Industry Trend Analysis - A Recap On The Pharmaceuticals & Healthcare Outlook For 2017: Asia Pacific - AUG 2017

BMI View: The Asia Pacific (APAC) pharmaceutical market will see modest growth in 2017. Ongoing trends such as the roll - out of universal healthcare and advances by private healthcare providers are expected to continue, shaping opportunities for the region. In 2017, APAC will be further impacted by the failure to pass the Trans-Pacific Partnership in 2017. In addition, the pricing environment in the APAC region will become more dynamic as governments seek to introduce more measures to control spending while still meeting the demand for high-value pharmaceuticals.

At the end of 2016, we set out a number of expectations for the coming year in our annual review of the pharmaceuticals and healthcare sector in Asia Pacific (APAC) ( see 'Pharmaceuticals & Healthcare Outlook For 2017: Asia Pacific, November 21 2016). We have selected two key trends and reviewed the progress of each. This article notes our view and details of any developments that support or confirm our outlook. Overall, we expect that these views will continue to play out.

Demise Of TPP To Drive Countries And Firms To Shift

BMI View: The failure to enact the TPP in its current form will be a central theme for the Asia Pacific region in 2017. A reassessment of the long-term strategies will be adopted by the remaining countries and alternatives to the TPP will come to the fore in 2017. Such cooperation will assist the countries by introducing stronger intellectual property protection with patent adjustments.

Country-specific factors that shape the growth trajectory of pharmaceutical markets in APAC will become more salient with the failure to ratify the TPP. Seven of the 12 participating members are in the APAC region (Singapore, Vietnam, Brunei, Japan, Malaysia, New Zealand and Australia), and implementation of Trans-Pacific Partnership (TPP) would have affected the business environment in the region - especially as other Asian countries such as Thailand and South Korea had signalled their interest in joining. However, this has come to nought with US President Donald Trump signing an executive order to formally withdraw the US from the trade deal in January 2017.

Alternative Trade Deals To Come To The Fore

Beyond bilateral trade agreements, regional integration programmes are becoming more prominent. For example, the demise of the TPP has enhanced the regional and global attention on the Regional Comprehensive Economic Partnership (RCEP).

  • In March 2017, with the demise of the US-led TPP agreement, attention in the Asia Pacific region turned towards RCEP negotiations being held in Japan.

  • In May 2017, trade officials from the 10 ASEAN states and six free trade agreement partners - China, Korea, Japan, Australia, New Zealand and India - participated in the 18th RCEP Trade Negotiating Committee meeting held in Philippines, to discuss trade of goods and services; economic and technical cooperation; and intellectual property issues.

  • In May 2017, RCEP met opposition due to fears that it would become an agreement that will lengthen patent terms, making it difficult and more expensive to produce low-cost drugs in the Asia Pacific region. For example, for people living with hepatitis C, access to medicines like sofosbuvir, ledipasvir and daclatasvir has been severely hampered by high prices and restrictive voluntary licensing by patent holders. In the case of India, Gilead Sciences has issued licenses to generic companies to produce low-cost versions of sofosbuvir.

  • In May 2017, the remaining 11 countries involved in the TPP negotiations indicated a willingness to negotiate a new deal without the US. At the Asia Pacific Economic Cooperation ministerial meeting held in Hanoi, Vietnam, ministers and vice ministers from Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Malaysia, Peru, Singapore and Vietnam reaffirmed the economic significance of the TPP and its potential to create new opportunities.

  • In early June 2017, Prime Minister Shinzo Abe and his Vietnamese counterpart, Nguyen Xuan Phuc, pledged to work together towards the rapid passage of the TPP trade agreement during a meeting in Tokyo. Additionally, in the same month, Taiwan announced its interest in participating in the TPP deal.

Price Containment Evolves

BMI View: In 2017, cost containment in the APAC region will become more acute as governments seek to contain rising healthcare spending amid a more uncertain economic outlook. Critically, pharmaceutical price cuts will not be the only tool employed by authorities in APAC. Other tools such as health technology assessments, price-volume agreements and greater use of generic medicines and biosimilars will be employed by authorities to mitigate the financial pressures stemming from the use of high - value pharmaceuticals.

  • In March 2017, it was reported that India's drug pricing regulator, the National Pharmaceutical Pricing Authority, reduced the price of selected cancer drugs by 86%.

  • In a bid to make healthcare more affordable in India, the Modi-led government announced its intentions in April 2017 to amend the Drug and Cosmetics Act to make it mandatory for doctors to prescribe medicines using international non-proprietary names.

  • In May 2017, local Indian drugmaker Natco Pharma entered into a non-exclusive licensing agreement with Gilead Sciences to manufacture and sell the generic version of its chronic hepatitis C drug, Epclusa (sofosbuvir and velpatavsir), in the country at a reduced price.

  • In May 2017, it was reported that to address rising pharmaceutical and healthcare spending, Japan's Ministry of Health, Labour and Welfare will remain highly focused on cost containment, and on boosting the use of generic drugs from 56% to more than 80% by September 2020.

  • In May 2017, it was reported that Singapore's Agency for Care Effectiveness will subsidise nine drugs for patients with conditions such as acute migraine attacks, metastatic breast cancer and rheumatoid arthritis, based on health technology assessments.

  • In June 2017, the Philippine Chamber of the Pharmaceutical Industry and the Philippine Food and Drug Administration expressed support for the formation of an Inter-Agency Committee on Generic Drugs Development to encourage investments in generics drugs manufacturing, as well as to provide greater access to generic medicines that are of higher quality and are more affordable.