Healthcare Development to Drive Thai Drug Sector

Thailand's pharmaceuticals and healthcare system reflects the entrepreneurial, market-driven nature of its economy. The domestic drug industry comprises a small number of large domestic producers, multinationals and an array of small, private manufacturers. Domestic output has grown to approximately US$450mn per year. Healthcare is financed and provided under a mixed public-private structure, and overall healthcare resources have markedly increased in recent years.

Although the general level of spending on drugs is low in Thailand, at roughly US$35 per capita annually, greater demand for drugs is being driven by declining public health, an ageing population and the presence of growing numbers of local and international patients requiring private healthcare.

Government policy has responded to growing public health problems associated with rapid development and urbanisation, and authorities introduced a flat patient co-payment of THB30 (US$0.78) per visit in 2001, equivalent to 10% of a flat subsidy rate paid to providers, in an effort to provide universal public sector treatment. Meanwhile, as imports of ethical drugs approach pre-crisis levels again, the government has further encouraged the dominant market position of generics.

The consumption of generics has soared in recent times, as low-cost healthcare has become increasingly popular amid difficult economic conditions. The sector holds a market share of about 63.7% in value terms and over 80% by volume. However, as economic conditions improve, enhanced healthcare is also expected to benefit the branded market, potentially creating a win-win situation for multinationals and leading local generics makers. However, it remains to be seen whether any acceleration in the currently slow process of regulatory reform will boost prospects further for the major international drugmakers operating in Thailand.