Challenges and Strategies in Developing Pharmaceutical Industry in Sabah

a). Regulatory Controls on Manufacturing of Pharmaceuticals

There is a need to ensure that the quality of the products developed conform to the accepted international standards specified by the Drug Control Authority (DCA). Quality control in drug manufacturing by the DCA is to ensure that all drugs manufactured, imported and sold in this country conform with the international standard of efficacy, safety and good manufacturing practice (GMP). The registration process, however requires 2 years which is considered too long by investors.

b). Registration of Patent Expired Products

While a pharmaceutical products is under patent protection, it cannot be registered in Malaysia, except for the patent holder or his authorised person. A local manufacturer can apply for registration of a particular product only after the patent has expired and it takes up to two years to be approved, providing the patent holder continued protection for another two years. In some countries, such as USA and Canada, manufacturers can introduce generics in their markets as soon as the patent has expired. In Malaysia, only recently has DCA permitted submission for registration of generics two years before patent expiry. However, no physical production of the generics is allowed under the Patents Act, 1983.

c). Research and Development.

Major world pharmaceutical companies undertake large scale R&D in order to remain competitive, allocating huge amount of funds, averaging about eight to ten per cent of their total turnover. In contrast, local pharmaceutical manufacturers (locals and foreign-owned companies) hardly undertake any R&D. Lack of R&D in this country certainly has contributed to its limited capability in developing new drugs and active ingredients. There is a huge potential to commercialise traditional and herbal pharmaceuticals. R&D efforts will be critical for the future development of this product category.

d). Competition With Imported Pharmaceutical

Most local manufacturers concentrate on producing over-the-counter (OTC) pharmaceuticals and generics only as they cannot produce patented ethical drugs unless under license. A substantial amount of imported generics and OTCs, brought in duty- free by the MNCs, are competing with the similar locally manufactured products.

e). Export Market For Locally Manufactured Pharmaceuticals

The country exports medicinal and pharmaceutical products mostly to Third World countries. However, many countries restrict imports of pharmaceutical products from Malaysia through tariff and non-tariff barriers such as through Free Sale Certificates and different labeling requirements.

f). Lack Of Standardisation in ASEAN Free Trade Area (AFTA)

Malaysia’s import regulation are more liberal than many of its counterparts in ASEAN. At present, there is no import duty on pharmaceutical products sold in the local market. A new manufactured pharmaceutical product in Malaysia is restricted to a stringent two year shelf-life until a real time shelf-life is done while it is more liberal in other countries. The two year expiration poses as a disadvantage to Malaysian manufacturers in other countries, for example in Singapore, are able to participate in government supplies as they have a three-year lead in export markets. Furthermore, registration requirements for pharmaceuticals are different among ASEAN countries.

Strategies

a). Conservation Of Medicinal Plants

Areas identified to be abundance with medicinal plants need to be preserved and gazetted as National Herbarium Area/National Arboretum. Protection of the area needs to be given priority so as to protect enrichment from outside agencies or individual. In terms of research and development programmes, botanical libraries must be adequate so that the plant material can be identified and stored safely within the country. Qualified botanists capable of identifying plants and looking after the herbarium should also be adequate.

b). Sustainable Collection Of Medicinal Plants From The Wild/Forest

Collection of medicinal plants from the forest could be done individually (rural community in vicinity of the forest) or by commercial organization. The ideal way of regulating excessive/illegal collection of medicinal plants is through introducing permits. Permits are required for commercial collection of any plants except plants under the endangered species list are not allowed to be collected. For the later collection for propagation purposes is allowed under supervision.

c). Cultivation Of Medicinal Plants

For the purpose of large scale production and use of medicinal plants, cultivation of selected medicinal plants is essential. The Ministries of Agriculture and Fisheries, and Health should co-ordinate and co-operate programmes to identify suitable area, establish nurseries, and manage the cultivated area. Chemicals such as weed-killers and pesticides should be reduced to absolute minimum as these chemicals might pose a risk to the environment and also to the plants themselves.

d). Ethnobotanical Databases

Research and collection of ethnobotanical data should be catalogued, preferably using the latest computer databases, to allow comparison of studies done on particular species, and to ease retrieval of the information. Should the date need to be disseminated, compensation to the community is vital.

e). Appropriate And Significant Compensation To The Communities

Appropriate compensation on the form of monetary value (or other appropriate type of compensation) should be channelled back to the communities who provide the information should the particular species of plants found to be commercialised as a formulated as a standard guideline of compensation.

f). Proven Medicinal Remedies Of Plants To Be Incorporated Into National Programmes Of Primary Health Care And Safety Of The Use Of Medicinal Plants

The Ministry of Health could look at selected plant remedies for use in the health services and approved them as well as banning the use of dangerous plants and products. The Ministry should ensure the safety of using medicinal plants by regulating the preparation of drugs in the country. A standard reference is required.

Potential And Prospect Of The Pharmaceutical Industry In Sabah

Sabah occupies a strategic geographical location with International air links to many destinations. It also enjoys good trading relationship with Peninsular Malaysia, Japan, EEC, Asean and People’s Republic of China and with BIMP-EAGA region. The Pharmaceutical Industry thus has good growth potential. With the pharmaceutical cluster concept introduced by the Second Industrial Master Plan, the economic development of the State could be moved towards transformation and with this there are various new opportunities and potential yet to be explored in the Pharmaceutical Industry. There are as follows:

a). Growth In Wholesale And Retail Trade

The growth of affluence has resulted in a higher dispersible income which augurs well for the retail trade. However, there is expected to be an economic slowdown due to the currency depreciation and share market downturn. Nevertheless, the mushrooming of shopping complexes will drive the retail trade further.

b). Government Support

The State Governments aspiration to transform Sabah’s economy from a traditional resources-based approach towards a more value-added end product. In line with the development trends, the Government will provide the infrastructure while the private sector will be the engine for growth.

c). The Use Of Natural Products

There is a worldwide move towards the use of herbal medicines in healthcare. The Malaysian Minister of Health has aggressively explored the use of traditional medicines by the Health Ministry taking the lead to visit China and Indonesia to find out more information regarding their uses. Sabah, with its flora and fauna and its biodiversity, can offer rich resources of herbal medicines. There is hence and urgent need to pursue in the research and development of these products. The manufacture of these medicines into dosage forms will of course require GMP standards and registration of the products. The marketing of the products will also require to comply with the legislation I n place. It is heartening to note that the local population has traditionally used many natural products for their medicinal benefits. It is time to document the various monographs and turn the products into commercial use.

d). Increasing Market Size

Ass Sabah is at the geographical centre of BIMP-EAGA and the Hub for air and sea traffic, the doors are wide open for strong economic links within Asean and the other emerging Nations such as Vietnam, Cambodia and Myanmar. The strategic framework for development is based on specialization and localization of economic activity. In addition, regionalisation of cross-border production processes can generate economies of scale and give rise to intra-industry or two way trade within the region, thereby enhancing the export competitiveness of the sub-regions outside the EAGA.

e). Policies And Strategic Directions

In the IMP2, the policy objectives of the industry are to build up production capability of active ingredients for export and the local market ant to become a key regional manufacturer for certain selected patented pharmaceuticals.

Source: IDS Project Report: Biotechnology in Sabah, April 1998.