Pharmaceuticals Thailand report 2007

ThailandPharma reportFebruary 2007

THAILAND DEF11/01 14/01/07 13:19 Page 1

Thailand:

ow that Thailand can guarantee healthcare for a vastnumber of our people, we are on our way to becomingthe medical hub of Asia. This year only, more that one

million foreigners received our high-quality healthcare. Othercountries in the region might try to position themselves ashealthcare hubs too, but we are different with our modern hospi-tals and good qualified human resources (HR)” claimed Dr. PratBoonyawongvirot, permanent secretary of the ministry of health(MOH).

Thailand might already have become a medical tourism des-tination but the country still needs to sort out serious issues on itslocal market as the country healthcare system is largely under-funded, the country depends on imported drugs and APIs, localcompanies are lagging behind in terms of manufacturing prac-tices and international pharma companies have delocalized theirproduction to neighboring countries.

But there is across-the-industry fear that as the insufficientfunding of healthcare programs, together with the price erosionwill put increasing cash flow problems for the market players.

Universal Health Coverage scheme

The challenge for the self-proclaimed “Land of Smiles” is tomanage the sensitive combination of international competitive-ness and social justice.

“The quality of healthcare is very satisfactory,” says Dr. Prat.“Today, 47 million people are covered by the new 30-BahtScheme, the Social Security Scheme covers another 10 millionand the rest of the population is covered by a civil servantscheme. In our Kingdom, everybody is guaranteed access tohealthcare.”

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Dire need fornew investment

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The pioneering 30-Baht Scheme (also known as UniversalHealthcare Coverage) Dr. Prat refers to was launched in 2001,covering six provinces and all MOH hospitals. The idea of offer-ing cost-subsidized healthcare at the point of delivery wooedmillions of low-income people. Eligible patients registered withhospitals closest to their homes and needed only to pay 30 baht(about 71 cents in US currency) for a hospital visit for treatmentof all illnesses. Apart from guaranteeing healthcare to the lowerincome group, the 30-Baht Scheme has enabled people who werenot covered under any program to access necessary medicaltreatments. Previously, a visit to the hospital required a fee of200 baht (around $4.50) or more.

The new government, appointed last fall following a blood-less military coup, has already declared that the 30-Baht Schemewill be replaced by free medical treatment throughout the coun-try. “Hospitals won't be richer or poorer whether or not theyreceive 30 baht,” said the new public health minister MongkolNa Songkhla.

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But there isa c r o s s - t h e -industry fearthat this couldharm thealready insuffi-ciently fundedhealthcare pro-grams, andtogether withthe price ero-sion put

increasing cash flow pressure for thestakeholders.

Fulfilling the needs of Thai people

The first company to be hit could be thestate owned Government PharmaceuticalOrganization (GPO). GPO enjoys the ben-efits of the government's former pharma-ceutical market regulation and holds a nearmonopoly over the supply to the publicsector. (Under the old regulation, publichospitals were legally obliged to purchase80 percent of their drugs from the GPOand only 20 percent from private organiza-tions.) GPO plays a prominent role forlocals as the producer of the simplestdrugs like penicillin and paracetamol andas the manufacturer of complex cocktailsfor the treatment of HIV and AIDS.

Today, the state-owned company pro-duces more than 200 items, most of themmedicines included in Thailand's essentialdrug list. GPO also manufactures herbalmedicines, biological products, and vac-cines for diseases including Japaneseencephalitis (JE) and diphtheria-polio-tetanus (DPT).

“GPO takes care of fulfilling the needsof all Thai people. Therefore, we have tofocus on producing generics by volumeand we have to be able to constantlyincrease capacity while maintaining quali-ty. Our goal is to become the leadinggeneric pharmaceutical manufacturer inThailand and the near region in producingmedicines of standard quality at reason-able prices,” claimed Lieutenant GeneralMongkol Jivasantikarn, GPO's managingdirector.

“We have a primordial role to serve the



Kingdom,” says Satit Chanjanavakul,Secretary General of the BOI.

Meeting Higher standards

“In the past, we only promoted the APImanufacturers, but in August last year wesaw an urgent need to upgrade the manu-facturing standards of our indigenousmanufacturers,” recalled Satit. We agreedthen that we would work together to helpthem upgrade and reach international stan-dards.” In order to be competitive on themanufacturing side, it was decided localmanufactures should comply with theinternational Pharmaceutical InspectionConvention and PharmaceuticalI n s p e c t i o nC o o p e r a t i o nScheme (jointlyknown asPIC/S) by 2008.

The pharma-ceutical proj-ects that BOIchose to pro-mote willreceive importduty exemp-tions onmachinery andexemptions offive to eightyears on corpo-rate income tax,depending onthe project's location. These incentiveswere designed with the purpose of encour-aging existing drug manufacturers in thecountry to improve their operations andinvest in new factories.

It will also be required that all BOI-promoted pharmaceutical companiesachieve Good Manufacturing Practices(GMP) standards that correspond withPIC/S within two years of beginning oper-ations. To Satit, the upgrading of the stan-dards should definitely position Thailandas a prominent pharmaceutical player.

“The upgrading of the companies' stan-dards would certainly not have been possi-ble without our seven years of lobbying,”said Chernporn Tenggamnuay, president

needs of our population in case of emer-gencies like the bird flu and other diseasesof the developing world that MultinationalCorporations (MNCs) or indigenous man-ufacturers are not able to supply,” hesummed up.

“We would like to have good new prod-ucts that can be exported. We also plan onmaintaining our leadership position in thecountry. Ten years from now, all our facil-ities will be brand new, even our headquar-ters. We will be the leaders in South EastAsia”, he promises. New facilities are away for GPO to significantly increase itsexport activities.

Currently, GPO continues its R&D onthe second line ARV drugs which are nolonger under patent protection. “We areapplying for WHO-GMP PrequalificationInspection and expect to get the approvaland be certified by April of 2007” says Lt.Gal. Mongkol.

Reducing the dependency on imports

Like most key players of the pharma-ceutical sector, Lt. Gal. Mongkol stressedthe importance of annihilating the endem-ic dependency of the Kingdom. “We haveto save our budget to reduce the numberof imported drugs. We must develop ourown products and be a self-sufficienteconomy (…) We can't do this by our-selves. That is why we are constantlylooking for partners.”

Participants across the board are fight-ing Thailand's dependency on importedpharmaceutical and raw materials. TheThai government hopes that promotionalprivileges and incentives through theBoard of Investment in Thailand (BOI)will enhance the national industry. To doso, the BOI has come out with an invest-ment promotion policy specifically relatedto the pharmaceutical industry.

“The pharmaceutical industry is one ofthe key sectors for our economy, especial-ly when we are talking about the wellbeingof our people. Therefore, we would like toenhance investment with the thought ofmanufacturing more drugs in the

Lt. Gal. MongkolJivasantikarn

“In ten yearsfrom now, all ourfacilities will be brand new”

Dr. Prat Boonyawongvirort



for more than 25 years and was the firstcompany to meet GMP standards. For thelast eight years, the company has investednon-stop in order to enhance its competi-tiveness, aiming to become a regionalplayer. Last year, Biolab invested $10 mil-lion in a facility for injectables, becomingthe only company in the country manufac-turing these products.

Another GMP pioneer was SiamPharmaceutical, which modestly startedup in 1966 as a pharmaceutical tradingcompany with first-year revenues of just 2million baht ($56,200). Forty years later, ithas grown to become Thailand's leadingprivate pharmaceutical group with anannual turnover of 1.5 billion baht.

GMP is no novelty for ThawanCheukarndee, chairman of Siam: “GMPswere implemented in our plant yearsbefore they were first introduced inThailand and later enforced by the author-ities (…) To further assure the effective-ness of our products, we started doing ourbioequivalence studies 30 years ago,” heremembered.

Regional integration

The Association of Southeast AsianNations (ASEAN) harmonized standardscould be seen as one of the factors influ-encing cross-border business opportuni-ties but also a more standardized qualityplatform in the region which would forcecompanies to comply.

ASEAN inte-gration and har-monization isseen by Pr.Pakdee Pothisiri,former secretarygeneral of theFDA as a greatopportunity forthe local indus-

try: “We will take the regional harmoniza-tion into consideration. We have alreadyadopted the common technical dossierand a common technical requirement.Once this is all put into place, I don't seewhy we couldn't become one of the phar-maceutical hubs in this region”, heexplained.

The FDA has in the past been a greatcontributor to the modernization of theindustry. Pr. Pakdee mentioned the cre-ation of the one-stop center that, besidesaccelerating the process of registrationhelped strengthen the links between theadministration and the industry. “Thework environment is completely different,so is the way in which we offer our serv-ices. It is actually similar to the privatesector. By showing the way, we are tryingto get the local industries to change theirbehavior and to become more service-ori-ented,” he said.

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Production at GPO's plant

Production at GPO's plant

of the Thai Pharmaceutical ManufacturersAssociation (TPMA). TPMA representslocal pharmaceutical companies andhelped the BOI and the Thailand's FDA,the regulatory body that controls drug reg-istration, meet and discuss these matters.

“Thailand joining PIC/S is a big break-through for the local industry because itguarantees all the drugs produced inThailand will be manufactured with thehighest standards. This will protect theconsumer while helping to developThailand as the future generic hub for theregion. We couldn't keep out of the worldtrends, so sooner or later Thailand had toadopt the harmonization center based ininternational standards in order to be com-petitive both in the region and the world,”explained Chernporn.

GMP Pioneers

Among the 171 privately owned Thaicompanies, only a handful already complywith GMP standards and chose, fromscratch, to focus on quality. Biolab forexample has been present in the country

“The pharmaceutical sector is one of the key industries for our country”

Satit Chanjavanakul






atit Chanjanavakul, secretary general ofthe Thai Board of Investment (BOI) isvery confident too that Thailand will

gain a regional position: “Our geographical loca-tion makes us the gateway to the ASEAN region.We also have great infrastructures, which makes itvery easy to reach all the countries in the region,”he concluded.

Nevertheless if it is to claim the status ofregional hub, Thailand will first have to attractMultinational Companies (MNC) back: even ifwith average gross margins of 39 percent outper-form local companies, with average margins ofonly 23 percent, and even if most MNCs haveincorporated local subsidiaries they have gradual-ly shut down all their production facilities overthe past ten years.

Global trends to centralize manufacturing,lower import tariffs in Thailand, rising local laborcosts, and access to low-cost outsourced manufac-turing may explain the situation.

“In past years a bunch of multinationals havemoved manufacturing facilities from Thailand toother countries in the region. It is true that withthe globalization trend and the US-Thailand FreeTrade Agreement [FTA], MNCs will look to establish their man-ufacturing facilities in other ASEAN or Asian countries that givebetter incentives than the Kingdom. As local manufacturers, weare not content with this situation. We hope that the new BOIprivilege can encourage MNCs to come back and invest inThailand”, said Chernporn Tenggamnuay, president of the ThaiManufacturers Association.

The BOI has recently grasped the question and sent greatincentives towards multinationals. “We have recently widenedour policies to include the promotion of finished products,” saidSatit Chanjavanakul. “Since we have informed people of ournew polices, we have received a number of requests from MNCsto discuss them. We will be eager to see them coming back”, heclaimed.

But not everyone shares his optimism. For Peter Jager, headof Novartis Thailand, it's the legal framework that needsimprovement, as he thoughtfully summarized this relative disaf-fection of MNCs: “we recently did a survey of Swiss pharmaceu-tical companies and found that the research and developmentspends in Thailand are less than two percent of sales,” he said.

In manufacturing, no investments at all are seen today. Thereason why this investment level is so low is that Thailand still

Multinational Corporations Wanted

S First ever Thai manager at the headof Pfizer local operation

Manu Sawang-Jaeng, country manager ofPfizer for Thailand and Indonesia, is proud tobe the first Thai ever at the head of this sub-sidiary. “I am sure that my 30-year experiencein sales and marketing will make Pfizer main-tain its leading position. Good proof of this is that the performanceof Pfizer Thailand and Indochina after my leadership from March2006, is the top of the curve in Asia,” he boasted. Pfizer's key tosuccess is, according to Sawang-Jaeng, based on the “drive ouradvantages in size, reach, and productivity” philosophy. Pfizer,with nine percent of the total sales, is the leading MNC in Thailand.

“We have to take advantage of our largest product portfolios inthe pharmaceutical industry and expand our market to increasebusiness,” he said. “What differentiates us from our competitors inthe industry is that we always focus on our people in terms ofmotivation and compensation.” As a strategy to remain at thehead of the game, Sawang-Jaeng stressed the importance ofintroducing new products. “Today, the generic local industry isbecoming more competitive and stronger, so indigenous manu-facturers are able to benefit from low-cost APIs that they canimport from India and China. We have to concentrate on andaccelerate the introduction of new drugs in the market.”

Manu Sawang-Jaeng

does not offer a proper protection of Intellectual Property [IP]Rights for innovative pharmaceuticals. Also, the process of obtain-ing patents is lengthy, cumbersome, and exposes the innovator asa result. I strongly believe that investments in research and devel-opment in Thailand can be a multiple of what they are today-thatis, if the Thai government addresses this issue and sets a clear IPprotection environment that is effectively enforced as it is in someother countries in the Asia Pacific Region, such as Singapore.”

The urge for IP enforcement

What is needed to re-attract all MNCs is a better and less com-plicated regulatory system as well as IP enforcement.

“Thailand's pharmaceutical patent laws are generally seen asbeing up to the standards of many of the world's developednations, but in one or two areas are clearly deficient. It is in theseareas that the competitiveness of Thailand is undermined whencompared with its neighbors”, said Edward Madden, director ofthe IP department of Tilleke & Gibbins, a Bangkok-based law firmthat serves as external legal council for the PharmaceuticalResearch and Manufacturers Association (PReMA). “A lot of thereform that is actually needed relates almost directly to matters ofinterpretation and implementation of laws which already exist,” headded.






The Biotec building

Among the principal areas of deficiency are unreasonable delaysin obtaining a patent, and the inability to effectively enforce patentrights. While the US-Thai FTA provided the opportunity to createa viable and attractive system of IP laws, which would have madeThailand more attractive to industry, it appears the opportunity mayhave been lost.

“History has shown that IP laws have only been enacted in theKingdom as a result of international pressure rather than any soundeconomic analysis, and this stance is not reassuring for thoseinvolved with leading- or cutting-edge technologies,” said Madden.Two issues have arisen in favor of enforcement. The first isenforcement against counterfeits, which are endemic in SoutheastAsia, fake medicines made out of inert materials like glue andchalk. “WHO has estimated more than 10 percent of medicinesworldwide are counterfeit. That's a frightening statistic, likeRussian roulette,” warned Edward Kelly, department and chiefclient relationship officer at Tilleke & Gibbins. The other isenforcement against unfair competition by copy products that aregranted market approval by the FDA despite being covered by apatent that would otherwise preclude the drug from being on themarket. “In Thailand, this phenomenon occurs because we have noformal patent linkage system,” said Kelly. “This is a reform that isurgently needed.”

Bright future ahead

But to Somgiat Mahapun, Janssen-Cilag's managing directorfor Thailand and Indonesia, these legal loopholes will graduallydisappear: “Thailand has had product patents since 1992, so thethreat of generics is fortunately decreasing. This is a good thing formultinational companies. The challenge remains for the local ones,since they have to raise the image of the local product in the eyesof doctors and patients. Furthermore, they have to develop allianceswith the research companies for marketing new products as well.”

Oncology is a priority field for Janssen-Cilag, a subsidiary ofJohnson & Johnson, along with hematology, pain, and central nerv-ous system (CNS). “One of our main fields of development is cur-rently anti-psychotic drugs. Marketing these types of drugs in acountry like Thailand was a major challenge. The market was pre-viously very small and I believe Janssen has expanded the markettremendously together with Eli Lilly and AstraZeneca by introduc-ing all these atypical antipsychotic drugs,” said Mahapun. “A majorchallenge would be to broaden this market in CNS since the busi-ness comes mainly from the governmental sector, where the moneyallocated to mental health problems is minimal.”

In the coming year, Janssen-Cilag will be also looking intobiotechnology with its flagship product, Eprex. “Our challengenow is to maintain our market share as we are facing with manybiosimilars for this product. Actually, our company is the second-largest biopharmaceutical company worldwide. “Unfortunately, wedon't have access to those products for Thailand,” said Mahapun.These constraints don't prevent him from considering a brightfuture, especially since Thailand is on the verge of becoming a clin-ical research hub.

Towards a clinical trial hub

Janssen-Cilag already has a separate Global Clinical ResearchOrganization (GCRO), which deals with early-stage trials and reportsdirectly to regional headquarters. “As the country manager, I am try-ing to lobby with corporate so we can perform more early stage-clin-ical trials locally,” explained “When we look at the market, we seethat it is growing exponentially. We have good researchers who willhelp in conducting clinical research in the early stages. Also, Thaidoctors are getting the opportunity to gain international exposure.Therefore, they are paving the way to acquire credibility for this kindof thing. This is a very good experience for the country in order todevelop our own research.”

Most MNCs predict a bright future for Thailand as a clinicalresearch hub. In their view, it could be a win-win situation for theindustry as well as the medical profession in Thailand. “What we aretrying to do is maximize the number of clinical trials, so that we canleverage our presence in Thailand and do cutting-edge clinicalresearch with interesting compounds, said Novartis' Jager. “This willalso aid Thailand in becoming a medical healthcare hub. We can dosome technology transfer, we can do a lot of training, and I think thatmany Thai doctors are very appreciative of these kinds of activities.”

Novartis Thailand is the most dynamic and best-performing sub-sidiary within Novartis in the region, ranking the fifth-largest MNCin Thailand in overall operations. Today, the group has taken a stepforward, complying with the parent company's highest standards toconduct clinical research.


“We really started to focus on our strategic products,on the ones that have innovative and competitiveadvantages in the market place,” said Robert Mitchell,general manager of Roche Thailand. “We have restruc-tured our organization accordingly and although it was-n't a major reconstruction, it was a fine-tuning to createa focus on those strategic and promoted products.”

Mitchell definitely considers RocheThailand as a specialty care company withmajor strengths in oncology and trans-plantation, whether it is renal disease orviral diseases like hepatitis B and C.

To Mitchell, the real future for Roche liesin the synergies between pharmaceuticalsand diagnostics. “Biomarkers, for exam-ple, are innovative medical tests which areexpected to facilitate drug development byproviding early indication of likely success

or failure, and which may help focus the development ofnew medicines toward specific subgroups of patientswho are most likely to experience a benefit,” saidMitchell. Roche has already pioneered this “personal-ized medicine” approach with Herceptin, which is thefirst medicine on the market linked with a novel diag-nostic test. “This approach will become increasinglyimportant in the future, as we intend to bring more andmore innovative, clinically differentiated products to themarket,” he added. With this strategy Mitchell is confi-dent that Roche can double its sales within the comingthree years.


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hough Roche ranks seventh in Thailand in salesaccording to IMS, it was the fastest-growing MNC overthe second half of 2006. “The fact that we are thefastest-growing company quarter to quarter is a niceposition, but quarters don't make pharmaceutical com-panies,” said Robert Mitchell, general manager of RocheThailand. “Our success clearly depends on the people.Starting right from the beginning, fromthe point of view of recruitment andselection, you have to make sure thatyou're bringing the right kind of peoplewith the competencies you require intothe organization. It is important to makesure you have the right kind of perform-ance management processes to measurethose people.”

The company's strategy will be toenhance certain innovative products,identify new trend diseases, and launchas many products as possible. “We have a very innova-tive group of products, probably one of the best in theindustry. Therefore, we need to make sure we knowwhat those innovations are, what their value is, and thatwe're able to communicate that to all our stakeholdersin the marketplace,” Mitchell noted.

Roche and Thailand have a long history, as the MNChas been present in the country since 1973. At that timeit was just distributing products through DKSH. It wasonly by the mid-90s that it established its own subsidiaryin the Kingdom.

The Biotechnology Fever Public-private sector cooperation is

adding strength to the industry. Newincentives in drug discovery, stem cell,DNA, and genomics research all under-score the potential being realized and theinvestment value in Thailand's biotech-nology sector. “Since we assessed thepotential of this field, we have createdsome bio-investment incentives,”explained Satit Chanjvavnakul, secretarygeneral of the Thai Board of Investment(BOI).

Incentives to invest in Thailand areoffered in two forms: tax and non-tax. TheBOI also offers new corporate income tax

e don't want to be perceivedas a low-cost country as we

are on our way to building a knowledge-based economy.” According to Prof. Dr.Pornchai Matangkasombut, chairman ofthe Thailand Center of Excellence for LifeSciences (TCELS), smart collaborationsand partnerships among government, uni-versities, entrepreneurial companies, andinvestors, both within and across nationalboundaries, will contribute substantially toThailand's ability to capture the valuebeing created.

TCELS is a non-profit, governmentorganization established in 2004 by royal

decree from the King of Thailand. Itsestablishment followed the developmentand execution of a strategic and innova-tion-based private public partnership(PPP) between the US ASEAN BusinessCouncil and 12 of its member companies.Today, TCELS mostly plays the role of aone-stop service center helping investorsto do overseas outsourcing. 25 years ago,Thailand already had sufficient researchand development infrastructure to qualifyas an international center for genetic engi-neering and biotechnology.

For a knowledge-based economy

W“

Robert Mitchell

TRoche to double sales in three years





field because aniche for Thailandis biodiversity,”Dr.Morakot point-ed out. “One ofour biotech focus-es is to add valueto biodiversity;therefore we arecombining the bio-diversity program with the tropical dis-eases research. With this combination, wecan create a genomic outcome. This trian-gle put us in a good position.”

If Dr. Morakot is conscious that, for themoment, multinationals are keener toinject capital into countries like Singapore,she refuses to see this situation as a curse.“In terms of investment, we are not asgood as Singapore, but money is not theonly thing, and we do have something thatSingapore is lacking in: HR. In Thailandwe have highly qualified people who havebeen trained abroad constantly bringinginnovative ideas into the Kingdom.”

“BIOTEC would really like to work asa partner, not as a recipient. We believe inpartnerships and we guarantee that we canprovide our future partners with goodfacilities and excellent HR power.”Insisted Dr.morakot. For example, theDrug Discovery Partnership aims to findpotential use of microorganisms and natu-ral compounds as sources of innovativemedicines.

As one of the first MNCs to take achance on Thailand, Novartis won't be theone to contradict. “We see a growingbiotechnology sector with a growing focuson healthcare. Thailand offers a uniquebiodiversity that may prove an excellentsource to discover new drugs. We atNovartis have started a joint research proj-ect with the BIOTEC institute to do exact-ly that: help discover new drugs out of nat-ural resources found in Thailand. The proj-ect focuses on technology transfer, train-ing, and pharmacological assays on sub-stances found. It's a long shot but we arehopeful of finding one or more interestingactive substances in the next few years,”said Peter Jager, country head for NovartisThailand.

exemptions for thep h a r m a c e u t i c a lindustry rangingfrom five to eightyears. “BOI is reallycommitted toenhancing biotechand building aknowledge-based

economy in the Kingdom,” said Satit.

The BIOTEC breakthrough

Biotechnology is definitely a priority sec-tor for the country. Thailand has set a tar-get to become a center of biotechnologyresearch and development in Asia with thegoal of investing more than $125 millionand establishing more than 100 new com-panies in the field. Operating under theoversight of the National Science andTechnology Development Agency(NSTDA), Thailand's National Center forGenetic Engineering and Biotechnology(BIOTEC) supports development inbiotechnology through conductingresearch and development projects, facili-tating the transfer of technologies fromoverseas, and promoting public under-standing of the benefits of biotechnology.

The BIOTEC breakthrough

“When we started the National Center23 years ago, we focused on building theinfrastructure and developing humanresources,” noted Dr. MorakotTanticharoen, president of BIOTEC. “Westarted out by setting up a medically spe-cialized laboratory in collaboration withMahidol University. That was where westarted our activities in medical biotech-nology. Since then, we have given 700scholarships for our academics to goabroad and gain expertise.”

Reinforcing biotechnological develop-ment, Thailand has formulated theNational Biotechnology PolicyFramework in line with the government'spolicy of promoting self-sufficiency andenhancing the country's competitiveness.Two years into the program, the resultsare, to Dr. Morakot, entirely fulfilling.“With the top guys in the committee, wecan really push to make things happen. We

have the full support of the most importantbodies in the government and we can getagreements on the things we consideressential to boost biotechnology in thecountry. For example, when we suggestedto the government that we needed to set upa biopark to foster Foreign DirectInvestment [FDI] and research and devel-opment, the government approved thebudget so that the Thai Biopark attractsmore MNCs.”

The Thai Biopark

The Thailand Science Park is the majorphysical manifestation of Thailand's com-mitment to research and development inscience and technology. Today, out of 60

companies in the park, 17 are involved inbiotech. “Our park is divided into twoparts. One we call 'the incubator' wherecompanies can rent space in the building,or at our pilot plant, to set up their labusing their own people. The second one iswhere they build their own research cen-ter,” explained Dr. Morakot.

Within the policy, BIOTEC also has a planto develop research for tropical diseases. “Wethink we have a lot of opportunity in this

Prof. Pornchai Dr Morakot ,director of Biotec

"BIOTEC would really like to work as a partner,

not as a recipient"

The Biotec building



f you work for MNCs, changes are natural, you willalways be facing new openings and different challenges indifferent markets and you have to be ready to take them.”

According to Patrick Bruhlmann, CEO of the Hong Kong-baseddistribution company Zuellig Pharma, the Kingdom is very muchdriven by customized customer demands and high expectationsfrom blue-chip pharmaceutical companies. Like many countriesin the area, Thailand is a dispensary market where 66 percent ofmedications are directly distributed to hospitals. Distribution isunder two main players (DKSH/Diethelem and Zuellig) sharing95 percent of the market. Another important variation is themechanism of prescription and dispensing of pharmaceuticalproducts. In Asia, medicines are prescribed and dispensed at thesame place. Hospitals give prescriptions and then dispense, as dodoctors. Therefore there is very little release of prescriptionsacross pharmacy channels.

Delivery within 24 hours

As an exclusive distributor, Zuellig acts on service agreementsand charges a percentage fee for services. “In Europe, USA, andJapan you have typical wholesaler markets. For example, theywill buy X or Y product at $100 and sell it for $105, hopefullykeeping the $5 profit. We operate differently, because we buy for100 sell at 100 and earn a small service fee on the transaction,”explained Bruhlmann.

With more than 300 salespeople servicing MNC customers,Zuellig makes sure its products are going into the right channels.It also performs a lot of secondary repacking and labeling in orderto customize imported products to local market needs. Zuelligusually operates as a central distribution system. “We have alarge, fully temperature-controlled facility where everything isstored. We take orders and invoice about 5,000 to 10,000 ordersevery day and make sure that everything is delivered within 24hours. The 24-hour delivery is almost always possible unless weface very adverse climatic conditions,” explained Bruhlmann.

The focus on niche markets

Because of the toughness of the distribution business in thecountry, an opportunistic company like Pacific Health Care(PHC) has thoughtfully chosen to follow another path. This mar-keting and distribution company has been present in Thailand formore than 40 years. Today it has more than 300 employees, themajority of whom are in marketing-related roles, and it has aturnover of $25 million. PHC provides marketing and sales serv-ices to the medical community (hospitals and clinics) and over-the-counter (OTC) channels, including direct-to-consumer mar-keting and sales services to the modern trade retail channel. “Wehave been able to develop a one-stop solution for high-qualityhealthcare and related products,” explained Cyrille FrederikBuhrman, Pacific Healthcare's managing director. “Another key

ingredient for our success has been our abilityto concentrate on specialized niche importedconsumer health, medical devices, and pharma-ceuticals markets and become dominant in suchareas,”

HR is another competitive advantage thatallowed PHC to enjoy such a dominant posi-tion. “We excel at bridging the gap betweenEast and West thanks to a workforce consisting of several keyThais who have either been Western educated or heavily exposedto the West,” said Buhrman. “They are capable of successfullyapplying Western knowledge to the local market.”

In the future, PHC intends to remain a niche player, focusing onspecialized and value-added products. Furthermore, the companyis expanding into the ASEAN region. “We see that many compa-nies want to be present in these markets, but they do not identifythem as strategic markets,” said Buhrman. “This is why they choseto outsource us to be their distributors here and take care of theirbusinesses. PHC is determined to keep on bringing innovativeproducts into the region, strengthening collaboration with leadingcompanies and help improving the quality of life.”


A Dispensary Market

I“


Cyrille Burhman



The Boom of “Medical Tourism” 9001 certification, the first hospital inThailand to receive the Thai hospital accred-itation, which complies with Canadian stan-dards, and the first in the region to receivespecialty accreditations to treat complexheart diseases. It also has the largest clinicaltrial center in ASEAN, a strategic area forthe future development of the business.Newsweek called Bumrungrad “Asia's firstinternationally accredited hospital and one ofthe most modern and efficient medical facil-ities in the world.” It listed Thailand's largestprivate hospital first amongst 10 “world-class destinations” including hospitals inGermany, France, the UK, and the US.

Surfing on the wave of medical tourism,Bumrungrad has already tied up with ThaiAirways International to offer foreignpatients package tours combining medicaltreatment with sightseeing.

he future of Thailand also relies on anew concept, commonly known as“medical tourism.” The Kingdom

enjoys top-quality hospitals that profitfrom an increasing number of internation-al tourists attracted by world-class medi-cine at developing-world prices. Hospitalssuch as Bumrungrad, Samitivej, orBangkok General are considered magnetsfor medical tourists. The others are big pri-vate hospitals that are starting to do somesimilar things. “Just going in to some ofthese hospitals, you'd think you wouldhave walked into a hotel,” said RobertMitchell, general manager manager ofRoche Thailand. “People travel from theUS to be cured for half of what it wouldcost in their country, and the physiciansand surgeons doing the operations haveoften been trained in the US or the UK.”

At present, Thailand has 40 private hos-pitals and is expected to have a total of 60by 2008. Out of the $4 billion that theregion is expecting in medical tourism,Thailand will attract 47 percent. The

Bumrungrad hospital, located in the heartof Bangkok, will be at the lead. Founded in 1980, Bumrungrad is the largesthospital in all Southeast Asia with 554 bedsand the capacity to take care of 3,500patients per day. It receives more foreigntourists than any other hospital in the world.Bumrungrad has benchmarked itself as thefirst hospital in the world to receive ISO

TThailand received over a million medical tourists last year

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Documents

Pharmaceuticals Thailand report 2007