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Malaysian Pharmaceutical Industry: Opportunities and Challenges

Article  in  Journal of Generic Medicines · May 2009

DOI: 10.1057/jgm.2009.12

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Mohamed Azmi Hassali Kah Hay Yuen

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Original Article

Malaysian pharmaceutical industry:

Opportunities and challenges
Received (in revised form): 23rd March 2009

Mohamed Azmi Hassali

is an academic staff member of the School of Pharmaceutical Sciences, Universiti Sains Malaysia.

Kah Hay Yuen

is an academic staff member of the School of Pharmaceutical Sciences, Universiti Sains Malaysia.

Mohamed Izham Mohamed Ibrahim

is an academic staff member of the School of Pharmaceutical Sciences, Universiti Sains Malaysia.

Jia Woei Wong

is a research manager of Hovid Bhd, Malaysia, a local pharmaceutical manufacturing company.

Bee Hong Ng
is a research manager of Hovid Bhd, Malaysia, a local pharmaceutical manufacturing company.

David Sue San Ho

is the managing director of Hovid Bhd, Malaysia, a local pharmaceutical manufacturing company.

ABSTRACT A sound generic pharmaceutical industry is vital for any country in order to
increase the access and affordability of pharmaceuticals to the society at large. In this context,
the generic pharmaceutical industry in Malaysia is seen as one of the potential manufacturing
sectors that contributes not only to the well-being of the population but also in terms of
economic output to the nation. However, the viability of the generic pharmaceutical industry
in Malaysia is not free from challenges. In this paper, an overview of the Malaysian
pharmaceutical industry together with the opportunities and challenges facing the generic
market will be discussed.
Journal of Generic Medicines (2009) 6, 246–252. doi:10.1057/jgm.2009.12

Keywords: Malaysia; generics opportunities; challenges

INTRODUCTION around the globe, including Malaysia, have

As a measure to contain the increasing costs promoted the use of generic medicines.1 The
of health care, authorities in many countries availability of cheaper generic medicines in
the Malaysian market gives an opportunity for
both the government and consumers alike to
Correspondence: Kah Hay Yuen
School of Pharmaceutical Sciences, Universiti Sains Malaysia,
reduce the cost associated with the use of
11800 Penang, Malaysia pharmaceutical products. Previous studies
E-mail: khyuen@usm.my conducted in Malaysia have highlighted that

© 2009 Palgrave Macmillan 1741-1343 Journal of Generic Medicines Vol. 6, 3, 246–252

www.palgrave-journals.com/jgm/
 Malaysian pharmaceutical industry: Opportunities and challenges
by choosing a generic product for some of
the chronic medications, consumers can save
up to 90 per cent of their medication
expenditure.2,3 Thus, the presence of a strong
local generic pharmaceutical industry,
together with the support from the
government, can help to reduce the
expenditure on medicines.
OVERVIEW OF THE
MALAYSIAN HEALTH-CARE
SYSTEM, HEALTH FINANCING
AND PHARMACEUTICAL
EXPENDITURE
Malaysia lies on the Malay Peninsula (West
Malaysia) in tropical Southeast Asia, bordering
Thailand to the north, the Strait of Malacca
to the west, the South China Sea to the east
and the island of Singapore to the south. The
country also occupies the northern one-third
of the island of Borneo (East Malaysia),
bordering Indonesia to the south, the South
China Sea to the north, and the Sulu Sea and
Celebes Sea to the east. Malaysia consists of
13 states and a federal territory covering an
area of 330 252 square kilometres. The
population of Malaysia in 2007 was estimated
to be 27.2 million with an annual growth
rate of 2.1 per cent. Sixty-two percent of the
population lives in the urban areas. The
population is relatively young with 32.2 per
cent between the age of 0 and 14 years,
63.4 per cent between 15 and 64 years and
only 4.4 per cent more than the age of
65 years.4
A dual health-care system, with both
public and private health services, coexists in
Malaysia. The government through its
Ministry of Health (MOH) is the major
health-care provider in the country, providing
primary care, secondary care and tertiary care
through various types of health facilities (such
as general hospitals, district hospitals and
health clinics).5 Private health providers
complement the medical services provided by
the government. However, the private health
providers mainly focus on curative services
© 2009 Palgrave Macmillan 1741-1343 Journal of Generic Medicines Vol. 6, 3, 246–252
through general practitioner clinics, medical
centres to private hospitals.5
Public health services are heavily subsidised
by the government and are financed mainly
from taxes on earned income. Other sources
of financing for health services are private
voluntary insurance, social security and user
fees. Private voluntary insurance is gaining
popularity now because there is no
compulsory insurance or National Health
Insurance Scheme in Malaysia yet. It was
estimated that the country spent 3.7 per cent
of its GDP on health care.6 This figure is
quite low compared to most developed
nations. The government finances most of
the resources in health care, amounting to
58.3 per cent of the total national health
expenditure. Private expenditure accounts for
the remaining 41.7 per cent.6
In Malaysia, pharmaceutical expenditures
have increased over the years. For instance, in
1994, the government spent about RM 300
million (USD$85.7 million)7 to procure
drugs, which has now increased to more than
RM 1 billion (USD$285.7 million). Total
expenditure on prescription medicines in
Malaysia was estimated to be worth RM 2.24
billion (USD$639 million) in 2005, with
equal expenditures between the public and
private sector (RM 1.12 billion (USD$319
million) and RM 1.13 billion (USD$322
million), respectively).8
OVERVIEW OF
THE MALAYSIAN
PHARMACEUTICAL MARKET
The Malaysian pharmaceutical market is
dominated by prescription drugs that account
for approximately 70 per cent of the
pharmaceutical market share and the
prescription drug dominance is likely to
prevail in the future.9 There are three
categories of prescription drugs in Malaysia,
namely imported proprietary drugs, generics
manufactured locally by Malaysian companies
as well as imported generics. Proprietary
drugs, being innovator products with a strong
foothold in the Malaysian market, have the
247
 Hassali et al
largest market share of approximately 70
per cent.10 Nevertheless, in recent years, the
market share of the generics is steadily
increasing to achieve the present 30 per
cent.10 Imported generics are also making
inroads into the Malaysian pharmaceutical
market in recent years due mainly to the
ASEAN harmonisation initiatives as well as
the unprecedented growth of the global
generic pharmaceutical industry such as in
India. The lack of entry barriers into the
Malaysian pharmaceutical market itself has,
in part, attracted many overseas generic
players. Only recently, initiatives are in place
to inspect foreign manufacturing facilities,
particularly those that have not been audited
by competent authorities, whereas local
manufacturing facilities are subjected to
periodic audit all this while by our local
regulatory authority including authorities
from countries in which Malaysian companies
are exporting to.
OVERVIEW OF
THE MALAYSIAN
PHARMACEUTICAL INDUSTRY
The Malaysian pharmaceutical industry was
valued at approximately US$1027 million in
2007.11 It is expected that it will continue to
register steady growth in the next few years,
and the market value is anticipated to increase
to over $1.8 billion after the year 2013.11
The pharmaceutical industry in Malaysia
may be divided into manufacturing,
importation and distribution.12 The
importation and distribution are mainly
dominated by the multinational
pharmaceutical companies whereas the
manufacturing sector consists of local generic
pharmaceutical manufacturers. The products
manufactured include prescription drug
products, over-the-counter medications,
traditional medicines as well as nutraceuticals/
health supplements. The local generic
manufacturers have the capability to produce
almost all dosage forms, including sterile
preparations such as eye preparations and
injections, as well as soft gelatin capsules,
248 © 2009 Palgrave Macmillan 1741-1343 Journal of Generic Medicines Vol. 6, 3, 246–252
controlled-release medications and granules
for reconstitution. Currently, there are over
40 local generic manufacturers in Malaysia.
The local industry is producing about 30
per cent of the domestic demand according
to the Malaysian Industrial Development
Authority (MIDA).13
In recent years, the Malaysian generic
pharmaceutical industry has made great
progress. Besides providing high-quality and
affordable pharmaceuticals to the population,
it has contributed significantly to the country
in terms of export revenue as well as holding
down the escalating health-care cost with
regard to prescription medications.
The growth in the Malaysian generic
pharmaceutical industry is contributed mainly
by the increasing health-care spending and
the need to contain increase in health-care
costs. It has been reported that health-care
spending of Malaysians is growing at about
13 per cent a year.11 Changing demographics
also contributed to the growth in the
pharmaceutical market. A growing population
together with an increasing ageing population
has spurred the demand for pharmaceuticals.
The Malaysian government and its policies
have also helped to propel the growth of the
Malaysian pharmaceutical industry. Initiatives
such as Bionexus status and promotion of
medical tourism, grants, tax incentives for
research and development activities and
financing schemes are all designed to develop
and nurture the pharmaceutical industry in
Malaysia. Moreover, the pharmaceutical
industry has been identified as a strategic
industry by the Malaysian government to be
promoted.12 Also, being a member of the
Pharmaceutical Inspection Co-operation
Scheme has helped to improve the standard
and quality of the generic industry. This has,
in turn, facilitated the export of Malaysian
pharmaceutical products overseas to over
30 countries, including those in ASEAN,
Africa, Middle East and Central America as
well as to gain access to member countries
like the European Union, Australia and
Canada.14
 Malaysian pharmaceutical industry: Opportunities and challenges
BIOEQUIVALENCE
REQUIREMENT AND ITS
IMPACT ON THE GENERIC
INDUSTRY
To ensure quality, efficacy and safety of
pharmaceutical products marketed in
Malaysia, MOH has required that the
products be proven to be bioequivalent to
the proprietary preparations (innovators). This
requirement has been implemented in stages
since 1999 for oral immediate release
products. The 1st list of drugs requiring BE
compliance was released in 1999 and it
consists of three drugs, namely, nifedipine,
cyclosporine and captopril. The latest 7th list
covering 27 drugs was released in 2008. To
date, a total of 96 drugs are required to be
BE compliant before they can be sold in
Malaysia. Moreover, it is compulsory for
generic oral modified-release preparations to
show BE compliance.
There are pros and cons with regard to the
BE requirement. The implementation has led
to an increase in the quality of generic drug
products manufactured in Malaysia, resulting
in an increase in the competitiveness of
locally manufactured pharmaceuticals for
export. This is evidenced by the increasing
capability of Malaysia’s pharmaceutical
products to be registered with regulatory
bodies in many countries. Moreover, with the
availability of bioequivalence (BE) data, the
information can be used to help reverse
the entrenched prescribing habit of physicians
in Malaysia who tend to prescribe proprietary
medications. It has also helped to increase
the confidence of consumers with regard to
their quality and efficacy.
On the other hand, the BE requirement
also poses additional challenges for the generic
manufacturers. Firstly, the time and cost of
developing a product have increased.
Secondly, local manufacturers are facing
problems of finding centres to conduct BE
studies. Centres offering such a service are
limited and are mostly University-based and
non-profit orientated and hence the number
of studies conducted by these centres per year
© 2009 Palgrave Macmillan 1741-1343 Journal of Generic Medicines Vol. 6, 3, 246–252
is not able to meet demand. Moreover, there
are also instances where a generic product has
better bioavailability compared to the
innovator (above the confidence interval of
0.8–1.25), and thus fails to meet the BE
criteria. Due to the above issues, some smaller
generic companies have stopped producing
some drug products requiring BE testing,
especially when their market share is small.
OPPORTUNITIES
Although there are considerable challenges
faced by the Malaysian generic pharmaceutical
industry, the outlook is not totally doomed
and opportunities still abound.
Stringent regulatory requirements are being
imposed on drug products submitted for
registration and this has resulted, in general, in
an increase in the overall quality of generic
drug products. GMP requirements, guidelines
for pharmaceutical development, conduct of
stability as well as BE studies and the content of
Common Technical Document for regulatory
submission are adopted from competent
regulatory agencies in the EU, the United
States as well as the International Conference
on Harmonisation (ICH). This has, in turn,
increased the quality of generic drug products
and made a headway for locally manufactured
generics to compete at the global level.
The escalating health-care cost contributed
mainly by prescription drugs is a major
concern of all countries. Affordable generic
medications are an attractive alternative to
hold down the health-care expenditure. In
this regard, the Malaysian government is
encouraging the usage of generic medicines
and this provides an opportunity for the
generic industry to increase their market
share. Moreover, changing Malaysian
demographics are also driving the industry
forward. With a growing population and an
increasing ageing population, there is an
ever-increasing need to contain the increase
in health-care cost, which can be achieved
by switching to generic drugs.
Generally, generic prescribing and the
practice of generic substitution are relatively
249
 Hassali et al
low and hence there is still room to increase
the generic market share and create
opportunity for the generic drug
manufacturers to increase their sales.
Like in other countries, one of the greatest
opportunities for the generic pharmaceutical
industry would be the patent expiry of many
blockbuster drugs. It is estimated that drugs
worth more than $75 billion in sales are
going off-patent in the coming few years.15
This translates into more opportunities for
local manufacturers to launch new generics
and increase their product pipeline and
market share.
Support from the Malaysian government
and its policies has also helped to drive the
generic drug industry forward. As mentioned
previously, the pharmaceutical industry has
been identified as one of the areas for
development by the Malaysian government
and various incentives are in place to assist
the local pharmaceutical industry. If all the
above opportunities and incentives are
carefully tapped, the Malaysian generic
industry may see better days ahead.
CHALLENGES
As mentioned earlier, branded pharmaceuticals
still dominate the Malaysian pharmaceutical
market. Although there is a generic medicine
policy (a documented future plan to improve
medicine affordability) prepared under the
Malaysian National Medicines Policy
(MNMP), which was approved in the year
2006, the action plan and time frame to
implement the policy are not clearly spelt
out. In view of the above scenario, there is a
need for MOH and local generic companies
to take more pro-active and comprehensive
steps to promote or encourage the use of
generic pharmaceuticals. In addition, MOH
should ensure that MNMP reaches out to
both the public and private health-care sectors
in order to realise the objectives of MNMP,
which are to promote equitable access to
essential medicines, to ensure availability of
safe, effective and affordable essential
250 © 2009 Palgrave Macmillan 1741-1343 Journal of Generic Medicines Vol. 6, 3, 246–252
medicines of high quality and to promote
quality use of medicines by health-care
providers and consumers.
Like many other countries in the world,
the growth of the Malaysian pharmaceutical
industry has always been tampered by the
strong lobby of branded pharmaceutical
manufacturers against generic pharmaceuticals,
giving the perception that generic
pharmaceuticals are more inferior compared
to branded pharmaceuticals. Such perceptions,
together with the lack of education on BE of
generic pharmaceuticals, have led to the loss
of confidence in consumers or even health-
care professionals such as doctors and
pharmacists, towards the use of generic
pharmaceuticals despite the proof of BE.
In order to help address this prejudice,
the 40 local generic pharmaceutical
manufacturers in Malaysia should work
closely to tighten the quality gap among
local generic pharmaceuticals, if any, and
ensure that there should be no sub-standard
generic pharmaceuticals being released into
the market.
The National Pharmaceutical Control
Bureau (NPCB), which is the regulatory
body under MOH, has over the years
imposed many new and stringent
requirements for generic pharmaceuticals.
However, the Malaysian pharmaceutical
industry faced a lot of difficulties in keeping
pace with the ever-increasing new
requirements imposed by the NPCB.
Fulfilling these new mounting requirements
is taxing the capabilities of many local generic
pharmaceutical manufacturers, bearing in
mind that each additional requirement
necessitates more work and extra expenditure
on facilities and resources. For example, the
BE requirement imposed on the 96 drugs
enforced by the NPCB to date has put extra
hurdles and pressure on many generic
pharmaceutical manufacturers owing to
insufficient local facilities and expertise
to conduct BE studies for these drugs, not to
mention the extra cost of conducting the
studies. Furthermore, only samples from a
 Malaysian pharmaceutical industry: Opportunities and challenges
relative large production batch size (for
example, 100 000 units) of a newly developed
product can be used for the conduct of the
BE studies. The entire batch of the new
product is non-marketable as approval has
not been granted and thus has to be
destroyed. This will increase further the
development cost of a new product. As a
result, many small local generic
pharmaceutical manufacturers have to
withdraw some products requiring BE from
the market and also to avoid developing
new products requiring BE testing.
Unlike many other countries where the
prices of medicinal products are closely
monitored and regulated, the Malaysian
government only monitors prices of those
supplied for use in the public health sector
while letting the market force to determine
the prices in the private health sector. Such
a free pricing policy was originally intended
to create healthy competition among the
manufacturers, be it branded or generic.
Unfortunately, intense pressure from the
increasingly stringent requirements imposed
by the NPCB, coupled with the competition
arising from foreign generic manufacturers
(such as the Indian generic producers), has
rendered the Malaysian generic industry
becoming too competitive, thus discouraging
the entry of new local generic players and
at the same time forcing the exit of smaller
less-competitive players. Therefore, the
Malaysian government should, like Thailand
and Indonesia, impose certain entry barriers
for foreign generic manufacturers in order to
protect the local generic industry. The
implementation of ASEAN Harmonization
on Pharmaceuticals in 2009 may present the
Malaysian pharmaceutical industry with
opportunities to freely penetrate the ASEAN
market. However, this harmonisation also
opens up the Malaysian pharmaceutical
market to the members of ASEAN countries,
intensifying further the competition in terms
of pricing and product quality, which already
existed among the local generic
pharmaceutical manufacturers.
© 2009 Palgrave Macmillan 1741-1343 Journal of Generic Medicines Vol. 6, 3, 246–252
Furthermore, the current economic crisis
worldwide has put additional pressure on the
local generic companies, particularly those
that are more dependent on the sales of
nutraceuticals than prescription drug products,
where demand for such health supplements
will tend to decrease. Thus, the local
pharmaceutical industry may face more
challenging times ahead.
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