The coming few years will bring a halt to the dominance of big pharmaceutical companies, which are exposed to patents that will expire on more than $80 billion-worth of blockbuster drugs. A famous example is the patent expiry of Eli Lilly’s anti-depressant drug, Prozac, which reportedly lost 73% of market share within two weeks of generic launch. Similarly, Pfizer’s anti-depressant, Zoloft, showed a decline in revenues to $531 million in 2007, compared to $3.3 billion in 2005. However, Pfizer’s bigger concern in the near future is when the patent for other famous drugs such as Lipitor and Viagra will expire.

Following the demand and impending expiry of patented drugs globally, local governments have given support to local companies to produce generics and biopharmaceuticals. According to Simranjit Singh, Director of Frost & Sullivan, Malaysia has been dubbed to be an ideal location to manufacture generics due to an existing strong base of regional players such as CCM Pharma, Pharmaniaga and Kotrapharma, which have raised standards for quality products. Malaysia is seen as a strong player in generics production due to many driving factors such as growing demand for drugs for lifestyle diseases (cancer, cardiovascular disease, etc.), the lack of drug price control in the private sector and government support for generics.

Malaysia offers vast resources and incentives to strengthen its biopharmaceutical industry. In Malaysia, the development, testing and production of biopharmaceutical products are entitled to high technology pioneer status, which offers significant tax incentives. Malaysia is also a participant in the TRIPS Agreement, which helps protect innovative patents. From a clinical research standpoint, the Clinical Research Centre of Malaysia (CRC) provides clinical trial services through a network of 17 hospitals. The CRC acts as a one-stop-shop for all clinical trial management activity.

However, the introduction of generic competition may not be so easy. A drug may already operate in a niche category that is too small, or with a brand presence too strong, to attract customers to the competition. The production of a generic may also take longer to develop, particularly where the manufacturing processes of the drugs are protected. Other factors restraining the growth include the large number of counterfeit drugs, and concern over the quality of generics plus the increasing use of traditional and herbal medicines.

Although significant challenges remain, Malaysia could present a viable and practical option for overseas investors setting up base for their pharmaceutical and biotechnology operations.