In the first quarter of this year, Thailand’s pharmaceutical industry has expanded by 7.5 per cent year on year to Bt5.7 billion because the Covid-19 outbreak has boosted demand for drugs and vaccines.
OUTLOOK
The pharmaceuticals market is forecast to grow by only 2.0-3.0% in 2020 as fears of being infected by Covid-19 and the enforcement of social distancing measures in the first half of the year are keeping both foreign and domestic patients away from hospitals. And because hospitals are the largest distribution channel for medicines in Thailand, consumption of medicines will drop. However, in 2021 and 2022, growth would accelerate to 4.5-5.0% per year (Fig. 10 and 11) supported by several factors:
⦁ Rising incidence of patients with communicable and non-communicable diseases[10]. The most common communicable diseases are diarrhea, pneumonia and dengue fever, while the most frequently encountered serious non-communicable diseases (NCDs) are hypertension, diabetes, chronic obstructive pulmonary disease, heart disease and stroke (Figure 12). At the same time, Thailand has an aging population and among the elderly, large numbers are affected by chronic NCDs, especially hypertension which affects almost half of the elderly in Thailand[11], and less commonly, diabetes, heart disease, stroke and cancer. The Office of the National Economic and Social Development Council estimates the number of Thais over-60 will increase from 11.2 million in 2018 to 13.5 million in 2023 (Figure 13) and that expenditure on healthcare for the elderly will rise to THB228bn in 2022 (2.8% of GDP) from THB63bn in 2010 (2.1% of GDP) (source: Thailand Twelfth National Economic and Social Development Plan (2017-2021)). Given this, domestic consumption of drugs and imports of patented medicines from overseas manufacturers are likely to increase steadily.
⦁ The extension of the public universal health coverage scheme means that almost all Thais now have access to better quality healthcare. In fact, over 99% of the population is now covered by some kind of health insurance. Over 75% of the population has a right to free healthcare under the Gold Card scheme, followed by 17% who can access health services under the social security scheme, and 7% have private insurance. Because of this, during 2020-2022, expenditure on medical treatment (for both medicines and care) is expected to grow by 6.6% per year (vs 6.3% in 2019), comprising 6.9% growth in public-sector spending and 5.5% growth in private sector spending, which would be an increase from 6.7% and 5.1% growth in 2019, respectively .
⦁ Number of overseas patients seeking treatment in Thai hospitals will grow again in 2021 and 2022. Private healthcare operators in Thailand offer superior quality healthcare and services as well as inexpensive medical fees. Many also operate specialist centers, especially for the treatment of NCDs including heart disease, rare bone conditions, and cancer, as well as senior care centers which are often cheaper than alternatives in Singapore and Malaysia. This has attracted a rising number of non-Thais to the country to seek treatment, with growth driven by both general and medical tourists which account for 80% of all foreign patients. Most of the foreign patients that seek Thai medical care come from East Asia, Europe and the Middle East. Krungsri Research estimates the number of foreign patients increased by 4.5% in 2019, but would shrink by over 60% in 2020 with the sharp drop in foreign tourist arrivals because of Covid-19.
⦁ Health concerns have put people on high alert, which could encourage individuals to seek medical care in hospitals and/or buy medicines from pharmacies although they have only mild symptoms.
OVERVIEW
The majority of Thai conventional medicine manufacturers are final-stage producers of finished generic drugs. The active ingredients are usually imported for domestic mixing and production into several forms for use in treatments. Thailand imports about 90% of all inputs used in the production of finished products. The highest value medicines are analgesics and medicines for treating fever. Data from the Food & Drug Administration show that as at February 2020, there were 144 domestic pharmaceuticals producers accredited with Good Manufacturing Practice (GMP) standard. But, not more than 5% have the ability to manufacture active ingredients (such as aluminum hydroxide, aspirin, sodium bicarbonate, or deferiprone) and they are largely for use in-house as inputs for finished products. In R&D, Thailand has been involved mainly in research into vaccines, for example against HIV, bird flu and influenza.
The main state manufacturer of pharmaceuticals is the Government Pharmaceutical Organization (GPO). Previously, government hospitals had to purchase their supplies principally from state suppliers. However, the Government Procurement and Supplies Management Act B.E.2560 which came into effect in August 2017 is intended to increase competition. This effectively allowed state hospitals to purchase supplies from non-GPO suppliers. This created a level playing field for private enterprises and increased competition between the GPO and private sector players, including suppliers in India and China which export low-cost products. Players in the medicines sector can be split into two groups (Figure 3).
⦁ Group 1 comprises state enterprises, such as the GPO and the Defense Pharmaceutical Factory, which emphasize the production of generic drugs as alternatives to imported drugs.
⦁ Group 2 comprises private sector producers. This can be divided into two sub-groups: (i) local manufacturers with Thai shareholders, which typically produce general-purpose low-cost generic drugs. Examples include Siam Pharmaceuticals, Berlin Pharmaceutical Industry, Thai Nakorn Patana, Biopharm Chemicals and Siam Pharmacy. Contract manufacturers such as Biolab, Mega Lifesciences and Olic (Thailand) also belong in this group; and (ii) multinationals (or MNCs) with foreign shareholders, which focus on original drugs and operate as agents to import pricier drugs for distribution in Thailand, though some have also established production facilities in the country. Operators in this group include Pfizer, Novartis, Roche, and Sanofi-Aventis (Figure 4).
Currently, two laws govern the manufacture of pharmaceuticals in Thailand. They are: (i) Patent Act B.E. 2522 (1979) and amendments, which grant patent-rights to discoverers and inventors (i.e. protects intellectual property rights), supervised by the Department of Intellectual Property; and (ii) Drug Act B.E. 2510 (1967) and amendments[2], which regulate the manufacture, import, sale and marketing of drugs in Thailand. In terms of regulatory bodies, the Food & Drug Administration (FDA) is responsible for overseeing compliance in the sector. Its tasks include licensing operators and registering drugs for domestic distribution. Potentially partnering in CPTPP would have a long-term effect on Thailand’s registration of drugs and licensing of patent.[3] This could extend drug patent rights for manufacturers of original drugs beyond 20 years, and domestic drug prices will remain extremely expensive.
Medicines and pharmaceuticals are distributed through two main channels
⦁ Hospitals: Thailand’s public healthcare system is extensive, covering both civil servants and the majority of scheme claimants. By value, 80% of the total domestic market for medicines is distributed through hospitals, comprising 60% government hospitals and 20% private-sector operations. Medicines distributed through hospitals are generally prescription drugs, which can be further sub-divided into (i) generic drugs, which account for 61% of the value of medicines distributed via hospitals, and (ii) patented drugs, which make up the remaining 39%. But although this latter group has a smaller share, consumption of patented drugs is growing faster than the consumption of generic drugs, because they are mostly used to treat common chronic non-communicable conditions such as high blood pressure, diabetes, and heart disease.
⦁ Over-the-Counter (OTC) medicines: Although the government health insurance scheme encourages individuals to increasingly seek medical care in hospitals instead of buying OTC medicines from pharmacies, the latter remain an important distribution channel for those with common minor ailments which can be treated with a quick trip to a pharmacy. Hence, the value of the OTC drugs market has been stable at 19-20% share of the total market for medicines. Nationwide, there are 20,516 registered pharmacies, 25% of which are in Bangkok and 75% in the provinces (source: FDA, August 2019). Pharmacies can be split into the two major groups: (i) stand-alone stores, mostly SMEs, which account for over 80% of pharmacy outlets in the country, and (ii) chain stores, which may either be run, centrally-funded, or organized for expansion through franchising, such as Fascino and Save Drug (a member of BDMS). Beyond this, modern trade outlets (including discount stores, supermarkets, convenience stores and specialist health stores) are turning over a part of their floor space to medicines and pharmaceuticals, and so are able to reach a wide range of customers.
Source Krungrsi Research
