Report from Myanmar

International pharmaceutical companies are flocking into Myanmar to explore business opportunities in the country. Myanmar’s pharmaceutical market has attracted investors with the sector projected to be worth $100 to $120 million despite its relatively small population of approximately 60 million people. “The country’s pharmaceutical industry is fuelled by the growing per capita income and a middle class that is seeking better healthcare,” Chris Woo, managing director of tax services at PricewaterhouseCoopers (PwC) Myanmar, told Pharmaceutical Technology. “Currently, many employers do not provide any health plans for its employees; however, the healthcare landscape and relevant demand are set to change as more international investors hire locals and establish international standards in the country.”

The advances made by Indian companies in Myanmar have also prompted foreign players to look into the potential investment opportunities in the country. Indian companies constitute 35% to 40% of the market followed by companies from Bangladesh, China, Indonesia, Pakistan, Thailand, and Vietnam. “Given that the per capita pharmaceuticals expenditure is still rather low, generic and over-the-counter drug companies will stand to benefit more in the short to medium term,” commented Abhijit Ghosh, healthcare and pharmaceutical leader at PwC Singapore, in an interview with Pharmaceutical Technology. “This is why many Indian pharmaceutical companies such as Ranbaxy Laboratories and Cipla continue to play a dominant role in the Burmese market.”

In 1993, Haryana-based Ranbaxy Laboratories set up business in Myanmar after receiving its first drug approval from the local Food and Drug Administration (FDA). The company then went on to establish a branch office in 1997 with more than 175 approvals to date. Recently, Mumbai-based Sun Pharmaceutical Industries showed interest in investing in Myanmar. Plans to open a branch office are already in the pipeline. The company has obtained approval to expand its pharmaceutical services and is in discussion with the Directorate of Investment and Companies Administration (DICA) officials on the required legislations and regulations.

Myanmar’s healthcare system

Myanmar’s healthcare system lacks funding and is primarily a self-pay system. Consequently, the market favors Indian manufacturers who can offer lower-priced options compared to players from developed countries. Potential investors should, therefore, plan their market-entry strategies carefully, according to Ghosh. “They should examine the option of partnering with local players, investing in the development of local sales force and launching product portfolios that offer incentives for purchases across its portfolios.”

Ghosh added, “At this stage, the country is facing uncertainties relating to the political landscape especially with rising ethnic tensions, changes in regulations and the need for greater infrastructure improvement. Therefore, it is advisable for international companies planning to penetrate the Burmese market to collaborate with a local partner, particularly in the area of distribution.” International industry players should also consider investing in manufacturing plants in Myanmar and hiring or developing a local support team to further their business interest. Such plans will better position companies to take advantage of the expected future economic growth in Myanmar.

The good news is that the Burmese government is introducing reforms to improve the healthcare sector. It is reallocating budgets to an expanded national pharmaceutical formulary, according to Varun Sethi, general manager of the Business Unit Healthcare at Diethelm Keller Siber Hegner (DKSH) Myanmar. DKSH has been operating in Myanmar for more than 15 years and is one of the country’s most comprehensive distribution infrastructures for pharmaceuticals, over-the-counter products, and medical devices. The company currently employs more than 550 employees in its business unit. The 2013 government budget has set aside $450 million in healthcare spending whereby a large portion would be allocated to pharmaceuticals as part of the plan to make available the expanded national formulary to public hospitals. Plans have been announced to increase spending on pharmaceuticals from $0.20 per person per annum to $2 per person per annum in the next two years. If this proposal materializes, pharmaceuticals will account for approximately $125 million, which represents 27.4% of the 2012-2013 healthcare budget (1). Part of the budget will also go towards increasing the number of doctors from local medical schools. Other initiatives by the government include reorganizing and strengthening Myanmar’s FDA workforce to build additional capabilities in the area of drug registration.

Projected growth
Moving forward, Myanmar’s pharmaceuticals sector is projected to double from $430 million in 2012 to $660 million by 2015 with the likelihood that branded products will gain popularity over the next two years (2). “However, the marketplace will remain highly fragmented at both wholesale and pharmacy levels coupled with challenges in compliance and infrastructure. Therefore, the selection of a trusted market-expansion services partner that knows the local market is essential. There are plans to increase the number of drugs as part of the government’s sponsored healthcare scheme but implementation is still in its early stages,” said Sethi.

Industry players have expressed mixed feelings about the future of Myanmar’s pharmaceutical sector. “While some are hopeful of the future, others harbor cynicism about the willingness of the past government who remain in the current political hierarchy to embrace meaningful reforms that would drive further investment into the country’s infrastructure, healthcare, and education systems,” remarked Ghosh. “The government, therefore, needs to embrace a policy of greater transparency, make additional investments in infrastructure to help improve connectivity, and facilitate further reforms that will directly benefit people across this country.”

References
1. Health Intelligence Asia, “Healthcare in Myanmar 2013—Myanmar Pharmaceutical Market & Devices Market Survey Report,” accessed Sept. 9, 2013.
2. Business Monitor International, “Myanmar Pharmaceuticals and Healthcare Report Q3 2013", accessed Sept. 9, 2013.

About the Author
Jane Wan is a freelance writer based in Singapore.