysian Medical Association (MAA) over not
being staffed by doctors, but rather by medical assistants (MAs) instead. Patients with more serious
illnesses are still referred by MAs to hospitals and polyclinics. Nevertheless, given the shortages of
medical personnel, many patients have welcomed the initiative that reduces waiting times as well as
consultation costs (which can now be as low as MYR1).
Healthcare Sector Funding

Sultan Azlan Shah of Perak noted in June 2008 that healthcare spending is rising every year, with
significant sums increasingly spent on facilities, personnel, equipment and pharmaceuticals. The
government bears the majority of costs, but this is an unsustainable situation, he says. And we agree, to an
extent. According to the WHO, a total of US$3.1bn was spent on health in Malaysia during 2000, which
equated to 3.30% of GDP. In 2005, the government subsidised MYR8bn (US$2.4bn) towards overall
healthcare spending. However, in 2008, this figure rose to MYR12.2bn (US$3.96bn), while the public
healthcare budget was expected to top US$3.7bn in 2009.
However, the Malaysian government risks further unpopularity if it goes ahead with plans to encourage
individuals to contribute more to public healthcare funds. Due to rising state spending, Sultan Azlan Shah
of Perak called on people to increase their social responsibility and buy more health insurance, receiving
tax rebates in return.
Health Minister Datuk Liow Tiong Lai is taking the Sultans suggestion to the cabinet. However, he has
assured the public that they would not have to contribute to the proposed National Health Insurance
Scheme, which has been debated for many years. In addition, he pledged not to introduce any changes to
the current system until later in 2009, with no developments on this front reported by early 2010.
According to a study by the International Islamic University (IIU)s deputy rector, up to 50% of the
MYR2.2bn (US$650mn) worth of medicines is wasted in Malaysia each year. The deputy rector
suggested that many patients fail to follow prescriptions properly or throw the drugs away if they judge
themselves to be healthy again. He also called for a better programme regarding pharmaceutical care
services, which would provide more information to patients at the point of medicines dispensing.
Medical Tourism
Medical tourism is becoming increasingly important to both Malaysias travel and healthcare industries.
Indeed, over the past decade, medical tourism has grown to become second largest foreign exchange
earner for the country. To facilitate this trade, the government set up the Health-care Travel Council,
Page 29
which promotes 35 private hospitals for medical tourism. Meanwhile, tax breaks have been introduced
for hospitals running medical tourism programmes (see below), while incentives have been provided to
help hospitals to expand their facilities. According to the Prime Minister Najib Razak, the medical
tourism revenues of the 35 designated hospitals grew to MYR299bn from MYR59bn in the past five
years. There are now approximately 375,000 foreign patients seeking treatment in the country each year,
up from 100,000 five years ago.
The advantages of the Malaysian medical tourism industry include low-costs, a well developed
infrastructure and high medical standards. For example, an angioplasty that can cost US$57,000 in the
US, and US$13,000 in Thailand, but costs just US$11,000 in Malaysia. Meanwhile, a knee replacement
which costs US$40,000 in the US and US$13,000 in Singapore, comes in at just US$8,000 in Malaysia.
This value offering has helped institutions such as the Pantai Medical Centre (PMC), which now runs
nine hospitals in the country. According to PMC, the majority of foreign patient come from Indonesia,
with other also arriving from the Middle East and Europe.
Additionally, the number of medical tourists from Singapore is expected to increase, as from the start of
March 2010 Singapore residents will be allowed to utilise savings held in the national medical savings
scheme (Medisave) for overseas hospitalisation and day surgeries at two hospitals in Johor (Regency,
opened in November 2009) and Malacca (Mahkota Medical Center). The Singapores Ministry of Health
(MOH) added that the scheme will be initiated with two providers Health Management International
(HMI), which runs the two Malaysian hospitals, and Parkway Holdings. The ministry took the decision
after consulting with union leaders, who suggested the scheme to ensure patients a wider choice and take
advantage of the lower cost of hospitalisation overseas. HMI is also planning to apply for Malaysian
physician licences, which would allow Singapore doctors to work in its Malaysian facilities.
In a related development, in April 2009, the Malaysian Health Minister invited registered foreign
professionals to Malaysia, allowing them to treat foreigners residing in the country. He added that many
people prefer to be treated by medical people from their own country, and it will also enable foreign
people to be treated at significantly lower cost in Malaysia. The registered foreign doctors will be allowed
when the services provisions of the ASEAN Free Trade Area agreement comes into force, expected
before the end of the year.
In November 2009, in a bid to boost numbers in the coming years, the government decided to increase tax
incentives for healthcare service providers who serve medical tourists, with the intention of enhancing
medical tourism. The government increased tax rebates to 100% (from 50%) in its 2010 budget as an
endorsement of its healthcare services overseas.
In the meantime, in February 2009, Malaysian KPJ Selangor Specialist Hospital, part of KPJ Healthcare
Bhd Group, stated that it sees potential for growth in its healthcare tourism business in Pekanbaru, Riau,
Page 30
Indonesia. The hospitals public relations manager said that a recent survey revealed more than 20,000
patients from Pekanbaru and Medan received medical treatment in Malaysia in 2008. The manager also
stated the private hospital is looking at Medan, Cambodia and Vietnam to grow its healthcare business.
KPJ operates 19 hospitals across Malaysia, as well as six hospitals overseas (in Bangladesh, Saudi Arabia
and Indonesia).
Biotechnology And Research

In regional terms, Malaysia has a small biotechnology sector, dominated by around 35 small and mediumsized companies. A number of larger players have developed strong R&D sectors within the overall
corporation structure. Most of the activity is recorded in specialist biotechnology (dealing in tissue
culture, diagnostics, vaccines, clinical testing and blood bank collection), bio-pharmaceuticals and
suppliers to the biotech industry.
Malaysian biotechnology and life sciences industries currently employ around 35,000 staff and appear to
be relatively resilient to economic downturn. In April 2009, Malaysian Biotechnology Corporation
(BiotechCorp), the leading development agency in the sector, organised a job fair, the first such event in
the industry. The BioCareer 2009 exhibition was organised in partnership with the Ministry of Science,
Technology and Innovation (MOSTI).
However, news that local firm CCM Duopharma is looking to begin exporting vaccines to regional
markets, could provide a sizeable boost to the market and is a sign that Malaysia pharmaceutical firms are
beginning to move up the value chain. Biopharmaceutical products are subject to stability problems
distinct from traditional sterile pharmaceutical processing and thus require more care in handling and
preservation than classical 'small-molecule' drugs. Most biopharmaceutical formulations are aqueous, and
protein products have limited stability in their liquid state. This results in additional production costs that
can be extrapolated to higher sale prices. However, BMI warns that a limitation on permits from the
government for imports of drug raw materials could hold back CCMs plans in the short-term.
In an attempt to make Malaysia more attractive to foreign investors, the government unveiled a national
policy in mid-2005, which earmarked biotechnology as the next engine of growth. The new policy was
announced after the disappointment of the Bio-Valley Project venture, which was inaugurated in 2001
inside Malaysias new US$3.7bn Multimedia Super Corridor. Despite government aspirations of
attracting US$10bn in foreign and local investment to the biotechnology industry over a 10-year period,
the Bio-Valley Project has proved to be a dismal failure, with only three companies signing up to
establish production facilities by the end of 2005.
Page 31
Table: Key Points Of The Malaysian National Biotechnology Policy
To transform and enhance value creation of the agricultural sector through biotechnology
To capitalise on the strengths of biodiversity to commercialise discoveries in health-related natural products and biogeneric drugs
To leverage our strong manufacturing sector by increasing opportunities in bio-processing and bio-manufacturing
To establish biotechnology centres of excellence in the country, where we bring together multi-disciplinary research
teams in co-ordinated initiatives
To build the nations human capital in biotechnology via education and training
To develop financial infrastructure to support biotechnology
To improve Malaysias innovation system by reviewing the countrys legal and regulatory framework
To build international recognition for Malaysian biotechnology
To establish a dedicated and professional agency to spearhead the development of Malaysias biotechnology sector
Source: Malaysian government
Despite these setbacks, in August 2005, the government proposed a new strategy of purchasing
technology from abroad, with the aim of stimulating production in the domestic pharmaceutical industry.
To this end, the government launched its new directive pertaining to a National Biotechnology Policy
aimed at developing appropriate infrastructure facilities, as well as attracting foreign investment.
However, Malaysias attempts to develop its biotechnology industry could be hampered by competition
from neighbours such as Singapore, as well as inadequate IP protection, although ASEAN harmonisation
and biotechnology sector development plans should facilitate some improvements.
Nevertheless, the government is undeterred in its focus on the development of biotechnology. Authorities
have recently created BioNexus Malaysia. The programme, which will eventually encompass a network
of centres of excellence from existing institutions around the country, presently has three components: a
centre of excellence for agricultural biotechnology will be part of the Malaysian Agriculture Research and
Development Institute (Mardi) and Universiti Putra Malaysia; a centre of excellence for genomics and
molecular biology will be based at the Universiti Kebangsaan Malaysia; and a centre of excellence for
pharmaceuticals and nutraceuticals will be built at the BioValley site.
Investment in BioNexus companies rose from MYR1.1mn in 2007, to MYR1.3bn in 2008, with 92 such
companies being developed by BioCorp in the course of 2008 (up by 119% y-o-y). In 2009, the
authorities are planning to develop a further 50 to 55 companies through the BioNexus scheme. In
November 2009, Bernama reported that the number of BioNexus companies will increase to 185 over the
coming two years, from the current number of 135, as predicted by the Malaysias Prime Minister. By
2011, the companies are expected to account for 2.5% of the countrys GDP, up from 2.2% presently.
Page 32
Previously, in July 2008, Universiti Sains Malaysia (USM) signed a partnership agreement with
BiotechCorp. Under the Advancement of Nanotechnology Research and Collaboration agreement, three
Malaysian researchers from the USM will spend a year in France, in a bid to improve R&D within the
Malaysian biotechnology industry through the development of new technology platforms or applications.
BiotechCorp, established in 2005, seeks to uphold the governments biotechnology sector initiatives and
is the leading state-owned agency responsible for the growth of the Malaysian biotechnology industry.
The company already has a collaborative agreement with French Nanobiotix, which has provided
BiotechCorp with an exclusive worldwide licence for a nanotechnology platform.
A number of players providing biotech solutions are raising their profile in Malaysia. One such company
is the Malaysia Genomics Resource Centre (MGRC), which went live in July 2005. The centre was set
up with the specific focus of establishing a bioinformatics services for the analysis of biological data.
MGRC collaborates with industry and individual partners, providing specially adapted applications for
online use.
Carotech is the leading supplier of phytonutrients and biodiesel products, with a daily capacity of 45
tonnes of crude palm oil a day. Palm oil can be processed into either biodiesel or vitamin E. Carotech is
owned by Hovid, one of the largest GMP-certified pharmaceutical companies in Malaysia. Hovid, which
boasts over 350 generics, health supplements, injectable products and herbal medicines in its portfolio, is
the leading exporter.
With a paid-up capital of MYR75mn (US$22.1mn), Inno Biologics is a wholly-owned subsidiary of Inno
Bioventures, which is 90% owned by a Ministry of Finance-owned company. The remaining stake in the
company is owned by the Malaysian Industry-Government Group on High Technologies (MiGHT). Inno
Biologics makes generic drugs for other companies and operates Malaysias first biopharmaceutical plant
in Nilai, Negri Sembilan.
The sector receives grants from the National Council for Scientific Research and Development (NCSRD)
under the Ministry of Science, Technology and Environment (MOSTE), with further incentives provided
by the Inland Revenue Board and the Malaysian Industrial Development Authority (MIDA), venture
capitals and banks. One of the more prominent funds in the field is the Malaysian Life Sciences Capital
Fund, which was created as a joint project between the government-owned venture capital firm,
Malaysian Technology Development Corp (MTDC), and US Burill & Co, in 2005, with a capital of
only US$40mn. By the end of 2006, the fund swelled to US$200mn, with US$140mn already invested
into over 20 companies.
The Malaysian Chapter of the Federation of Asian Biotech Associations (FABA) was launched in August
2006. FABA aims to encourage biotechnology investment from private sector corporations, as well as to
improve relationship between public and private biotechnology spheres. To this end, the government
Page 33
offers a number of financial incentives, such as a 100% group tax relief or deduction on qualifying
investments in biotechnology, a 10-year tax-exempt pioneer status, exemption of import duties on
approved equipment and materials, and double tax deductions on qualifying expenses and R&D
investments. Moreover, the Malaysian stock Exchange (MESDAQ) offers benefits in terms of venture
capital consideration to biotech companies, given their higher risk profiles.
Table: The Benefits Of Conducting Biotechnology Research In Malaysia
Strategic location in the heart of Asia

Pro-business government
Political stability
Cost-effective base for business
Excellent transportation and ICT Infrastructure
Located nearby fast-growing markets
Long history in open trade
Strong in outsourcing services
Highly skilled workforce
Presence of several multinationals
Government support
Extensive base and network of R&D
Excellent quality of life
Rich biodiversity
Presence of Multimedia Super Corridor
Knowledge workers
Multi-ethnicity
Source: BiotechCorp
Recent Biotechnology Developments

!
In March 2010, Indias Institute of Cellular Therapies (ICT) said that it had accepted an offer from the
Malaysia Health Ministry to establish a cell culture lab in the country to provide a cell-based cancer
immune-therapy, Indo-Asian News Service reported. The new lab will conduct clinical trials for dendritic
cell therapy, which aids recovery in cancer patients and decreases the risk of relapse, and will produce
Denvax.
Meanwhile, Indian biotechnology company Biocon is exploring expansion opportunities in Malaysia,

considering its potential as a regional biotechnology hub. Chairman and Managing Director Kiran
Page 34
Mazumdar Shaw said that the company is eager to expand its operations in Malaysia and sees the BioXcell Ecosystem in Iskandar as an attractive proposal. She added that the company looks forward to
formalising its partnership with Malaysia's Biotechnology Corporation (BiotechCorp)
!
In December 2009, Inno Biologics signed a licensing agreement with German CEVEC Pharmaceutical
GmbH, a therapeutic proteins development specialist that uses new technology based on human
amniocytes. Under the terms of the deal, Inno will use the German firms technology CEVECs
Amniocyte Production (CAP) to develop cell lines and produce biopharmaceutical products.
Additionally, Inno is planning to use this collaboration to train local experts in the area of human cell
technology. For its part, the German company has welcomed the agreement as its first foray into Asian
markets.
In November 2009, CCM Duopharma and Inno Biologics agreed to develop a version of erythropoietin
(EPO) for the treatment of anaemia associated with cancer treatment or kidney failure, thus entering the
high-potential biosimilars field. Inno Biologics will supply bulk EPO to CCM Duopharma, which will
finish the product and market it to healthcare specialists. Given the savings that Malaysia will realise
through domestic manufacturing of the high-tech pharmaceutical, BMI expects companies in other
countries at a similar stage of economic development to emulate this deal. The Malaysian government
currently spends MYR45mn (US$13.3mn) on EPO annually. Transportation from Europe, India and South
America adds to the cost of the already-expensive EPO (due to complex manufacturing). Inno Biologics
and CCM Duopharma estimate their version of EPO will reduce the governments expenditure on EPO by
40%. The product will be synthesised in Inno Biologics 1,000 litre fermentation tank and
commercialisation is expected in 2011. To adapt its production line, Inno Biologics will have to spend
MYR5mn (US$1.5mn).
In June 2009, a subsidiary of US biotechnology firm Actis Biologics was in the process of securing funds
for the creation of a biotech park (to be named Biocity) in Melaka, Malaysia. Actis Biologics Pvt Ltd was
reportedly close to finalising a US$750mn deal with two international parties. Actis is also looking to
expand in India. Actis Biologics Malaysia is also due to expand through its subsidiaries, namely Telesto
Diagnostics (which is focused on breast cancer detection) and Kohinoor Biotech. Malaysian government
has already approved a 270-acre site for the Biocity construction.
In March 2009, the chief executive officer of the Malaysian Biotechnology Corporation stated that the
Malaysian biotech industry is expected to contribute 5% to the countrys GDP by 2020, up from the
current 1%, to generate 280,000 jobs. He also added that the industry has a total investment of
MYR1.37bn (US$402mn), which is approximately 1% of the GDP.
In March 2009, the managing director and chief executive officer of Malaysia Debt Ventures (MDV)
stated that there are adequate funds in the market to support biotechnology companies. He added that
financial assistance can be easily obtained by companies that demonstrate their intentions to develop high-
Page 35
quality products and initiate projects. MDV is currently reviewing loan applications with a cumulative
value of over MYR300mn (US$88.23mn) for 15 biotech companies.
!
In February 2009, continuing the global trend for bio-prospecting, Novartis announced plans to search the
rich ecology of the Malaysian state of Sarawak for new medicines. Given the rewards on offer and the
drop in productivity from synthetic drug discovery, BMI expects other innovative pharmaceutical
companies to engage in similar activities. The Swiss multinational has had talks with the relevant
authorities in the capital Kuala Lumpur to search the forests of Sarawak for unique compounds that may
be useful in the treatment of disease. Malaysia is a good country to invest in as it has excellent
infrastructure, a business-friendly government, and a well-educated, English-speaking population,
according to Switzerlands ambassador to the country.
In October 2008, Indian contract manufacturer Malladi Drugs & Pharmaceutical revealed a plan for a
major investment in Malaysia, spending up to US$300mn over the next three to five years on setting up a
global one-stop shop. As the project was announced at the opening of the BioMalaysia 2008 exhibition,
it is BMIs view that Malladis Malaysian facility will focus on the production of high-value biological
agents rather than low-margin small molecules. Malladis speciality is the manufacture of APIs for cough
and cold products, such as ephedrine and pseudoephedrine. However, as these compounds can be used for
the illicit manufacture of methamphetamine, regulators are limiting their use and global sales are
declining, with the company consequently looking at other options.
Clinical Trials
Despite some IP and regulatory shortcomings, the environment for novel pharmaceutical products in
Malaysia is relatively favourable. The fact that the government is willing to fund innovative medicines
has also stimulated the development of locally based clinical research by multinational companies.
Additionally, locally undertaken clinical trials conducted both in private and public hospitals are lowcost.
However, further growth of the sector will be dependent on the governments willingness to ensure that
bioequivalence data cover all therapeutic areas, as well as ensure a more balanced regulatory environment
that would not discriminate between local and foreign producers. Nevertheless, various estimates suggest
that market capitalisation of publicly listed biotechnology and biotechnology-related healthcare
companies topped US$857mn in 2007. Foreign direct investment (FDI) in the sector in the same year was
almost US$286mn, with biotechnology forecast to generate over US$70bn in revenue by 2020.
The recently launched network of clinical trial centres (CRCs) enables the Ministry of Health to provide a
one-stop conduit for clinical research organisations (CROs) to test drugs and devices. This results in
reduced costs due to operational efficiencies being realised at every step of the process. There are
Page 36
currently 14 CRCs, which provide access to 50 district hospitals, and subsequently several hundred
clinics.
Late-stage or phase III studies which usually enrol several thousand patients across the globe are the
most common trial in Malaysia. BMI currently estimates that over 100 are currently ongoing in the
country, which is impressive considering that there were just 50 being conducted in 2004. Studies take
place in Ministry establishments, private hospitals and medical teaching facilities. According to
clinicaltrials.gov, some 87 studies were recruiting volunteers in February 2010.
There are some drawbacks that prevent CROs from fully exploiting the potential in Malaysia. A common
internal view is that the country gets overlooked as potential investors either go to the large population
centres of India and China, or opt for technological hubs, such as Singapore and Hong Kong. Other
reasons come from negative perceptions surrounding bureaucracy, delayed timelines and long registration
processes.
In fact, contrary to popular conceptions, it only takes six weeks for an investigation to receive approval
from the authorities. Moreover, procedural delays should not be that common as Good Clinical Practice
(GCP) is very much the applied standard. True, a comparatively large amount of paperwork is involved,
but this is fairly standard, and is arguably of benefit to one or more involved parties.
Indeed, the Health Ministry has recently constructed the National Medical Research Register (NMRR),
which helps industry to identify appropriately experienced research to conduct studies. It also brings
Malaysia in line with international practice, which requires medical research, especially clinical trials, to
be published in publicly accessible registers.
In light of the above benefits, in December 2007, US CRO Quintiles identified Malaysia as a key growth
market, after posting an average annual growth of 70% in the country. Accordingly, the firm plans to run
even more trials there, particularly in the field of oncology and other high-value therapeutic areas.
Malaysia is seen as an attractive market due to low costs, a moderately sized population, rapid patient
enrolment, a diverse gene pool and high quality data, as well as government support. The company has
had operations there since the 1990s, but only on a small scale until recently. On behalf of various
multinational clients, Quintiles was involved in a few short-term studies in areas such as flu vaccines and
basic anti-infectives. However, now the CRO is looking into chronic disease trials, evaluating therapeutic
for conditions such as diabetes, cardiovascular complications and central nervous system impairments.
Other foreign companies are also increasingly interested in Asian markets. To this end, in late 2008,
Chinese CRO Tigermed Consulting established a global clinical trials network, in partnership with
Russian OCT and South Korean LSK. The latter is responsible for operations in Malaysia, Taiwan, Japan
and South Korea. Tigermed, one of the leading CRO firms in China, is also showing interest in Europe-
Page 37
and US-based clinical trials. More recently, one of leading CROs in Australasia, Gleneagles, organised a
May 2009 workshop, which focused on clinical trials quality assurance, roles of participants and
coordination of activities. Gleneagles runs a private Intan Medical Hospital in Malaysia.
Recent Developments in the Clinical Trials Industry

!
In December 2009, MOSTI was reported to be seeking funds from the government for biotechnology
development in the country under the 10th Malaysia Plan (10MP), to the tune of MYR4bn
(US$1.18bn). The minister of health stated that the Ministry had finalised its submissions to the
government, adding that MYR2bn (US$0.6bn) funds had already been allocated to the development
under the 9MP.
In November 2009, Australia-based international CRO Novotech set up a new management hub in
Kuala Lumpur, Malaysia. The facility will supervise operations in Malaysia, Singapore, Thailand and
the Philippines. The Kuala Lumpur office, due to be fully operational in the next few months, will
serve as the base for expansion in the Asia-Pacific contract research sector. Other new regional offices
are scheduled to be opened before the end of 2009.
In the same month, Indian biotechnology company Biocon was reported to be exploring expansion
opportunities in Malaysia, considering its potential as a regional biotechnology hub. Chairman and
Managing Director Kiran Mazumdar Shaw said that the company is eager to expand its operations in
Malaysia and sees the Bio-Xcell Ecosystem in Iskandar as an attractive proposal. She added that the
company looks forward to formalising its partnership with Malaysias BiotechCorp.
In September 2009, according to Bernama, Melaka Chief Minister Datuk Seri Mohd Ali Rustam
announced that the Melaka State Development Corporation, along with India-based Vivo Bio
Tech, had decided to invest MYR150mn (US$42.5mn) in the creation of a monkey laboratory at the
Beribi Industrial Park. The laboratory will facilitate pre-clinical trials to develop drugs for the
treatment of various diseases like diabetes and cancer.
In June 2009, Indian Veeda Clinical Research announced the creation of its South East Asia office in
Malaysia. At the same time, the company signed a collaborative agreement with the Malaysian
Ministry of Health, with a view to opening an early clinical trials centre within the Ampang Hospital
in Kuala Lumpur, which specialises in haematological oncology. The unit would provide facilities for
phase I studies as well as experimental medicine studies in selected populations.
In the same month, CRO Kendle created three new units in Asia, namely in Malaysia (in Kuala
Lumpur), Thailand and the Philippines, as its commitment to the region grows. The US-based
company will focus on services for the regional players in the field of biopharmaceutical development
as well as manufacturing.
Page 38
In March 2009, Singapore drug firm Innogene, acting on behalf of the biopharma unit of Indonesian
PT Kalbe Farma Tbk, signed a memorandum of understanding (MoU) with Malaysian clinical
research organisation (CRO) Info Kinetics Sdn Bhd. The MoU refers to the provision of accredited
bioavailability and bioequivalence studies in Indonesia, through the creation of a joint venture (JV), to
be named PT Pharma Kinetics, which will act as a clinical trials centre. Pharma Kinetics, which will
be based in Jakarta (Indonesia), is expected to provide clinical trials services to both domestic and
regional markets. In 2005, Innogene created another Indonesian bioequivalence centre, PT Pharma
Metric Labs, in response to rising demand for such services. In Malaysia, Info Kinetics runs the only
good laboratory practice (GLP)-accredited laboratory in Southeast Asia (at Universiti Sains
Malaysia), with the facility also having an accreditation from the Organisation for Economic Cooperation and Development (OECD).
Medical Devices
An initial draft of Malaysias Medical Device Bill was submitted in September 2005. One of the
requirements contained in the proposed legislation is the registration of all healthcare equipment with the
Ministry of Health. The enforcement of the Medical Device was due to begin 2007, and the voluntary
registration of healthcare equipment commenced at the end of 2005. The proposed bill will apply for all
medical devices within Malaysia.
At present, Malaysia does not have a medical device regulatory authority, and as such, the government is
eager to implement a system that will be in line with the standards of other Asian countries. Under the
bill, a supervisory body would be established within the Ministry of Health to ensure the safety of all
healthcare equipment. The main responsibilities of the new governing body would be to oversee the
registration, enforcement and monitoring of all laser and healthcare equipment in the country.
In 2005, members of the Association of Malaysian Medical Industries (AMMI) jointly posted US$9mn in
revenue from medical devices. Estimates put forward by the Third Industrial Master Plan (IMP3) put the
revenue of the entire industry at around US$1.3bn. The market is dominated by imports (at around 90%),
especially at the hi-tech end of the scale, although there is room for contract manufacturing as local
demand increase in the face of demographic, economic and healthcare technology improvements.
More recently, the Malaysia External Trade Development Corporation (Matrade) released figures
showing that exports of healthcare services and low-end medical devices, such as surgical gloves, reached
a value of MYR3bn (US$937mn) in 2007. In the previous year, the market for clinical diagnostics was
worth around US$418mn, according to the figures published by the US Commercial Service. US
companies supplied around 58% of this total. In 2008, total medical devices exports were around
US$2bn.
Page 39
Table: Malaysia Clinical Diagnostics Market, 2006 (US$mn)
HS codes
Description
US$
30062000
Blood Grouping Reagents
1.15
300630
Opacifying preparations for x-ray
3.93
382200
Diagnostic Laboratory Reagents
41.29
Centrifuge
12.62
Medical, surgical, laboratory sterilizers
4.78
90121000
Microscopes
9.70
90129000
Microscope parts and accessories
1.77
901600
Balances of a sensitivity of 5cg or better
0.85
902720
Chromatographs and electrophoresis instruments
15.71
902730
Spectrometers
17.08
902750
Other instruments using optical radiations
11.67
902780
Other instruments
260.16
Microtomes, parts and accessories
10.96
Compound optical microscopes
17.70
Apparatus based on the use of x-rays for medical purposes
5.24
Apparatus based on the use of alpha, beta or gamma
3.44
842119000
8419200
90279000
9011
902214
902221000
Total
418.05
Source: US Department of Commerce (USDOC), 2007
Malaysia exports a number of items, with a focus on surgical and examination gloves, catheters (the
country manufactures 80% of the total global supply of rubber-based catheters) and condoms, which
accounted for 85% of exports in 2005. The domestic industry is also active in the production of needles,
medical and surgical instruments and appliances, and orthopaedic appliances. Malaysia supplies some
60% of the global demand for surgical gloves, according to 2005 figures by AMMI, although the
competition in this field from other regional players has intensified in recent years, pushing local
manufacturers to increase their role in the production of non-rubber catheters, surgical drapes and gowns
and medical tubing, among other items.
Leading Medical Device Players

Malaysia has around 180 small and medium-size manufacturers of medical devices. However, the number
of companies involved in the industry may increase during economic downturn, as players from
automation equipment, engineering and product packaging turn to medical devices to combat falling
demand for their products. The key driver of such a trend will be the fact that most manufacturing
Page 40
undertaken in the industry is still semi-automated, leaving room for further growth, according to Wong
Engineering Corp Bhd.
One of the more prominent local medical device manufacturers is Ambu Sdh Bhd, which is active in the
cardiology and neurology segments. The company is expecting to continue strong growth over the
coming years, due to the conducive environment provided by various governments incentives and
various other changes. In fact, according to the 2006 report by the AMMI, the Malaysian medical devices
industry is expected to continue posting an average annual growth of 8% through until 2010. Other more
prominent local players include WRP Asia Pacific and Supermax Corp.
Established in 1991, Malaysias Top Glove is the worlds largest producer of rubber gloves. Its 20
factories churn out nearly 15bn pairs of gloves annually and export goods to 180 countries. The company
posted Q408 net profit of MYR25.1mn (US$7.0mn), which was an 87% increase compared with same
period in the previous year. A spokesperson said that the slowdown in the world economy is unlikely to
have an impact on sales because gloves are a necessity item in the healthcare industry.
Top Glove is looking to capitalise on the favourable market conditions. The number of centrifuge
machines at its two latex plants in Thailand will be increased to meet rising demand for concentrate from
other facilities. Top Gloves newest factory in Klang, Selangor, has just been fitted out with the latest
technology, which will allow it to produce gloves for less money and using fewer technicians.
Meanwhile, the firms plant in China has been expanded to include an additional vinyl glove production
line.
In terms of foreign medical device players, medical technology company B Braun Medical Industries
has a considerable interest in Malaysia, which also acts as its Asia Pacific regional office. Since
establishing a presence in 1972, to 2008, the company invested a total of MYR1bn (US$287mn) in the
South East Asian country. A total of 4,700 people are employed and over 10% are engaged in the
manufacturing of pharmaceuticals.
B Braun is currently investing a further MYR103mn to expand its business for intravenous safety canals
in Penang, including R&D and regulatory affairs. The investment was to double the production output of
the intravenous safety canals from the current 140mn pieces to 290mn a year by the end of 2009. As part
of its strategy to become a leading supplier of medical products in the Asia Pacific region, B Braun is also
building two factories in Suzhou province, China, designed to manufacture infusion solutions and surgical
instruments. In 2008, B Braun posted US$5.4mn in Malaysian sales, up on US$5.1mn achieved in the
previous year. Consolidated net profit was US$364mn, down from US$311mn in 2007.
However, in a May 2009 announcement, the company suggested it may move some of its Penang
operations to Indonesia, in a bid to cut expenditure. B Braun has indicated that the fact that they cannot
Page 41
compete through open tenders is one of the reason for the potential relocation of its pharmaceutical
business elsewhere. Currently, the company must operate through local agents. Final decision is expected
by the end of 2009, although a November 2009 announcement that the company will invest EUR100mn
in R&D in the Penang facility should mean that the plant is safe. According to official estimates, hospital
supplies are 30% more expensive due to the activities of the middlemen, with Malaysia losing around
MYR10.45bn per annum as a result of the situation.
Other foreign companies active in Malaysia include Japanese Japan Medical Products, Australian
Ansell, and US-based Sharp-Roxy (which provides ioniser systems to hospitals, among other products),
Tyco, Rusch and CR Bard. Sharp-Roxy recently revealed that it expected lower growth during 2009 (of
just 10%, compared to 30% previously), due to worsening economic conditions. In 2008, the company
posted a turnover of MYR500mn (US$148mn).
Recent Developments In The Medical Devices Industry

!
In March 2009, Zecotec Photonics announced the receipt of grants from the Malaysian Industrial
Development Authority (MIDA), which offers financial assistance to foreign companies willing to
establish facilities in the country, as well as the Singapore Economic Development Board (EDB). In
2007, Zecotec forged a partnership with the Malaysian Institute for Micro-electronics Systems (MIMOS),
which aimed to complete the development of the manufacturing process of Zecoteks MAPD solid-state
photo detectors.
In the same month, GE Healthcare IT (Asia Pacific) revealed that the company is co-operating with the
Ministry of Health on establishing online diagnostic solutions. GE stated that one of the main problems is
the incompatibility of devices from different vendors, although the eventual integration of rural and urban
hospital systems will provide a considerable boost to healthcare provision.
Also in March 2009, Australian medical diagnostics company HealthLinx finalised the commercial terms
for the launch of its OvPlex device in Singapore, Malaysia and a number of other Asian countries, over
the next decade. OvPlex, which is used to detect early-stage ovarian cancer, will be distributed by
Singapores Inex, a specialist distributor working in the field of womens health and disease.
In February 2009, Latexx Partners Bhd announced an investment of MYR70mn in the upgrade of its
production capacity for latex and nitrile gloves, starting next year. In 2011, the company is targeting
output of 9bn, with the current capacity at 4bn. The decision was based on rising demand, despite the
global economic downturn. In the course of the current year, the company is expanding its factories by 16
production lines. In financial year 2008 (ending December), Latexx posted MYR223mn in revenue and
MYR15.5mn in pre-tax profit, up on MYR150mn and MYR4.9mn, respectively, in the previous year.
Page 42
Industry Forecast Scenario

Overall Market Forecast
Leading healthcare company
Pharmaceutical Market Forecast
Pharmaniaga expects the outlook for
2005-2019
the Malaysian pharmaceutical industry

to improve in 2010. This view is in
0.8
accordance with BMI's Pharmaceutical

Expenditure Forecast Model, which
0.6
0.4
shows that medicine sales in the South

East Asian country increased by just
0.2
3.4% in 2009 well below the 2004-
expanding economy and an ageing
2019f
2018f
2016f
2017f
2015f
2013f
2014f
2012f
2009
2010f
2011f
2007
2008
0.0
2006
(CAGR) of 6.9%. But driven by an
0
2005
2008 compound annual growth
Drug expenditure (US$ bn), LHS

Drug expenditure as % o f GDP , RHS
population, we expect the market to

expand by 9.46% in 2010 and 7.96%
f = forecast. Source: IMS Health Asia, AC Nielsen, BMI. For data, see
Forecast Tables section below.
between 2009 and 2014.

Indeed, economic indicators for the country are beginning to look more positive. BMI has bumped up our
2010 real GDP forecast to 4.9% (from 4.1%) in view of a stronger export recovery, although fears of a
Chinese-led slowdown have forced us to downgrade our economic outlook for 2011, with growth
expected to come in at only 3.5% (revising downwards from 4.7%). Malaysia's Q110 real GDP growth
came in at a larger-than-expected 10.1% y-o-y, accelerating from the 4.5% expansion recorded in Q409.
Notably, the headline figure has been boosted tremendously the recovery of global trade, where exports
roared ahead with 19.3% y-o-y growth, much faster than the 6.0% rise in the preceding quarter. With the
improved, economic outlook in 2010, we have bumped up Malaysia's economic growth forecast to 4.9%
for the year, from 4.1%.
However, we are concerned at the looming risk of a severe double-dip slowdown in China, where the
recent spate of monetary tightening measures introduced by Beijing to stem the Chinese property bubble
could eventually strangle the region's economic recovery, which would affect for our forecasts for the
pharmaceutical sector.
As a focal point of regional sector development, BMI expects the Malaysian drug market to grow y-o-y
through to 2019, from an estimated MYR4.29bn (US$1.22bn) in 2009. By 2014, BMI expects the market
to grow to MYR6.29bn (US$1.81bn) at consumer prices, with a somewhat lower local currency CAGR of
7.09% expected over our longer, ten-year forecast period. Key drivers of growth are medical tourism,
Page 43
growing reputation of Malaysian pharmaceuticals, the encouragement of the generics and specialist
segments, as well as the rising demand for and supply of halal medicines, although the economic
downturn will negatively impact shorter-term market development. By 2019 we expect the market to be
worth MYR8.51bn (US$2.66bn).
The public sector will continue to provide the bulk of demand, especially with the planned improvement
and expansion of medical services. The government has made the healthcare industry a priority,
implementing schemes to boost the sector. Growth should also be supported by an ageing and expanding
population, as consumers becomes increasingly aware of alternative products, and government priorities
remain favourable.
As purchasing power and private insurance increase and the government shifts more drug costs to
patients, per-capita drug expenditure will rise significantly in US dollar terms (at a CAGR of 8.21%
through to 2014), despite dipping in value in 2009, due to adverse economic conditions and exchange rate
considerations. OTC manufacturers are particularly well placed to exploit this trend, encouraged by the
recent and future finalisation of a number of FTAs. Traditional medicine is expected to post strong gains,
due to rising awareness of self-medication and cost containment.
Regional drug export potential remains strong, particularly in countries like Vietnam and Myanmar,
whose markets are growing, but the area continues to rely on cheaper products such as antibiotics and
painkillers. Halal medicine is being developed with a view to boosting Middle Eastern exports. Local
manufacturers are being encouraged to improve R&D, and the steady growth of exports has started to
attract foreign investment especially in the field of biotechnology.
Page 44
Key Growth Factors Industry

Economic growth and the development
Healthcare Expenditure Forecast
of the healthcare sector and the
2005-2014
consequent increase in sector spending
2014f
2013f
2012f
remedies.
0
2011f
where healthcare is based on traditional
1
2010f
medicines, especially in rural areas
2009
of disease and better access to modern
2008
will be driven by a greater knowledge
2007
and the industry. Further development
2006
growth of the pharmaceutical market
20
18
16
14
12
10
8
6
4
2
0
2005
are expected to play a key role in the
Health expenditure (US$ bn), LHS

Health expenditure as % o f GDP , RHS
Improving regulatory and trade

conditions should continue to attract
investment from multinationals, aiding
f = forecast. Source: Department of Statistics Malaysia, World Health

Organization (WHO), Ministry of Health (MoH), BMI. For data, see
Forecast Tables section below.
market development. Closely tied in with this advance is the harmonisation of procedures within the
ASEAN region, with alignment providing better market access for multinationals looking to establish or
expand operations in an increasingly lucrative regional market. The recent strengthening of regional
cooperation and collaboration with respect to significant healthcare areas suggests that the harmonisation
initiative is developing successfully.
Another factor aiding market growth is the stabilisation and strengthening of the ringgit against the US
dollar, with spending power rising as a result. However, controversies over the Malaysias FTA
negotiations with the US will act as a barrier to foreign involvement in the countrys pharmaceutical
sector, although Malaysia is still seeking to join regional trade initiatives.
Meanwhile, a serious risk to the sector would be a sharper-than-expected Chinese slowdown, precipitated
by a bursting of the property bubble that has been forming in large urban cities such as Beijing and
Shanghai. Indeed, Chinese demand for Malaysian exports make up about 20% of total outbound
shipments for Malaysia.
The Malaysian drug manufacturing and clinical trial industry will continue to develop as an increasingly
attractive option for international pharmaceutical firms, since the country has a large pool of highly
trained but inexpensive research professionals. The government has been making concerted efforts to
reinforce this trend, focusing on the development of the pharmaceutical and biotech hub around the
capital, Kuala Lumpur. Malaysia is a member of the European Pharmaceutical Inspection Co-operation
(PIC) Scheme, which is intended to ensure mutual confidence in manufacturing standards.
Page 45
While ASEAN co-operation is improving regional operating conditions, international co-operation is

evident further afield. Indias government is welcoming joint venture collaborations with Malaysian
pharmaceutical firms. The development follows a higher degree of involvement of Indian pharmaceutical
firms in the Malaysian pharmaceutical sector, most notably leading generics manufacturer Ranbaxy,
which has constructed a new manufacturing plant in the country. Malaysian pharmaceutical firms have
also expanded abroad, with leading local manufacturer Pharmaniaga being the most active.
Key Growth Factors Macroeconomic

Recovery Expected, But Beware Chinese Risks
BMI View: The lower-than-expected 1.7% decline in real GDP in 2009 suggests that a V-shaped
recovery is currently in the works. However, a Chinese double-dip slowdown remains a key risk; and, in
view of still-weak global trade flows and an impending reduction in fiscal expenditures, we have revised
our 2010 real GDP growth forecast downwards slightly to 4.1% (from 4.3%).
The Malaysian economy performed better than expected in Q409, increasing by 4.5% y-o-y compared
with the -1.2% y-o-y registered in the previous quarter. The latest improvement in the fourth quarter
helped shrink the annual real GDP decline to 1.7%, bettering our -2.1% estimate. Latest data suggest that
a V-shaped recovery is at hand, as private consumption and investments have rebounded strongly from
the previous quarters, supporting growth.
That said, we emphasise that the external sector expansion is expected to remain lacklustre due to stillweak global trade flows. Moreover, we expect the government's drive to slash official spending in order
to reduce the fiscal deficit to lead to a slowing in government consumption growth in 2010 and 2011. As
such, BMI is forecasting that the Malaysian economy will expand by 4.1% (down slightly from our
forecast of 4.3% previously), before accelerating to 4.7% in 2011 as the recovery gathers pace.
Private Consumption Key To Growth

As expected, private consumption which made up 52.7% of the economy in Q409 continued to play
an important role in buffering the decline in the broader economy, and we expect this trend to persist into
2010 and 2011. Private consumption rose 1.7% y-o-y in the fourth quarter of 2009, accelerating from the
1.5% figure registered in the preceding quarter.
A closer look at the GDP by sector numbers reveal that the services sector which made up 57.4% of the
economy grew 5.1% y-o-y, which was considerably faster than Q309's 3.5% expansion. We attribute
such growth to the recovery in consumer-driven industries - particularly the wholesale and retail trade,
which comprise about one-fourth of the services sector where local buyers played a significant role in
propping up the economy while exporters languished due to the steep drop in global demand following
the onset of the global financial crisis. Given the local economy's size and sustained growth, we expect
Page 46
such domestic consumption to play an increasing role in the coming years, serving as a 'shock absorber' in
the event of a global double-dip downturn.
As such, we are pencilling in 5.8% growth in private consumption in 2010, followed by a stronger 7.8%
in 2011 as consumer confidence returns. Such growth figures imply that the expenditure component will
form the largest contributor to headline growth, boosting the real GDP growth figure by 3.1pp and 4.3pp
in 2010 and 2011 respectively.
Capital Formation To Resume Expansion

Gross fixed capital formation grew by 8.2% y-o-y in Q409, after sustaining four consecutive quarters of
declines. The encouraging rebound in private investments added 1.6pp to headline growth, which was in
stark contrast to the 1.8pp subtraction in Q309.
Going forward, we believe capital formation will continue its pace of recovery in 2010, reclaiming the
losses registered in 2009 as investors regain confidence in Asian developing economies such as Malaysia.
Our view is consistent with the investment growth patterns registered by the Malaysian economy in the
past, where sharp rebounds were common following major crises, as was the case following the Asian
financial crisis and an earlier recession in the mid-1980s. In short, we believe that gross fixed capital
formation will grow by 5.8% in 2010, contributing 1.2pp to headline growth.
Government Spending To Take Back Seat

The MYR67bn (US$20bn) worth of fiscal pump-priming unveiled by the Barisan Nasional (BN)-led
government early in 2009 which made up about 10% of GDP has continued to support the broader
economy throughout the downturn. Government consumption grew by 1.3% y-o-y in Q409, which,
considering the high base effects from the whopping 12.7% seen in Q408, is a substantial increase. The
Sun newspaper reported that 113,000 projects had been included in the official spending binge, and
MYR14bn out of the MYR17bn slated to be disbursed already spent. Consequently, this has led to a 9.2%
y-o-y rise in construction activity in Q409, accelerating from 7.9% for Q309, according to sectoral GDP
data.
Over the next few years, however, Prime Minister Najib Razak's administration will progressively reduce
spending in order to bring down the large budget deficit which is estimated to have reached 7.9% of GDP
in 2009. That said, government consumption is still expected to grow, and we are forecasting growth of
5.9% in 2010, before decelerating to 4.8% the following year.
Factoring In Chinese Double-Dip On External Sector

In line with our global view, Malaysia's trade with other nations is expected to be lacklustre relative to the
past, with the total value of outbound goods expected to remain below its 2008 high until at least 2012. In
addition, we have factored in the heightened risk of a Chinese double-dip slowdown, hampering export
Page 47
growth over the next few years. Therefore, we are expecting only a mild expansion in exports in 2011
when the impact of a Chinese slowdown is expected to be maximised growing by 1.7%, which is
considerably lower than the 5.4% growth forecast for 2010. In 2009, exports shrank by 10.1%.
Table: Malaysia Economic Activity
2007
2008
2009e
2010f
2011f
2012f
2013f
2014f
641.9
698.3
693.9
747.7
807.7
879.3
959.5
1,031.7
187.4
209.4
197.0
229.1
252.4
256.7
272.2
296.9
6.2
4.6
-1.7
4.1
4.7
5.8
6.1
5.6
6,897
7,552
6,959
7,936
8,570
8,559
8,912
9,550
27.2
27.7
28.3
28.9
29.5
30.0
30.5
31.1
Industrial production
1
index, % y-o-y, ave
2.3
0.7
-7.6
2.0
2.7
3.9
4.6
4.7
Unemployment, % of
3
labour force, eop
3.0
3.1
3.5
3.3
3.4
3.3
3.2
3.1
Nominal GDP, MYRbn

Nominal GDP, US$bn
1
1
Real GDP growth, %

1
change y-o-y
GDP per capita, US$
Population, mn
Notes: BMI estimates. BMI forecasts. Sources: Bank Negara Malaysia, BMI; OEF; Department of Statistics,
BMI.
Prescription Drug Market Forecast

The market for prescription drugs was
Prescription Drug Market Forecast

2005-2019
2009. market modernisation continues,

the use of doctors and hospitals will
2.5
encourage higher consumption of
2.0
prescription medicines, although the
1.5
market will make up a smaller share of

the total market going forward as its
0.0
2018f
2019f
growth. Indeed, the prescription drug
0.5
2014f
2015f
2016f
2017f
dispensing will act as barriers to
1.0
2011f
2012f
2013f
expected separation of prescribing and
2005
2006
higher uptake of generics and the
80
70
60
50
40
30
20
10
0
2007
2008
2009
2010f
valued at MYR3.12bn (US$887mn) in
P rescriptio n drug market (US$ bn), LHS

P rescriptio n drug sales as % o f to tal market, RHS
percentage falls albeit slightly y-oy. In January 2009, the Malaysian
f = forecast. Source: IMS Health Asia, BMI. For data, see Forecast
Tables section below.
Pharmaceutical Society (MPS)

proposed the creation of a zoning system to facilitate the transition, with those areas with sufficient
numbers of pharmacists to be the first to start dispensing. However, to date, no major changes have been
Page 48
implemented in this area. BMI expects the prescription market to grow y-o-y over our 10-year forecast.
After dipping in 2009 we expect to see the market to resume growth to MYR3.38bn (US$1.04bn) in
2010.
Additionally, the majority of the pharmaceutical expenditure will continue to be recorded in the private
sector, which is vulnerable to economic fluctuations. Moreover, the government is seeking compulsory
licences for some patented products, which could dent the values of the prescription sector over the
coming years. Therefore, its five- and ten-year CAGRs of 6.21% and 5.88%, respectively, in local
currency terms will be lower than that for the overall market as well as the OTC segment, despite the
latter suffering in the short-term due to economic downturn. Once the separation of prescribing and
dispensing is fully enforced, BMI will change the forecasts accordingly. In the meantime, we expect the
market to strengthen to MYR4.35bn (US$1.25bn) in 2014.
Presently, the distinction between OTC and prescription market is blurred, as doctors can both prescribe
and dispense, which has in the past made market estimations difficult to make. The private sector
accounts for 60-70% of the prescription market. Much of this is informal, with prescription drugs often
available OTC. As in many Asian countries, physicians often sell the drugs they prescribe. Around 45%
of non-OTC drugs are sold by dispensing medical practitioners, with a further 30% being sold through
public/private healthcare institutions. Dispensing pharmacies account for the remaining 25%.
Presently, the leading prescription category is cardiovascular drugs, followed by nervous system
treatments, in line with the countrys demographic and epidemiological profile. Producers of cancer drugs
will also benefit from rising demand for oncology treatments over the coming years, with the threat of
avian and swine influenza boosting the commercial potential of treatments against such viral infections.
According to a 2006 Ministry of Health survey, the leading therapeutic classes were diabetes treatments,
beta blockers, angiotensin agents, drugs for pulmonary obstruction disorders, anti-histamines and serum
anti-lipidaemia products. These categories were followed by calcium channel blockers, systemic antibacterials, anti-inflammatories and anti-rheumatics and diuretics. As part of its cost-containment drive
(and due to antibiotic resistance concerns), however, the government may wish to limit the use of
antibiotics, which would have a negative impact on the sectors value.
According to the Health Ministry, some MYR150-200mn (US$43-58mn) is spent on medicines for
diabetes, high blood pressure and elevated cholesterol levels each year. There is an increasing mortality
and morbidity from diabetes mellitus, which varies due to the culturally diverse population. The
proportion of the population with diabetes has increased from 6% to 10% over the past 20 years and this
figure is expected to reach 13% by 2020. The highest prevalence of diabetes, for example, is recorded
among Indians.
Page 49
However, officials have noted that as the data indicate that less than 2% of the population use
hypolipaemics on a regular basis, it is likely that related conditions are under-diagnosed. The relative
expense of patented cholesterol reducers has been blamed as a disincentive for their use. Figures obtained
from the Malaysian National Renal Registry show that, as of 2006, a total of 14,647 kidney patients were
on dialysis.
Patented Product Market Forecast

The demand for advanced medicines
should fall over the coming years, due
Patented Product Market Forecast

2005-2019
to patent expirations, possible issuing
50
cardiovascular and central nervous
0.8
40
system therapies growing notably and
0.6
30
0.4
20
0.2
10
0.0
providing substantial opportunities for

foreign players in particular. Overall,
the five- and ten-year growth of the
patented market is expected to be at a
level of 4.73% and 3.47%, respectively,
2018f
2019f
1.0
2014f
2015f
2016f
2017f
generics, despite high demand for
2011f
2012f
2013f
60
2007
2008
2009
2010f
1.2
2005
2006
of compulsory licences, and focus on
Patented pro duct market (US$ bn), LHS

Patented pro duct sales as % o f to tal market, RHS
in local currency CAGR terms,

therefore trailing that of the overall and
generics markets. Moreover, patented

drugs will lose market share y-o-y through to 2019 as generics take a greater share of the total market.
BMI estimates that the patented market held 46.9% of the total market in 2009, which we see falling to
45.6% in 2010 as the sector grows to MYR2.14bn (US$657mn). By 2014, patented products will be
worth MYR2.54bn (US$728mn), making up 40.3% of the total market and dropping to 33.3% by 2019.
Diabetes treatments, beta blockers, angiotensin agents, drugs for pulmonary obstruction disorders,
antihistamines and serum anti-lipidaemia products remain some of the best-sellers, followed by drugs in a
number of other categories, including calcium channel blockers, systemic anti-bacterials, antiinflammatories and anti-rheumatics and diuretics. The present levels of under-diagnosis and undertreatment will boost the growth of the above therapeutic areas, although the relatively high price of novel
patented medicines represents a hindrance.
Lifestyle drugs have gained prominence in recent years. Growth prospects for the ED segment are
especially strong given the social stigma attached to the condition, which the companies aim to overturn
through intensive marketing campaigns. The global ED market was also expected to expand significantly
over the next four to five years, reaching US$5bn in 2009, up from US$3bn in 2006.
Page 50
Overall, main drivers of the patented segment will include higher healthcare expectations, demographic
changes and the availability of new drugs on the market, boosted by improved operating conditions, made
possible by rising international collaboration and FTAs. However, high prices for patented drugs will be
targeted by the government, while they are also likely to lose out to generics in terms of volume.
On a positive note for manufacturers of patented drugs, according to a GfK HealthCare Asia survey
conducted for the first time in Malaysia in October 2008, pharmaceutical sales representatives remain a
major force in terms of market penetration. The RepOtimiser Study, involving around 350 Malaysian
physicians and over 1,500 companies, found that doctors are receptive to information provided by sales
representatives, with such marketing and promotional investment thus judged to be worth the effort and
money.
The survey, published n May 2009, found that in addition to journals continuing medical education
(CME) is the most popular information source for practicing physicians. Broken down by specialties,
some 90% psychiatrists and 69% of general practitioners report reliance on sales representatives, in
contrast with only 44% of ear-nose-throat (ENT) specialists. Overall, however, around 70% of doctors
use sales representatives to gain up-to-date information on new drugs and diseases in general.
Generic Drug Market Forecast

Government efforts to lower healthcare
Generic Drug Market Forecast
spending, which prompted new
2005-2019
regulations, will stimulate the generics

market, which has so far been growing
1.2
at a very modest pace. Efforts to create
1.0
a genuine generics sector have been
0.8
Malaysia, with branded drugs generally
2018f
2019f
generics are poorly promoted in
0.0
2014f
2015f
2016f
2017f
to produce generic versions. Presently,
0.2
2011f
2012f
2013f
five years is a chance for manufacturers
0.4
2007
2008
2009
2010f
drugs with high sales figures in the next
0.6
2005
2006
patchy, but the expiry of patents on 47
40
35
30
25
20
15
10
5
0
Generic drug market (US$ bn), LHS

Generic drug sales as % o f to tal market, RHS
viewed as superior in quality. The

market was accordingly worth just
MYR1.11bn (US$316mn) in 2009. The

relatively small size of the market in Malaysia gives it a greater potential for growth in the coming years,
however. Indeed, after the OTC market, BMI believes the generics market will post the strongest growth
over the next nine years. BMIs forecast shows a local currency CAGR of 10.34% over 2009-2014,
accelerating to 10.87% over 2009-2019. Generic products, along with OTC products, were the only
categories that did not register a decline in 2009 as generics took a greater share of the total market.
Page 51
Generics are expected to make up 26.4% of the total market in 2010, which will grow y-o-y through to
2019. BMI expects the market to be worth MYR1.24bn (US$381mn) in 2010.
Other growth drivers are the rising quality of generics, cost-containment needs and implementation of the
ASEAN Free Trade Area (AFTA) agreement, with products from signatory countries to be exempt from
import barriers and tariffs. The flow of imports is expected to increase, tightening competition and
pushing local manufacturers to create competitive advantages.
A study published in March 2009 by the School of Pharmaceutical Sciences at the Universiti Sains
Malaysia (USM) indicates that the substitution of branded drugs with generic equivalents has the
potential to substantially reduce healthcare costs. The research states that patients using private hospitals
could slash their bills by between 60 and 90% if they used generics. According to the USM team, up to
80% of all essential drugs marketed in Malaysia have generic equivalents.
A survey conducted by the Universiti Sains Malaysia on community pharmacists perception of generic
substitution published in March 2010 found that attitudes were mostly favourable. As many as 93.6% of
the respondents agreed that pharmacists ought to have generic substitution rights, the survey found. While
96.8% thought that pharmacy-only medicine was the most appropriate drug category for generic
substitution, 51.6% showed a preference for universal substitution for any prescription, Biotech Week
reported. Although the response rate was fairly limited, the survey shows the overwhelmingly favourable
attitudes of community pharmacists in Malaysia towards a generic substitution policy the future, which
could have a positive impact on sales for the sector.
However, doctors are still unwilling to prescribe generics in large amounts, as most are engaged in the
lucrative practice of dispensing patented and branded prescriptions. In addition, the plans to introduce
price ceilings on essential drugs would be negatively reflected in the value of the generics segment.
Nevertheless, through to 2014, generics are expected to grow at a CAGR of 10.34% in local currency
terms, beating the patented as well as the overall market growth, to reach MYR1.82mn (US$522mn) in
value at consumer prices, while also gaining market share at the expense of patented drugs, despite the
formers lower prices. Over our longer, ten-year forecast, generics will maintain most of this momentum,
with their value expected to grow by a CAGR of 9.82%. In 2019, generics are likely to account for over a
third of the total market in terms of value.
Page 52
OTC Medicine Market Forecast

Malaysias OTC market will see the strongest growth of the countrys drugs markets over the 2009-2014
period. The value of the market is expected to record an impressive 10.95% local currency CAGR over
the period, which dips only slightly to 10.36% over BMIs longer 10-year forecast. The value of OTC
products reached an estimated MYR1.17bn (US$332mn) in 2009 (27.2% of the total market) and is
forecast to expand to MYR1.32bn (US$404mn) in 2010.
A steady absolute value growth is
OTC Medicine Market Forecast
attributed to several factors, but mainly
2005-2019
to importance of branding, greater

health awareness among consumers and
1.2
greater willingness to self-medicate.
1.0
Additionally, the expected separation of
0.8
40
35
30
25
20
15
10
5
0
0.6
prescribing and dispensing has the
0.4
potential to improve OTC values and
0.2
volumes beyond the forecast, if and
2018f
2019f
2014f
2015f
2016f
2017f
2011f
2012f
2013f
2005
2006
the market to grow to MYR1.94bn
2007
2008
2009
2010f
0.0
when implemented. By 2014 we expect
OTC medicine market (US$ bn), LHS

OTC medicine sales as % o f to tal market, RHS
(US$557mn) as its share of the total

market edges up to 30.8%.
f = forecast. Source: AC Nielsen, BMI. For data, see Forecast Tables

section below.
In the meantime, the value of herbal

medicines will also increase, supported by the governments backing for R&D in the area of medicinal
plants. Having been worth around MYR300mn (US$82mn) in 2006, the herbal medicines market is likely
to top MYR1bn (US$330mn) at consumer prices by 2013.
Growth in vitamins and dietary supplements and stable demand for cough, cold and allergy remedies,
analgesics and medicated skincare treatments should be among the main contributors to overall growth in
the sector. Digestive remedies will in particular perform strongly over the forecast period, while the
government anti-smoking drive expected to benefit the nicotine replacement segment of OTC medicines.
Additionally, traditional medicines are also expected to make notable gains over the coming years, as the
population seeks to lower its healthcare costs.
Most of the OTC medicines are imported, illustrating future commercial potential for foreign
manufacturers. Vitamins and dietary supplements are an exception, with Malaysia exporting such
products to over 30 countries worldwide, including Singapore, Vietnam, Brunei, Hong Kong, Taiwan,
Japan and Germany, as well as Africa and Central America.
Page 53
The widespread availability of most OTC medications via direct sales, pharmacies, supermarkets or
traditional medicine stalls will continue to encourage self-medication sales. Pharmacists, however, remain
the main source of OTCs, having accounted for some 38% of total pharmaceutical sales in 2004. Their
efforts to increase their revenues will support the future development of the OTC market, although the
segments performance remains vulnerable to economic fluctuations.
Medical Device Market Forecast

By 2014, we expect the value of
Malaysias medical devices market to
Medical Device Market Forecast

2005-2014
have reached MYR3.61bn

(US$1.02bn), growing at a CAGR of
4.2% in local currency terms, which is
considerable, but which falls below the
level of development forecast for the
pharmaceutical spending. Healthcare
modernisation efforts are currently
focused on expanding access to
medicines rather than to expensive
medical diagnostics, which will remain
the case for some years to come.
f = forecast. Source: Ministry of Health (MoH), trade press, BMI.

For data, see Forecast Tables section below.
Although the demand is rising, given

the epidemiological profile in the country, medical devices are expected to account for a sharply falling
percentage of the overall healthcare expenditure over the coming five years. Additionally, the high
percentage of out-of-pocket expenditure as a proportion of total healthcare spending will continue to act
as a brake on the development of medical devices values in Malaysia, where much of the rural population
(especially) has no means of accessing expensive medical services.
In the meantime, the local medical devices industry remains focused on lower-end scale, in terms of
product mix. Although the demand is mostly met through imports, Malaysia does have a significant
export activity in the field of surgical gloves, catheters and similar low-tech devices. Local manufacturing
standards are expected to improve once Malaysia implements a new medical device regulatory authority,
which should harmonise regulations in line with those of other Asian countries. The economic crisis has,
however, thrown a shadow over the shorter term development of the sector, with some smaller
manufacturers folding.
Page 54
Pharmaceutical Trade Forecast

In the 2009-2014 period, the
pharmaceutical export sector is forecast
Pharmaceutical Trade Forecast (US$mn)

2005-2014
to grow at a medium pace (at a CAGR

of 5.62% in US dollar terms, and by a
300
similar rate in local currency, given the
-200
relative stability of exchange rates).
-700
Factors driving growth at a specific

-1,200
pharmaceutical trade level are the
-1,700
modernisation of the local
-2,200
products, an influx of foreign
Expo rts
Impo rts
2014f
2013f
2012f
2011f
2010f
2009f
2008
2007
2006
ability to produce biotechnology-driven
2005
manufacturing industry, increased
B alance
investment in manufacturing units

which are serving both the domestic
market and other key regional markets
f = forecast. Source: International Trade Centre (ITC), United Nations

(UN) Commodity Trade Statistics Database, Malaysian External Trade
Development Organisation (MATRADE), BMI. For data, see Forecast
and ASEAN harmonisation.

Furthermore, although bilateral FTA negotiations with the US appear to have been abandoned partly
because of public pressure, both parties will be aiming to include Malaysia in a multilateral trans-Pacific
agreement. The wider agreement, along with deals with a number of other trade partners are set to
improve export figures, albeit at some risk to local manufacturers if they fail to be competitive. The total
value of pharmaceutical exports should grow to US147.7mn in 2010, reaching US184.9mn by 2014.
However, growth in the value of imports will continue to outpace exports over the forecast period, as
imports will grow at a CAGR of 12%. Imports will be worth US$1.02bn in 2010, taking Malaysias
pharmaceutical deficit to US877mn.
On a broader scale, exports have also benefited from the strong growth in the global economy, especially
in the US, and the further opening of Chinas economy following WTO entry, which led to a drop in
import tariffs from 7.8% in 2003 to 7.2% in 2004. The ongoing elimination of tariffs under the JapanMalaysia Economic Partnership Agreement and the consequent FTA will serve to further boost trade
between the two countries. In January 2009, China authorised Malaysian companies certified by the
Malaysian Ministry of Health to export their products to China, although export performance will suffer
from a demand slowdown in regional and wider global economies.
To boost sales and profit, Malaysian drugmaker CCM Duopharma was looking to export high-value
products to neighbouring countries as of February 2010. Given the relatively limited size and growth of
the company's domestic market, BMI believes this is a sound strategic move. However, we would warn
of competition from larger rivals operating from lower-cost bases.
Page 55
CCM Duopharma intends to construct a 'fill and finish' plant that will package vaccines from bulk form
into small dosage packs. A total capacity of 12mn doses per annum is anticipated and distribution to
Indonesia, Thailand and Vietnam is planned. The attraction of these countries is clear. Last year, sales of
pharmaceuticals in Malaysia, Vietnam, Indonesia and Thailand were US$1.24bn, US$1.53bn, US$2.79bn
and US$3.79bn, respectively. Over the 2009-2014 period, the respective medicine markets' CAGRs will
be 8.21%, 15.77%, 8.17% and 7.41%, according to BMI's Pharmaceutical Expenditure Forecast Model.
Meanwhile, a new deal struck in March 2010 between the Health Ministry and Indias Institute of
Cellular Therapies will see the establishment of a cell culture lab in Malaysia to produce cancer drug
Denvax. This could help the pharmaceutical trade balance as Malaysia currently imports the drug from
India.
By the end of 2006, Malaysia, Singapore, Thailand, Indonesia and Vietnam succeeded in harmonising
their pharmaceutical exports as part of the ASEAN Common Technical Dossiers (ACTD) programme.
The decision to harmonise dossiers eliminated some of the cumbersome bureaucracy that had previously
been responsible for delays in pharmaceutical trade. Other ASEAN members were due to adopt common
standards by the end of 2008.
BMI expects more drugmakers in South East Asia to attain Good Manufacturing Practice (GMP)
accreditation after a major trade agreement was signed in April 2009. Upgrading facilities and processes
will require considerable investment in the short term, but producers of pharmaceuticals will eventually
see a significant upside, both domestically and abroad. This is because consumers, especially those on
those low incomes, will increasingly appreciate the quality of medicines made in the region.
The Sectoral Mutual Recognition Arrangement for GMP Inspection of Manufacturers of Medicinal
Products is designed to remove barriers that impede the trade of pharmaceuticals between ASEAN
member states. A countrys drug regulator will approve a drugmakers plant and this certification will be
accepted by fellow ASEAN states, thereby reducing a duplication of effort. Full implementation is
expected by January 2011.
In addition to adhering to GMP standards, the agreement states that medicine producers must also meet
Pharmaceutical Inspection Co-operation Scheme (PIC/S) guidelines. Conceived by the EU authorities,
PIC/S is proving increasingly popular as it seeks to encourage dialogue between regulatory authorities. As
of November 2009, there were 37 participating agencies.
More than 65% of Malaysias pharmaceuticals and medical equipment are imported (mostly from the US,
Japan and Germany), partly because most doctors are reluctant to switch to local brands as they perceive
imported drugs as being of the higher quality, especially novel and specialist treatments. Most drugs
produced by local companies are basic medicines, such as painkillers and antibiotics, since it is not
Page 56
economically feasible to target a specialised segment. However, there are signs that domestic players
looking to move up the value chain and are investigating advanced therapeutics.
Increasing domestic demand, a significant proportion of which the local manufacturing industry will be
unable to meet, will stimulate the growth of pharmaceutical imports over the next five years. The market
will remain receptive to foreign products, particularly at the hi-tech end of the scale. The overall trade
balance will increasingly shift further in favour of imports throughout the forecast period, indicating
sizeable business opportunities for foreign companies.
Other Healthcare Data Forecasts

The number of private hospitals in Malaysia proliferated in the 1980s, driven by increased affluence of
the countrys population, the demand for better services and the government privatisation programme,
which witnessed a number of state-owned healthcare facilities become for-profit enterprises. The number
of private hospitals is likely to increase over the coming years, as the country attempts to attract foreign
patients, not just from the region but also from further afield. The demand for services will also be driven
by a growing as well as ageing (an increase of 200% is expected in the coming years, putting a strain on
public sector provision) population, although the boost in the private sector is likely to cause further
shortages of both personnel and facilities in the public sphere.
In fact, the country is already facing shortages of certain medical professionals, due to its changing
demographics and epidemiological profile and emigration. To this end, in November 2008, the Malaysian
Minister of Health was quoted by The Star as stating that the country needs at least 200 oncologists as
cancer cases in the country are rising. Presently, official figures indicate that the country has only 39
oncologists for a population of 26mn, which is clearly insufficient. In late 2008, the government unveiled
various initiatives to increase the number of doctors including dentists, pharmacists and specialists in
the country, which include employment of foreigners mainly from Indonesia and India as a temporary
measure.
As of recently, the number of complaints filed against doctors and nurses has been rising, with the
Ministry of Health receiving over 30 such grievances in the first two months of 2009. The Public
Complaints Bureau reports that the complaints are primarily related to a lack of communication skills.
The minister added that to sort out such complaints it will undertake a number of initiatives, including
compulsory communication skills training for medical employees.
Page 57
Key Risks To BMIs Forecast Scenario

While generics play a major part in the Malaysian market, the development of a genuine sector has been
slow. However, the government continues to encourage their use and its perseverance could see a sizeable
increase in the generics market above the level already forecast, especially given the recent legalisation of
parallel trade and the challenging economic situation.
The prescription of generics in the public sector is becoming increasingly popular, indicating a greater
willingness to use low-cost medicines, but it is the changes in the private sector that remain crucial to
market development. In the meantime, the private sector, which favours patented products, as they bring
higher revenues for healthcare providers, would have also felt the pinch of the economic downturn.
Nevertheless, physicians reliance on sales representatives for up-to-date product information bodes well
for market penetration by research-based companies.
Given the notable level of counterfeit pharmaceuticals in the country, the difficulties in applying process
patents, a lack of data exclusivity and an overall poor standard of enforcement of regulations,
multinationals revenues over the forecast period may be lower than predicted for certain products.
Additionally, some companies may reconsider or delay launching products on the Malaysian market,
which would have a further negative effect on the sectors value.
The situation above is likely to improve in a longer term, as Malaysia embraces ASEAN harmonisation
procedures. The standardisation of requirements will also serve to improve Malaysias export potential, as
already witnessed by a surge in exports following Chinas accession into the WTO. Exports should
further benefit from an increase in trade partnership within the region and wider, potentially pushing the
figures above the forecast levels. However, global economic difficulties are already resulting in lower
overall exports from Malaysia, which will threaten forecast export figures, despite the positives brought
about by the nascent biotechnology industrys potential.
Moreover, regional competition, especially from Singapore and China, will hamper Malaysias efforts to
increase pharmaceutical exports. Nevertheless, the recently signed FTA between ASEAN states and
Australia and New Zealand, and the expected FTA agreements with the US and a number of other
countries should boost trade activities somewhat, although the main benefits are likely to be felt in terms
of increased FDI inflows.
Malaysia is presently debating the separation of prescribing and dispensing, with the implementation of
changes likely in the short to medium term, in line with wider Asia Pacific trends. When the change is
actioned, BMI will adjust its prescription and OTC forecasts accordingly.
Page 58
Competitive Landscape
Domestic Pharmaceutical Industry
The local industry remains focused on the production of generics and lower-tech medicines. The local
drug industry is dominated by one company, Pharmaniaga, which controls around 30% of the total
market. In the future, domestic sector development is likely to remain centred on the operations of the
industrys larger producers, as these look to benefit from the onset of ASEAN harmonisation, which has
brought marked growth in the private sector and opened up export markets. The modernisation of the
sector is also likely to see many smaller drug companies disappear as a result of the tightening of
regulations, with the costs of the required upgrading being a major problem.
Pharmaniaga has had a turbulent start to 2010. Following the February release of financial results that
BMI described as 'disappointing', the company's manufacturing licence has been revoked by the
Pharmaceutical Services Division of the Ministry of Health as of March 2010. The firm's majority
shareholder, UEM Group Berhad, has subsequently failed to deny claims that it plans to divest its interest
in Pharmaniaga.
Despite these setbacks, the outlook for Pharmaniaga is positive. According to Edge Malaysia, sources
suggest that the pharmaceutical company has retained its lucrative 10-year concession for the provision of
generic drugs to the Malaysian government. This deal will provide a steady revenue stream and allow
Pharmaniaga to increasingly explore growth strategies such as ramping-up exports to neighbouring
countries and producing higher-value medicines. The revocation of the manufacturing licence followed a
routine audit of Pharmaniaga's Bangi plant. Inspectors found 'a few' non-compliance issues, according to
the firm's managing director, Mohammed Abdullah. He believed that the problems could be rectified
within a week and ministry officials would return 'very soon'. If the facility shutdown exceeds seven days,
customers will be affected, added Abdullah.
Medicine manufacturing accounted for approximately 10% of Pharmaniaga's turnover, or US$38.2mn, in

2009. However, it is the firm's most profitable division. It is BMI's view that a significant delay to the
resumption of production at the Bangi factory will have two main effects. Sales and profitability will drop
due to a lack of products reaching the market. Demand for Pharmaniaga services, such as distribution
activities, will also decline as result of lower stakeholder confidence in the Shah Alam-based firm.
The uncertainty over the future involvement of UEM Group Berhad in Pharmaniaga is a moderate
concern. The drugmakers parent company is in negotiations with several parties to dispose of its entire
86.31% equity stake. UEM Group Berhad has until March 29 to ensure it meets the 'public spread
requirement' a 25% public shareholding in Pharmaniaga. BMI believes a merger between Pharmaniaga
and compatriot drugmaker CCM Duopharma remains a distinct possibility.
Page 59
At the end of 2007, there were approximately 235 GMP-compliant manufacturers in Malaysia licensed by
the DCA, some of which act as sales agents for international pharmaceutical companies. Around 30 are
licensed to manufacture prescription medicines, while the rest produce OTC medicines. Some 140
manufacturers are licensed to produce traditional and herbal medicines, with such products integrated into
the mainstream healthcare system. Malaysian companies market share rose to 20-30% in recent years, in
comparison to the 1995 figures of only 10-15%.
In January 2009, the health ministry of China allowed the importation of medicines from Malaysia that
had been certified by the Malaysian government. Malaysias membership of the Pharmaceutical
Inspection Convention and Pharmaceutical Inspection Co-operation/Scheme (PIC/S) puts local
manufacturers in a good position to export to developed markets.
Foreign Pharmaceutical Industry

Due to their strength in innovative products, multinationals control about 70% of the pharmaceutical
market, especially in terms of innovative and specialised products. All of the major multinational drug
companies are represented in Malaysia, although only a small number have a direct manufacturing
presence, largely as a result of restrictive regulatory practices. Companies with significant local
production facilities are B Braun, GSK, Johnson & Johnson (J&J) and Ranbaxy. Multinationals, which
are primarily represented by the Pharmaceutical Association of Malaysia (PhAMA), are gradually getting
involved in the fields of local biotechnology, clinical trials and bio-equivalence studies, illustrating the
rising market potential as well as an improvement in operating conditions.
Malaysia represents a major and very competitive market for ED treatments, with the condition
affecting estimated 2.2mn men in the country. The main players in the field include US major Eli Lilly,
which launched its ED drug Cialis (tadalafil) in January 2004. German pharmaceutical company Bayer
and GlaxoSmithKline Malaysia (a subsidiary of British GSK) entered the market with the introduction
of Levitra (vardenafil). The drugs also compete directly with Pfizers Viagra (sildenafil). However, the
ED treatments have also been a frequent target of counterfeiting activities.
Other multinationals are also making more concerted efforts to capture higher market shares in Malaysia,
outside the ED segment. German drug giant Schering AG (now part of Bayer), leading Indian drugmaker
Ranbaxy and Belgium-based Agfa have made known their intentions to expand activities in the country,
with the latter planning to create a regional R&D centre in Malaysia, and Ranbaxy intending to establish
its Malaysian operations as a regional manufacturing base. Other companies present through imports
include Swiss Roche, US-based Bristol-Myer Squibb (BMS) and German Boehringer Ingelheim,
which employs around 60 staff in Malaysia. Roche is also active in the diagnostic segment.
Page 60
Aside from the above, recent multinational sector activity in Malaysia has been relatively low key. The
situation reflects the decision of many companies to focus more on other Asian markets, such as China,
Taiwan and Singapore, which offer greater opportunities and more favourable business climates. In the
future, multinational activity is likely to reflect sector modernisation and the proliferation of FTAs, but at
a pace of development slower than, for example, Singapore, which holds greater investment potential and
offers a more favourable regulatory environment. In the current year, market activities will be dictated by
negative economic conditions, which are likely to boost the use of cheaper generic products across the
board.
Pharmaceutical Demand
A survey carried out by the Ministry of Health, which was published in May 2006 and aimed to be the
first independent study of its kind, indicated that the pharmaceutical market is at a comparatively early
stage of development. The research confirms the fundamental role played by older, mainly generic, drugs
and copies. Significantly, sales of the top 40 drugs available in 2004 were only equivalent to around 10%
of the countrys total pharmaceutical market. Furthermore, in all but the most life-saving and inexpensive
drugs for chronic disease such as metformin in diabetes the private market continues to account for
the overwhelming majority of sales. Moreover, the data indicate that true prescription drugs account for a
less substantial share of overall demand than in advanced markets. This is unsurprising in light of the
availability of powerful OTC pharmaceuticals, and the low-cost focus of public sector reimbursement.
Recent Company Activities

!
In February 2010, CCM Duopharma was reportedly looking to export high-value products to
neighbouring countries to boost sales and profit. Given the relatively limited size and growth of the
company's domestic market, BMI believes this is a sound strategic move. However, we would warn of
competition from larger rivals operating from lower-cost bases. CCM Duopharma intends to construct a
'fill and finish' plant that will package vaccines from bulk form into small dosage packs. A total capacity
of 12mn doses per annum is anticipated and distribution to Indonesia, Thailand and Vietnam is planned.
Pakistani generic pharmaceutical company Getz Pharma is planning to invest more than US$45mn in
Malaysia through subsidiary Getz Pharma Malaysia. The company said in May 2010 that it will invest
in R&D, production and commercialisation of sterile injectables and other biopharmaceutical products.
The announcement was made by the Malaysian Biotechnology Corp at the Malaysian Pavilion at the
BIO International Convention.
Australian pharmaceutical company Genepharm announced in April 2010 that it will carry out its
operations under the new name of Ascent Pharmaceuticals, reports Pharmacy News. Ascent
Pharmahealth CEO Dennis Bastas said the company had established the Ascent brand in 2008 when it
Page 61
launched its Australian generic portfolio into Asia. The company said that re-branding will help align its
business more closely with its fast-growing international brand.
!
Thai pharmaceutical company The British Dispensary signed a deal with Chemical Company of
Malaysia (CCM) in March 2010 for developing its manufacturing base and expanding its product range,
reports Business Times. With the MYR50mn (US$15.3mn) collaboration, the Thai company is looking to
include halal-based cosmetic and healthcare products in its existing 18-brand portfolio. The two
companies are capitalising on the ASEAN free trade area to expand their businesses in the region
In August 2009, reinforcing its strong position in Malaysias cardiovascular drug sector, Ranbaxy
launched Covance (losartan), which will be manufactured locally. Given the low cost of the product and
the unmet medical need, BMI expects prescribers uptake of the drug to be rapid. The Drug Control
Authority approved standard (50mg) and high doses (100mg), but not the low dose recommended for
those taking diuretics or with liver problems. In addition to cannibalising sales of the originator product
Merck & Cos Cozaar Covance will gain market share at the expense of Diovan (valsartan), Aprovel
(irbesartan) and Micardis (telmisartan). According to market research firm IMS Health, sales of Cozaar
in Malaysia reached US$6.29mn in the twelve months ending June 2008. In September 2006, Ranbaxy
launched a generic version of atorvastatin under the brand name Storvas in Malaysia. The product a
copy of Pfizers Lipitor was made available to all general practitioners, pharmacies and hospitals in the
country. At that time, Malaysias statin sector was calculated to be valued at MYR100mn (US$27.12mn)
and expanding by 25% a year.
In March 2009, Carotech, a subsidiary of Malaysian drugmaker Hovid, was awarded a certificate of
excellence by the Minister of International Trade and Industry. Carotech was honoured for its export
excellence on a global scale, with the award taking into consideration factors such as market penetration,
product development and reduced usage of imported components. Carotech has sales offices overseas,
namely in the UK and the US.
In April 2009, Indian pharmaceutical company Marck Biosciences, which specialises in sterile dosage
therapeutics, commenced an export of medicines to Malaysia. The move was recently authorised by
Malaysias National Pharmaceutical Control Bureau (NPCB). In the first year of exports, the company is
targeting sales of US$1mn, with a focus on ophthalmic and injectable medicines. Over the longer term,
March has hinted that it would create a local manufacturing base, which would also be used as a regional
export centre.
In March 2009, psoriasis product Raptiva (efalizumab), marketed by Merck Serono, was suspended by
the Malaysian Ministry of Health. The decision was made on the basis of its risks outweighing its
benefits, with the company requested to stop all imports of Raptiva, effective immediately. The product,
Page 62
manufactured in partnership with US firm Genentech, had recently also been voluntarily withdrawn from
both the European and US markets.
!
In March 2009, US-based generics specialist SOHM Inc. revealed that it will expand its distribution to
South East Asia, namely to Malaysia, Thailand, Indonesia and the Philippines. The company is targeting
the rapid development of pharmaceutical demand in those countries. SOHM has manufacturing plants in
the US as well as in India, with the latter likely to be the source of South East Asia distribution network.
In January 2009, Denmark-based global leader in dermatology and critical care Leo Pharma won a court
case against Malaysia generic manufacturer Kotra Pharma. The Malacca High Court ruled that Kotra
infringed Leo Pharmas trademarks Fucidin (fucidic acid) and Fucicort (fucidic acid) by adopting
trademarks Axcel Fusidic and Axcel Fusi-Corte back in 2000. The products are used for the treatment of
skin infections. Consequently, Kotra will be permanently restrained from further infringing Leo Pharmas
trademarks, while it may also need to pay compensation to the Danish company.
Halal Medicine
Halal medicines are highly important to the Malaysian market, given that Islam is the countrys official
religion. Halal is an Arabic term meaning permissible. With respect to pharmaceuticals, it excludes
products derived from blood, animals slaughtered in the name of anyone but God, and swine. As such,
many medicines for example those compounded in capsules with the animal product gelatin cannot be
consumed by many observant Muslims. Pharmaceutical companies have been aware of this niche for
some time, but it is only recently that drugmakers have explicitly targeted this growth area.
Like Pakistan, Malaysia is looking to become the conduit for medicine exports to the Islamic world.
Demonstrating this intent, the countrys Halal Development Corporation (HDC) has agreed to certify as
Halal traditional Chinese medicine manufactured in Ningxia province. Malaysia will then distribute the
products to the consumers globally.
Other companies concentrating on Halal medicines include Chemical Company of Malaysia (CCM),
which has singled out Halal medicines as a key driver of its future growth. BMI strongly endorse this
approach as the firms other divisions fertilisers and chemicals will always return lower margins. To
achieve increased profit, which has been falling in recent years despite booming revenues, CCM is
expanding domestic manufacturing capabilities with a US$17.6mn plant. The factorys annual capacity
will be 1bn tablets of generic drugs and vitamins.
The company is simultaneously ramping up recruitment of agents in markets where the Muslim
population is large, such as in the Middle East. CCM is aggressively registering all of its products in
countries such as Jordan, Syria, Vietnam, Thailand and Indonesia. In addition to all these countries having
significant Muslim populations, the values of the pharmaceutical markets are increasing y-o-y.
Page 63
Chinese firm Shanghai Al-Amin Biotech recently unveiled a comprehensive Halal product range that is
intended for global distribution. Given its low-cost manufacturing base, BMI believes that it has a distinct
advantage over CCM. However, because CCM is headquartered in one of the most orthodox Muslim
states compared to China where the practicing of religion is suppressed Shanghai Al-Amin Biotech
will be frequently operating in unfamiliar territory, limiting its favourable fundamental.
Traditional Medicine
As with many Asian nations, traditional medicines are frequently used in Malaysia, often in tandem with
modern drugs. This is evidenced by the Kepala Batas Hospital in Penang becoming the first healthcare
facility in Malaysia to offer both modern and complementary (herbal preparations, acupuncture and
traditional massage) medicine. If the scheme is successful it will be extended to other hospitals. The
Kepala Batas Hospital will only employ internationally recognised traditional medicine practitioners,
whose degree components comprise 30-40% modern medicine and 60-70% traditional medicine expertise
to enable them to treat patients accordingly.
In March 2007, Malaysian scientists reportedly succeeded in the development of a breakthrough antiviral
dengue fever drug. The product, based on extracts of Artemisia and eight other local herbs, is potentially
the worlds first dengue treatment of its kind. The herbs were supplied to the University Malaya Medical
Centre (UMMC) by Autoimmune Sdn Bhd, as part of an ongoing collaboration between the two.
Page 64
Company Profiles
Leading Indigenous Manufacturers
Pharmaniaga
Strengths
Weaknesses
Opportunities
Threats
Company Overview
!
!
Leading company in the Malaysian market.
!
!
A focus on bioequivalent generics.
!
!
Dependent on one customer, the Ministry of Health, in a 15-year concession agreement.
!
!
!
Little in-house R&D.
!
!
Government support for local drugmakers.
!
!
Overseas expansion through local manufacture, joint ventures and product launches.
The companys growth and performance dependent upon economic conditions in Malaysia
and other countries, particularly Singapore, the Philippines and Vietnam.
Relatively low barriers to entry, which is creating intense competition from new entrants such
as Indias Ranbaxy.
Generic manufacturers competing on price due to weak patent law and wide variety of
generics available, further reducing profit margins.
The governments policy of tariff-free imports of pharmaceutical products.
A trend towards the purchase of branded drugs over low-cost locally manufactured generic
drugs to benefit importers of products from companies based in the US, UK and Germany.
The company may eventually lose its generic supply agreement with the government or see
less favourable conditions in the near term.
Concession agreement with the Ministry of Health via its distribution unit.
The plants customised to meet the US Food and Drugs Administration (FDA) standards and
acquire FDA certification, in a bid to improve it share in the contract manufacturing market.
Product prices potentially considered for revision only once every three years.
Limited geographic diversification.
Sales revenue dropped in 2009.
Expected growth in Malaysias pharmaceutical industry and the biotech sector.

Increasing healthcare costs and consumer awareness boosting demand for cheaper locallymanufactured drugs.
Pharmaniaga Bhd, established in 1998, is Malaysias leading integrated local healthcare

company. The company operates through nine business units: Manufacturing, Marketing,
Logistics, Solutions, Pharmaniaga Research Centre, Pharmaniaga Diagnostics, Pharmaniaga
Biomedical and Esteem Interpoint. The company produces through Raza Manufacturing, while its
distribution unit, Pharmaniaga Logistics Sdn Bhd (formerly known as Remedi Pharmaceuticals)
provides pharmacy management services.
Through Pharmaniaga Logistics, the company supplies around 75% of medicines purchased by
Malaysias public healthcare institutions. The companys contract run out in 2009, but was
extended in December 2009 for a further 10 years, subject to conditions that need to be
negotiated over the course of H109. In the meantime, the previous contracts requirements will
remain operational.
Page 65
Presently, the company has three factories, which churn out more than 400 generic products,
although ideally it is keen to have five or six facilities. The company is estimated to control over a
quarter of the total market.
In late 2005, UEM World, which forms part of the UEM Group, the countrys leading conglomerate
in infrastructure development (including healthcare), completed its general offer to acquire the
remaining 70% of shares of Pharmaniaga. The companys core business involves generic
pharmaceuticals manufacture and supply, R&D, warehousing and distribution of pharmaceutical
and medical products, sales and marketing, hospital equipment, and contract manufacturing for
multinational pharmaceutical companies.
Recent Activities
A massive risk to Pharmaniaga's short-term prospects was the potential failure to retain its
lucrative generic drug supply agreement with the Malaysian government. However, sources now
suggest that the company has managed to retain the contract.
During mid-2008, Malaysian state investment firm Kazanah Nasional Bhd was in talks to sell its
72.5% stake in Pharmaniaga and its 54.6% share of Chemical Company of Malaysia (CCM). A
merger between Pharmaniaga and CCM is a distinct possibility.
In July 2008, Pharmaniaga announced its intention to acquire a manufacturing plant in Indonesia.
To this end, Pharmaniaga has set aside MYR300mn (US$93mn) for the purchase. The news
comes against a backdrop of an expanding Indonesian drug market. Pharmaniaga already has
distribution arm in Indonesia, PT Millennium Pharmacon International, but is keen is produce
locally, thereby eliminating transport costs and import duties.
In September 2007, Pharmaniaga was in talks with the Kazakh government over a deal to supply
medicine and equipment to over 200 hospitals in the country. The majority of Pharmaniagas key
products are antibiotics and the leading Anatomical Therapeutic Chemical (ATC) class in
Kazakhstans hospital sector is J01 Anti-bacterials for Systemic Use, accounting for 22.1% of
purchases.
Pharmaniaga is also preparing to enter the domestic small-volume injectable (SVI) drugs market,
following the construction of a production plant in Puchong, Selangor. The MYR90mn SVI facility
was to become operational by the end of 2009. The plant will produce a new and important
dosage form or drug-delivery method, which will help expand the groups existing product range,
mainly in sterile liquid formulations in vials and ampoules.
In October 2005, Pharmaniaga Pegasus (Seychelles) Co, a wholly-owned subsidiary of
Pharmaniaga, entered into an equity JV agreement with Shanghai Worldbest Treeful
Pharmaceutical Group Company (SWTP) for the production of pharmaceutical products in China.
SWTP is a member of the China Worldbest Group, a government-affiliated company that is
currently one of the largest pharmaceutical manufacturers in China.
The new company, Wuxi Worldbest Pharma Pharmaceutical Company, manufactured largevolume intravenous (LVI) soft bottles and bags at Wuxi Huishan Life Science and Technology
Park in Chinas Jiangsu province. However, escalating costs and less than acceptable sales been
attributed to changes in Chinas regulatory environment and maturation of distribution channels
forced the Malaysian company to pull out of China in mid-2007.
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Product Portfolio
Pharmaniaga manufactures about 280 generic products. Under a concession agreement valid for
the 1994-2010 period, the company supplies and distributes pharmaceutical and medical
products to government hospitals. It manufactures about 16% of all drugs supplied to the
Malaysian Ministry of Health. The company is a buying agent of the Ministry of Health, and
sources about 80% of the drugs from third-party suppliers. It also has an estimated 30% market
share in the supply of pharmaceuticals to hospitals.
At present, it is estimated that the SVI market for the government sector alone is worth some
MYR119mn a year. The company has a 15-year government concession that ends in December
2009. The ratio of government to private sector contracts currently stands at 56:44, compared to
61:39 in March 2005.
Currently, the markets local SVI leader is Duopharma Biotech, which is also a contract
manufacturer for over 30 of Pharmaniagas products. However, it is unclear at this stage whether
Duopharma will remain as Pharmaniagas manufacturer in the future.
The firm registered seven new products in 2005, with three bioequivalent generics approved in
the year. The company has 50 products registered in international markets. In the course of 2009,
the company was planning to launch a total of 14 new products.
Key Competitors
The company is mainly in competition with local producers. The pending ASEAN harmonisation
and other regulatory changes and improvements will push the local industry to increase its
competitiveness, with Pharmaniaga consequently feeling more pressure.
Regional Operations
Pharmaniaga states that it wants to become a regional player, but it is only additionally present in
Indonesia and Vietnam. Since these countries have impressive five-year CAGRs for
pharmaceutical sales (+8.2% and +15.8% respectively), the company is clearly not exploiting the
opportunities on offer.
Currently accounting for 25% of total sales, exports are key to Pharmaniagas future. The
drugmaker has already entered markets with very low barriers to entry, such as neighbouring
countries at the early emerging stage (for example, Papua New Guinea and Myanmar) and those
with nascent regulations (several countries in Africa). Now it is looking at the larger markets of
South East Asia, the prosperous Middle East and some other Organisation of the Islamic
Conference (OIC) member countries. Regionally, the company has 38 sites, in Indonesia and
Vietnam, in addition to its home market.
The companys most significant foreign enterprise is its 55% stake in Indonesian pharmaceuticals
distributor PT Millenium Pharmacon International. Purchased for US$3.2mn in 2004 from
Indonesias PT Tigamitra Multikarya, the acquisition gives it control of a unit that controls 2% of
Indonesias promising pharmaceutical market. The distributor has 14 principals and 24 branches
and controls 2% of the Indonesian market.
A small-scale Thai venture, worth only MYR54mn (US$14.21mn) over five years, will replicate the
companys IT systems for a hospital group. Meanwhile, the company is to begin a drug supply
chain JV in South Africa with equal partners Procon Fischer and Corpafrica.
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Financial Performance The company expected MYR1.8bn in sales, in 2009 boosted by the rising demand for generic
drugs. By 2013, it is hoping to become a US$1bn company. Pharmaniaga released disappointing
2009 financial results, however. Sales and profit before tax both decreased compared with the
previous year. In the twelve months ending December 31 2009, Pharmaniaga posted sales of
MYR1.301bn (US$382mn), a 0.5% decrease compared with the previous year's figure of
MYR1.306bn (US$384mn). The 10% decline in profit before tax to MYR81mn (US$24mn) was
mainly attributed to lower gross profit. Q409 financial results were indicative of the whole year.
Sales decreased from MYR328mn (US$96mn) in the same period of 2008 to MYR324mn
(US$95mn) in Q409 a drop of 1%, mainly due to lower sales from its Indonesian operation.
Profit before tax increase by 12% to MYR28mn (US$8mn). However, had the divestment of two
plots of lands for MYR7mn (US$2mn) been excluded from the income statement, a loss would
have been recorded for the quarter.
In Q309, Pharmaniaga posted a 5% revenue increase, to MYR333mn, due to improvements in
sales by its Indonesian subsidiary (up by 15.1%), as well as the 9.3% increase in its concession
sales. Year-to-date revenues stood at MYR976.9mn, stable on the same period of 2008, but profit
contracted by 18.4%, to MYR53.9mn, as a result of lower gross profit margins.
In Q308, the company posted a 6.1% decrease in its revenue, to MYR314.29mn. Its net profit was
down by over 50%, to MYR10.59mn. For the full-year 2008 however, Pharmaniaga forecasts
MYR1.4bn in revenues, up from MYR1.18bn in the previous year. It posted MYR1.31bn, up by
10.3% y-o-y.
Pharmaniaga was expecting three of its core businesses pharmaceuticals, health logistics and
medical equipment to experience double-digit growth in 2007. Total sales were in the region of
US$347mn, up from around US$310mn in the previous year.
Pharmaniaga incurred an impairment loss of MYR21.5mn (US$6.3mn) from its Chinese
operations. Consequently, in 2006, Pharmaniagas net profit dropped more than 100% to
MYR14mn (US$4.1mn), despite a 13% increase in revenue to MYR100mn (US$29.5mn).
Leading Products
Company Address
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Bromocriptine
Pharmaniaga Bhd , 7 Lorong Keluli 1B

Kaw. Perindustrian Bukit Raja Selatan, PO Box 2030
Pusat Business Bukit Raja, 40800 Shah Alam, Selangor Darul Ehsan Malaysia
!
!
!
Tel: +60 (3) 3342 9999
Ticlopidine
Clarithromycin
Salbutamol
Citrex
Fax: +60 (3) 3341 7777

www.pharmaniaga.com
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Prime Pharmaceutical
Strengths
Weaknesses
Opportunities
Threats
Company Overview
Presence in both the prescription and the OTC sector.
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Strong manufacturing and distribution network.
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Competition from other local manufacturers.
Government programme for developing the pharmaceutical and biotechnology sectors in the
country.
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Expected increase in regional drug consumption.
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Widespread counterfeit industry.
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Involved in contract manufacturing.
Pressure on the government to reverse policies biased towards the local industry.
Increasing demand for compliance with international IP standards.
Rising demand for and encouragement of the generics sector.

Strong growth in both the generics and OTC markets over next nine years.
Increased competitiveness of local players driven by ASEAN harmonisation and other

regulatory developments.
Potentially detrimental impact of an FTA with the US.
Prime Pharmaceutical Products Sdn Bhd, established in 1988, is one of the more prominent local
manufacturers of pharmaceuticals. The company produces, markets and distributes a variety of
pharmaceutical products as well as traditional herbal preparations and health foods. Prime
Pharmaceutical Products also deals in vitamins.
Prime Pharmaceutical Products is one of the regular suppliers and distributors of medicines to
government hospitals as well as private healthcare facilities, including pharmacies. The company
has a factory in Bukit Tengah Industrial Park, which conforms to international GMP standards.
Prime Pharmaceutical Products is also involved in contract manufacturing.
Product Portfolio
The companys product range includes the following: analgesics (including paracetamol and
acetylsalicyclic acid), anti-asthmatics, anti-histamines, corticosteroids, gastrointestinal
preparations, cough and cold remedies, anti-biotics, anti-fungals and dermatologicals (such as
hydrocortisone), among a few other therapeutic areas.
Company Address
Prime Pharmaceutical Products Sdn Bhd, 1505 Lorong Perusahaan Utama 1

Taman Perindustrian Bucket TengahndaBukit Mertajam, Penang, Malaysia
Tel: +60 (4) 507 4787
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!
Fax: + 60 (4) 507 1862

www.primepharma.com.my
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Bumimedic
Strengths
Weaknesses
Opportunities
Threats
Company Overview
Presence in both the prescription and the OTC sector.
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country.
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Strong growth expected in the generics and OTC markets over next nine years.
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Backed by a large local healthcare group.

Involved in contract manufacturing.
Rising demand for and encouragement of the generics sector.

ABI Bumimedic (Malaysia) Sdn Bhd is a subsidiary of privately owned Antah HealthCare Group,
which is controlled by one of the royal families of Malaysia. Bumimedic is one of the largest
healthcare companies in Malaysia, dealing prescription and OTC pharmaceuticals, medical
equipment and consumable supplies for hospitals, medical centres, clinics and pharmacies.
The Antah Group distributes medicines and medical equipment to government, private and
university hospitals, laboratories, health centres, state medical stores, GPs and retail pharmacies.
Rising demand and strong marketing will support growth of the Group and its Bumimedic arm.
Recent Activities
In early 2006, US-based Amarillo Biosciences (ABI) entered into a distribution agreement with
Bumimedic Malaysia. The Malaysian firm, which markets Amarillos low-dose interferon,
manufactures lozenges from ABIs bulk natural human interferon supplied by Hayashibara
Biochemical Laboratories, and distribute them to local hospitals, clinics and pharmacies.
Product Portfolio
Bumimedics factory, which complies with international GMP standards, manufactures over 300
products in the form of tablets, capsules, liquids and ointments. The company supplies local and
overseas customers, and it is engaged in contract manufacturing. At present, Bumimedic is
engaged in the creation of another manufacturing site as a JV.
Company Address
ABI Bumimedic Antah Pharma Sdn Bhd3 Jalan 19/1 Petaling Jaya
46300 Selango,Malaysia
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!
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Tel: +60 (4) 7956 7677

Fax: +60 (4) 7955 2007
www.ahcg.com.my/companies_bme.htm
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Hovid
Strengths
Weaknesses
Opportunities
Threats
Company Overview
One of the leading local drug producers and exporters.
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country.
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Expected increase in local and regional drug consumption.
Demand for Malaysian pharmaceutical exports is forecast to grow over next four years.
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Potentially detrimental impact of the pending FTA with the US.
Involvement in the herbal supplements business.

Considerable in-house R&D.
Already present in a number of African and Middle Eastern countries, which are expected to
continue their steady development.

Hovid (formerly Ho Yan Hor) was established in 1945 as the manufacturer of herbal tea. In the
1980s, the company began engaging in pharmaceutical production. At present, Hovid is also
involved in the manufacture of herbal and dietary supplements, teas and tocotreienols. Hovid is
the leading exporter in Malaysia and one of the largest GMP-certified pharmaceutical companies
in the country.
The company was responsible for the construction of the first gelatine encapsulation plant in the
country, as well as the first film-coated analgesic manufacture and the development of the first
ampitab in dispersable tablet form. More recently, Hovid became the first global company to
succeed in the processing and extracting carotenes and vitamin E from palm oil.
Hovid also deals in drug delivery systems, nanotechnology research (into liposomes and
polymeric nanoparticles). Its clinical trials are conducted both nationally and internationally, in
collaboration with Japanese and US universities, among others.
Hovid also owns local biotechnology firm Carotech, which is the leading supplier of phytonutrients
and biodiesel products.
Recent Activities
At the start of January 2008, Hovid purchased a controlling stake in Indian Biodeal
Pharmaceuticals. Hovid chose India because of the more relaxed patent laws and lower labour
costs, which will allow it to place cheaper generics on the Malaysian market. The transaction will
provide Hovid with a 100% increase of its production capacity for the manufacture of tablets and
capsules, although regulatory delays mean that Biodeal will only be used for the production of
Hovids products from 2010.
In September 2009, the company announced that it would consider acquisitions of foreign firms,
as part of its expansion programme. By the end of 2010, Hovid plans to extend its sales network
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to between three and five new countries, with a focus on Africa (particularly western parts) and the
Middle East. Currently, Hovid is active in South Africa, Sudan and Jordan, among other countries
in the two regions of interest.
Product Portfolio
Hovids portfolio contains in excess of 350 different kinds of pharmaceutical products, mostly
branded generics. Other products include health supplements, injectable products and herbal
medicines. Some 100 products are prescription drugs, with a focus on antibiotics, anti-diabetics,
anti-hypertensives, anti-malarials and anti-inflammatory analgesics. The company holds over 700
marketing authorisations worldwide, launching on average 12 new products per year. The
company currently holds the right to 12 global patents.
Carotech is the only Malaysian company with a GMP certificate for the manufacturing of fullspectrum tocotrienol complex (Tocomin), natural mixed carotenoids (Caromin), phytosterol
complex (Stelessterol) and high quality refined and molecularly distilled palm methyl ester
(CaroDiesel) from virgin crude palm oil. Carotech exports a significant proportion of its CaroDiesel
output.
In October 2009, the companys Carotech unit initiated human clinical trials on tocotrienols,
namely the patented and bioenchanced palm complex. The product Tocomin SupraBio will be
evaluated for its neuroprotective and anti-atherogenic abilities. The 400-people trial is funded by
the Ministry of Science and the Malaysian Palm Oil Board.
Regional Operations
Hovid is already present in several countries, particularly in Asia. Outside Malaysia, its largest
market is Nigeria, with annual sales there exceeding MYR16mn (US$4.6mn).
In January 2007, Hovid signed a distribution agreement with William & Friends Pharmaceuticals
(Thailand) covering 30 products. It hopes to realise annual sales of MYR7mn (US$2mn) in
Thailand.
The company is increasingly focusing on foreign markets, with offices in Singapore, Hong Kong
and the Philippines, while planning to set up subsidiaries in Vietnam and India. Hovid has also
earmarked China for future expansion.
Financial Performance In 2007, the company posted around US$54mn in revenue, up by 31% on the previous year.
Hovid revealed that its efficiency drive had succeeded in increasing its margin on pharmaceutical
products from 4% to 18%. In FY08 (ending June), Hovid reported MYR214.7mn in revenue, and
MYR15.3bn in net profit.
For H209 (ending December), the company posted a loss of MYR5.89mn, as compared to the
MYR8.44mn profit in H208, as European demand for carotene and other products decelerated. In
FY09, Hovid posted MYR0.5mn in net profit, including MYR15.6mn in unrealised forex losses at
Carotech, due to a weakening ringgit in relation to US dollar. For the year, core net profit was
MYR16mn excluding the forex loss down by 40% on the forecast, which was attributed to
higher depreciation charges and interest expenditure.
In March 2009, Hovid indicated that it is aiming for a 50% revenue increase during 2009. The
company recently completed the construction of its second Carotech plant in Lumut, which will
increase its production capacity to 120,000 tonnes per annum and underpin this growth.
Page 72
Leading Products
Company Address
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Amoxicap (amoxycillin)
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Doxycap (doxycycline)
Hovid Bhd, 121, Jalan Kuala Kangsar

30010 Ipoh, Perak, Malaysia
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Tel: +60 (5) 506 0690
Clamovid (co-amoxiclav)
Ho Yan Hor (herbal tea)
Quicklean (anti-bacterial hand gel)
Fax: +60 (5) 506 1215

www.hovid.com
Page 73
Chemical Company of Malaysia (CCM)

Strengths
Weaknesses
Opportunities
Threats
Company Overview
One of the leading local chemical and pharmaceutical producers.
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Diverse business portfolio.
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Government programme for developing pharmaceutical and biotechnology sectors.
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Involvement in the herbal supplements business.

Local leader in small volume injectables.
Strong OTC portfolio.
Leading generics player in the country.
Exploiting ASEAN free trade area.
Growth in profit in 2009.
Focus on halal medicine, which is in demand in the Islamic world.

Rising demand for OTCs.
Recent launch of anti-flu medicines Omniflu, with demand increased following the onset of
swine influenza.

Chemical Company of Malaysia (CCM) was established in 1930. The company was listed as a
public company in 1966, initially as a subsidiary of UK-based ICI PLC and now as a Malaysian
owned corporation. The company is focused on chemical products and applications, fertilisers and
pharmaceuticals and healthcare products and services. It has four divisions, namely CCM
Chemicals, CCM Fertilizers, CCM Pharmaceuticals and CCM Duopharma Biotech.
Launches of new products will be fuelled by a new 63,000 sq foot research and development
facility that cost MYR10.0mn (US$2.7mn) to build. The firm also intends to spend MYR2mn
(US$550,000) on advanced analytical equipment in 2009 to facilitate the testing of pipeline
products. Through to 2015, a total of 35 new generic drugs will be introduced to the marketplace.
The company already exports its products to a number of regional markets, including Vietnam, the
Philippines, Singapore and Hong Kong, as well as to Pakistan, Yemen, Sudan and Bangladesh.
CCM is also planning to increase its overseas promotional activities, targeting a figure of 40% of
total sales for exports by 2010, up from 30% presently.
Recent Activities
In March 2010, Thai pharmaceutical company The British Dispensary signed a deal with CCM for
developing its manufacturing base and expanding its product range, Business Times reported.
With the MYR50mn (US$15.3mn) collaboration, the Thai company is looking to include halalbased cosmetic and healthcare products in its existing 18-brand portfolio. The two companies are
capitalising on the ASEAN free trade area to expand their businesses in the region.
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In November 2009, CCMs Duopharma arm and Inno Biologics agreed to develop a version of
erythropoietin (EPO) for the treatment of cancer-related anaemia, thus entering the high-potential
biosimilars field. Inno Biologics will supply bulk EPO to CCM Duopharma, which will finish the
product and market it to healthcare specialists. Inno Biologics and CCM Duopharma estimate their
version of EPO will reduce the governments expenditure on EPO by 40%.
In April 2009, CCM inaugurated its new US$2.8mn research and development centre in Malaysia.
The Innovax 63,000 sq ft site will be used for the manufacture of new and innovative generic
drugs. Innovax will be the largest facility of its kind in the country, with CCM planning an additional
US$562,000 investment in the course of 2010.
Around the same time, the company won two government contracts. The MYR20mn deal will
mean that CCM will supply the government with an HIV drug (SLN 30) and methadone over the
next two years. The company is also in the process of setting up a manufacturing base for inert
vaccines fill and finish, which would be the first such venture in ASEAN.
In June 2007, the company singled out Halal medicines as a key driver of its future growth. CCM
is ramping up recruitment of agents in markets where the Muslim population is large, such as in
the Middle East. CCM is aggressively registering all of its products in countries such as Jordan,
Syria, Vietnam, Thailand and Indonesia. In addition to all these countries having significant
Muslim populations, the values of the pharmaceutical markets are increasing y-o-y.
In April 2007, CCM revealed that was set to strengthen its position in the OTC market through the
acquisition of Malayan Pharmaceuticals brands and assets for MYR22mn (US$6.4mn). Malayan
is involved in the OTC sector and owns established brands such as Chewies childrens chewable
vitamins, Milidon analgesics, Cosmos dietary supplements and Cosmoplast plasters and
dressings. CCMs acquisition of Malayan Pharmaceuticals brands would enrich CCMs OTC
product pipeline and enable the company to leverage the combined strengths of both companies.
Product Portfolio
CCM Pharmaceuticals is the largest local manufacturer of generics. Its portfolio consists of over
280 products, including anti-histamines, anti-biotics and expectorants. The division is also the
leading producer of OTCs, with key brands being Champs, Proviton and Uphamol.
CCM is the largest producer of generic drugs in Malaysia, currently holding a 21% share.
According to the pharmaceuticals division director, the company plans to increase this share to at
least 23% over the next twelve months.
In 2007, the consumer health division extended its portfolio to include Chewies (childrens
chewable vitamins), Milidon (paracetamol) and Cosmos dietary supplements, following the
Groups acquisition of Malayan Pharmaceuticals brands and assets.
CCM Duopharma Biotech manufactures oral preparations, sterile injectables, haemodialysis and
sterile irrigation solution. The division is the leading local manufacturer of sophisticated and
specialised small volume injectables.
CCM Duopharma is raising its profile in the traditionally low-margin vaccine sector. The company
is spending MYR7mn (US$2mn) on a vaccine fill and finish facility in Klang, Selangor. In H209,
the company launched Omiflu, a generic version of Tamiflu (oseltamivir), for the treatment of
influenza virus.
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Financial Performance CCM had a challenging 2009. In Q309, the firm posted sales of MYR404mn (US$118mn), a 4.7%
decrease compared with the previous quarter. Encouragingly, CCM returned to profit in Q309,
after posting a net loss of MYR439,000 (US$129,000) in Q2.
Meanwhile, CCM Duopharma Biotech (CCMD) registered an 8% y-o-y increase in profit before tax
to MYR38.21mn (US$11.21mn) in 2009, compared with MYR35.34mn (US$10.37mn) in 2008. In
the same period, the company also recorded a slight increase in revenue to MYR123.77mn
(US$36.32mn) from MYR122.87mn (US$36.05mn) in 2008. CCMD's pre-tax profit jumped 138.4%
y-o-y to MYR8.61mn (US$2.53mn) in Q409, compared with MYR3.61mn (US$1.06mn) in Q408.
Company Address
Chemical Company of Malaysia

13th floor, Menara PNB
201-A Jalan Tun Razak
50400 Kuala Lumpur Malaysia
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Tel: +60 (3) 2612 3888

Fax: +60 (3) 2691 9901
www.ccm.com.my
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Kotra Pharma
Strengths
Weaknesses
Opportunities
Threats
Company Overview
One of the leading local drug producers.
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Strong OTC portfolio.
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country.
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Lawsuit filed against the company in May 2010.
Ability to expand its manufacturing capacity.

Comprehensive and expanding marketing network.
Product portfolio mainly focused on OTCs.

Rising prominence of Chinese drugmakers, which can compete on price.
Kotra is a wholly-owned subsidiary of Kotra Industries Berhad. The company is mainly engaged in
the development, manufacture and sales of pharmaceutical and healthcare products.
The company had modest beginnings, initially being a family-run enterprise specialising in
traditional Chinese medicine, before evolving into the distribution of pharmaceutical products. In
2002, when Malaysia was admitted as member country for Pharmaceutical Inspection Convention
Scheme, Kotra was selected to be audited for the quality inspection of its facilities. One year later,
the company was awarded the internationally recognised ISO 9001 accreditation for the Quality
Manufacture, Design and Development of pharmaceutical products.
Recent Activities
In May 2010, it was reported that Takaso Rubber Products had taken legal action against Kotra
Pharma for allegedly failing to pay for goods. The company said that it intends to file a
counterclaim.
In July 2007, Kotra Pharma unveiled a five-year plan that focuses on exports, initially to
neighbouring ASEAN countries (Thailand and the Philippines in particular), but ultimately to the
lucrative markets of Western Europe and the US. To achieve this goal, the company intends to
expand production capabilities, increase R&D investment, attract world-class talent and enlarge
its product portfolio.
Currently, just over a third of Kotras business comes from overseas sales to countries such as
Indonesia, Singapore, Brunei, Vietnam, Cambodia, Myanmar, Hong Kong, Mauritius and Sri
Lanka. Mid-way through the firms five-year plan, Kotras exports should exceed domestic sales.
Kotra is currently constructing a MYR120mn (US$35.3mn) plant in Melaka, which is a
manufacturing centre for products ranging from food and consumer products, through high-tech
Page 77
weaponry and automotive components, to electronic and computer parts. Phase 1 of the
2
35,000m production facility is scheduled to be finished in 2009, and total completion is expected
in 2012. At full capacity, the new plant will have ten times the current output of Kotras
manufacturing lines.
Demonstrating its commitment to R&D, the company upped its research expenditure from
MYR1mn (US$293,900) to MYR6.4mn (US$1.9mn) for the fiscal year ended June 30 2008.
In January 2009, Danish Leo Pharma won a court case against Malaysia generic manufacturer
Kotra Pharma. The Malacca High Court ruled that Kotra infringed Leo Pharmas trademarks
Fucidin (fucidic acid) and Fucicort (fucidic acid) by adopting trademarks Axcel Fusidic and Axcel
Fusi-Corte back in 2000. The products are used for the treatment of skin infections.
Product Portfolio
Kotra has 163 products currently registered with the National Pharmaceutical Controls Board, with
OTCs accounting for the bulk of the portfolio and branded generics increasing in importance. In
FY09, the companys prescription medicines range grew by 19% in relation to the previous
financial year, on the back of new product launches, which include antifungal Axcel Ecozalon
cream, psoriasis and dermatitis cream and ointment Axcel Clobetasol and osteoarthritis treatment
Axcel Glucosamine.
Kotras Appeton health supplement range is the firms flagship franchise, accounting for 61% of
sales over the last five years. In FY09, Appetons share of the market for childrens vitamin C
increased from 48% to 55%, as reported by ACNielsen. Kotra is also aiming to strengthen its
penetration of the adult multivitamin market, with efforts that include the recent introduction of
Appeton Wellness 60+.
Kotra Pharmas total annual production at its main factory includes sterile and non-sterile items. In
the sterile range, the company manufactures 2mn eyedrops and 2mn ampoules, 1.5mn of each
powder vials and dry syrups and 3mn liquid vials. In the non-sterile range, it produces around
528mn tablets, 139mn capsules, 38mn liquid bottles, and 15mn tubes of cream.
Financial Performance In 2007, the company achieved an estimated MYR83mn in sales. Its net profit reached MYR2bn
in Q307, down from MYR2.75bn in the previous quarter. In FY09, group revenues were
MYR90mn, up by 3.8% y-o-y, with pre-tax profit reaching MYR9mn, an increase of 17% y-o-y, on
the back of stronger domestic sales and exchange gains due to rising US exports. Overall
exports, however, fell from MYR32.3mn in 2008 to MYR31.1mn in 2009.
Company Address
Kotra Pharma, 1 Jalan TTC 12

Cheng Industrial Estate, 75250 Melaka, Malaysia
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Tel: +60 (6) 336 2222

Fax: +60 (6) 336 6122
www.kotrapharma.com
Page 78
Multinational Companies
GlaxoSmithKline (GSK)
Strengths
Weaknesses
Opportunities
Threats
Company Overview
One of the few multinationals drugmakers with a direct manufacturing presence in Malaysia,
enjoying the benefits available to local producers.
Strong product portfolio covering a wide range of therapeutic areas and the highest market share
amongst multinationals.
!
!
Diverse local manufacturing portfolio in Malaysia.
Malaysias weak domestic patent law and benefits granted to local generic-based pharmaceutical
companies.
!
!
!
!
Sizeable drug copying and counterfeiting sector.
Expected increase in local and regional drug consumption, driven by demographic and economic
changes.
Increase in consumption of patented medicines supported by ASEAN harmonisation effort and

pharmaceutical sector modernisation.
!
!
!
Governments focus on developing the countrys biotechnology sector.
Government resistance to aligning domestic patent law fully with internationally acceptable
standards.
!
!
!
Government failure to revise its discriminatory pricing policy.
Involvement in the ED market.
Biased drug pricing policy adopted by the government.

Lack of patent protection for GSKs anti-AIDS drugs.
The company sees potential for strong growth in Asia.

Malaysia may join multilateral trans-Pacific trade agreement with the US.
Competition from other multinationals wishing to expand its local base.

Companys Avandia drug has been attacked for apparent heart risk links.
GSK Malaysia was incorporated in 1958 under the name Glaxo Malaysia Sdn Bhd. The incorporations
of Beecham Products (Far East) Sdn Bhd and Sterling Drug (Malaysia) Sdn Bhd followed in 1959 and
1962, respectively.
Due to the merger between SmithKline Beckman Corp (USA) and Beecham Group PLC (UK) in 1989,
the name changed to SmithKline Beecham Consumer Brands Sdn Bhd. In 1992, the company moved
to new premises in Bangsar Utama. Glaxo and Wellcome merged to form Glaxo Wellcome in 1995. In
December 2000, Glaxo Wellcome and SmithKline Beecham merged to form GSK.
Currently, the company has around 600 employees. Its Malaysian manufacturing operations export to
Singapore, Hong Kong, Thailand, China, the Philippines and Indonesia. GSK Consumer Healthcare is a
fully-owned subsidiary in Malaysia.
In fact, Malaysia is home to one of GSKs 24 consumer healthcare manufacturing sites. The facility
produces OTC medicines for the domestic market as well as Singapore and Taiwan. Production costs
exceed MYR40mn (US$12mn) per annum. The sites annual output includes 800mn tablets, 400 tonnes
of powder and 150,000kg of cream. Demonstrating its importance, GSKs consumer healthcare
manufacturing in Taiwan, Thailand and Venezuela is to be transferred to Malaysia.
Page 79
Recent Activities
In March 2010 the DCA asked the GSK to amend prescription information for its diabetes drug
Avandia. The US Senate had previously suggested that GSK had known of Avandias heart risk
links for some years before it had become widely known, which the company denies. The DCAs
request was officially made on the back of 33 adverse effect reports received by the Health
Ministry.
In October 2009, GSK announced that it is to spend MYR60mn (US$18mn) to upgrade its global
IT facility in Petaling Jaya, Selangor. Funds will be used to raise the headcount from 130 to 250
over six months. Malaysia was chosen as the site for the global IT facility because of its
computer-literate, English-speaking workforce. The plant in Petaling Jaya receives tax breaks due
to its MSC (formerly known as the Multimedia Super Corridor) status.
In February 2009, the Public Health Medicine Specialist Association of Malaysia began a yearlong study into the financial burden of cervical cancer, which is supported by GSK Malaysia. The
research will assess current costs of treating and managing human papilloma virus (HPV)-related
cervical cancer, as well as assess the viability of HPV vaccinations on a national basis. Presently,
cervical cancer is the second most common type of cancer among women, resulting in some 750
deaths per annum.
In February 2004, the Malaysian government abolished the patent rights on two of GSKs antiAIDS drugs (zidovudine and the combination therapy lamivudine). Instead, a two-year compulsory
licence was issued to Indias Cipla for the export and supply of generic versions of the drugs to
state-run or public hospitals in Malaysia under fixed ceiling prices.
Product Portfolio
GSKs manufacturing portfolio in Malaysia is diverse. The company produces a variety of ethical
pharmaceuticals, consumer healthcare products and vaccines. In addition, GSK also distributes a range
of OTC medicines, including Eno, Eye-Mo, Oxy, Panadol, Scotts and Zentel, along with its oral
healthcare products and a range of nutritional health drinks. The company has a distribution agreement
with Diethelm Holdings (Malaysia), one of the countrys largest distribution concerns. GSKs main nonprescription brands include Horlicks, Ribena, Panadol, Scotts Emulsion, Menara Lien Hoe Eye-Mo,
Eno, Oxy and Aquafresh.
The companys local subsidiary sells a range of other prescription drugs, such as antibiotics, antiasthmatics, anti-diabetics, anti-virals, anti-migraine treatments as well as vaccines for hepatitis A and B,
varicella, meningitis, polio and diphtheria. GSKs anti-AIDS drugs, zidovudine and the combination
therapy lamivudine, continue to suffer from lack of patent protection.
In mid-2009, the price of some of GSKs drugs in select Asian countries had been cut. Its breakthrough
cervical cancer vaccine, Cervarix, is now cheaper in Thailand and Malaysia. In some Asian countries,
the firm will combine price cuts on its branded drugs with the introduction of more low-cost generic
medicines. To achieve this goal, GSK has entered into an agreement with Dr Reddys, with the regions
that will be targeted including Africa, the Middle East, Asia Pacific and Latin America.
In February 2009, GSKs avian influenza vaccine Prepandrix was approved in Malaysia, which became
the first country outside Europe to do so. The company announced that it is working closely with local
authorities in order to prepare for a possible pandemic.
Page 80
In 2004, GSK and Germanys Bayer launched Levitra (vardenafil) on the Malaysian market, marking the
last of the big three ED drugs to be commercialised in the country. Panadol ActiFast was also
launched early in the same year, boosting revenue growth.
Research &
GSK formed a vaccines joint venture with Neptunus Bioengineering in November 2008. Total
Development
investment in Shenzen GSK-Neptunus Biologicals exceeded US$140mn.
Key Competitors
In the ED market, GSK competes directly with Pfizer and Eli Lilly. Local manufacturers and parallel
imports compete with its branded products. Other multinational-produced brands will continue to
challenge GSK in its four main areas of expertise, namely anti-infectives, CNS, respiratory and gastrointestinal/metabolic medication, in which GSK has emerged as a leader.
Regional Operations
GSK has a strong regional network of operations, comprising both manufacturing and sales and
marketing operations. In South East Asia, the company has offices in Vietnam, Thailand, Singapore,
the Philippines, Cambodia, Indonesia and Myanmar.
It was announced in July 2008 that GSK planned to double its R&D capabilities in China. At that time,
the company employed 170 research staff and planned to boost the number to 200 by the end of 2008,
and to 350 over 2009-2010.
Financial Performance Despite the challenging economic scenario, combined sales of consumer health products and
prescription drugs recorded by GSK in Malaysia were MYR600mn (US$178mn) in 2008. Revenue
generated by prescription drugs and consumer health products increased by 6% and 10%, respectively.
GSK expects to match its competitors in Malaysias prescription drug sector during 2010 by posting
sales growth of 6-8% through the launch of new drugs and increased promotion of established
products. Francis Del Val, VP and managing director of GSK Pharmaceutical Malaysia, Singapore and
Brunei, says demand for prescription medicines is growing in Malaysia, on the back of the increasing
prevalence of chronic diseases, such as obesity, heart conditions and diabetes.
Leading Products
Company Address
!
!
!
!
!
Panadol (paracetamol)
GlaxoSmithKine Malaysia Sdn Bhd7th & 8th Floor

Menara Lien Hoe ,47410 Petaling Jaya
Selangor Malaysia
!
!
!
Tel: +60 (3) 7806 5911
Tel: +60 (3) 7491 2020
Levitra (vardenafil)
Seretide (fluticasone propionate + salmeterol)
Avandia (rosiglitazone)
Paxil (paroxetine)
Fax: +60 (3) 7806 5912
www.gsk.com.my
Glaxo SmithKine Consumer Healthcare & Global Manufacturing Supply, Lot 89, Jalan Enggang ,
Ampang/Ulu Kelang Industrial Estate
54 200 Selangor , Malaysia
Fax: +60 (3) 4253 2111
Page 81
Pfizer
Strengths
Weaknesses
Opportunities
Threats
!
!
!
Largest pharmaceutical company in the world.
Broad portfolio of products including antibiotics, vitamins and OTC pharmaceuticals,

consumer and healthcare products.
Weak domestic patent law and benefits granted to local generic-based pharmaceutical
companies.
!
!
!
The biased drug-pricing policy adopted by the Malaysian government.
Drug consumption expected to increase.
!
!
!
The Malaysian governments focus on developing the countrys biotechnology sector likely to
result in improved investment opportunities, a favourable business environment and a costeffective R&D proposition.
standards.
!
!
Significant presence of the counterfeit drug industry.
!
!
Company Overview
One of leading providers of ED medicines.

Financial capability, business portfolio and industry experience to exploit the Malaysian
pharmaceutical market.
No direct manufacturing presence.

Plans to launch 15 new products by the end of 2009.

The ASEAN harmonisation effort and pharmaceutical sector modernisation increasing the
demand for patented products in the country.
Key ED product Viagra particularly susceptible to competition, of both genuine and fake
nature.
Strong competition from other multinationals.
In Asia, Pfizer was incorporated as a private limited company in Singapore in 1964. The company
began its operations modestly, selling only a few products. The Malaysian operation was set up
as a subsidiary of the Singapore-registered company and became a fully registered company in
1978. Today, the company has a strong presence in Malaysia, with around 400 staff, most of who
are engaged in sales operation across ten offices. In 2009, Pfizer acquired compatriot Wyeth,
which also operates in Malaysia through imports via a local office.
Recent Activities
Pfizer is investing heavily in the Malaysian market, including the expansion of existing
manufacturing assets and the establishment of a new R&D centre. The company hoped to launch
15 new medicines by 2009.
In 2005, Pfizer voluntarily withdrew Bextra (valdecoxib) from the Malaysian market, following
global warnings of adverse side effects. Bextra, which was registered as a total of five products
since 2003, was indicated for short-term treatment of post-operative pain. The withdrawal of the
product had a short-term negative effect on the companys image and sales of the related
products.
Page 82
Product Portfolio
Pfizer Malaysia markets a wide range of pharmaceuticals and therapeutic products, ranging from
vitamin supplements and nutritionals, to antibiotics and cardiovascular therapies.
The companys portfolio of products includes cardiovascular, neuroscience, infectious diseases,
arthritis/pain, urology, ophthalmology, oncology and respiratory disease. Pfizers key products
include Aromasin (exemestane), Celebrex, Detrusitol (tolteridine), Diflucan, Lipitor, Neurontin,
Norvasc, Viagra, Xalatan (latanoprost), and Zoloft.
Damaging the companys bottom line, counterfeits are a problem in the region. In September
2007, Pfizer Malaysia reported that there were illegal imitations of Aricept (donepezil), Celebrex,
Diflucan, Feldene (piroxicam), Lipitor, Norvasc, Ponstan (mefenamic acid), Zoloft and Viagra
circulating in Asia.
In August 2007, Sutent (sunitinib) was launched in Malaysia for kidney cancer and gastrointestinal
stromal tumour.
Key Competitors
Pfizer will continue to be challenged by other multinationals, on the one hand, and by local
producers, on the other, with Indian Ranbaxy also entering the fray with the 2006 launch of
generic Lipitor Storvas. Its direct competitors in the ED market in Malaysia are GSK/Bayer and
Eli Lilly.
Leading Products
Company Address
!
!
!
!
!
!
Celebrex (celecoxib)
!
!
Neurontin (gabapentin)
Pfizer Malaysia Sdn Bhd, 3rd & 4th Floor

Bangunan Palm Grove,No. 14 Jalan Glenmarie (Persiaran Kerjaya)
Section U1 ,40150 Shah Alam ,Selangor Darul Ehsan, Malaysia
!
!
!
Tel: +60 (3) 5568 6688
Lipitor (atorvastatin)
Diflucan (fluconazole)
Viagra (sildenafil citrate)
Sutent (sunitinib)
Zoloft (sertraline)
Norvasc (amlodipine)
Fax: +60 (3) 5568 6600

www.pfizer.com.my
Page 83
Novartis
Strengths
Weaknesses
Opportunities
Threats
Company Overview
Diverse manufacturing presence, including a broad portfolio of antibiotics, vitamins and OTC
pharmaceuticals, consumer and healthcare products.
Solid financial capability, business portfolio and industry experience.
Presence in the generics sector.
Weak domestic patent law and benefits granted to local generic-based pharmaceutical
companies.
Low purchasing power of much of the population, exacerbated by high out-of-pocket

contribution to pharmaceutical expenditure.
!
!
Biased drug-pricing policy adopted by the Malaysian government.
!
!
Increasing health awareness in the Asian region, which will boost overall drug consumption.
ASEAN harmonisation effort and pharmaceutical sector modernisation boosting demand for
patented products.
!
!
standards.
!
!
Significant counterfeit drug industry.
Potential to expand in the fast-growing generics market.
Government failure to revise its discriminatory pricing policy likely to limit company
expansion, both in terms of activity and investment.
Novartis was established in Malaysia following the merger of Sandoz and Ciba-Geigy in 1997.
The company comprises Pharmaceuticals, Consumer Health, Ciba Vision and a generics sector,
with more than 100 staff employed around the country.
Novartis is among the 10 leading pharmaceutical companies in Malaysia. The companys
groundbreaking approach to the industry has seen it expanding into generics, in contrast with
global peers such as Pfizer and GSK, which remain focused on high-profit, patented blockbuster
pharmaceutical products. The progressive ageing of the population is increasing the need for
medicines, as well as the need to restrain healthcare costs, and as such, generics are likely to
continue to penetrate the market.
Recent Activities
Novartis has expressed interest in locating research centres and conducting clinical trials in
Malaysia, thereby boosting the countrys ambitions to become a biotech rival to Singapore or
Taiwan. Novartis may also invest in Malaysias biotechnology industry, and is evaluating
Malaysias rich biodiversity with the aim of producing novel treatments.
In November 2009 Novartis signed an agreement with BiotechCorp and Sarawak Biodiversity
Centre in order to discover bioactive compounds. Novartis director Alexander Jetzer-Chung said
that the agreement enables the company to leverage capitalise on the countrys biodiversity in the
development of new medical opportunities, Pharmaceutical Business Review reported.
CIBA Vision, the eye care business of Novartis, invested MYR500mn (US$132.45mn) to build an
integrated contact-lens manufacturing plant in Malaysia. The plant, at Johors Tanjung Pelepas
Page 84
Free Trade Zone, was operational by December 2007. The facility now produces one of the most
technologically advanced high-oxygen transmissible products, O2OPTIX contact lenses. These
breathable contact lenses are made from a silicone hygrogel Lotrafilcon b the latest material
used in contact-lens technology.
Initial production capacity was expected to reach 300,000 contact lenses a day, with output rising
to 500,000 lenses per day by 2008. Investment in the project will be spread over eight years, with
the plant creating 2,000-3,000 jobs in the later stages of operation.
Product Portfolio
The company has a broad portfolio of products, including medicines in transplantation and
immunology, cardiovascular diseases, diseases of the central nervous system, Parkinsons
disease, skin allergies, OTC and ophthalmic medications.
With regard to central nervous system disorders, recent introductions include an
acetylcholinesterase inhibitor for Alzheimers disease and a COMT-inhibitor for Parkinsons
disease.
In the field of transplantation, the companys cyclosporin microemulsion is the worlds most
prescribed product, and is regarded as the gold-standard immuno-suppressant.
In the case of oncology, Gleevec (imatinib) is the first of a new generation of highly selective anticancer drugs for chronic myelogenous leukaemia. The company produces Femara (letrozole) as
a first-line therapy for advanced breast cancer in post-menopausal women.
Key Competitors
Novartis is present in both branded and generics sectors in Malaysia and therefore faces
competition from both multinational and local producers. Globally speaking, its generics sales
represent some 15% of total business (up from 11% in 2004), while consumer healthcare
accounts for around one-quarter of the total.
Regional Operations
Novartis has a considerable presence in Asia, and particularly in China, Hong Kong, Indonesia,
South Korea and Japan.
Leading Products
Company Address
!
!
!
Tegrital (carbamazepine)
Novartis Corporation (Malaysia) Sdn Bhd, Lot 9 Jalan 26/1

Seksyen 26 Kawansan Perindustrian Hicom ,40400 Shah Alam, Malaysia
!
!
!
Tel: +60 (3) 5192 6666
Exelon (rivastigmine)
Lopresor (metoprolol tartrate)
Fax: +60 (3) 5191 6514

www.my.novartis.com
Page 85
Merck & Co
Strengths
Weaknesses
Opportunities
Threats
Company Overview
!
!
!
!
Strong portfolio of prescription pharmaceuticals.
Malaysias weak domestic patent law and benefits granted to local generic-based
pharmaceutical companies.
!
!
Biased drug-pricing policy adopted by the Malaysian government.
!
!
Significant contribution of out-of-pocket expenditure to overall drug spending.
!
!
Increasing health awareness in the Asian region, which will boost overall drug consumption.
!
!
!
!
standards.
!
!
Significant threat from the counterfeit drug industry.
!
!
Strong competition from other multinationals.
Strong regional presence.

A leading multinationals, with extensive network in South East Asia.
Presence in the vaccines segment.
Lack of local manufacturing capacities.

ASEAN harmonisation effort and pharmaceutical sector modernisation boosting demand for
patented products.
Rising demand for treatments of chronic conditions.
Prescription drug market is set to grow y-o-y through to 2019.
Failure to revise discriminatory pricing policy likely to limit company expansion, both in terms
of activity and investment.
Threat posed by generic companies targeting off-patent medicines.
Merck & Co operates in Malaysia, as well as other countries in the region, through Merck Sharpe
& Dohme (MSD) Asia Pacific. The Malaysian sales and marketing section, established in 1997,
employs over 240 people.
Product Portfolio
MSD Malaysia markets and sells a variety of prescription pharmaceuticals in the country. Main
product areas include osteoporosis, asthma, cardiovascular and cancer drugs.
The performance of its cardiovascular product Coozar (losartan) in Malaysia is under threat,
following Ranbaxys launch of a branded generic competitor in August 2009. According to market
research firm IMS Health, Malaysian sales of Cozaar topped US$6.29mn in the 12 months ending
June 2008.
Key Competitors
Multinationals represent the main challenges to Mercks Malaysian operations. Additionally, the
counterfeit industry and lax patent protection continue to disadvantage some of its patented
products performance. Mercks products that are coming off-patent are facing generic
competitors.
Page 86
Regional Operations
MSD Asia Pacific division is a considerable commercial force in the region. The company is
involved both in local manufacturing and marketing initiatives, with the regional focus being on
Japan, the leading Asian market.
Leading Products
Company Address
!
!
Fosamax (alendronate)
Merck Sharpe & Dohme Malaysia, Level 15-15A

Menara Merais, No 1 Jalan 19/3 ,46300 Petaling Jaya Selangor, Malaysia
Tel: +60 (3) 7955 0707
!
!
Fax: +60 (3) 7957 8363
Zocor (simvastatin)
www.msd-malaysia.com
Page 87
Sanofi-Aventis
Strengths
Weaknesses
Opportunities
Threats
Company Overview
!
!
!
Third-largest drug manufacturer in the world.
Malaysias weak domestic patent law and benefits granted to local generic-based
pharmaceutical companies.
Biased drug-pricing policy adopted by the Malaysian government having a negative impact
on the market conditions for the company and restricting its market growth potential.
!
!
!
!
Drug consumption in the Asian region due to rise from increasing health awareness.
!
!
Drugs market is set to expand y-o-y through to 2019.
Countrys significant counterfeit drug industry.
Continued government resistance to aligning domestic patent laws with international

standards.
!
!
!
Among the leading foreign producers in Malaysia.

Broad portfolio of products, including antibiotics, vitamins and OTC pharmaceuticals.
Potential to expand its presence in the expanding generics market.

The ASEAN harmonisation effort and pharmaceutical sector modernisation.
The Malaysian governments focus on developing the countrys biotechnology sector
improving investment opportunities, and providing a favourable business environment for the
company, and a cost-effective R&D proposition.
Focus on cost-containment in public healthcare.

Competition from other generics player in the country and region.
Following the merger with Aventis in 2004, the integration and reorganisation of the companys
assets will take some time. In the meantime, the company is represented in Malaysia by both
Aventis and Sanofi-Synthlabo subsidiaries. Sanofi-Synthlabo (Malaysia) was formerly known as
Sanofi (Malaysia). The company was incorporated in March 1987, employing more than 100 staff.
Product Portfolio
Sanofi-Aventis majors in a number of key therapeutic areas, including diabetes,

cardiovascular/thrombosis, central nervous system, oncology and internal medicine.Leading
brands include Plavix, Aprovel, Epilim (sodium valproate), Lactacyd (lactoserum atomizate),
Eloxatin (oxaliplatin), Rhinathiol (carbocisteine), Phenergan (promethazine), Stilnox, Ticlid
(ticlopidine) and Tramal. Aprovel is one of the brands facing generic competition, in the shape of
Ranbaxys Covance.
Regional Operations
Sanofi-Aventis boasts a considerable regional market presence. Its Japanese operations include
a number of licensing deals with local companies. Given the epidemiological profile of the region,
Sanofi-Aventis is also highly present through vaccines.
Leading Products
!
!
Plavix (clopidogrel)
!
!
Stilnox (zolpidem)
Aprovel (irbesartan)
Tramal (tramadol)
Page 88
Company Address
Sanofi-Synthelabo (Malaysia) Sdn Bhd

8th Floor PNB Damansara, No. 19, Lorong Dungun
Damansara Heights,50490 Kuala Lumpur, Malaysia
!
!
!
Tel: +60 (3) 2089 3333

Fax: +60 (3) 2089 3338
www.sanofi-synthelabo.com.my
Page 89
Ranbaxy Malaysia
Strengths
Weaknesses
Opportunities
Threats
Company Overview
!
!
!
Strong generic portfolio and local production facilities.
!
!
!
!
Relatively recent entry to the Malaysian market.
country.
!
!
!
!
Continued encouragement of the generics sector.
!
!
Rising prominence of China and other regional suppliers of cheaper generic medicines.
Nascent global generic player.

Ability to expand through acquisition.
Competition from government-supported local producers.

Government policies biased towards the local industry.
The company has seen sales contract in Asia in Q110.
Higher level of patient awareness of cost containment.

Malaysias drugs market is set to expand y-o-y through to 2019.

Ranbaxy Malaysia is a joint venture established in 1984 by Indias Ranbaxy Laboratories Limited
(RLL), and has shareholders from India as well as Malaysia. In 2006, Ranbaxy held around 4.5%
of the ethical market in Malaysia, according to IMS Health data.
The company manufactures pharmaceutical products for oral use comprising liquid formulations,
tablets, capsules and granules for suspension. In 1987, the company established a manufacturing
unit in Sungai Petani, Kedah, to supply markets in Malaysia and Singapore.
Recent Activities
In August 2009, reinforcing its strong position in Malaysias cardiovascular drug sector, Ranbaxy
launched Covance (losartan), which will be manufactured locally. Given the low cost of the
product and the unmet medical need, prescribers uptake of the drug should be rapid.
In September 2006, Ranbaxy Malaysia launched a generic version of atorvastatin under the
brand name Storvas. The product a copy of Pfizers Lipitor will be made available to all
general practitioners, pharmacies and hospitals in the country. The company is targeting the fastgrowing statins market in the country, presently estimated to be worth around MYR100mn
(US$27.12mn) and rising by 25% a year. Ranbaxy already holds a leadership in the
cardiovascular drugs segment through its brand Cascor XL (ditiazen HCL), although its two top
products in the country are antibiotics Enhancin (co-amoxyclav) and Vercef (cefaclor).
A few months prior to that, Ranbaxy Malaysia launched the first generic oseltamivir (the active
ingredient in Roches anti-flu drug Tamiflu) in the field of infectious disease. Malaysia has been
stepping up its efforts to contain avian flu, with the government announcing that it would provide
enough anti-influenza drugs to cover 30% of the population.
Page 90
Product Portfolio
Ranbaxys portfolio contains around 80 brands, including those managed through local
partnerships. Ranbaxy Malaysias top 10 brands account for around two-fifths of total sales.
Ranbaxy has a presence in the therapeutic segments of cardiovascular, antibiotic, pain
management, gastrointestinal and food supplements. Its second manufacturing facility in Kuala
Lumpur (which is compliant with international standards) manufactures antibiotics, anti-bacterials,
NSAIDS, vitamins, cough and cold remedies, antacids, anti-spasmodics, anti-fungals, antiulcerants and cardiovasculars. The company is the only foreign manufacturer of ARVs in
Malaysia.
Regional Operations
Regionally Ranbaxy also has business in China, Thailand, Vietnam, Myanmar, Australia and New
Zealand.
Ranbaxy Malaysia has sales and marketing agreements with foreign firms such as Schwarz
Pharma and Desitin in Germany, Pharmascience in Canada, Penwest Pharmaceuticals in the US,
Knoll and Ajanta pharmaceuticals in India, and Almirall Prodesfarma in Spain, to cater to the
markets in Malaysia, Singapore and Brunei.
Financial Performance In 2008, the company posted US$25mn in sales from its Malaysian operations. Of this figure,
88% was accounted for by sales in Malaysia itself, with the remainder sourced from regional
exports (mainly to Singapore).
Leading Products
Company Address
!
!
!
Enhancin (co-amoxyclav)
Ranbaxy (Malaysia) Sdn. Bhd.,Box 8

th
Wisma Selangor Dredging ,5 Floor South Block
142-A Jalan Ampang, 50450 Kuala Lumpur, Malaysia
!
!
!
Tel: +60 (3) 2161 4181
Storvas (atorvastatin)
Vercef (cefaclor)
Fax: +60 (3) 2162 7593

www.ranbaxy.com
Page 91
Eli Lilly Malaysia

Strengths
Weaknesses
Opportunities
Threats
Company Overview
!
!
!
One of leading multinationals in the world.
!
!
!
!
No local manufacturing base.
country.
!
!
!
Relatively favourable environment for novel treatments.
!
!
Rising prominence of China and other regional suppliers of cheaper generic medicines.
Strong patented product portfolio.

Involvement in the ED market.
Competition from government-supported local producers as well as other multinationals.

Government policies biased towards the local industry.


Eli Lilly Malaysia is a local marketing arm of the US-based major. In 2004, the company launched
an ED treatment Cialis (tadalafil), which captured a 35% of the market by the end of the same
year. Other products include anti-biotic Mandol (cephalosporin) and Evista (raloxifene
hydrochloride), indicated for the prevention of non-traumatic vertebral fractures in postmenopausal women at increased risk of osteoporosis.
Regional Operations
Eli Lilly is active in most leading Asian markets, largely through imports. The company has also
created a Clinical Pharmacology Centre at the National University of Singapore and carries out
over 15 drug trials a year.
Key Competitors
In the ED field, Eli Lilly is competing with two other leading multinationals, namely Pfizer (with
Viagra) and GSK (with Levitra). In the wider prescription market, multinationals again are its main
competitors.
Company Address
Eli Lilly Sdn BhdSuite 7/4, 7th Floor Menara Cold Storate Section
1746100 Jalan Semangat, Malaysia
!
!
!
Tel: +60 (3) 7955 1286

Fax: +60 (3) 7957 9144
www.lilly.com
Page 92
Country Snapshot: Malaysia Demographic Data

Section 1: Population
Population by age, 2005:2030 (total)
Population by age, 2005

75+
75+
70-74
70-74
65-69
65-69
60-64
60-64
55-59
55-59
50-54
50-54
45-49
45-49
40-44
40-44
35-39
35-39
30-34
30-34
25-29
25-29
20-24
20-24
15-19
15-19
10-14
10-14
5-9
5-9
0-4
0-4
-1.5
-1.0
-0.5
0.0
Male
0.5
1.0
1.5
-3.0
-2.0
Female
-1.0
0.0
2030
1.0
2.0
3.0
2005
Figures in millions. Source: UN Population Division
Table: Demographic Indicators, 2005-2030
2005
2010f
2020f
2030f
Dependent population, % of total
36.9
34.3
32.5
32.2
Dependent population, total, 000
9,473
9,526
10,408
11,371
Active population, % of total
63.0
65.6
67.5
67.7
Active population, total, 000
16,132
18,175
21,612
23,898
Youth population*, % of total
32.3
29.3
25.3
21.7
Youth population*, total, 000
8,291
8,135
8,130
7686
Pensionable population, % of total
4.6
5.0
7.1
10.4
Pensionable population, total, 000
1,182
1,391
2,278
3,685
f = forecast. * Youth = under 15. Source: UN Population Division
Page 93
Table: Rural/Urban Breakdown, 2005-2030
2005
2010f
2020f
2030f
Urban population, % of total
65.1
68.2
78.5
82.2
Rural population, % of total
34.9
31.8
21.5
17.8
Urban population, total, 000
16,494
18,781
25130
28994
Rural population, total, 000
8,854
8,751
6889
6276
25,348
27,532
32,019
35,270
Total population, 000
f = forecast. Source: UN Population Division
Section 2: Education And Healthcare

Table: Education, 2000-2003
2000/01
2002/03
100
93
Gross enrolment, secondary
69
70
Gross enrolment, tertiary
23
29
Adult literacy, male, %
92.0
na
Adult literacy, female, %
85.4
na
Gross enrolment, primary
na = not available. Gross enrolment is the number of pupils enrolled in a given level of education regardless of age
expressed as a percentage of the population in the theoretical age group for that level of education. Source: UNESCO
Table: Vital Statistics, 2005-2030
Life expectancy at birth, males (years)

Life expectancy at birth, females (years)
2005
2010f
2020f
2030f
70.80
71.9
73.8
75.3
75.5
76.5
78.5
80.0
f = forecast Life expectancy estimated at 2005. Source: UNESCO
Page 94
BMI Methodology
How We Generate Our Pharmaceutical Industry Forecasts
Pharmaceutical sub-sector forecasts are generated using a top-down approach from BMIs Drug
Expenditure Forecast Model. The semi-automated tool incorporates historic trends, macroeconomic
variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market.
The following elements are fed into the model:
!
BMIs historic pharmaceutical market data, which has been collected from a range of sources including:
regulatory agencies;
pharmaceutical trade associations;
company press releases and annual reports;
subscription information providers;
local news sources;
information from market research firms that is in the public domain.
Data that has been validated by BMIs pharmaceutical and healthcare analysts using a composite
approach, which scores data sources by reliability in order to ensure accuracy and consistency of historic
data.
Five key macroeconomic and demographic variables, which have been demonstrated, through regression
analysis, to have the greatest influence on the pharmaceutical market. These have been forecast by BMIs
Country Risk analysts using an in-house econometric model.
The burden of disease in a country. This is forecast in disability-adjusted life years (DALYs) using BMIs
Burden of Disease Database, which is based on the World Health Organizations burden of disease
projections and incorporates World Bank and IMF data.
Subjective input and validation by BMIs pharmaceutical and healthcare analysts to take into account key
events that have affected the pharmaceutical market in the recent past or that are expected to have an
impact on the countrys pharmaceutical market over the next five years. These may include
policy/reimbursement decisions, new product launches or increased competition from generics.
Page 95
Pharmaceutical Business Environment Ratings Methodology

Our approach in assessing the Pharmaceutical Business Environment Ratings is threefold. First, we have
defined the risks rated to capture the operational dangers to companies operating in this industry. Second,
we attempt where possible to identify objective indicators that may serve as proxies for issues/trends.
Finally, we use BMIs proprietary Country Risk Ratings (CRR) to ensure only the aspects most relevant
to the industry are included. Overall, the system, which is integrated with all the industries covered by
BMI, offers an industry-leading insight into the prospects/risks for companies across the globe.
Ratings Overview
Ratings System
Conceptually, the new ratings system divides into two distinct areas:
Limits of potential returns: Evaluation of sectors size and growth potential in each state, and also broader
industry/state characteristics that may inhibit its development.
Risks to realisation of those returns: Evaluation of industry-specific dangers and those emanating from
the states political/economic profile that call into question the likelihood of anticipated returns being
realised over the assessed time period.
Indicators
The following indicators have been used. Overall, the rating uses three subjectively measured indicators,
and 41 separate indicators/datasets.
Page 96
Table: Pharmaceutical Business Environment Indicators
Indicator
Rationale
Limits to potential returns

Market structure
Market expenditure, US$bn
Market expenditure per capita, US$
Sector value growth, % y-o-y
Denotes breadth of pharmaceutical market. Large markets score higher than

smaller ones
Denotes depth of pharmaceutical market. High value markets score better than
low value ones
Denotes sector dynamism. Scores based on annual average growth over five-year
forecast period
Country structure
Urban-rural split
Pensionable population, % of total
Population growth, 2003-2015
Urbanisation is used as a proxy for development of medical facilities.

Predominantly rural therefore states score lower
Proportion of the population over 65 years of age. States with aging populations
tend to have higher per-capita expenditure
Fast-growing states suggest better long-term trend growth for all industries
Overall score for country structure is also affected by the coverage of the power transmission network across the state
Risks to potential returns
Market risks
Intellectual property (IP) laws
Markets with fair and enforced IP regulations score higher than those with
endemic counterfeiting
Policy/reimbursements
Markets with full and equitable access to modern medicines score higher than
those with minimal state support for healthcare
Approvals process
High scores awarded to markets with a swift appraisal system. Those that are
weighted in favour of local industry or are corrupt score lower
Country risk
Economic structure
Policy continuity
Bureaucracy
Legal framework
Corruption
Rating from CRR evaluates the structural balance of the economy, noting issues
such as reliance on single sectors for exports/growth, and past economic volatility
Rating from CRR evaluates the risk of a sharp change in the broad direction of
government policy
Rating from CRR denotes ease of conducting business in the state
Rating from CRR denotes the strength of legal institutions in each state. Security
of investment can be a key risk in some emerging markets
Rating from CRR denotes the risk of additional illegal costs/possibility of opacity in
tendering/business operations affecting companies ability to compete
Source: BMI
Page 97
Weighting
Given the number of indicators/datasets used, it would be wholly inappropriate to give all subcomponents equal weight. Consequently, the following weight has been adopted.
Table: Weighting Of Components
Component
Weighting
Limits of potential returns
60%
Pharmaceutical market
75%
Country structure
25%
Risks to realisation of potential returns
40%
Market risks
60%
Country risk
40%
Source: BMI
Sources
Sources used include national industry associations, government ministries, global health organisations,
officially-released pharmaceutical company results and international and national news agencies.
Page 98
0.61
0.60
35.14
3.42
0.93
2006
44.04
0.58
0.57
4.06
1.22
2008
39.13
3.64
1.06
2007
0.62
43.07
4.29
1.22
2009
Health expenditure (% GDP)
44.77
Public sector health expenditure (%)
45.22
45.22
3.02
251.49
4.27
24.48
6.69
2006
44.00
44.00
3.59
299.70
4.35
27.88
8.15
2007
43.00
43.00
4.02
337.53
4.45
31.13
9.35
2008
0.62
49.89
4.70
1.44
2010f
9.00
42.00
42.00
3.78
317.86
4.55
31.66
0.63
53.10
5.46
1.59
2012f
2009
0.63
53.81
5.08
1.59
2011f

18.40
4.50
Births per 000 population
Deaths per 000 population
4.50
18.00
0.91
64.14
1.06
408.00
2006
4.40
17.60
0.87
66.14
1.05
412.00
2007
4.40
17.30
0.86
68.23
1.04
416.00
2008
4.40
17.00
0.88
70.40
1.03
420.00
2009
16.60
4.30
4.30
0.89
74.34
1.04
426.00
16.80
0.88
72.19
1.06
423.00
2010f
2011f
40.00
41.00
4.79
406.08
4.75
40.00
f = forecast. Source: Department of Statistics Malaysia, World Health Organization (WHO), Ministry of Health (MoH), BMI
0.85
62.07
1.07
404.00
Doctors per 000 population
Hospital admissions per 000 population
Beds per 000 population
Hospitals
2005
Table: Malaysia Other Healthcare Indicators, Historical Data and Forecasts
11.98
38.33
0.62
61.99
6.72
1.96
2015f
2011f
0.62
58.14
6.29
1.81
2014f
41.00
4.42
372.80
4.65
35.12
10.77
2010f
0.62
54.56
5.87
1.66
2013f
f = forecast. Source: Department of Statistics Malaysia, World Health Organization (WHO), Ministry of Health (MoH), BMI
44.77
2.57
Public sector health expenditure (%)
Public sector health expenditure (US$bn)
219.60
4.15
Health expenditure (MYRbn)
Health expenditure per capita (US$)
5.73
21.72
Health expenditure (US$bn)
2005
Table: Malaysia Health Expenditure Indicators, Historical Data and Forecasts
f= forecast. Source: IMS Health Asia, AC Nielsen, BMI research
Drug market expenditure as % GDP
32.02
3.17
Drug market expenditure (MYRbn)
Per capita drug market expenditure (US$)
0.84
Drug market expenditure (US$bn)
2005
Table: Malaysia Drug Expenditure Indicators, Historical Data and Forecasts
4.30
16.40
0.89
74.69
1.04
427.00
2012f
39.00
39.00
4.78
408.69
4.85
42.05
12.26
2012f
0.61
65.94
7.18
2.12
2016f
4.30
16.20
0.90
76.24
1.04
428.00
2013f
38.50
38.50
5.04
429.59
4.90
46.25
13.10
0.60
75.91
8.09
2.53
2018f
2013f
0.61
71.13
7.63
2.33
2017f
4.20
16.00
0.90
77.49
1.03
429.00
2014f
38.00
38.00
5.53
468.33
5.00
50.69
14.57
2014f
0.60
78.65
8.51
2.66
2019f
Page 99
59.35
Blood and blood forming organ drug sales
24.61
16.53
67.83
60.24
30.93
87.78
Systemic hormonal preparation, excluding

sex hormones and insulins, sales
Anti-infective for systemic use sales
Antineoplastic and immunomodulating agent

sales
Musculoskeletal system drug sales
Nervous system drug sales
f = forecast. Source: IMS Health Asia, BMI
9.23
10.26
Sensory organ drug sales
Various drug sales
49.53
Respiratory system drug sales
0.77
15.30
Dermatological drug sales
Genito-urinary system and sex hormone

sales
Antiparasitic product, insecticide and repellent sales
66.53
81.38
75.32
75.13
91.90
74.70
2.72
0.80
2007
72.80
3.12
0.89
2009
84.30
83.85
103.11 102.56
73.11
2.97
0.89
2008
71.21
3.62
1.13
2011f
70.49
3.85
1.12
2012f
69.81
4.10
1.16
2013f
69.17
4.35
1.25
2014f
98.08 106.83 106.12 109.79
118.20
119.96 130.67 129.79 134.28 144.57
71.98
3.38
1.04
2010f
10.35
11.50
55.52
0.86
98.40
34.67
67.53
76.04
18.53
27.59
17.15
43.93
85.57
96.35
23.48
34.95
21.73
43.69
85.11
95.83
23.36
34.77
21.62
29.76
44.29
27.54
29.56
44.00
27.36
30.58
45.52
28.30
32.92
49.01
30.47
51.11
55.67
55.30
99.55 108.44 107.72
57.21
111.44
61.59
119.98
112.09 122.10 121.28 125.48 135.09
27.32
40.66
25.28
11.69
12.99
62.70
0.97
13.11
14.58
70.35
1.09
13.04
14.50
69.98
1.08
15.26
16.96
81.85
1.27
16.62
18.47
89.15
1.38
16.51
18.35
88.56
1.37
17.08
18.98
91.62
1.42
18.39
20.44
98.64
1.53
111.12 124.68 124.01 145.06 158.00 156.95 162.38 174.82
39.15
76.26
85.87
20.93
31.15
19.37
123.05 137.94 155.77 174.78 173.85 203.34 221.49 220.02 227.63 245.06
72.59
Alimentary tract and metabolism
Cardiovascular system drug sales
75.13
Prescription drug market as % total market
0.70
0.63
2.38
Prescription drug market (US$bn)
Prescription drug market (MYRbn)
2.58
2006
2005
Table: Malaysia Prescription Market Indicators, Historical Data And Forecasts (US$mn unless otherwise stated)
68.02
4.88
1.44
2016f
68.58
4.61
1.34
2015f
67.51
5.15
1.57
2017f
67.03
5.42
1.69
2018f
66.60
5.67
1.77
2019f
Page 100
332.68
Nervous system drug sales
34.99
Various drug sales
37.88
42.11
203.21
3.14
360.15
126.89
247.18
278.31
67.82
100.96
62.77
504.87
243.52
297.84
2006
39.97
44.43
214.43
3.32
380.03
133.89
260.82
293.67
71.57
106.54
66.24
532.74
256.96
314.28
2007
50.83
1.61
Patented products (MYRbn)
Patented market as % total market
0.42
Patented products (US$bn)
2005
50.72
1.74
0.47
2006
49.90
1.82
0.53
2007
48.11
1.95
0.59
2008
46.90
2.01
0.57
2009
Table: Malaysia Patented Drug Market Indicators, Historical Data and Forecasts
38.90
187.72
Sensory organ drug sales
Respiratory system drug sales
2.90
117.21
Musculoskeletal system drug sales
Antiparasitic product, insecticide and repellent sales
228.32
Antineoplastic and immunomodulating agent

sales
62.65
Systemic hormonal preparation, excluding

sex hormones and insulins, sales
257.08
93.26
Anti-infective for systemic use sales
57.98
466.36
Cardiovascular system drug sales
Genito-urinary system and sex hormone

sales
224.94
Blood and blood forming organ drug sales
Dermatological drug sales
275.12
Alimentary tract and metabolism
2005
45.59
2.14
0.66
2010f
43.67
48.54
234.27
3.62
415.18
146.28
284.95
320.83
78.19
116.39
72.36
582.01
280.73
343.35
2008
Table: Malaysia Prescription Market Indicators, Historical Data And Forecasts (MYRmn)
44.27
2.25
0.70
2011f
42.95
2.35
0.68
2012f
45.91
51.04
246.31
3.81
436.53
153.80
299.60
337.33
82.21
122.38
76.09
611.94
295.16
361.01
2009
41.63
2.45
0.69
2013f
49.74
55.29
266.82
4.13
472.88
166.60
324.55
365.42
89.06
132.57
82.42
662.90
319.74
391.07
2010f
40.29
2.54
0.73
2014f
38.94
2.62
0.76
2015f
53.18
59.11
285.29
4.41
505.61
178.14
347.01
390.71
95.22
141.74
88.13
708.78
341.87
418.13
2011f
37.56
2.70
0.80
2016f
56.62
62.94
303.76
4.70
538.33
189.66
369.47
416.00
101.38
150.92
93.83
754.65
364.00
445.20
2012f
36.16
2.76
0.84
2017f
34.74
2.81
0.88
2018f
60.29
67.02
323.42
5.00
573.19
201.95
393.39
442.94
107.95
160.69
99.90
803.52
387.57
474.02
2013f
33.27
2.83
0.88
2019f
63.99
71.13
343.27
5.31
608.36
214.34
417.53
470.11
114.57
170.55
106.03
852.82
411.34
503.11
2014f
Page 101
24.30
24.60
24.80
0.90
0.26
2007
25.00
1.02
0.31
2008
25.90
1.11
0.32
2009
26.40
1.24
0.38
2010f
26.94
1.37
0.43
2011f
27.54
1.50
0.44
2012f
10.39
Other OTC sales
f = forecast. Source: AC Nielsen, BMI
36.23
Vitamins and minerals
44.81
40.37
30.67
Digestives
Skin treatments
43.06
38.80
Cough & cold drugs
11.53
40.21
34.03
57.04
51.39
Analgesics
24.68
0.84
24.87
0.79
OTC market (MYRbn)
0.23
2006
OTC market as % total market
0.21
OTC market (US$bn)
2005
13.46
46.93
39.72
52.30
50.25
66.57
25.30
0.92
0.27
2007
16.40
57.17
48.39
63.71
61.22
81.10
26.89
1.09
0.33
2008
16.58
57.78
48.91
64.39
61.88
81.97
27.20
1.17
0.33
2009
20.20
70.40
59.59
78.45
75.39
99.87
28.02
1.32
0.40
2010f
22.85
79.64
67.41
88.75
85.29
112.98
28.79
1.46
0.46
2011f
23.50
81.93
69.35
91.31
87.74
116.24
29.51
1.61
0.47
2012f
Table: Malaysia OTC Drug Market Indicators, Historical Data and Forecasts (US$mn unless otherwise stated)
Generics market as % total market
0.23
0.20
0.77
Generics market (US$bn)
Generics market (MYRbn)
0.84
2006
2005
Table: Malaysia Generics Drugs Market Indicators, Historical Data and Forecasts
30.83
1.94
0.56
2014f
28.88
1.82
0.52
2014f
25.12
87.57
74.12
27.87
97.15
82.23
97.58 108.27
93.78 104.04
124.23 137.82
30.19
1.77
0.50
2013f
28.18
1.66
0.47
2013f
31.42
2.11
0.62
2015f
29.64
1.99
0.58
2015f
31.98
2.29
0.68
2016f
30.46
2.19
0.65
2016f
32.49
2.48
0.76
2017f
31.34
2.39
0.73
2017f
32.97
2.67
0.83
2018f
32.30
2.61
0.82
2018f
33.40
2.84
0.89
2019f
33.32
2.83
0.89
2019f
Page 102
153.01
116.22
137.30
Digestives
Skin treatments
Vitamins and minerals

42.21
147.15
124.56
163.99
157.59
208.76
2006
46.04
160.49
135.85
178.85
171.87
227.68
2007
54.61
190.38
161.14
212.16
203.87
270.08
2008
10.78
2.64
0.72
2006
9.37
2.61
0.76
2007
-479.28
Balance (US$mn)
-558.49
655.57
97.08
2006
-611.35
775.31
163.97
2007
-682.88
816.85
133.97
2008
-774.20
914.87
140.67
2009
8.56
2.74
0.80
2008
58.34
203.39
172.16
226.65
217.81
288.53
2009
-876.95
1,024.65
147.70
2010f
9.27
2.78
0.83
2009
65.84
229.51
194.27
255.76
245.78
325.59
2010f
-991.64
1,147.61
155.97
2011f
8.06
3.06
0.87
2010f
73.11
254.86
215.72
284.01
272.93
361.55
2011f
2012f
-1,120.46
1,285.32
1,439.56
174.42
2013f
7.50
3.37
0.98
2013f
88.67
309.11
261.65
344.47
331.03
438.52
2013f
-1,265.14
7.69
3.02
0.94
2012f
164.86
7.56
2.95
0.91
2011f
80.62
281.04
237.88
313.19
300.96
398.69
2012f
-1,427.42
1,612.31
184.89
2014f
7.03
3.61
1.02
2014f
96.98
338.09
286.17
376.76
362.06
479.63
2014f
f = forecast. Source: International Trade Centre (ITC), United Nations (UN) Commodity Trade Statistics Database, Malaysia External Trade Development Corporation (MATRADE),
BMI
87.05
566.33
Exports (US$mn)
Imports (US$mn)
2005
Table: Malaysia Pharmaceutical Trade Indicators, Historical Data and Forecasts (US$mn)
f = forecast. Source: Ministry of Health (MoH), trade press, BMI
12.16
2.64
Medical device market (MYRbn)
Medical device market as % of total healthcare market
0.70
Medical device market (US$bn)
2005
Table: Malaysia Medical Device Market Indicators, Historical Data And Forecasts
f = forecast. Source: AC Nielsen, BMI
39.39
147.04
Cough & cold drugs
Other OTC sales
194.79
Analgesics
2005
Table: Malaysia OTC Drug Market Indicators, Historical Data and Forecasts (MYRmn)
Page 103
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Business Monitor International

2010 Business Monitor International.

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Pharmaceutical Business Environment Ratings ........................................................................................ 10

Malaysia Market Summary ......................................................................................................................... 13

Industry Trends And Developments ............................................................................................................ 24

Industry Forecast Scenario ........................................................................................................................... 43

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Patented Product Market Forecast ...................................................................................................................................................................... 50

Competitive Landscape ................................................................................................................................. 59

Company Profiles ........................................................................................................................................... 65

Country Snapshot: Malaysia Demographic Data ........................................................................................ 93

BMI Methodology ........................................................................................................................................... 95

Forecast Tables .............................................................................................................................................. 99

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Increasingly progressive government policy, aimed at attracting international investment.

Manufacturing of halal medicines improving access to other global Islamic markets.

Lax patent law remains conspicuously below international standards.

Generics sector as an integral factor of market growth.

Potential membership of a multilateral trans-Pacific trade agreement.

Existence of a significant counterfeit drugs sector.

Improving local manufacturing standards, with a commitment to biotech development.

Local manufacturing output comprising predominantly inexpensive, basic medicines.

Investment in the biotech sector development supported by government initiatives.

Government failure to revise discriminatory pricing policy.

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Malaysia Political SWOT

Malaysia is a successful example of a democratic Islamic state. Despite murmurs of discontent

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Malaysia Economic SWOT

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Malaysia Business Environment SWOT

Foreign companies, or at least foreign manufacturing companies, looking to do business in Malaysia

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Pharmaceutical Business Environment Ratings

Limits of potential returns

Risks to realisation of returns

Scores out of 100, with 100 highest. Source: BMI

Business Monitor International Ltd

Malaysia Pharmaceuticals & Healthcare Report Q3 2010

Limits Of Potential Returns

Business Environment Ratings By

returns. Malaysias score of 44 is a drop

from a Q210 score of 47, and is still

below the average for the 16 regional

receives a score of 40 (out of 100),

M alaysia Sco res

illustrating a relatively low per capita

Regio nal Sco res

Scores out of 100. Source: BMI