Thailand- A Booming Land For Pharmaceutical Companies
Thailand has one of the most significant contributions towards the pharma market, among ASEAN countries.In 2021 the Thai pharma market had a total contribution of 6.3 billion US dollars, which is expected to rise to 8.4 billion USD by 2026. The market of the pharmaceutical industry in these areas is rapidly growing due to the rise in regular wages. Prioritization of health care sector by governments of these countries are also contributing to the growth of the pharma industry.
Thailand Health Care on the World’s Map
Thailand comes on the six spots with a total 67.99 health Care index, as per the report published by CEOWORLD in August 2019. It plies that Thailand is providing the world’s sixth-best medical facilities to its people. The second ASEAN near to Thailand in Singapore, at 24the spot with a total point on health Care index as 48.54.
The health care index is considered as a statistical analysis of the overall health care facilities of the country. In includes:
- Health care infrastructure, including the condition AMD facilities at hospitals. It includes the building as well as all the amenities provided to the patient, medical professionals, etc.
- Competency of Medical professionals.
- Cost of treatment
- Availability quality medicine
- The readiness of the government.
Thailand Pharmacy Retail Market Overview and Size:
Volatile growth was observed within Thailand pharmacy retail market as multiple pharmacy stores closed due to the non-compliance of GPP standards required by the FDA. However, the closure of pharmacy outlets resulted in higher customer footfall in other pharmacies; hence a lower revenue growth rate was recorded in the year 2019. The market was observed in the growth stage owing to the growing intensity of competition among the retail pharmacies in the market in terms of wide product offering and value-added services. The franchise model has become quite popular with new chains adapting to this model for faster store expansion. Moreover, a collaboration between state hospitals and small chains has helped patients being treated under “UHC” alongside the growth of pharmacy stores. Change in population structure i.e. the transition to the Thai aging society has led to a surge in drugs (including dietary supplements) demanded towards chronic diseases such as hypertension, diabetes, and others. The market is booming owing to the rising number of cases of NCDs, online pharmacy services, increasing government health expenditure, and other growth drivers.
Thailand Pharmacy Retail Market Segmentation
By Market Structure (Organized and Unorganized Market):
The unorganized segment dominated in terms of revenue as well as basic number of pharmacy stores in Thailand during 2019. The particular segment is competitively positioned in OTC, Generics & Health Supplements & generally do not provide home delivery services.
On the other hand, the organized segment has established a strong presence across all the regions in Thailand that resulted in a higher footfall of customers at these outlets. In addition, organized chains have mobile applications, higher brand value, strong presence, and higher product listings & provide home delivery services.
By Product Categories (Prescribed Medicines, OTC, Non-Pharmaceuticals, and Medical Equipment): Prescribed drugs dominated the market in terms of revenue in 2019 largely due to the higher price/margins involved. Among the other product categories, OTC & Non-Pharmaceutical products were consistently growing in terms of revenue share. Medical equipment captured the least revenue share.
By Drug Type (Generic and Patented Drugs): Generics Drugs within Thailand dominated in terms of revenue as it has high consumption volume alongside rising government healthcare schemes to increase patient purchasing power in the country. Whereas, patented drugs on the other hand are ailment specific.
By Therapeutic Class (Cardiovascular, Anti-Infective, Pain / Analgesics, Respiratory, Vitamins / Minerals / Nutrients, Anti Biotic, Gastrointestinal, Gynecology, Neuro, Oncology, Ophthalmology, and Others): Cardiovascular class dominated the market in terms of revenue in 2019 majorly due to surge in Heart Failure (HF) risk factors such as obesity, hypertension & diabetes, related to changing lifestyle; followed by Anti-infective segment.
By Region / Cities (Bangkok, Central, South, Northeast, North, Eastern, and Western): Bangkok and its vicinity captured the second-highest number of pharmacy retail outlets (central region being the first) during 2019. However, in terms of revenues Bangkok region dominated majorly due to higher customer footfall & average basket size towards medicines in a particular region.
Comparative Landscape of Thailand Pharmacy Retail Market
The competition stage within the retail pharmacy industry has become highly fragmented with numerous unorganized chain brands present across almost every region. On the other hand, penetration of organized space is increasing over the years with top five players including Watsons Thailand, Boots Thailand, and Pure Pharmacy by Big C, Fascino Drugstores, and Save Drug. The players in the industry compete on the basis of parameters such as Number of Pharmacy Stores, Geographical Presence, Brand Recognition, and Partnerships with Telemedicine & E-Prescription Providers, product portfolio, online deliveries & Other Value Added Services.
Distributors of pharmaceuticals (retailers and wholesalers)
In general, the manufacturers and/or importers will deliver medicines to health facilities by themselves. Currently, the logistic system has been drastically changed by the technology, resulting in an emergence of skillful companies managing warehouses and pharmaceutical delivery business. Many pharmaceutical importers presently prefer to dedicate the inventory and logistic system to these logistic companies which represent as the pharmaceutical distributors and being responsible for the inventory under good storage and good delivery practices. As for drug delivery, there is a tracking system which facilitates the drug companies to check delivery status themselves, similar to that of the online counterparts. In the government sectors, the Government medicines to the public hospitals. The organization also represented as the supply security partner in Universal Health coverage in Thailand by taking the responsibility in procuring and distributing drugs in the special projects under the National Health Security Office and the Social Security Office via the Vendor Managed Inventory (VMI) system. Keywords: drug procurement, drug distribution, drug inventory management.
Pharmaceutical Organization plays an important role in procuring and distributing medicines to public hospitals, especially distributing drugs to special projects under the National Health Security Office and the Social Security Office via the Vendor Managed Inventory (VMI) system. On the other hand, the wholesalers who act as traders tend to have reducing role because the direct ordering systems from manufacturers are easy and convenient to use with better tracking systems. However, wholesalers still play a crucial role in distributing medicines to service facilities in case of short-term drug shortage. More-over, they also distribute medicines to those clinics and pharmacies which have fewer demands
Distributors’ revenues will rise, albeit only gradually, supported by rising domestic demand for medicines. But as with manufacturers, competition will intensify, especially for stand-alone retailers and general pharmacies. They will face rising threat from large operators of chain stores, some of which have aggressive expansion plans. For example, Fascino (a pharmacy chain) plans to extend its current network of 100+ branches by opening 200 franchise outlets over the next 3 years, Save Drug (part of Bangkok Hospital group) hopes to expand its network of 100 branches nationwide, and large modern retail operations, including discount stores and supermarkets, also expect to divert more floor-space to medicines and supplements. Over the next 3 years, Thailand is expected to see at least 50 new pharmacy stores annually. These developments will increase the dominance of chain stores, but most convenience stores also carry a range of pharmaceutical products and they have outlets across the country. Thailand is projected to see 600-700 new convenience stores per year, which will increase competitive pressure for stand-alone operators. As such, pharmacy operators will register limited earnings growth.
Wholesalers of pharmaceuticals are also increasingly expanding into the retail market, and because they enjoy cost advantages by being able to place larger orders, their earnings should continue to grow.
The finished products then are distributed to healthcare providers by distributors, wholesalers and manufacturers. Instead of allowing a third party to deliver their products, there are many manufactures that are responsible for distributing their own products allowing them to leverage margin on self-manufactured products to discount the distribution fee.
in Thailand, healthcare supply chain is a new concept. Operations and co-ordinations across players are still neglected. It seems that most hospitals focus only on healthcare performance and undermine its own operational performance. However, supply chain problems, data inconsistency, fragmented system, and inefficient business process, affect not only at operational performance but also lead to negative impacts to patient safety.
Healthcare supply chains exist as highly fragmented systems in which manufacturers, distributors, wholesalers and suppliers operate independently of each other. Fragmentation complicates the task of linking the thousands of partners involved at any stage in the chain.
It is evident that an inefficient process leads to poor performance and avoidable costs in the healthcare industries as activities related to the purchase, distribution and management of supplies represent about one third of the operating costs of healthcare facilities.
IS IT TIME TO CHANGE?
Perhaps the time has come to look at other integrated healthcare provider models, such as the European ones. A few years ago some European countries, such as Italy, were experiencing the same problems of fragmentation in the pharmaceutical supply chain. Today, with the concentration of large distribution groups and the implementation of systems, many of those problems have been solved for the benefit of patients.
An example is given by the PHOENIX Group wholesaler, Comifar.
The Comifar Group is the main operator of the Italian pharmaceutical distribution, with a market share of approximately 19%. 13,000 client pharmacies, 21 distribution units and 3 HUBs, more than 100,000 references managed and over 2,000 employees. The Group operates according to the “All-in-One” principle. It connects the pharmaceutical industry, wholesalers, pharmacies and patients. One focus is on logistics, another on business intelligence and patient services.
The PHOENIX group is a leading integrated healthcare provider in Europe. 40,000 employees, 161 Distribution centers in 26 countries, 2800 own pharmacies in 14 European countries, more than 200 Manufacturers benefit from the Pharma Services of the PHOENIX group, 155 million Customer contacts in pharmacies per year, 28.2billion euros in sales in the 2020/21 financial year.
Source: H Care Index, Krungsri B., Mahidol University, GPO, Phoenix Group