Given its developing nature, Thailand's pharmaceutical market will continue to be of interest to multinationals. However, risks remain high, both on the political and the regulatory side. The government is also looking to increase domestic drug-producing capacities in order to reduce reliance on imports of expensive modern treatments.
Pharmaceuticals: THB126.53bn (US$3.99bn) in 2010 to THB131.23bn (US$4.41bn) in 2011; +3.7% in local currency terms and +10.5% in US dollar terms. Forecast unchanged from Q411.
Healthcare: THB421.36bn (US$13.28bn) in 2010 to THB447.09bn (US$15.01bn) in 2011; +6.1% in local currency terms and +13.0% in US dollar terms. Forecast down slightly from Q411 due to macroeconomic factors.
Medical devices: THB30.33bn (US$956mn) in 2010 to THB32.79bn (US$1.10bn) in 2011; +8.1% in local currency terms and +15.2% in US dollar terms. Forecast unchanged from Q411.
Business Environment Rating: Thailand's Pharmaceuticals & Healthcare Business Environment Rating (BER) composite score fell by 4% quarter-o-quarter (q-o-q). The new score of 47.6 places Thailand in 12th position, out of the 18 countries surveyed in the Asia-Pacific region, down from 11th previously. Its reward and risk profiles are relatively evenly balanced, with both also falling below the regional averages. Low per capita spending on healthcare and the need for fiscal consolidation will continue to represent challenges to the development of the country's pharmaceutical market.
In October 2010, US computer networking company Cisco Systems entered a partnership with Thailand's Siriraj Piyamaharajkarun Hospital (SiPH) to collaborate on the TelePresence System as part of the development of the 'Hospital of the Future'. Under the deal, Cisco technologies will be used along with wireless mobility, security, voice and video to develop a borderless hospital offering the next generation of patient care and hospital administration.
In September 2011, the Health Systems Research Institute of Thailand claimed that medicine patent laws were driving up drug prices in the country, calling for amendments to the Patents Act and patent application processes. The Institute claims that evergreening patents represent the majority of patents granted over the past decade, to the detriment of patient access to cheaper medicines and also to domestic research and development (R&D) activities.
The use of herbal medicines is on the rise in hospitals in Thailand, according to the Public Health Ministry. Paichit Warachit, permanent secretary for Public Health, said that all hospitals under the ministry are offering Thai herbal medicines as an alternative cure. He added that the use of traditional medicines had been promoted by the ministry along with western medicines. Currently, the National List of Essential Medicine includes 71 herbal medicines. Paichit noted that the value of herbal medicine used in health stations and hospitals across the country stood at THB146mn (US$4.9mn) in 2010.
The Thai government is set to introduce a new set of tax rules over the coming months. These include slashing the corporate tax rate from 30% to 20% by 2013, while also raising personal income tax for the wealthy and reducing the amount of deductions allowed to offset taxable income. The government is also reviewing proposals to raise consumption taxes to offset an increase in public spending over the coming quarters. Nevertheless, we expect the government to maintain a business-friendly tax system over the coming years, even though the recent increase in minimum wages was seen as a move against this sentiment.
Policymakers in Thailand have been urged by experts to create a better plan in preparation for the regional integration under the ASEAN Economic Community (AEC) in 2015. In addition to creating a single market and production base, the AEC would also result in the free movement of goods, services, investment, capital and labour. The AEC agreement calls for zero import tariffs as well as removal of other restrictions on trade, which have obstructed competition in cross-border trade dealings in the past. The policymakers need to create ways to specifically facilitate small- and mediumsized enterprises in ensuring an enhanced adaptability and competitiveness, according to Arin Jira, a member of the ASEAN Business Advisory Council.
Click for Report details:Thailand Pharmaceuticals and Healthcare Report Q1 2012
