An Executive Country Review: South East Asia An ... - EC Reviews

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these leaders have adapted spectacularly well to the new conditions of production expected from any decent player today. Although the country does not request CGMP for product registration, the Indonesian manufacturers have anticipated the call and have started investing ahead of time. Sanbe pharma’s two splendid new production units are ready to welcome inspections from any national drug regulatory body and take orders for export sales and contract manufacturing. The quality of the construction, equipment used, and procedures in place testify of the head start some players of the region have taken. In Malaysia, Pharmaniaga, the statebacked listed company, is also facing its own set of challenges and its path is a valuable indication of regional trends affecting the industry. The undisputed leader in its home market, Pharmaniaga must go beyond its cozy protected position (Pharmaniaga being the exclusive concessionary for public hospitals sales) and step up its efforts to become a regional leader. Over the past few years, these efforts have become more visible as the company built a superb new smallvolume injectables (SVI) plant to FDA standards and put a foot in China through a joint venture with a company that, such as Pharmaniaga, has public shareholders. The fact that the small-volume injectable factory (to be completed by Q4 2006) was built to FDA standards is no luck: Azhar Hussain, the company’s managing director is confident that “the next stage will be registration and our ultimate goal will be to enter the US market with one or two products. Contract manufacturing is also a very serious possibility. We have no limitation as we are a generic player and competition is everywhere.” Looking at the open- ness of his company to global cooperation, he adds that “one has to cooperate to compete nowadays.” Dynamism across the market In the shadows of the regional leaders is a thriving lot. Medium-size companies are forcing through their market positions by developing their niche competencies and their flexibilities to be recognized as serious market contenders. Among them, Indonesia’s SOHO, The Mensa Group, or Novell, Malaysia’s Hovid and Kotra, Thailand’s Siam pharmaceutical, Thai Nakorn Patana or Phillippines United Laboratories Mid-size companies are forcing through their market positions by developing their niche competencies and their flexibilities to be recognized as serious market contenders. are the best in class. With challenges lurking on every pharmaceutical horizon, these companies are using their flexibility and strong focus to design strategies that allow them to make the most out of the current situation. Thanks to Indonesia’s sheer market size, medium-size operators can have available capital to work on different approaches. The SOHO group, for instance, is completely refurbishing its production tool to bring it to the best standards in class. Tang Eng Liang, the company’s president is clear about the mid-term targets: “We want to renovate our factory, to be able to export to European nations first, then, who knows, to the United States” The quality required to achieve such results should be without any compromise, and while the emphasis is on renovating the production tool, other avenues for strengthening the business model are also sought after, as explained by SOHO Group’s President Director, Andreas Djamwari: “We also have to work towards rationalizing our portfolio, by looking at consolidating therapeutic classes coverage amongst our products.” As do many companies in the region, the SOHO group combines manufacturing alongside distribution activities, thus allowing the company to control its own distribution channels across Indonesia as well as to act as a distributor for any principal, local or international, willing to enter the fray. Yet, Mr. Djamwari stresses that the company is “looking for success in manufacturing instead of only distribution.” Meanwhile, external pressure cumulates on the manufacturers’ shoulders across the region to comply with more stringent quality standards, face the ever-increasing bite of the international competition, notably from the dual threat of India and China, and extra difficulties are being added by local authorities and regulators. In Indonesia, a price-capping policy has been announced, although the full extent of its application is still largely unknown. Local manufacturers are willing to play the game, all the more when the future cap doesn’t affect much their bottom line because they don’t produce the very basic products that will see their sales prices capped off. Roy Lembong, dynamic Director of Novell Pharmaceutical Laboratories, a versatile producer that has posted some of the best growth rates in the market, is unabated by the forthcoming price control and actually sees opportunities for some local players: “Usage of non-branded generics is low in Indonesia as there are little incentives for doctors to use them. Japan is facing the same issue but now has incentives. Doctors here still like to subscribe products from multinationals. A price capping will benefit patients, health systems as well as some players producing these type of cheap drugs.” Head of Dexa Medica, Ferry Soetikno believes that price cap will “ push a rationalization of prices and increase accessibility and affordability.” Expanding on the conundrum faced by the industry confronted to the future price cap he asks: “How do you link a good insurance system and good suppliers without sacrificing the sustainability of the companies? With higher accessibility, more people will go for more frequent health visits. This means more units sold, which in turn will 80 Pharmaceutical Technology SEPTEMBER 2006 www.pharmtech.com
alance the losses of price caps. The nature of the business will change and will turn even more towards volume-oriented activities.” This should favor those with large installed capacities. In the case of Novell though, the corporate strategy is to look up and aim at the top segment of the market by putting effort on the products through product development, high-end technology, and strong marketing. “We need technology, information on how to make products, how to achieve EU GMP standards and the right quality insurance system, etc.” With products ranging from oncological through to psychotic and osteoporosis treatments, the company is already positioned beyond commodity drugs and into the high-value added segments. The next stage for Novell and for Southeast Asian companies willing to stay abreast of the competitive environment and to succeed going forward will be not only to manage the changes domestically, in particular those induced by the pressure on public health systems and the transition into private health insurance but also product development and using pharmaceutical technologies available. Climbing the value ladder Novell’s Roy Lembong adds that “Indonesian companies need to improve their product development and be able to do for instance produce slow release products with good bioequivalent data.” Dexa Medica, one of the leading companies also worked on technological solutions to retain the edge. Developing its own fast-disintegrating capsules as well as sustainedrelease products, the company managed to license one of its products to Glaxo Indonesia. Improving delivery systems, packaging, or formulations to the point of achieving out licensing deals is a path of excellence that many in the region want to go down. These standards are meant to Pharmaceutical Technology SEPTEMBER 2006 81
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