By 2016, the global pharmaceutical industry is expected to generate an estimated 30% of its total sales in emerging markets (1). After India and China, southeast countries such as Indonesia, Singapore, Malaysia, Vietnam, and Thailand are especially attractive markets. The Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) consists of 10 countries united through regional economic cooperation: Thailand, Myanmar, Laos, Vietnam, Malaysia, Singapore, Indonesia, Philippines, Cambodia, and Brunei. The ASEAN Community 2015 (AEC 2015) initiative aims to form a unified economic system throughout the region by the end of 2015. In some ways similar to the economic unity of the European Union, the AEC works to develop a single market system for a more equally developed and globally integrated economic region. To that aim, existing trade barriers have been removed or reduced, and standards across a number of sectors have been harmonized.
One report projects that demand for biologics active pharmaceutical ingredients (APIs) will continue to grow an estimated 20% annually from 2011 to 2017 and that the biologics contract manufacturing market will grow 9% annually in that same period as demand for biosimilars increases (2). Another report projects that contract manufacturing will eventually account for 30% of biomanufacturers’ total outsourcing activities (3). Contract research and manufacturing continue to expand quickly, with China, India, and some ASEAN countries (e.g., Singapore) leading the list of preferred destinations. With consistent growth in global biosimilars markets, the ASEAN region is likely to attract more such manufacturing activity.
Western regulatory agencies are allowing companies to overcome some of the financial burden associated with drug development and production through outsourcing. For example, the US Food and Drug Administration (FDA) recognizes cooperative manufacturing when a biologics manufacturer lacks capability or chooses not to perform all operations at its own facility. At any stage in production, a license applicant can partner with one or more biomanufacturers or work with a contract manufacturing organization (CMO).
Intellectual Property Challenges
Preparing for economic unity is complicated, especially when it comes to intellectual property (IP) rights — the primary focus of AEC efforts since 2011. Although free trade has progressed rapidly throughout the region, an IP system is still a work in progress. Achieving agreement will involve adoption of the ASEAN Intellectual Property Rights Action Plan 2011–2015, which aims to standardize and strengthen IP institutions throughout the region. That plan will contribute to making the ASEAN region more competitive with five strategic goals: to create a more balanced IP system taking into account different levels of development, to promote IP use and awareness across the region, to develop national or regional legal and policy infrastructures that address evolving demands, to establish active participation in the international IP community, and to encourage cooperation among members and enhance the capacity of IP offices in southeast Asia.
Evening Out the Differences
One big concern is how well the AEC will be able to achieve uniformity among more developed (in terms of economy, technology, and infrastructure) and lesser developed countries. Vast differences exist, for example, between Singapore and Cambodia. How those differences are evened out will determine the region’s connectivity. The AEC is one of the most dynamic regional economic blocs in the developing world, and it may well meet all of its goals by the December 2015 deadline. More likely there will be a transition period during which many issues will have to be addressed. Bringing all 10 countries to an equivalent level of development will require major investment in infrastructure and technology.
Adopting One Language
The AEC has decided to adopt English as a common language to better standardize patent documentation, facilitate cooperation, shorten the examination period, and reduce translation costs. English already is the official business language in the AEC across all industries. But despite the fact that some member countries are former British colonies and will have less trouble communicating in English, the use of a single language is not so straightforward. Language is very strongly linked to each country’s cultural identity. When a patent office wants to investigate filing details, it probably will do so in the local language. And although the entire patent process will be in English, many countries will translate the patent into their local language once that process is completed. Currently, Thailand, Indonesia, and Vietnam require local translation of patent specifications. A unified system ultimately will eliminate some bureaucracy and inefficiencies in the current system and reduce translation costs, but some individual differences will remain.
1 Pharma Emerging Markets Report 2.0: How Emerging Markets Are Driving the Transformation of the Pharmaceutical Industry. Strategy& (formerly Booz and Company): New York, NY, 2013.
2 The Contract Biomanufacturing Market Outlook to 2017. Datamonitor: London, UK, 2013.
3 The Changing Dynamics of Pharma Outsourcing in Asia. PricewaterhouseCoopers International, Ltd: New York, NY, 2008.
Karen Politis Virk is director of biotech and pharma research at Language Connections, Boston, MA 02135; karen@ languageconnections.com; www.languageconnections.com.