Asia Pacific hot zone for pharma
A third of Asia’s drugmakers want to buy other pharmaceutical companies as they seek a bigger share of the $643 billion global market, a new study said.
By Agencies |
SINGAPORE: A third of Asia’s drugmakers want to buy other pharmaceutical companies as they seek a bigger share of the $643 billion global market, a new study said.
More than half of the drugmakers based in Asia are keen to penetrate markets outside the region, including through partnerships and acquisitions, according to the study by PricewaterhouseCoopers.
The findings are based on a survey of 185 senior pharmaceutical executives, half of them located in China, India, South Korea and six other Asian countries.
The centre of gravity for the industry is shifting to the Asia-Pacific region from the US and Europe, the accounting firm said. The MSCI Asia Pacific Health Care Index, which tracks the region’s 31 largest health-related companies, has risen by an average of 18% a year since 2003, compared with 3% annual growth in the S&P 500 Health Care Index, which tracks the 53 largest US health-related stocks.
“In addition to becoming the largest market in the world for drugs, led by growth in China, India and Singapore, Asia Pacific is seeing an influx of multinational companies, and its own pharmaceutical companies are bulking up by acquiring international market share,” said PwC, the world’s largest accounting firm, in a statement on Tuesday. The pharmaceutical market grew 7% worldwide last year to reach $643 billion, according to IMS Health, a Fairfield, Connecticut-based market research firm.
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Competition among countries to attract international pharmaceutical companies is intensifying as Asian governments offer grants, incentives and infrastructure support, according to the PwC report. Singapore is trying to establish itself as a global hub for biomedical research by offering incentives to lure researchers such as Alan Colman, the scientist who helped clone Dolly the sheep more than a decade ago, and companies including Novartis and GlaxoSmithKline. “There is a dearth of innovation that plagues the pharmaceutical industry, and R&D must become a greater focus,” PwC said in the report, titled Gearing up for a Global Gravity Shift: Growth, Risk and Learning in the Asia Pharmaceutical Market.
A third of multinational companies plan to expand in the region within the next year through acquisitions or developing their own newly built sites, the firm said. Investment though is being tempered by corruption, drug pricing and concern that intellectual property laws in Asia don’t adequately protect patents.
“If US-based companies want to have part of that market, they are going to need to be present in the region and learn to navigate the risks,” said Dan Bartholomew, senior MD with Pricewaterhouse’s pharmaceutical and life sciences practice, in the statement.
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Competition from cheaper generic drugs and pricing pressures in the health-care market are pressuring multinational companies to cut costs, the firm said. “Outsourcing to lower-cost, but highly effective companies in Asia has become a common response,” PwC said. “Much of the focus has been on outsourcing drug manufacturing, but increasingly, companies are turning their attention to R&D and clinical trials.”
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