The analysis, by GBI Research, said that both countries have recently joined the ranks of the world’s top 20 most populated. However with a lack of CRO (contract research organisation) activities in the regions, “huge” patient populations remain untapped.
Regulatory woes for manufacturers, as well as unfavourable legislation – in particular in Indonesia where foreign pharma companies are required to maintain local facilities in order to operate and obtain drug licenses – means the CMO (contract manufacturing organisation) business is also so far largely unsaturated.
But now after realising the potential economic and social benefits of having a productive in-country pharmaceutical manufacturing industry, the study said the Governments are taking action to attract more outsourcers, says GBI.
Counterfeit drug problems rank high on both authority’s reform list – valued at $881.6m (€693.4m) in Indonesia and makes up 30 per cent of the of the total medicines sold in the Philippines, according to the FDA and the Philippine Pharmacists Association.
Both countries are now apparently fixing their so-called “ineffective” enforcement of IPR (intellectual property rights). 100 per cent foreign ownership of drug firms is the proposed solution for Indonesia, “consequently elevating the quantity and value of home manufacture,” whilst pulling plants up to GMP (good manufacturing practice) standard.
The Philippines is working with the US to beat the problem. Analyst Prachi Saxena told Outsourcing-Pharma.com: “The US has encouraged ongoing efforts to address shortcomings in the judicial system, and advised on the establishment of specialized IPR courts so that rights holders have a reliable avenue for recourse and prosecutions move forward effectively and without delay.”
For the research sector, a “lack of research budget has been a major hindrance,” the authors added.
They said however the countries simply do not have the funds to pump into research projects, and that more companies conducting trials in the area will boost the sector, as well as ensuring Western regulatory standards are put in place. “Sufficient research funds need to be generated to finance the training of more health scientists in order to meet up-to-date industry standards.”
Kinks to work out
Besides actions currently underway however, the report recognises that extensive changes to the legal system must happen if the counties want the Western market to outsource to the region.
“Currently, foreign pharmaceutical companies are required to maintain local manufacturing facilities in order to operate in Indonesia and obtain drug licenses,” said Saxena.
However, according to the report, the Indonesian Government is planning to abolish restrictions on overseas investment in Indonesia’s pharmaceutical sector.
“The companies can partner with a local manufacturer in order to operate in Indonesia and obtain drug licenses. High fragmented nature of Indonesian pharmaceutical market will further encourage such partnerships,” Saxena added.
The report also said that Philippine laws on possession of medical facilities must also be altered in line with plans, because they do not allow foreign equity ownership.
“Foreign citizens may provide services as a medical provider,” the analysts said. “But if foreign professionals wish to practice in a corporate form, then foreign ownership of that corporation would have to be limited to 40 per cent. “