Cambodia - Q1 2013
The fact that Cambodia's neighbours Malaysia and Thailand have become established as more successful emerging markets over previous decades has stifled the development of foreign interest in Cambodia's pharmaceutical market and industry. Other obstacles have included corruption, poor infrastructure and the lack of funding for healthcare and medicines. In the coming decades, however, Cambodia's economic, political and demographic developments should combine to improve - to a degree - the operating environment for multinationals, none of which are present in the market through direct manufacturing facilities.
Theoretically, Cambodia already offers a relatively investment-friendly economy, with untapped opportunities in pharmaceutical manufacturing for export presently being explored by Indian companies. Given their expertise in the manufacture of generic medicines, Indian drugmakers should be well-placed to capitalise on steady levels of demand, especially as Chinese-sourced medicines are often sidelined due to concerns over their quality. However, generally speaking, corruption and poor infrastructure will continue to hamper FDI inflows, especially from developed markets.
Cambodia's pharmaceutical market was calculated to be worth KHR718bn (US$178mn) in 2011. In terms of market segmentation, the lack of official data and, more importantly, the absence of a clear distinction between prescription and over-the-counter (OTC) medicines have made calculations all but impossible. However, BMI estimates that prescription drugs represent less than half the market in value terms, due to underdeveloped healthcare coverage and access to medicines and counterfeiting, as well as the fact that many patients seek to circumvent consultation costs by going straight to the pharmacy. The proportion of OTCs in the overall market would likely be even higher were it not for the presence of non-governmental organisations (NGOs) as part of the country's healthcare provision.
The domestic pharmaceutical industry comprises seven small manufacturers dealing in basic generic medicines. The bulk of demand is met through imports, both from developed markets (such as France, which has considerable influence in Cambodia given its colonial history) and emerging markets (such as India, Thailand and Vietnam). The lack of funding for upgrades to local manufacturing facilities will likely see Cambodia continue to fall further behind other emerging production locations with more modern capacity. Consequently, pharmaceutical exports from Cambodia will remain negligible, with the country's drugmakers only able to target consumers in markets at very low levels of development, such as many of those in Africa.