Industry Trend Analysis - Improvements To The Intellectual Property Environment Will Be A Positive For Drugmakers - MAR 2018

BMI View: Improvements to Thailand ' s regulatory environment, including medicine approval times, will support a greater multinational presence over the long - term. Sustaining this trend will be a confluence of the government's drive to foster innovation as well as the growing momentum within the pharmaceutical industry towards new medicine launches. In recognition of th e country's efforts to improve intellectual property protection and enforcement, the United States removed Thailand from its Priority Watch List of intellectual property violators in December 2017.

Intellectual property protection in Thailand will continue to improve as the country aligns itself closer with international standards. In 2007, the country was placed on the US Trade Representative's (USTR) Special 301 Priority Watch List, where it remained for a decade. However, following an out-of-cycle review of Thailand under the Special 301 provisions concerning the protection and enforcement of intellectual property rights, the Office of the USTR announced on December 15 2017 that Thailand's status was being amended from a Priority Watch List country to a lower-tier Watch List country. The USTR indicated that close engagement with the country had helped resolve US concerns in a range of areas, including patents of pharmaceuticals, trademarks and copyrights. The USTR stated in a press release that, 'In recent months, Thailand has taken steps to improve enforcement against pirated and counterfeit goods, including enhanced coordination among enforcement agencies and a sustained focus on investigations.'

Improving Regulatory Landscape To Have A Noticeable Impact

While Thailand is a member of both the Paris Convention on the Protection of Industrial Property and the Patent Cooperation Treaty, the Department of Intellectual Property (DIP) has struggled until recently to examine patent applications and issue patents in a timely fashion, with examination taking, on average 15-18 years for pharmaceutical patents. Prolonged waiting periods to obtain a pharmaceutical patent negatively impacts the effective patent term available for innovative medicines in Thailand. In 2014, the country granted drug patents for medicine that only a few days remaining on their protected lifespan and in 2015, Thailand issued 16 patents for medicines with less than a year of patent protection left.

Thailand Suffers From Patent Pendency
Average Number Of Years From Patent Application To Approval (2008-2015)
Source: Centre For The Protection Of Intellectual Property, BMI

The recently published 2017 International Intellectual Property Index, compiled by the Global Intellectual Property Centre, assessed the IP environment in 45 countries. Thailand achieved a rank of 40, one of the lowest scores in the index, whereas Singapore ranked 8 out of 45 countries.

Thailand Fares Poorly In Intellectual Property Protection
ASEAN: US International IP Index Ranking Out Of 45 Countries (2017)
Note: Higher rank = Poor IP protection. Source: Global Intellectual Property Center, BMI

With the aim of increasing investor confidence by resolving the patent backlog issue, and improving the examination process for the newly filed applications, the Ministry of Commerce and National Council for Peace and Order, along with the DIP, proposed amendments to the Patents Act in February 2017, to permit faster and more efficient examination of applications. The DIP increased the number of patent and trademark examiners. In addition, the government issued a special order under Section 44 of the Interim Constitution for issuing patents for those applications for which an invention has already been issued a patent overseas.

Thailand also established an interagency National Committee on Intellectual Property Policy as well as a sub-committee on enforcement against intellectual property infringement in 2010, led by the prime minister and a deputy prime minister, respectively. According to USTR, 'this strong level of interest from the highest levels of the Thai government has led to improved coordination among government entities, as well as enhanced and sustained enforcement efforts to combat counterfeit and pirated goods throughout the country.'

The country also joined the Madrid Protocol in August 2017, making it easier for multinational pharmaceutical companies to apply for trademarks. Other encouraging developments include a commitment to improve transparency related to pharmaceutical issues, such as taking stakeholder input into account as Thailand considers amendments to its Drug Act and provide interested stakeholders with regular consultation opportunities with the Thai Food and Drug Administration.

Therefore, these reforms to improve the regulatory landscape will be a step towards facilitating the faster approval of applications, boosting innovation in research and development and allowing new medicines to enter the market quickly. In addition, this will serve to benefit the growing demand of medicines driven by the country's rising disease burden; robust healthcare access under the universal healthcare system; and the country's thriving medical tourism sector.

Furthermore, according to BMI's Country Risk team, Thailand has emerged as a strong regional contender for foreign direct investment, particularly in manufacturing due to its relatively large domestic and export market, excellent transport infrastructure, improving ease of doing business, and relatively well-developed business clusters. As such, we highlight that the country will retain its position as an attractive market for innovative drugmakers looking to launch new products and/or establish local manufacturing facilities, thus facilitating the growth of the medicine market. In 2016, we calculate that Thailand's pharmaceutical market was valued at THB160.9bn (USD4.5bn), experiencing a 5.3% increase from the previous year. Over the forecast period to 2021, we calculate the pharmaceutical market will reach a value of THB209.7bn (USD6.3bn), experiencing a compound annual growth rate (CAGR) of 5.4% in local currency terms and 6.8% in US dollar terms. Over the extended forecast period, medicine sales will experience a 10-year CAGR of 5.5% and 6.3% in local currency and US dollar terms respectively, reaching THB275.2bn (USD8.4bn) by 2026.