Overview of the pharmaceutical industry in the ASEAN region

TOPIC 01 – OVERVIEW OF THE PHARMACEUTICAL INDUSTRY IN THE ASEAN REGION

This article provides an introduction to the Association of South East Asian Nations (ASEAN), Pharmaceutical industry and covers:-

• ASEAN regional integration
• The regulatory background and recent changes
• History of the pharma industry and typical status today
• Issues, opportunities and drivers for change

WHAT IS ASEAN (HTTP://WWW.ASEAN.ORG)

ASEAN was formed in 1967 and now consists of 10 nations. Its main mission is to accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership.

ASEAN is an increasingly important economic trading bloc of more than 600 million people. The member nations and their populations are shown below:

ASEAN IS HAPPENING IN 2015!

All across ASEAN, people and companies are scrambling to get ready for an integrated Economic Area in 2015. The potential of this area is vast and will enable access to a single regional trading bloc with millions of skilled workers and some of the fastest growing markets in the world. For the regulated industries the harmonisation of regulations in this integrated area is a key business driver and brings both opportunity and challenges to the local markets.

ASEAN is a very important development for the Pharmaceutical Industry because of the harmonisation of standards based on the Pharmaceutical Inspection Cooperation Scheme’s (PIC/S) GMP standard (http://www.picscheme.org). Similarly in other important regional industries such as Professional Services, Oil and Gas, Automobile and General Manufacturing there has been increasing adoption of best practices such as ISO, Sarbanes-Oxley, Risk Management, IT Compliance and Preventative Maintenance. These initiatives are increasingly seen as highly applicable and important to local and regional facilities and operations in order to remain competitive, to increase quality and to internationalise.

THE NEW REGULATIONS ARE HERE

In the Pharmaceutical business the deadlines are clear! By 2015 all ASEAN countries should be operating to the PIC/S GMP standard and already the Singaporean, Malaysian and Indonesian inspectorates are accredited and full members of PIC/S. These nations are leading the other ASEAN members who have development programs underway to gain membership for 2015 and to incorporate PIC/S as their national standard. In Thailand the PIC/S GMP Guideline was written into the national law.

For both the regulators and the regulated companies themselves in the industry then it is clear that the rise of ASEAN is bringing many changes to the status-quo. For the regulator the difficulties are in re-training and become rapidly up-to-date with the new requirements in order to fulfill new inspection standards. This is particularly difficult in specialist areas such as the use of IT, process control and automation and un-common dosage forms.

Also there is the ever changing landscape of new regulatory changes and concepts coming from the wider international arena in topics and requirements such as risk assessment, validation using a QbD approach, PAT, serialization / track and trace and continuous manufacturing. Understand the latest trends and technology is necessary to develop opportunities for new markets for new products and for the new generation!

For the regulated companies the challenges are to remain profitable under the onset of higher bottom line compliance costs, increasing competition from around the region, eroding revenues and the ever pressing need to internationalize.

SOME HISTORY

20-30 years ago many of the international pharmaceutical companies invested in the region and established manufacturing bases here. Alongside this investment then local companies developed often from pharmacy store chains into medium-sized private and family owned businesses, there was knowledge transfer and sharing from multinationals to the local companies.

20 years ago tax privileges and government incentives attracted multinationals to relocate to hubs particularly in Singapore and Penang. These were seen as more secure financially while providing a presence in the Far East to take advantage of lower labor costs and to gain market access. Local companies made relative large investments in infrastructure and facilities to support the growing local demand but the knowledge transfer from internationally exposed companies decreased.

5 – 10 years ago the investments made 20 years ago that were generally not well maintained due to lack of external drivers led to an environment in desperate need of development, the following conditions can be observed:

• A focus on the local markets, local expertise and experience
• Little international experience
• Manual processes
• More isolated/legacy GMP practices, less standardization
• Modern IT tools not available to SMEs
• Some technology solutions often built for other industries (e.g. MRP used in auto industry)
• No integration of data or workflows across systems.
• Mostly data and processes managed on paper
• Large amount of manual entry and transcription between sources.

A TYPICAL ASEAN PHARMACEUTICAL COMPANY TODAY

NOTE there is very little API made in the whole of ASEAN with the exception of Singapore and a base of local herbal API manufactures. Companies generally import active precursor’s from India, China, EU and USA with the common and cheapest source of API usually from China.

A typical Medium Sized Pharmaceutical production company in ASEAN is either a family owned or ex-family owned company and produces formulated products and packing for its local market. The company distributes to hospitals, wholesalers and major retail outlets. In this typical facility there is 600 staff, producing a total of 300 products. The products are mainly OSD with ‘conventional API’ (no potent products), also liquids and creams.

Note a few companies also have some Sterile production, typically LVP IV (saline and dextrose) and SVP typically optical solutions.

In our typical facility there are 50 batches per week in a multiproduct processing plant, with ‘open ‘ processing, a typical batch is 1 million tablets.

Many companies have been established for 30, 40 or even 50 years and some of the premises are old and difficult to modify. With the establishment of ASEAN and PIC/S then many companies are having to heavily renovate or build complete new production facilities (often on green field sites outside of cities in new industrial zones) to cope with the new requirements especially to meet HVAC, facility layout and architectural/cleaning requirements.

Regarding records there are very detailed batch records on paper and these are reviewed by QA to allow the release of products. There are other records but in the past these have been incomplete and not well controlled.

There is very little automation anywhere, many companies have entirely manual operations throughout and have operated in this manner since the company began. Most companies are run under managements predominantly educated in pharmacy who are good at pharmaceutical production and laboratory procedures but in general not as experienced with IT and Engineering strategies.

Many of the larger local companies installed ERP/MRP systems 20 years ago using software developed for the auto industry. More recently companies have taken on board modern office network systems and spreadsheets are heavily used across multiple departments including purchasing, finance, production and QC/QA.

CURRENT WORKING SITUATION

Salary for a professional is about 1000 dollars per month and salary for an operator is about 300 dollars per month. With a reference to costs, then a good hotel maybe 50 US dollars per night, the cost of a meal from 1 dollar and an annual holiday entitlement of 2 weeks. Private companies generally do not support employee’s to travel to meetings outside the country for trainings and seminars, any travel outside the country is difficult and a big issue for conducting audits of overseas suppliers.

WHAT DOES PIC/S MEAN TO ASEAN PHARMACEUTICAL COMPANIES?

PIC/S of course brings many challenges to the regional Pharmaceutical manufactures, however in a classic eastern warrior move then the most forward looking of ASEAN companies are looking to turn this to their opportunity;

The main challenges of becoming compliant to the new regulations are in terms of constraints of existing production facilities, inadequate quality management systems, inefficient methods for record control and local regulatory environments which all must improve quickly.

The clear opportunity is to establish then leverage the harmonized GMP standards in order to register products in other ASEAN countries and potentially to look to other PIC/S members globally in order to find new markets for products.

WHAT DOES ASEAN INTEGRATION MEAN TO REGULATORS?

Regulators and national governments in the region are also seeing a wide impact from PIC/S as a means to achieve better inspection consistency and to bring credibility to the region as a revived manufacturing hub to produce products and pass inspection for outside the region, for example in Australia, Japan and the EU.

The ASEAN technical working groups of the member nations have also implemented standards in other related areas such as for common registration procedures for Pharmaceutical products. The ASEAN Common Technical Dossier (ACTD) is a standardised format for the compilation and submission of documentation required for drug registrations that is harmonized now across all ASEAN countries. This standardization was intended to drive efficiency and has enabled nations such as Malaysia and Singapore to establish partly or fully electronic submission platforms that reduce greatly the efforts in handling the large amounts of paper documentation required.

FAST DEVELOPMENT, BUT STILL A LONG WAY TO GO

The forward looking Pharmaceutical manufacturers are looking to make maximum use of this large integrated market but they need to increase quality standards rapidly in order to do this. The majority of the companies in ASEAN can be considered as several years behind the EU in the areas of compliance and technology but some are now starting to catch up.

Today there are native ASEAN companies that are producing Pharmaceuticals with total annual revenues (including non-Pharma) of greater than 1 Billion US dollars and this access to larger capital will result in further investments, faster development and regional expansion.

In the next 6 years a large number of block buster drugs will come off patent and as the western multinationals lose their price protection and the medicines become more affordable then the local demand will boom. The ASEAN companies with an accumulated experience in the production of generic medicines, access to greater financial reserves, established supply chains and comparatively low production costs are well positioned. These factors should lead to further strong potential across

ASEAN in the short term and the longer macro-economic fundamentals of a fast growing and wealthier middle class will play an important part of the longer term growth for both the Pharmaceutical markets and manufactures in the region.