Pharmaceutical industry in Southeast Asia - statistics & facts
Southeast Asia as a region is often referred to as a pharmerging market. Globally, this umbrella term encompasses markets characterized by a yet unsaturated need for pharmaceutical products, fast growth, and strong government initiatives and investments in the industry. In recent years, factors such as pricing pressure, patent protection, and regulatory frameworks have slowed down growth in established pharma markets such as the U.S. and Japan. Thus, major pharma companies are increasingly looking to pharmerging markets for their untapped potential.
Alongside generics export-powerhouse India, Singapore is the only country in Asia with a positive trade balance for pharma products, highlighting many countries' reliance on pharmaceutical imports.
In the Philippines, the share of household out-of-pocket payments on health expenditure has been falling since 2014. It can be expected to decline further following the passing of the 2019 Universal Healthcare Act (UHC). In Thailand, the Universal Coverage Scheme (UCS) budget, introduced in 2002, reached a new peak in 2024. Indonesia's national health insurance (JKN-KIS) beneficiaries are more than 248 million, covering over 90 percent of the country's population.
While a lot of SEA's pharma demand is currently met by foreign companies, the region is becoming increasingly attractive as a contract manufacturing destination. In Indonesia, foreign direct investment in the chemical and pharma industry exceeded 4.5 billion U.S. dollars in 2022. This development is accelerated by government initiatives, such as an online form enabling business licenses in the country to be acquired within one day.
In 2022, the Association of Southeast Asian Nations (ASEAN) adopted the ASEAN Pharmaceutical Regulatory Policy (APRP). The APRP lays out the framework for further integrating the region's pharmaceutical market, striving to synchronize regulations and safety standards between national regulators. This can be expected to further attract international players to the Southeast Asian pharmaceutical market while also facilitating approval processes and intra-regional trade for local companies.
Singapore – a government-backed hub for research and innovation
Not classified as pharmerging, Singapore boasts Southeast Asia's most developed pharma market. The country is a globally renowned biopharma hub attracting substantial foreign investments for pharmaceutical and biological products and serving as an R&D and manufacturing base for international market leaders such as Pfizer, Novartis, and AbbVie. Its strong position in the global pharma landscape can be attributed to the national government's Biomedical Science (BMS) initiative launched in 2000, which entailed large-scale funding and the construction of Biopolis, a major R&D center.Alongside generics export-powerhouse India, Singapore is the only country in Asia with a positive trade balance for pharma products, highlighting many countries' reliance on pharmaceutical imports.
The road to universal healthcare coverage
Southeast Asia's pharma market growth can be primarily attributed to government efforts towards universal healthcare and synchronized regulatory standards across the region.In the Philippines, the share of household out-of-pocket payments on health expenditure has been falling since 2014. It can be expected to decline further following the passing of the 2019 Universal Healthcare Act (UHC). In Thailand, the Universal Coverage Scheme (UCS) budget, introduced in 2002, reached a new peak in 2024. Indonesia's national health insurance (JKN-KIS) beneficiaries are more than 248 million, covering over 90 percent of the country's population.
Synchronized regulations will further accelerate pharma growth in SEA
Indonesia is home to Southeast Asia's largest publicly listed pharmaceutical company, Kalbe Farma. Like many companies in the region, Kalbe's biggest business segment lies in the distribution of pharma products. The reliance on imported raw materials impedes large-scale production for local companies. In contrast, international providers importing branded drugs must adjust price points to compete with locally manufactured, lower-priced generics.While a lot of SEA's pharma demand is currently met by foreign companies, the region is becoming increasingly attractive as a contract manufacturing destination. In Indonesia, foreign direct investment in the chemical and pharma industry exceeded 4.5 billion U.S. dollars in 2022. This development is accelerated by government initiatives, such as an online form enabling business licenses in the country to be acquired within one day.
In 2022, the Association of Southeast Asian Nations (ASEAN) adopted the ASEAN Pharmaceutical Regulatory Policy (APRP). The APRP lays out the framework for further integrating the region's pharmaceutical market, striving to synchronize regulations and safety standards between national regulators. This can be expected to further attract international players to the Southeast Asian pharmaceutical market while also facilitating approval processes and intra-regional trade for local companies.
