With Asia covering 60 percent of the world’s population but accounting for just around 30 percent of global pharma spending, it goes without saying that healthcare needs in the region must be addressed effectively, quickly and comprehensively. Who better to accomplish that than the Asian companies on the ground, closest to the patients and the markets? However, while many Asian companies have proven adept at developing novel therapeutics and technologies, they often falter on the road to market.
As our Precision Medicine in Asia report highlights, there are exciting hotspots of innovation across different aspects of precision medicine in the region, with countries leveraging their respective areas of strength to emerge as technology leaders in certain areas. Given the multidisciplinary nature of precision medicine, the distinct and often complementary strengths of different Asian countries across technology platforms in molecular diagnostics as well as therapeutic modalities, coupled with the large patient populations, seem to be the perfect recipe for Asia to leapfrog and lead the world in the advance of precision medicine.
However, despite their geographic proximity, the different Asian markets are not as well-integrated as one might expect, leaving many of the potential synergies uncaptured. One major cause of that is the high market heterogeneity within the region. Markets like Singapore, Hong Kong, Taiwan, South Korea and Japan behave much like developed markets with fairly high healthcare spending, developed healthcare infrastructure with well-articulated reimbursement systems, as well as their own biopharma industrial sectors. Most other Asian markets, however, fall on a spectrum between less developed and even less developed. With the exception of China and India, the second- and the eleventh-largest markets globally, the less developed markets are often deprioritized and even overlooked by the industry due to the challenges and costs of operating there.
Another roadblock to closer regional cooperation is the relatively low degree of regulatory harmonization amongst the different countries. International initiatives like the ICH and PIC/S have increased this somehow, as have region-specific actions like the Association of Southeast Asian Nations (ASEAN) Medical Device Directive (AMDD) approved by all member countries in August 2014. Asian regulators have also taken steps to increase exchanges and linkages between each other. For instance, Japan’s Pharmaceuticals and Medical Devices Agency (PMDA), one of the most respected regulators in the world, offers HR development programs through its Asia Training Center (ATC) for Pharmaceuticals and Medical Devices Regulatory Affairs, established in 2016.
Nevertheless, with the obvious exceptions of China, Japan and India, most of the markets in the region are far too small to successfully commercialize homegrown product and service offerings, no matter how novel or transformative – a structural weakness that many industry stakeholders have observed. This means that regional cooperation is not an option – it is the only way forward.
Another comparative area of weakness is the still-developing capital markets in the region when it comes to biopharma or biomedical investments. Though the landscape has evolved rapidly over the past few years, growing in size and sophistication, the general consensus amongst industry players seems to agree that investor appetites in Asia (excluding China) are still fairly cautious, especially when it comes to the sector’s longer investment horizons. When investment dollars do flow, Chinese companies receive the lion’s share. As Hong Kong-based cancer diagnostic player Sanomics CEO Stanley Sy muses, “how can a company like Sanomics survive between two giants: China and the USA?”
How should homegrown champions in other countries deal with the hefty gravitational pull of the China market? For Sanomics, the trick is understanding the realities of regional markets. He shares, “patients in South East Asia are often overlooked. For companies in the US, it is difficult for them to penetrate these markets, mainly because the regulatory environment is very bureaucratic. In China, the idea of genetic testing is not well-received there, and as a result, there are fewer genetic companies in the market. This means that the Chinese market is sufficient for the limited number of companies in operation, reducing their incentive to expand into Southeast Asia.” As a result, Sanomics has been able to penetrate over 20 countries with a sales and marketing team of only seven people.
Other companies have also realized that the region offers tremendous opportunities to those bold enough to take the first step. For instance, Korean diagnostic company Gencurix has already outlined a pan-Asian strategy. CEO Sangrae Cho shares, “we already have plans to enter the market in China. Even without receiving regulatory approval, there are still channels to enter the Chinese market. We are going to establish a partnership with a company in China to set up a lab [to] provide our BCT tests to Chinese patients. In Japan, we have conducted feasibility studies with some of the main hospitals. These studies have shown promising results. For the rest of Asia, we will provide a centralised service. The customers will send the samples directly to our lab in Korea, where they will be analysed. This will remove the need for further regulatory approval. Dependent on market growth in the future, it may be beneficial to set up another local lab based in Singapore to handle demand from the Southeast Asian market.”
The diversity of languages and cultures within Asia may not facilitate communication and cooperation between companies and institutions but as long as all stakeholders speak the language of patient-centricity, the region can advance in its development and deployment of precision medicine to deliver more precise, effective and efficient therapeutics to its patients.