Strong Growth in Lower-Tech Drugs Expected in Malaysia

Malaysia's drug market is expected to grow strongly in the next few years, but government aspirations to attract foreign investment to biotech ventures and make the sector a key growth driver are unlikely to be fulfilled in the medium term.

Responding to claims that local biotech has recently failed to develop significantly despite heavy government backing, the country's prime minister, Abdulla Ahmed Badawi, has insisted that a real improvement in the sector will become apparent within the next five years. However, the industry has claimed that there is a lack of skilled workers and coherent government incentives, and has cited strong competition due to similar, more fruitful efforts in neighbouring Singapore.

Instead, other factors are expected to drive medium term market growth of over 8% per year, although this strong performance will be mainly restricted to the low-tech end of the scale. Malaysia's pharmaceuticals sector is dominated by generics, with state-backed local giant Pharmaniaga accounting for up to 30% of market volume. Local producers are expected to become the key beneficiaries of the healthcare sector's ongoing modernisation, as awareness of drugs increases and Western medicines gradually replace traditional remedies prevalent outside the major population centres.

A further factor will be Malaysia's increasing integration within the ASEAN trade bloc, with Japan, China and South Korea becoming increasingly involved in new frameworks to harmonise standards in the member countries' healthcare industries. Indeed, without a radical improvement in intellectual property standards in the country, its rising population and regional trade are likely to remain among the main drivers of continued strong growth, expected to bring market value to US$1.3bn by 2009.