WHAT YOU NEED TO KNOW
  • Aging populations and rising chronic diseases strain health care systems globally. This has been worsened by widening health inequities that are fueled by the climate crisis.
  • Countries face resource constraints while reducing fiscal deficits and public debt, likely increasing dissatisfaction among health care stakeholders and pressuring governments.
  • The pharmaceutical industry confronts global challenges in pricing, production and competition, driven by rising costs and limited investment in research and development.
  • The U.S. Inflation Reduction Act and challenges from energy prices, inflation, interest rates and tax law changes have eaten into profit margins. Drug prices are set to rise despite regulatory efforts, prompting a reevaluation of medicine price containment policies.
  • This year is a crucial period for weight-loss medication adoption, potentially impacting reimbursement decisions and supply chain dynamics.
ON THE HORIZON
  • China is removing barriers to investment in manufacturing and service sectors like health care. This opens up opportunities for foreign investors, facilitating easier market entry and participation.
  • As new health ministers take office in Thailand and Taiwan, companies should align their strategies with the priorities of the new leadership. Expect ministerial changes in India and Indonesia later this year.
  • India’s recent budget increases health care funding exceeds $10 billion. Priorities include expanding universal health coverage and enhancing women and child health care through vaccination and nutrition programs. This focus could spur public-private partnerships and boost domestic demand for health care products and services.
  • Vietnam has outlined plans to implement its national development agenda and improve the business environment. Initiatives include expanding health insurance, promoting digital health care transformation, ensuring vaccine availability, establishing a Central Disease Control Agency and executing the Vietnam-Korea Social Insurance Agreement. Expected amendments to the Law on Pharmacy signal regulatory changes in the health care sector.

Sector Overview and Forecast


Macrotrend Monitor
Building Resilience: Overcoming Health Care and Pharmaceutical Challenges in 2024

Health care systems are under strain due to the challenges of meeting the needs of aging populations and addressing the increasing burden of chronic diseases. Health inequities are widening, driven partly by the climate crisis. Many countries will continue to face resource constraints as they work to reduce fiscal deficits and public debt levels. This situation is expected to fuel dissatisfaction among health care workers, patients and taxpayers, leading to increased pressure on governments.

Pharmaceutical companies are encountering challenges in pricing, production and competition due to rising operational costs, supply chain disruptions and limited investment in research and development. The U.S. Inflation Reduction Act may further impact profit margins. The industry also faces challenges from higher energy prices, inflation, high interest rates and tax law changes. Despite regulatory efforts, drug prices are set to rise. Notably, BGA has observed a trend among Asian countries, such as Malaysia, to again look into medicine price containment policies in response to potential price surges triggered by cost increases and price increases announced by major U.S. pharmaceutical companies.

This year marks a significant juncture for the adoption of weight-loss medications. This expanded use will generate a wealth of real-world data regarding their efficacy, potentially influencing insurers and governments to consider extending reimbursement for these treatments. However, the surge in demand may also exacerbate existing supply challenges.

Subsector Highlight
Assessing Progress: Rare Disease Drug Market in the Indo-Pacific

The Indo-Pacific rare disease market is expected to reach $58.5 billion by 2028, with a projected compound annual growth rate of 8.9 percent. Supported by frameworks like the U.S. Orphan Drug Act of 1983, which encourages drug development, the rare disease drug market has shown steady growth.

Japan revised its Pharmaceutical Affairs Law in 1993, defining rare and intractable diseases, and Australia launched the National Strategic Action Plan for Rare Diseases in 2020. Dedicated legislation on rare diseases and orphan medicines has been enacted throughout the Indo-Pacific between 2000 and 2021, including in Singapore, Korea, Taiwan, Hong Kong, China, India, Indonesia, Malaysia, the Philippines and Thailand. However, despite the presence of rare disease policies, the level of implementation varies greatly within the region.

The Asia-Pacific Economic Cooperation forum initiated in 2018 an action plan to address rare disease health care challenges by 2025, with varying progress across the Indo-Pacific. China has made significant strides in streamlining its rare disease review process and negotiating therapy prices, while countries like India and Indonesia lag behind their targets.

We will continue to keep you updated on developments in the health care sector as they occur. If you have comments or questions, please contact BGA Director Yeh Cher Low at clow@bowergroupasia.com.

Best regards,

BGA Health Care Team

A small ginko leaf

Director

Yeh Cher supports BGA clients based on her expertise in public affairs, investment analysis and political economic risk assessment. She focuses on healthcare and pharmaceutical sectors at BGA. Yeh Cher earlier did research at the Institute of Diplomacy and Foreign Affairs on port infrastructure investment, particularly in Malaysia and Indonesia. She continues to closely follow developments in Southeast Asia and on China’s Belt and Road Initiative. Prior to joining BGA, she worked as a journalist reporting on East Asia’s market trends and issues. Yeh Cher obtained her master’s degree in strategy and diplomacy from a joint program between the Ministry ... Read More