Asia-Pacific Pharmaceutical Industry Outlook 2023

Disruptive Technology Adoption and Outsourcing Growth is Advancing Innovation in the Pharmaceutical Industry

Asia-Pacific’s pharmaceutical market is forecast to record 4.2% growth from 2022 to 2027, with China and Japan dominating the market in terms of value. Generics dominate the regional markets based on volume, directly impacting innovator molecule uptake. Nevertheless, Asia-Pacific is establishing itself as a global innovation hub, with China, Japan, and Korea leading the space in overall innovative pipeline assets in the region. Compared to the United States and the European Union, Asia-Pacific has unique industry dynamics accompanied by a highly competitive landscape owing to its complex and diverse regulatory landscape and varying pharma industry infrastructures across each country, impacting innovation in each country.

However, the region excels in creative market access strategies alongside its robust portfolios and pipelines, innovative business models (e.g., in-licensing and out-licensing assets), effective stakeholder engagement, and aggressive go-to-market strategy. China and Japan stand out in market size as the world’s second and third-largest pharmaceutical markets, respectively, valued at $152.79 billion and $82.67 billion.

Japan, South Korea, and Australia are the region’s developed markets. Japan’s Ministry of Economy, Trade and Industry (METI) implemented 2 subsidy programs - Program for Promoting Investment in Japan to Strengthen Supply Chains and Program for Strengthening Supply Chains - in 2020 to assist Japanese companies in relocating production back to Japan and Southeast Asian countries.

India, Malaysia, Vietnam, Singapore, Thailand, and Indonesia represent Asia-Pacific’s emerging countries. A growing population, significant R&D investments, a modernized manufacturing base, and the prevalence of chronic diseases fuel growth in these countries.

While the region shows a growing focus on innovative therapies, including advanced CGTs and mRNAs, generic drugs account for more than 45% of the share in terms of value. Market-friendly regulations such as the Special Law on Counterfeit Drugs, the Consumer Act of the Philippines (labeling and packaging requirements), the Cheaper Medicines Act (drug price regulation), the recent overhaul of Universal Health Coverage, and easing of the drugs’ registration process will be key growth drivers.

Public procurement inefficiencies cause supply-side issues and drive higher pharmaceutical product prices in the Philippines than other ASEAN countries. Generic drugs make up a larger market share than original drugs in terms of license type.

Regarding innovator therapies, China is emerging as a biopharma innovation hub, followed by Japan and South Korea, with significantly robust therapy pipelines. Local governments adopt initiatives to support local innovators and introduce new regulations to facilitate quicker access to the market and streamline the innovator therapy market in the region. China and India continue their dominance in global API production by forging strategic partnerships with global and local pharma manufacturers for small and large-molecule API and KSM supply, supporting regional pharma production and consumption.

Despite a slowdown in crucial markets, such as China and Japan, Asia-Pacific shows tremendous promise in the next 3 to 5 years, surpassing global growth rates.