Despite its small population, foreign pharmaceutical firms will continue to be interested in Singapore given the highly skilled workforce and the success the country had with its biomedical sector, attracting investments into the sector. In addition, the impending launch of the Association of South East Nation Economic Community in 2015 will bring opportunities to Singapore as firms can look to market their products through the whole of ASEAN using Singapore as a base. From the healthcare perspective, the government's promise to improve healthcare provision, alongside with the rising demand for services due to the ageing population will create opportunities for private healthcare players.
Headline Expenditure Projections
- Pharmaceuticals: SGD940mn (US$770mn) in 2012 to SGD1.0bn (US$800mn) in 2013; +5.9% in local currency terms and +7.2% in US dollar terms. Forecast down slightly from Q313 due to reassessment of the country's macroeconomic conditions.
- Healthcare: SGD16.3bn (US$13.3bn) in 2012 to SGD18.0bn (US$14.4bn) in 2013; +10.4% in local currency terms and +8.6% in US dollar terms. Forecast upgraded from Q313 due to government's increased focus on healthcare provision.
Singapore's Pharmaceutical Risk/Reward Rating (RRR) score for Q413 is 62.0 out of the maximum 100 under our newly improved RRR system. The country scored above average for the majority of indicators and sub-indicators, including sector value growth, pensionable population and overall economic and political landscape. With the relatively high score, the country is ranked 6th out of the 19 key markets in the region, behind developed countries like Japan, South Korea and Australia, as well as emerging markets like China and Taiwan. In the South East Asia region, it continues to rank first due to its relatively higher score under country and industry risks.
Key Trends And Developments
- In August 2013, Astellas Pharma established its newest affiliate Astellas Pharma Singapore. The wholly-owned subsidiary will mainly commercialise Astellas' global products through its own sales force in Singapore and supervise the sales of such products through a contract sales organisation in Malaysia. Astellas Singapore will start its business in October, and quickly build up its business capabilities in both Singapore and Malaysia.
- In July 2013, US-based Pathway Genomics Corporation entered a partnership deal with Singaporebased company Parkway Laboratory Services. Parkway Laboratory Services' laboratory, Parkway Health Laboratory, caters to physicians as well as patients at several hospitals. It has the widest array of services among private laboratories in Singapore. A comprehensive saliva-based nutrigenetic test, Pathway Fit, will be offered to these hospitals and physicians under the partnership.
- In June 2013, Singapore registered lower-than-expected factory output in June, following a sharp drop in the pharmaceuticals sector. The Economic Development Board (EDB)'s data showed that the country's manufacturing output dropped 5.9% year-on-year (y-o-y) in June. According to an economists' earlier poll, June's industrial production output was expected to drop 3.5% y-o-y. The drop has majorly been attributed to a 28.9% drop in pharmaceuticals output.
- In the same month, Pfizer Asia Pacific, Glaxo Wellcome and Siemens became the founding members of a new Singapore's Agency for Science, Technology and Research (A*STAR) research & development (R&D) Consortium Programme - Innovative Processing of Specialties and Pharmaceuticals. The consortium was launched with the aim of offering a platform for pharmaceutical and specialty chemicals industry players to deal with several challenges like cost, regulatory compliance and responsiveness in production and processes to bring drugs to markets from trials.
BMI Economic View: The Singaporean economy experienced its strongest y-o-y growth in nearly two years in Q213, expanding by 3.7% in real terms. The result smashed the consensus estimates of 2.0%, and reflected the cyclical manufacturing pick-up that we have witnessed in the city-state over the past four months. However, we expect Singapore's manufacturing recovery to be a transitory one, as external weaknesses stemming from slowing growth in China, Japan, and the US begin to bite in H213. Additionally, we would be remiss to read too much into a single quarter's figures, as Singapore's GDP prints have traditionally proved to be highly volatile. In result, we are happy to maintain our 2013 real GDP forecast of 2.2%, and believe that risks to this forecast are evenly balanced.
BMI Political View: Singapore faces very limited political risks in the near term and we expect the ruling People's Action Party (PAP) to retain its monopoly on power through the next two election cycles at a minimum. However, over the longer term, the city-state will come under greater pressure from its citizens to become a more vibrant democracy and foster credible opposition parties, and PAP policy will likely shift towards slightly more populist measures as its popularity begins to erode.