Higher public spending, surging investments in healthcare boosts Myanmar pharmaceutical industry

These new facilities as well as a hefty increase in public spending on healthcare are boosting Myanmar’s pharmaceutical industry. Win Si Thu, chairman of Myanmar Pharmaceutical and Medical Equipment Entrepreneurs' Association, said this would make Myanmar an attractive investment destination for pharmaceutical companies.

The Myanmar Investment Commis-sion in 2013 allowed joint venture for the production of pharmaceuticals and equipment, which could be owned up to 80 per cent by foreign companies.

“There are quite a few [approved by the MIC] but the number will grow. It is better for us to minimise dependence on imports. It is not a good sign that we are importing more than 80 per cent of pharmaceutical products from abroad … If there is an urgent global issue like SARS, we are dependent on urgent imports of medicines. If we can produce them ourselves, we do not need to wait in case of an emergency,” he said in an exclusive interview.

His association has more than 4,000 members, including hundreds of pharmacies.

Local or foreign hospitals and pharmacies have to rely on supplies from local agents. However, there are only five manufacturing facilities in the country, all owned by the government and running at full capacity in producing generic products. This leads to big demand for imports, constituting 85 per cent of market demand valued at about US$800 million, approximately Bt28 billion. This is on top of the supplies of medical equipment – mostly cardiac monitors, MRI, X-ray and ultrasound machines – which are valued at about $200 million. Nearly all are imported.

Most of the pharmaceutical products are from India and Thailand. Medi Myanmar Group, of which he serves as the managing director, is also a client of Thailand’s Thai Nakorn Patana Co.

The demand is huge, as government expenditure on healthcare have risen steadily. In fiscal 2015-16, starting in April, a sum of 757.44 billion kyats was allocated for health, an increase of more than Ks48 billion over last year’s Ks708.95 billion and seven fold compared to just Ks92 billion in fiscal 2010-11.

According to World Health Organisation, Myanmar’s life expectancy is about 65 years, well below the world average of 71.

Win Si Thu said that the industry needs a lot of support from the new government.

Human resource is the most challenging issue, he said. There are some students graduating with pharmaceutical degrees, but they have no experience, as there are no facilities where they can be trained.

Win Si Thu envisaged the establishment of the Pharmaceutical Institute to produce the right workforce, with some sent overseas for training. Meanwhile, the supporting industries – like packaging – must be strengthened. The government must also set the right taxation policy, to ensure that the price of locally produced items are cheaper than imported products.

He is confident that local companies are capable of producing pharmaceuticals. But aside from the challenging issues, the locals are facing high interest rate and that could destroy their competitiveness against foreign players. In addition, the upcoming Asean Economic Community will force local companies to strengthen their competitiveness or lose out to foreign companies.

Due to the constraints, imports should remain active in the next few years. Private manufacturing should start only when investors consider it profitable to do so, he said.

“If the cost of production is low, we can distribute the medicines at a very competitive price… Local companies may start production in the next two or three years. If the market situation is favourable for local production, more and more factories will come up. This will lead to intense competition and end up benefiting the end-users, as they can buy quality goods at a very competitive price,” he said.

In the past few years, the association has sought help from related associations in India, Thailand and Bangladesh, in providing training and business matching.

For now, Win Si Thu does not expect local companies to be able to produce pharmaceuticals for exports in the short term.

“If we can develop good-quality products, that will happen one day,” he said.