Preferential Treatment A Cause For Concern

BMI View : Preferential treatment of local manufacturers will limit foreign pharmaceutical firms' access into Malaysia ; however on the upside , it can potentially develop its competitiveness in Malaysia's pharmaceutical industry. We highlight that Malaysia's halal guidelines should not be a significant concern given that it is voluntary at the moment . I mportantly , should a company respect h alal laws, it can potentially leverage on the opportunities from the global h alal pharmaceutical market.

In the Pharmaceutical Research and Manufacturers of America (PhRMA) submission to the Special 301 report, the association has placed Malaysia under the Watch List. The report essentially reviews foreign countries that deny fair market access to PhRMA members that rely on intellectual property (IP) protections. Key concerns of PhRMA include:

Preferential Treatment of Local Manufacturers: The association highlights that Malaysia's National Medicines Policy (NMP) set by the government 'endorses potential price controls, generic drug substitution and preference for generic and local manufacturers by promoting national self-reliance for drugs listed on the National Essential Drug List'. While the promotion of generic drugs is damaging for the association, BMI highlights that this is a natural option that developing and developed countries would opt for given the inexpensive nature of generic drugs. However BMI agrees with PhRMA that foreign firms looking to gain access to the generic drug market should be given similar fair treatments.

Halal Pharmaceutical Guidelines: According to the association, a set of halal pharmaceutical guidelines 'The Malaysia Standard' was launched in April 2011 by the Technical Committee on Halal Food and Islamic Consumer Goods. The committee comprises representatives from a diverse set of Malaysian government, academic and domestic pharmaceutical stakeholders.

While PhRMA remains supportive of religious and cultural sensitivities, it is concerned over the compulsory requirement to declare bovine/porcine content for procurement documentation, stating that it may cause a potential direct or indirect preferential treatment.

BMI believes that the situation is not as dire as stated by the association, given that in comparison to Indonesia, halal requirements are voluntary in Malaysia. In addition, there is a sizeable Muslim population globally (approximately 1.6bn in 2009, representing 23% of the total world population), pharmaceutical firms that are able to develop halal pharmaceuticals are also better able to capture the market from a global perspective.

Lack Of Effective Patent Enforcement: Similar to several developing countries, PhRMA is concerned over weak patent enforcement. The report encourages the country to establish a competent and practical enforcement mechanism that can provide solutions to infringement of IP rights.

On a similar note, the association also highlighted concerns over the country's aim to improve on its patent and trademark law. PhRMA stated that the proposed amendments require 'disclosure of traditional knowledge and genetic resources as well as compulsory licensing'. These are causes of concern, although on an upside, the proposed amendments also included provision for effective patent enforcement and patent term restoration, which will potentially extend the exclusivity period for PhRMA members.

This article is tagged to:
Sector: Pharmaceuticals & Healthcare
Geography: Malaysia, Malaysia, Malaysia, Malaysia

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