BMI View: We have revised our pharmaceutical and healthcare market forecasts upwards for Malaysia this quarter, because of continued signs of strong growth, and a clear government commitment to healthcare and the pharmaceutical sector. Steps are being taken to separate the roles of prescribing and dispensation (currently both tasks are undertaken by doctors), which will give patients greater choice and will help boost the generic drug sector. Malaysia is also pioneering in the halal drug sector, introducing a halal certification for medicines this quarter, which has the potential to boost exports to other Muslim countries. The country is also attracting investment in terms of pharmaceutical manufacturing - Ranbaxy plans to open a new facility - and biotechnology, with plans for a pharmaceutical park in the state of Melaka. Risks do remain, intellectual property and drug pricing are two examples, but overall, Malaysia is demonstrating strong growth potential.
Headline Expenditure Projections
- Pharmaceuticals: MYR6.06bn (US$1.96bn) in 2012 to MYR6.5bn (US$2.20bn) in 2013; +7.3% in local currency and +12.3% in US dollars. Forecast raised from Q113 because of increasing government commitment to pharmaceuticals and regulatory developments.
- Healthcare: MYR41.69bn (US$13.50bn) in 2011 to MYR44.51bn (US$15.09bn) in 2012; +6.8% in local currency and +11.8% in US dollars. Forecast raised from Q113 on account of proposed regulatory reform.
Risk/Reward Rating: Malaysia's Pharmaceutical Risk/Reward Rating (RRR) score for Q213 is unchanged from the previous quarter. This is also the case for all other countries in BMI's proprietary system that ranks pharmaceutical markets according to attractiveness to multinational drugmakers. A minor re-weighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q313 updates of the Pharmaceuticals & Healthcare reports. Malaysia has a RRR score of 59.3 out of 100, making it the eighth most attractive pharmaceutical market in the Asia Pacific region.
Key Trends And Developments
- In January 2013, the Ministry of Health opened up a pharmacy bill to public consultation and feedback, which proposes granting pharmacists an exclusive right to dispense medication. Currently doctors both prescribe and distribute medicines.
- The Chemical Company of Malaysia was the first pharmaceutical firm to be awarded a halal certification, in January 2013. The halal logo is now present on around 200 products, mainly OTC medicines. The move opens up export potential for halal-approved drugs to other Muslim countries.
- Ranbaxy Malaysia received approval in September 2012 for the construction of its second manufacturing facility in the country, which will involve an investment of MYR125mn (US$40n).
BMI Economic View: Forthcoming general elections are weighing heavily on Malaysia's economy, and should election results be unclear, this could delay tax reforms and weaken its fiscal position. Private consumption and gross fixed capital formation will be the key drivers of Malaysia's real GDP growth in 2013, which we forecast to come in at 4.5%, and for the remainder of our forecast period, we forecast a CAGR of 4%.
BMI Political View: General elections mark the political horizon, with elections scheduled before the end of June 2013 (no date had been announced at the time of this update). The ruling Barisan Nasional (BN) coalition faces a close race - with the latest polls suggesting it will win by a marginal vote. With new voters accounting for approximately a fifth of the electorate, this is likely to be a very close general election.