Malaysia’s healthcare market has huge
potential for growth. Medical tourism, easy regulatory guidelines, a lack of
strict price regulation and an increasing elderly population, as well as the
fact that Malaysia is not dependent on imported branded products, will provide
the necessary impetus for its growth.
Its value was an estimated $1.2 billion
in 2008 and is projected to reach approximately $3.7 billion by 2020, at a
Compound Annual Growth Rate (CAGR) of 9.5% (MOPI, 2014). The proportion of
Malaysia’s population aged 65 or above is expected to increase at a CAGR of
4.2%, from 5.5% in 2013 to 7.0% in 2020 (Department of Statistics, 2013b).
Reforms, such as free outpatient registration for the elderly, will impose a
financial and logistical burden on the healthcare system but will also act as a
driver of growth in the healthcare market.
Medical tourism is another driving
factor for Malaysia’s pharmaceutical and healthcare industry. Its healthcare
tourism market increased by 51% in terms of revenue and 63% in terms of
visiting foreign patients, between 2010 and 2012 (MHTC, press release, April
29, 2013). This growth has been supported by government policies, such as tax
exemption for hospitals.
Government initiatives that aim at
increasing investment in the pharmaceutical industry, such as Entry Point
Projects (EPP) and National Key Economic Areas, have so far been successful.
Companies such as Chemical Company of
Malaysia Pharmaceuticals, Biocon, Ranbaxy (Malaysia) Sdn Bhd and Kotra Pharma
have made either significant investment or strategic agreements in Malaysia as
part of the EPP3, which aims at increasing generic manufacturing for exports
(ETP, 2013a). The expected patent expiry of drugs such as Abilify
(aripiprazole), Celebrex (celecoxib) and Nexium (esomeprazole) will also drive
the market.
The implementation, pending
parliamentary approval, of a National Health Insurance System (NHIS), which
will lead to universal healthcare coverage, is expected to be another driver of
the pharmaceutical market. Currently, the lack of universal healthcare
insurance forces people to purchase medicine from the open market and results
in high Out-of-Pocket (OOP) expenditure.
The Malaysian medical device market is
growing and constitutes approximately 25% of healthcare expenditure (ETP,
2012a). Initiatives, such as the voluntary registration system, launched in
2006, for medical device companies and the introduction of the Medical Device
Act 2012, are expected to have a significant impact on the medical device
market. In 2012, as a result of these initiatives, the medical device market
saw a surge in investment from private companies. The size of the medical
device market in Malaysia was approximately $585m in 2010 (ITA, 2008).
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Malaysian
Regulatory Authority
The Malaysian regulatory authority
provides a transparent and efficient regulatory system to facilitate the
approval of pharmaceutical products and medical devices, which positively
influences the growth prospects of the healthcare market. In Malaysia, the
National Pharmaceutical Control Bureau (NPCB) is the main regulatory authority
for pharmaceutical products, working under the guidance of the Ministry of
Health (MoH). The marketing authorization of a new drug requires certification
from the NPCB and MoH for good laboratory practice and satisfactory safety,
efficacy and quality. The total number of prescription (control medicines) and
non-prescription (OTC) drugs registered in Malaysia was 23,805 during the
1991–2012 period (MoH, 2013b). The approval time for prescription drugs and
non-prescription drugs is 210 working days (NPCB, 2014c).
The patent expiry of innovative drugs
opens up a significant commercial opportunity for generic drugs. Since 2012, a
Bioequivalence (BE) study has been mandatory for the approval of all generic
drugs in Malaysia, leading to an efficient regulatory system for generics and
streamlining the approval process for them (NPCB, 2014g).
The Drug Control Authority (DCA) has a
‘‘queue’’ system for reviewing the applications and documents submitted for
approval according to product category. The order of priority, from highest to
lowest, is new chemical entities, biologics, generics, OTC drugs and
traditional products. The drugs intended for the treatment of serious or
life-threatening diseases are reviewed on a priority basis (NPCB, 2014c).
In February, 2012, the Medical Device
Act 2012 or Act 737 and Medical Device Authority Act or Act 738 was published
in the official gazette of Malaysia. Medical Device Act 2012 came into effect
by end 2012 and has been undergoing a transition period before it is fully
enforced in 2014. This act specifies the requirements for the registration of
medical devices, licensing for medical device manufacturing and Conformity
Assessment Body (CAB) registration (MDB, 2013a).
Private
Sector Dominates Malaysian Healthcare System
The lack of adequate facilities in the
government healthcare set-up and high OOP expenditure result in the private
sector dominating the healthcare system. The government provides an easy access
to healthcare facilities to the population through primary care services such
as 1Malaysia clinics. The primary care centers are prevalent in rural and urban
areas, providing healthcare services to all of Malaysia’s population. However,
the public prefer private healthcare services over public healthcare services,
due to the unavailability of advanced diagnostic services and long waiting
times and even the unavailability of required medicines in public healthcare
facilities.
In 2011, public healthcare expenditure
accounted for approximately 61.2% of total healthcare expenditure, while
private healthcare expenditure accounted for approximately 38.8% (World Bank,
2014n). OOP expenditure as a share of total healthcare expenditure was valued
at 41.7% (World Bank, 2014o). The lack of a law controlling drug prices creates
extra burden on the public. There is no reference price policy in Malaysia, and
prices are decided by manufacturers, wholesalers and retailers. The high retail
price markups make drugs costly for the Malaysian population (Department of
Statistics, 2014).
The government plans to introduce the
NHIS, under the National Health Financial Scheme. This system will change the
healthcare infrastructure, provide universal coverage to healthcare facilities
and reduce the OOP payment of the population.
Ministry
of Health Healthcare Policies and Initiatives
MoH’s healthcare policies and
initiatives augur well for the growth of the healthcare system in Malaysia. The
government is focusing on reducing the disease burden, especially that of the
elderly population, in order to improve its global competitiveness. The MoH has
framed a number of policies for the prevention and early detection of various
disease conditions. Efforts are ongoing to improve the quality of life,
workforce productivity and cost efficiency. This is expected to lead to
improvements in patients’ health outcomes and quality of life.
- In 2010, the MoH introduced the
Cardiovascular Disease and Diabetes Prevention and Control Program in Malaysia
(2010–2014). This program was introduced under the National Strategic Plan for
Non-Communicable Disease (NSP-NCD). Through this program, MoH is trying to
reduce the prevalence of cardiovascular disease and diabetes.
- In 2009, MoH established the Malaysia
Healthcare Travel Council (MHTC) to develop and promote the medical tourism
industry. The purpose of MHTC is motivating public and private sector
collaboration in setting up strategic plans for the promotion of healthcare
services through promotional activities and increasing medical tourism.
- As of February 2013, the government
had established 178 clinics through the 1Malaysia program (MoH, 2013a). These
1Malaysia clinics are operated by medical assistants, rather than doctors. They
were established to reduce congestion in urban-based public hospitals.
Political
Stability and Strong Government Initiatives have Resulted in Economic Growth
In 2012, Malaysia was ranked 25th in the
Global Competitiveness Index 2012–2013 for health and primary education
facilities. It had been ranked 26th in the 2010–2011 period (MASTIC, 2013).
Malaysia’s strong and consistent economic performance is due to its efficient
and sound financial sectors, which place it among the world’s developed
countries. The Transformation Initiative (2010) helped the economy enormously,
by increasing investment and production in different sectors. Malaysia’s
overall investment grew by 19.9% in 2012, compared with 6.5% in 2011. Private
investment has increased threefold since the implementation of the ETP,
increasing to 22% in 2012 (ETP, 2012a).
Owing to the multiple projects and
initiatives implemented by the government, Gross Domestic Product (GDP) saw a
constant growth from 2009 to 2013, and the deficit as a percentage of GDP
decreased to 4% in 2013 (MoF, 2013). Significant growth in GDP, Gross National
Income (GNI) and exports in the past two years shows the development of
Malaysia’s economy.
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