Thailand Pharmaceuticals and Healthcare Report Q2 2009

In BMI's Pharmaceutical Environment Ranking table for Q209, Thailand is found in 10th position, out of the 15 key markets surveyed in Asia Pacific. Thailand's attraction for foreign drugmakers is largely based on its growing and ageing population, although its forecast compound annual growth rate (CAGR) of 6.89% (in local currency terms) in the 2008-2013 period is lower than for the Philippines, for example, which is placed 11th in the BMI matrix. Other drawbacks include unresolved political issues and the controversial compulsory licensing scheme, as well as a deteriorating economic situation. Overall, the value of the Thai pharmaceutical market, estimated at THB116.11bn (US$3.40bn) in 2008, is expected to top THB161.99bn (US$5.59bn) in 2013, although the need to ensure universal healthcare coverage will continue to threaten prices, as will the new health economics requirements for patented medicines.

In terms of notable company news, in February 2009 the Thai pharmaceutical regulator certified the quality of a generic version of a heart drug, clopidogrel, which is manufactured by an unnamed Indian supplier. The generic product is much cheaper than its patented alternative, Sanofi-Aventis' Plavix (clopidogrel bisulfate), which had raised doubt about its efficacy. The certification will go some way towards increasing the public acceptance of generics, and also provide support for the compulsory licensing scheme. The product is imported by the Government Pharmaceutical Organisation (GPO), although the patented medicine has yet to be officially brought under the scheme.

Cost-containment pressures are also heralding problems for UK and US-based multinationals, respectively - GlaxoSmithKline (GSK) and Merck & Co - following the news that Thailand is planning to develop a generic version of a cervical cancer vaccine. While the launch of the product is far from imminent, it could potentially reach the market before 2017, when the first patent on the vaccine expires.

Additionally, although Thailand has the second-highest cervical cancer prevalence in the region, public programmes for cervical cancer prevention are in their infancy. Nevertheless, the pending competition to GSK's Cervarix or Merck & Co's Gardasil could have a wider international impact, spurring on generic developers elsewhere.

In the meantime, given Thailand's disproportionate dependence on exports, we have a hard time envisaging anything but further weakness for the Thai baht and would not be surprised to see the currency rendezvous with its 2008 lows over the coming months. As evidenced by the intervention seen in recent weeks, the central bank - and the rest of the region for that matter - is reluctant to see any appreciation.

With imported inflation now a non-issue and local industries tottering amid the brutal collapse in external demand, the internal pressure to nudge its currencies lower is increasing. Although the falls are unlikely to be as precipitous and disorderly as during the Asian financial crisis - when the causal dynamics were of a different nature altogether - some fairly large, albeit controlled, drops could materialise nonetheless, which would have a negative impact on CAGR rates of the Thai pharmaceutical market, as well as its overall values.