Healthcare Market Access: Thailand

TABLE OF CONTENTS

1. COUNTRY LANDSCAPE ...... 9 1.1 Economic environment ...... 9 1.2 Economic indicators ...... 11 1.2.1 Gross domestic product ...... 11 1.2.2 Gross national income ...... 13 1.2.3 Inflation ...... 14 1.2.4 Foreign exchange reserves ...... 16 1.2.5 Current account balance ...... 17 1.2.6 Government gross debt ...... 17 1.2.7 Exchange rate ...... 18 1.2.8 Foreign direct investment ...... 19 1.2.9 Trade balance ...... 20 1.3 Demographics ...... 22 1.3.1 Population ...... 22 1.3.2 Growth of middle class ...... 24 1.3.3 Education and literacy ...... 25 1.3.4 Access to internet...... 26 1.3.5 Employment ...... 26 1.4 Political structure and environment ...... 30 1.4.1 Political history ...... 30 1.4.2 Political structure ...... 30 1.4.3 Current government ...... 31 1.5 Trade associations ...... 33 1.5.1 Pharmaceutical Research & Manufacturers’ Association ...... 33 1.5.2 Thai Pharmaceutical Manufacturers’ Association ...... 33 1.5.3 The Thai Cosmetic Manufacturers’ Association ...... 33 1.5.4 Thai Self‐Medication Industry Association (TSMIA) ...... 34 1.6 Opportunities and challenges ...... 35 1.6.1 Opportunities ...... 35 1.6.2 Challenges ...... 35

2 HEALTHCARE INFRASTRUCTURE ...... 37 2.1 Healthcare system ...... 37 2.2 Health status ...... 43 2.2.1 Life expectancy...... 43 2.2.2 Mortality rate ...... 44 2.2.3 Total fertility rate ...... 45 2.3 Healthcare policy ...... 46 2.4 Healthcare financing and expenditure ...... 48 2.4.1 Healthcare expenditure as a percentage of GDP ...... 49 2.5 Shares of public and private sectors ...... 51 2.6 Pharmaceutical expenditure ...... 52 2.7 Spending in pharmaceutical R&D ...... 53 2.8 Health insurance ...... 54 2.9 Hospital sector ...... 56 2.9.1 Major hospital profiles ...... 60 2.9.1.1 Siriraj Hospital ...... 60 2.9.1.2 Bangkok Dusit Medical Services...... 60 2.9.1.3 Bangkok Chain Hospital ...... 60 2.9.1.4 Bumrungrad Hospital ...... 61 2.9.1.5 Chularat Hospital ...... 61 2.9.1.6 Thonburi Hospital ...... 62 2.9.1.7 Mahidol University - Ramathibodi Hospital ...... 62 2.9.1.8 Sikarin Hospital ...... 62 2.9.1.9 Vejthani Hospital, Bangkok ...... 62 2.10 Healthcare personnel ...... 62 3 OVERVIEW OF PHARMACEUTICAL MARKET ...... 65 3.1 Market overview ...... 65 3.2 Industry structure ...... 67 3.3 Market segments ...... 69 3.4 Opportunities and challenges ...... 70 3.4.1 Opportunities ...... 70 3.4.2 Challenges ...... 70 3.5 Major players ...... 72 3.5.1 Government Pharmaceutical Organization (GPO) ...... 72

3.5.2 BIOLAB Pharma ...... 72 3.5.3 GlaxoSmithKline Pharmaceuticals ...... 73 3.5.4 Pfizer Thailand ...... 73 3.5.5 Merck Thailand...... 74 3.5.6 Greater Pharma ...... 74 3.5.7 Sanofi Thailand...... 75 3.5.8 Roche Thailand ...... 75 3.6 Key products ...... 76 3.7 Supply channel ...... 77 3.7.1 Distribution / wholesale ...... 77 3.7.2 Retail ...... 78 3.8 Sales and marketing ...... 79 3.9 Events ...... 80 3.10 Major diseases ...... 81 3.10.1 HIV/AIDS ...... 82 3.10.2 Stroke ...... 82 3.10.3 Diabetes ...... 83 3.10.4 Cancer ...... 84 3.10.5 Traffic Injuries ...... 84 4 MARKET ACCESS ...... 85 4.1 Stakeholder landscape ...... 85 4.1.1 Physicians ...... 85 4.1.2 Regulatory bodies and government agencies ...... 85 4.1.3 Supply channels ...... 86 4.1.4 Patients / patient advocacy groups ...... 86 4.1.5 Pharmaceutical companies ...... 86 4.1.6 Payers ...... 87 4.1.7 Healthcare service providers ...... 87 4.2 Regulatory landscape ...... 90 4.2.1 Regulatory agencies ...... 90 4.2.2 Organization structure ...... 91 4.2.3 Market authorization for pharmaceutical products ...... 92 4.2.4 Clinical trial regulations ...... 95 4.2.5 Licensing process for pharmaceutical manufacturing ...... 97

4.2.6 Licensing for pharmaceutical import and export ...... 98 4.2.7 Post-marketing regulations ...... 99 4.2.8 OTC products ...... 100 4.2.9 Labeling and advertising ...... 100 4.2.10 Pharmaceutical advertising ...... 101 4.2.11 Intellectual property rights ...... 103 4.3 Pricing...... 107 4.3.1 Pricing system...... 107 4.3.2 Pricing policy ...... 107 4.3.3 Price trends ...... 108 4.3.4 Discount and margins ...... 110 4.4 Reimbursement landscape ...... 112 4.4.1 Reimbursement process ...... 112 4.4.2 Insurance providers ...... 113 4.4.2.1 Public insurance ...... 113 4.4.2.2 Private insurance...... 115 4.4.3 Co-payment ...... 115 4.5 Prescribing and dispensing ...... 117 4.5.1 Prescribing guidelines ...... 117 4.5.2 Prescribing influences ...... 117 4.5.3 Dispensing ...... 118 4.6 Reimbursement drug lists ...... 119 4.6.1 National List of Essential Drugs ...... 119 4.7 Drug procurement ...... 123 4.8 Hospital formulary ...... 124 5 APPENDIX ...... 125 5.1 Glossary ...... 125 5.2 Sources ...... 128 5.3 Methodology ...... 135 5.3.1 Secondary research ...... 135 5.3.2 Primary research ...... 135 5.3.3 Data validation ...... 135 5.4 Disclaimer ...... 136 5.5 Contact us ...... 136

LIST OF TABLE

Table 1: GDP ($bn), Thailand, 2009 – 2013 ...... 11 Table 2: Annual GDP growth (%), Thailand, 2009 – 2013 ...... 12 Table 3: Gross national income ($bn), Thailand, 2009 – 2013 ...... 13 Table 4: GNI per capita (PPP), Thailand, 2009 – 2013 ...... 14 Table 5: Inflation rate (%), Thailand, 2009 – 2013 ...... 15 Table 6: Consumer price index, Thailand, 2009 – 2013 ...... 16 Table 7: Forex reserves ($bn), Thailand, 2009 – 2013 ...... 16 Table 8: Current account balance ($bn), Thailand, 2009 – 2012 ...... 17 Table 9: Central government debt (% to GDP), Thailand, 2009 – 2013 ...... 18 Table 10: Exchange rate (THB per USD), Thailand, 2009 – 2013 ...... 19 Table 11: Foreign direct investment ($bn), Thailand, 2009 – 2013 ...... 20 Table 12: Imports and Exports ($bn), Thailand, 2009 – 2013 ...... 21 Table 13: Population (million), Thailand, 2009 – 2013 ...... 22 Table 14: Urban and rural population (million), Thailand, 2009 – 2013 ...... 23 Table 15: Population distribution by age groups (%), Thailand, 2009 – 2013 ...... 24 Table 16: Gross enrolment ratio, Thailand, 2009 – 2013 ...... 26 Table 17: Employment to population ratio (15+ age), Thailand, 2009 – 2012 ...... 27 Table 18: Employment by sector (%), Thailand, 2009 – 2012 ...... 28 Table 19: Unemployment rate (% of labor force), Thailand, 2009 – 2012 ...... 29 Table 20: Number of primary healthcare centers, Thailand, 2006 – 2010 ...... 41 Table 21: Health facilities in the public sector, Thailand, 2010 ...... 42 Table 22: Life expectancy (years), Thailand, 2008 – 2012 ...... 44 Table 23: Mortality rate (per thousand), Thailand, 2008 – 2012 ...... 44 Table 24: Healthcare insurance schemes, Thailand ...... 47 Table 25: Healthcare expenditure (% of GDP), Thailand, 2008 – 2012 ...... 49 Table 26: Healthcare expenditure per capita, PPP ($), Thailand, 2008 – 2012 ...... 50 Table 27: Public-private share of healthcare expenditure (%), Thailand, 2008 – 2012 ...... 51 Table 28: Health insurance coverage in Thailand, 2012 ...... 54 Table 29: Number of hospitals, Thailand, 2006 – 2010 ...... 58 Table 30: Number of private and public hospitals, Thailand, 2008 – 2010 ...... 59 Table 31: Number of beds, Thailand, 2006 – 2010 ...... 59 Table 32: Number of physicians, Thailand, 2006 – 2010 ...... 64 Table 33: Healthcare personnel (per 100,000 population), Thailand, 2006 – 2010 ...... 64 Table 34: Imports and exports of pharmaceuticals ($bn), Thailand, 2008 – 2012 ...... 66 Table 35: Recent events in pharmaceutical industry, Thailand ...... 80 Table 36: Leading cause of disability-adjusted life years ...... 81 Table 37: Illustrative price build up ranges for an imported pharmaceutical product in Thailand ...... 111 Table 38: Public insurance schemes, Thailand ...... 114

LIST OF FIGURES

Figure 1: GDP ($bn), Peer countries, 2013 ...... 10 Figure 2: GDP ($bn), Thailand, 2009 – 2013 ...... 11 Figure 3: Annual GDP growth (%), Thailand, 2009 – 2013 ...... 12 Figure 4: Gross national income ($bn), Thailand, 2009 – 2013 ...... 13 Figure 5: GNI per capita (PPP), Thailand, 2009 – 2013 ...... 14 Figure 6: Inflation rate (%), Thailand, 2009 – 2013 ...... 15 Figure 7: Consumer price index, Thailand, 2009 – 2013 ...... 15 Figure 8: Forex reserves ($bn), Thailand, 2009 – 2013 ...... 16 Figure 9: Current account balance ($bn), Thailand, 2009 – 2012 ...... 17 Figure 10: Central government debt (% to GDP), Thailand, 2009 – 2013 ...... 18 Figure 11: Exchange rate (THB per USD), Thailand, 2009 – 2013 ...... 18 Figure 12: Foreign direct investment ($bn), Thailand, 2009 – 2013 ...... 19 Figure 13: Imports and Exports ($bn), Thailand, 2009 – 2013 ...... 21 Figure 14: Population (million), Thailand, 2009 – 2013 ...... 22 Figure 15: Urban and rural population share (%), Thailand, 2009 – 2013 ...... 23 Figure 16: Population distribution by age groups (%), Thailand, 2009 – 2013 ...... 24 Figure 17: Gross enrolment ratio, Thailand, 2009 – 2013 ...... 25 Figure 18: Employment to population ratio (15+ age), Thailand, 2009 – 2012 ...... 27 Figure 19: Employment by sector (%), Thailand, 2009 – 2012 ...... 28 Figure 20: Employment by sector (%), Thailand, 2009 – 2012 ...... 28 Figure 21: Levels of health services in Thailand ...... 37 Figure 22: Overall healthcare system and its financing, Thailand ...... 40 Figure 23: Number of primary healthcare centers, Thailand, 2006 - 2010 ...... 41 Figure 24: Life expectancy (years), Thailand, 2008 – 2012 ...... 43 Figure 25: Mortality rate (per thousand), Thailand, 2008 – 2012 ...... 44 Figure 26: Healthcare expenditure (% of GDP), Thailand, 2008 – 2012 ...... 49 Figure 27: Healthcare expenditure per capita, PPP ($), Thailand, 2008 – 2012 ...... 50 Figure 28: Public-private share of healthcare expenditure (%), Thailand, 2008 - 2012 ...... 51 Figure 29: Health insurance model, Thailand ...... 55 Figure 30: Number of hospitals, Thailand, 2006 – 2010 ...... 58 Figure 31: Number of private and public hospitals, Thailand, 2008 – 2010 ...... 59 Figure 32: Number of beds, Thailand, 2006 – 2010 ...... 59 Figure 33: Number of physicians, Thailand, 2006 – 2010 ...... 63 Figure 34: Healthcare personnel (per 100,000 population), Thailand, 2006 – 2010 ...... 64 Figure 35: Imports and exports of pharmaceuticals ($bn), ...... 66 Figure 36: Pharmaceutical industry structure, Thailand ...... 67 Figure 37: Products at cost according to categories (THB mn), GPO, Thailand, 2011 ...... 72 Figure 38: Pharmaceutical drug distribution channel, Thailand ...... 77 Figure 39: Stroke mortality per 100,000 person-years, Thailand, 2008 – 2012 ...... 83 Figure 40: Organization structure of FDA, Thailand ...... 91 Figure 41: Drug approval and review process, Thailand ...... 92 Figure 42: New drug registration process followed by Thai FDA ...... 94

Figure 43: Process of obtaining drug manufacturing license, Thailand ...... 98 Figure 44: Process of obtaining drug import license, Thailand ...... 99 Figure 45: Drug inclusion process for NLED list, Thailand ...... 121

1. Country Landscape

1.1 Economic environment

Thailand’s economy has witnessed considerable instability in the last few years. The global economic crisis of 2009 had an adverse impact on its gross domestic Thailand ranks product (GDP), which registered a negative growth of 2.3%. The economy amongst the top bounced back on to the growth trajectory in 2010 to register a healthy growth of thirty economies 7.8%. But, devastating floods in the second half of 2011 hampered the economic worldwide when it growth and the GDP registered a miniscule growth of 0.1%. Post the floods, the comes to ease of doing business. But, economy rebounded in 2012 to register a healthy growth of 6.5%, primarily due to political instability, factories resuming production and higher consumer spending. The economic global economic slowdown in Japan, China, and the US, the top three trade partners of Thailand, slowdown and also had impacted its economic growth. The GDP growth was restricted to 2.9% in onslaught of natural 2013 and could not sustain the momentum generated in 2012, largely because of calamities have feebler domestic demand and a drop in investments. severely affected its economic Political stability has eluded Thailand since the end of absolute monarchy in 1932. environment. There have been twelve coups since. Thailand plunged into a political crisis after the army imposed martial law in May 2014, to quell months of protests by citizens. The protracted political turmoil threw Thailand’s economy out of gear, dampening domestic demand and eroding business confidence. Further, tourism, which is the backbone of the Thai economy, was hit hard by the political unrest. As the country limps back to normalcy following months of political unrest, the growth prospects for the economy in 2014 remained subdued. The economy was expected to grow by 1.5% in 2014, primarily driven by cagey private consumption resulting from high household debts, weak exports and sluggish recovery of the tourism sector.

The conomy is stipulated for a rebound in 2015, provided there is political stability and the country adopts major economic reforms. The government announced a slew of reforms in October 2014 to make Thailand an attractive business destination and to develop a digital economy. The focus of the reforms includes tackling pervasive corruption, transparent taxation regime, promoting Thai investment abroad and improving the domestic business environment. Despite the numerous challenges faced by the economy, Thailand remains an attractive country for foreign investments, especially for pharmaceutical companies, as the majority of the population is covered by health insurance. The attractiveness is further aided by the World Bank report that ranks Thailand among the top thirty economies worldwide and second among the emerging economies of East Asia on the parameter of ease of doing business. Thailand jumped two places from 28th in 2013 to 26th in 2014 in terms of ease of doing business.

Figure 1: GDP ($bn), Peer countries, 2013

1,000 868 800

600 387 400 312 298 GDP ($bn) 272 171 200

0 Indonesia Thailand Malaysia Singapore Philippines Vietnam

Source: World Bank

1.2 Economic indicators

1.2.1 Gross domestic product

The global financial crisis of 2009 and the flooding in 2011 severely dented Thailand’s economic growth prospects. The GDP of Thailand was pegged at $264 Although severely bn in 2009. Thailand’s economy is predominantly export-oriented. In 2009, dented by the global financial crisis of exports to China, which constitute a major chunk of its exports, deteriorated 2009 and the flooding noticeably. The global financial crisis of 2009 also impacted the tourism industry, of 2011, Thailand’s an important contributor to Thailand’s economy, thus tapering the GDP. Yet, the GDP grew at an GDP rallied in 2010 to record a healthy $319 bn. Albeit the flooding in 2011 average of 3% in negatively impacted the GDP, the construction post flooding helped revive the 2009 – 2013. economy and the GDP registered $366 bn in 2012. The GDP of Thailand grew at an average of approximately 3% from 2009 to 2013.

Amongst the peer group of Indonesia, Malaysia, Philippines, Singapore, Vietnam and Thailand, Indonesia has the largest GDP ($868 bn), followed by Thailand ($387 bn) and Malaysia ($312 bn).

The GDP growth of Thailand in 2014 was expected to be 1%, lower than the 1.5% - 2% that was forecast earlier. Still, the economy is expected to expand by 3.5% - 4.5% in 2015. The GDP growth forecasts for 2015 remain buoyant due to expected improvement in the export sector propelled by a recovery in the global economy.

Figure 2: GDP ($bn), Thailand, 2009 – 2013

5,779 5,480 600 5,192 6,000

4,803 3,979 400 4,000 387 346 366 319 200 264 2,000 GDP ($bn) GDP GDP per capita ($)

0 0 2009 2010 2011 2012 2013

Source: World Bank

Table 1: GDP ($bn), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 $bn 264 319 346 366 387

Source: World Bank

Barring 2009, when GDP per capita slumped to $3,979, Thailand has witnessed a steady growth. The GDP per capita grew from $3,979 in 2009 to $5,779 in 2013 at a compounded annual growth rate (CAGR) of 9.8%. Amongst its peer country group, Thailand has the third highest GDP per capita, with Singapore and Malaysia at first and second place respectively.

The GDP in 2009 plummeted to register a negative growth (-2.3%) and barely managed to avoid a negative growth (0.1%) in 2011. But, the economy rallied in 2012 to register a healthy growth of 6.4%, primarily driven by strong investments fuelled by reconstruction and flood-prevention efforts, and a rise in minimum wages that resulted in higher consumption. Low government debts coupled with flexible monetary and exchange rate policies also underpinned the economic growth. The GDP growth could not sustain the heights of 2012 and registered a muted growth of 1.8% in 2013, primarily due to sluggish exports, decrease in tourist arrivals, high household debts (82% of GDP in 2013), and weak investor sentiments.

Figure 3: Annual GDP growth (%), Thailand, 2009 – 2013

9 7.8 7.7

1.8 0.1

GDP GDP growth (%) 1

2009 2010 2011 2012 2013 -2.3 -3

Source: World Bank

Table 2: Annual GDP growth (%), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 Annual GDP Growth (%) -2.3 7.8 0.1 7.7 1.8

Source: World Bank

1.2.2 Gross national income

The gross national income (GNI) of Thailand increased at a CAGR of 9% from 2009 to 2013. The GNI was $364 bn in 2013, up by 3.7% from the previous year ($351 bn in 2012). Among the peer group, Indonesia, with a GNI of $841 bn in 2013, tops the list followed by Thailand ($364 bn), Philippines ($326 bn), Malaysia ($301 bn), Singapore ($291 bn), and Vietnam ($163 bn).

Thaliand’s GNI was expected to slow down in 2014 due to political unrest and sluggish exports. However, the forecast for 2015 is positive, provided the government implements long pending economic reforms coupled with political stability. Figure 4: Gross national income ($bn), Thailand, 2009 – 2013

500 364 333 351 305

253 250 GNI ($bn)GNI CAGR: 9% (2009-2013)

0 2009 2010 2011 2012 2013

Source: World Bank

Table 3: Gross national income ($bn), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 $bn 253 305 333 351 364

Source: World Bank

The GNI per capita of Thailand increased from $11,100 in 2009 to $13,510 in The GNI per capita 2013 at a CAGR of 5%. Due to its low population and high income, Singapore increased from ($76,850) topped the GNI per capita ranking among the peer group in 2013. $11,100 in 2009 to Malaysia ($22,460) was ranked at second place followed by Thailand ($13,510), $13,510 in 2013 at a Indonesia ($9,260), Philippines ($7,820) and Vietnam ($5,030). CAGR of 5%.

Figure 5: GNI per capita (PPP), Thailand, 2009 – 2013

16,000 13,420 13,510

12,030 12,340 11,100 12,000

8,000

4,000 CAGR: 5% (2009-2013) GNI capita ($)per GNI

0 2009 2010 2011 2012 2013

Source: World Bank * current international $

Table 4: GNI per capita (PPP), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 $ 11,100 12,030 12,340 13,420 13,510

Source: World Bank * current international $

1.2.3 Inflation

Over the last decade, inflation in Thailand has been hovering around 3%. Inflation accelerated to record an eleven year high in 2008 due to high volatility in world oil Inflation in Thailand has been hovering prices. The spurt in inflation pulled down the purchasing power of consumers. around 3% for the Inflation plunged to record a negative growth (-0.85%) in 2009 due to a mismatch last few years. The between supply and demand created during 2008. The supply outstripped demand Bank of Thailand leading to a steep decline in the prices of fuels and food products. It took almost a (BOT) has set an year for the supply and demand to stabilize. The rate of inflation stabilized from inflation target of 3% 2010 to 2012 before declining in 2013 at 2.2%. The decline in inflation in 2013 for the year 2015. was due to the global economic slowdown, reduced household spending and decline in global fuel prices. The rate of inflation recorded in 2013 was within the target projected by the commerce ministry that estimated the inflation to be in the range of 2.1% to 2.6%.

Vietnam, with an inflation of 6.6% in 2013, recorded the highest inflation among the peer group followed by Indonesia (6.4%). Thailand recorded the second lowest rate of inflation with Malaysia registering the lowest inflation rate of 2.1% in 2013.

The Commerce Ministry of Thailand expected inflation in 2014 to be in the range of 2.0% - 2.8%, due to price control measures and an improvement in domestic demand. However, the inflationary pressure is expected to increase in 2015, especially if the value added tax is raised to 10% (scheduled for October 2015). In

addition, the government’s plan to increase the salaries of civil servants by 8% in 2015 is expected to add approximately 0.05% point to inflation. The Bank of Thailand (BOT) has set an inflation target of 3% for the year 2015. Figure 6: Inflation rate (%), Thailand, 2009 – 2013

5 3.8 3.3 3.0 3 2.2

1 Inflation (%) rate Inflation

2009 2010 2011 2012 2013 -1 -0.8 Source: World Bank

Table 5: Inflation rate (%), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 Annual % -0.8 3.3 3.8 3.0 2.2

Source: World Bank Data

The consumer price index increased at a CAGR of 3% indicating an increase in cost to the average consumer of acquiring a basket of goods and services. Figure 7: Consumer price index, Thailand, 2009 – 2013

150

104 107 109 97 100 100

CPI 50 CAGR: 3% (2009-2013) 0 2009 2010 2011 2012 2013

Source: World Bank

Table 6: Consumer price index, Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 CPI 97 100 104 107 109

Source: World Bank

1.2.4 Foreign exchange reserves

The foreign exchange (forex) reserves of Thailand grew at a CAGR of 4% from 2009 to 2013. The total forex reserves (including gold) increased from $138 bn in 2009 to $181 bn in 2012. The forex reserves fell to $167 bn in 2013. The degeneration occurred due to the Central Bank’s currency intervention to prevent the Baht from becoming volatile. Besides, the Bank of Thailand (BoT) utilized foreign exchange reserves for the appreciation of Baht in real terms. The increase in global oil prices due to conflicts in Syria also contributed to the depletion of forex reserves, since it increased the cost of Thai energy imports. The forex reserves of Thailand in 2013 covered eight month of imports. Figure 8: Forex reserves ($bn), Thailand, 2009 – 2013

250

181 200 172 175 167 138 150

100

50 CAGR: 4% (2009 – 2013) Forex resrve ($bn) resrve Forex 0 2009 2010 2011 2012 2013

Source: World Bank

Table 7: Forex reserves ($bn), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 $bn 138 172 175 181 167

Source: World Bank

1.2.5 Current account balance

The current account balance of Thailand saw a steep decline post 2009 and it Adverse events like plunged into a deficit ($-1.4 bn) in 2012. The downward slide occurred the global financial predominantly due to adverse events like the global financial crisis, the flooding in crisis, flooding in 2011, weaker exports and increased imports for large investment projects, and an 2011, weaker exports appreciation of Baht in real terms. The current account balance as a percentage of and increased imports GDP of Thailand has tapered over the years and stood at -0.4% in 2012. The for large investment current account balance was at a deficit at $2.8 bn in 2013 (0.7% of GDP) projects, and the compared to a $1.4 bn deficit in 2012 (0.4% of GDP). The current account deficit appreciation of Baht was expected to taper in 2014 due to improved exports. It was also anticipated that in real terms led the the increase in trade surplus would reduce the current account deficit to 0.3% of current account GDP in 2014. balance to plunge into deficit. Figure 9: Current account balance ($bn), Thailand, 2009 – 2012

25 21.9

15 9.9

($bn) 4.1 5 -1.4

Current account balance account balance Current 2009 2010 2011 2012 -5

Source: World Bank

Table 8: Current account balance ($bn), Thailand, 2009 – 2012

Year 2009 2010 2011 2012 $bn 21.9 9.9 4.1 -1.4

Source: World Bank

1.2.6 Government gross debt

The net debt of Thailand has stayed stable over a period of few years, accounting for 30% of the GDP in 2012. The stable net debt gave the government the relevant flexibility for additional spending in case of a financial crisis. A majority of Thailand’s debt is domestic in nature and the capacity of the government to repay the debt is good due to financial stability.

Figure 10: Central government debt (% to GDP), Thailand, 2009 – 2013

40 29 29 30 30

10 (% to GDP)

Central government government Central debt 2009 2010 2011

Source: IMF

Table 9: Central government debt (% to GDP), Thailand, 2009 – 2013

Year 2009 2010 2011 % to GDP 29 29 30

Source: IMF

1.2.7 Exchange rate

The currency rates are managed by the Bank of Thailand, which has maintained a managed-float exchange rate regime. The Baht was at 34.3 per dollar in 2009 after which it started to depreciate because of foreign investors pulling out their investments, fearing political instability. The Baht recovered marginally in 2012, driven by improved investor sentiments and demand for risky assets, but slipped again in 2013. The exchange rate for 2014 was likely to be THB 33.0, while it is expected to be in the range of THB 31 - 34 against the dollar in 2015.

Figure 11: Exchange rate (THB per USD), Thailand, 2009 – 2013

40 34

32 30 31 31 30

Exchange rate Exchange 10 (THB per USD) CAGR: - 2% (2009 - 2013) 0 2009 2010 2011 2012 2013

Source: World Bank

Table 10: Exchange rate (THB per USD), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 THB per USD 34 32 30 31 31

Source: World Bank

1.2.8 Foreign direct investment

Thailand is a major destination for foreign direct investment (FDI). FDI in Thailand has grown at a CAGR of 23% from 2009 to 2013. Due to the global Apart from the financial crisis, FDI in Thailand fell to $5 bn in 2009. FDI inflows picked up in automotive manufacturing sector, 2010 and it registered approximately $9 bn but plunged to $4 bn in 2011 due to the tourism, services, flooding debacle. The post-flood initiatives saw FDI increase to a record $11 bn in infrastructure, metal 2012, which further increased to $13 bn in 2013. Still, some projects were shelved processing and due to political instability in 2013. The highest FDI was registered by Singapore agricultural products with $64 bn followed by Indonesia, which registered $19 bn. are among the sectors that received higher In 2013, Japan was the top investor in Thailand followed by China and Malaysia FDI in Thailand. respectively. Services, infrastructure, metal processing and agricultural products were among the sectors that received higher foreign investment in 2013. The automotive manufacturing sector and tourism industry were also prominent sectors that received sizeable FDI. Respectable growth in the processed foods sector ensured continuous reception of FDI for the agriculture sector. The inclusion of Thailand in the ASEAN Economic Community (AEC) from 2015 onwards will elevate Thailand’s stature as a potential country for business initiatives. After its integration with the AEC, the International Institute for Trade and Development (ITD) named Thailand as one of the top five countries in the Southeast Asian region to expect increased FDIs.

Figure 12: Foreign direct investment ($bn), Thailand, 2009 – 2013

15 12.6 10.7 9.1 10

FDI ($bn) 4.9 3.9 5 CAGR: 23% (2009 - 2013)

0 2009 2010 2011 2012 2013

Source: World Bank

Table 11: Foreign direct investment ($bn), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 $bn 4.9 9.8 3.9 10.7 12.6

Source: World Bank

1.2.9 Trade balance

Trade balance is the difference between the export and import of goods and services. Thailand is predominantly an export-oriented country and is highly Thailand is predominantly an susceptible to external economic fluctuations, which can adversely impact the export-oriented trade balance. country and is highly susceptible to external The import of goods and services was pegged at $272 bn in 2013, increasing at a economic CAGR of 16% over 2009 - 2013. The export of goods and services increased at a fluctuations. CAGR of 12% over the same period to register $285 bn in 2013. Exports were expected to grow by 6% in 2014, with recovery expected in Thailand’s major export markets particularly the US and the EU. As the exports improve, the imports too are expected to grow by nearly 5% in 2014.

The trade balance was projected to be around 2.3% of the GDP in 2014 and trade surplus was expected to contribute to a lower current account deficit (0.3% of GDP in 2014 compared to 0.7% deficit in 2013). The major exports include car parts and The major chunk of imports in 2013, in terms of value, was crude oil with a total accessories, of $38.9 bn. Machinery and parts, jewelry (gold and silver), electrical machinery, computer-related iron and steel were other key imports. Japan was the major country for imports products, refined followed by China, the UAE, the US and Malaysia. fuels, precious stones and jewellery, rice The major exports in 2013 were car parts and accessories valued at $24.4 bn and rubber. Crude oil followed by computer-related products, refined fuels, precious stones and jewelry. is the major import Rice and rubber also constituted a major chunk of exports. China continued to be item. the major export destination for Thailand valued at $27.2 bn. The other major countries for exports were the US, Japan, Hong Kong and Malaysia.

Figure 13: Imports and Exports ($bn), Thailand, 2009 – 2013

350

300

250 CAGR (2009 - 2012): 200 Import: 16% Export: 12% 150 Imports Imports and exports ($bn) 100

50 28 23 16 4 13 0 2009 2010 2011 2012 2013

Trade balance Import Export

Source: World Bank

Table 12: Imports and Exports ($bn), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 Imports 152 204 250 270 272 Exports 180 227 266 274 285 Trade balance 28 23 16 4 13

Source: World Bank

1.3 Demographics

1.3.1 Population

Thailand, previously known as Siam from 1945 - 1949, is located in the Southeast Asia region in the middle of the Indo - China peninsula. Thailand is the 51st largest Reportedly 67 million country in the world with an area of 514,000 square kilometers and a population in 2013, the density of 131 people per sq. km. The population of Thailand has been stable over population of a period of five years, growing at a CAGR of 0.3%. Thailand, with a population of Thailand has been 67 million, was the third most populous country among its peer group in 2013. stable over a period of Indonesia topped the chart with a population of 250 million, followed by Vietnam five years, growing at (90 million). The Thai government-sponsored family planning program has been a a CAGR of 0.3%. catalyst in decelerating the population growth from 3% in 1960 to below 1%. The majority of the population resides in rural areas where agriculture is the predominant occupation. The rural population is slowly migrating to urban areas in search of new jobs. The country has a healthy gender ratio of 1:1.

The majority of population, nearly 90%, practices Buddhist religion and speaks the Thai language.

Figure 14: Population (million), Thailand, 2009 – 2013

80 CAGR: 0.3% (2009 - 2013)

40 66 66 67 67 67 20

Population (million) 0 2009 2010 2011 2012 2013

Source: World Bank

Table 13: Population (million), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 Population 66 66 67 67 67 (million)

Source: World Bank

Rapid industrialization in Thailand has resulted in the migration of population from rural areas to urban areas in search of better job prospects. The rural population depends on agriculture as the prominent sector for employment and Rapid often move to industrial and service sectors that are principally confined to urban industrialization in areas. Additionally, as part of seasonal migration, the rural population staying in Thailand has resulted urban areas move back to rural areas when there is not enough work available. in the migration of population from rural This can be predominantly seen in labor class workers in construction, areas to urban areas manufacturing and services sectors. in search of better job prospects. Figure 15: Urban and rural population share (%), Thailand, 2009 – 2013

43% 44% 45% 47% 48%

57% 56% 55% 53% 52% Population (%)

2009 2010 2011 2012 2013 Rural Urban

Source: World Bank

Table 14: Urban and rural population (million), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 Rural 38 37 36 36 35 Urban 28 29 30 31 32

Source: World Bank

The working age population (15 - 64 years) constitutes the largest chunk of population (~72%) with geriatric population (above 65 years) constituting 9% of The working age the entire population. The World Bank estimates that the population will undergo population (15 - 64 contraction in the coming decade. It is projected that the population of Thailand years) constitutes the largest chunk of the will touch approximately 72 million and the proportion of people in the age group population (~72%) of 60 years and above will increase to approximately 19% by 2025, thus exerting a and the geriatric strain on healthcare services. population (above 65 years of age) constitutes 9%.

Figure 16: Population distribution by age groups (%), Thailand, 2009 – 2013

9% 9% 9% 9% 10%

71% 72% 72% 72% 72%

Population (%) 20% 19% 19% 18% 18% 2009 2010 2011 2012 2013 0 - 14 15 - 64 >65

Source: World Bank

Table 15: Population distribution by age groups (%), Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 0 – 14 (%) 20 19 19 18 18 14 – 64 (%) 71 72 72 72 72 65+ (%) 9 9 9 9 10

Source: World Bank

1.3.2 Growth of middle class

Thailand reaped rich dividends of economic prosperity that resulted in the emergence and expansion of middle classes that are socially coherent, culturally and intellectually dominant and politically participative. The resurgent middle class of Thailand has been the result of political and economic reforms, especially the establishment of the 1997 constitution. The promulgation of the constitution in 1997 paved the way for greater participation of middle class in the political arena of Thailand. The elected middle class representatives became highly involved in the formulation of policies and legislation processes. The growth of middle class was also compounded by educational reforms that led to creation of new universities. A majority of the middle class is confined to Bangkok and other The middle class metropolitan cities. population grew from 21% of the total The middle class population grew from 21% of the total population in 2000 to 42% population in 2000 to in 2014. It is projected to reach 85% of the total population by 2030. In Thailand, 42% in 2014. It is projected to grow to the upper-middle class accounts for a greater share of the population compared to 85% of the total the lower middle class. A majority (nearly 35%) of the Thai middle class fell under population by 2030. the income bracket of $4 - $6 per day in 2010. But, the population under the income brackets of $6 - $10 and $10 - $20 are expected to increase in the coming

years. Most of the middle class spent a large share of their incomes on health and education.

1.3.3 Education and literacy

Education in Thailand is mainly facilitated by the Ministry of Education that There has been a functions under the aegis of the Thai government. The education policy is shaped gradual increase in on the basis of the National Education Act of 1999 and the 15 Year National school enrolment at Education Plan (2002 - 2016). The education provided is relatively low-cost. The all levels. Yet, the public education system in Thailand (primary, secondary and tertiary) covers high dropout rate nearly the entire country. School attendance is virtually universal as public after the secondary schooling (from grade one to twelve) is mostly free and grades from one to nine education remains a are compulsory. The education budget represented 4% of the GDP in 2012. concern. Poor quality of teachers in state There has been a gradual increase in the rate of enrolment of students at all levels. schools has been a Yet, high dropout rates after secondary education remains a concern. The medium perennial problem. of instruction is mostly Thai but English is gaining acceptance as a preferred medium of instruction. The literacy rate stood at 93.5% in 2012, with female literacy rate being higher than male literacy. School enrolment of male students at the primary level is higher but female enrolment is higher at the tertiary level.

Poor quality of teachers in Thailand’s state schools has been a perennial problem. A dearth of qualified teaching professionals continues to bog down Thailand’s education sector. Public schools and state-run universities have been plagued with hierarchical and incompetent administration. Urban areas tend to offer better quality of education than the rural areas. The Abhisit government started education reform titled ‘15 Years of Free Education’ program, to provide partly free education to approximately twelve million disadvantaged Thai students in 2009. The Yingluck government also initiated reforms to modernize schooling system by providing wireless internet and computer tablets to first graders. There have been proposals to privatize the education system in Thailand. But, many people feel that privatization will deepen the rift between rich and poor students.

Figure 17: Gross enrolment ratio, Thailand, 2009 – 2013

150

119 102 108 110 112 100 97 95 95 95 93 83 87 87 81 50 49 50 53 51 51

Gross enrollment ratio enrollment Gross 0 2009 2010 2011 2012 2013 Pre primary Primary Secondary Tertiary

Source: World Bank

Table 16: Gross enrolment ratio, Thailand, 2009 – 2013

Year 2009 2010 2011 2012 2013 GER, pre-primary 102 108 110 112 119 GER, primary 97 95 95 95 93 GER, secondary 81 83 87 87 - GER, tertiary 49 50 53 51 51

Source: World Bank

1.3.4 Access to internet

Access to internet has gradually increased in Thailand. Internet penetration in Thailand was approximately 29% with 19 million users in 2014. The internet user base grew by 8% compared to the figures of 2013. It is estimated that internet users in Thailand will reach approximately 42 million by 2016. Thailand has provided all schools with an internet connection. On an average, an internet user spends ten hours per week in Thailand. Common uses of internet ranged from checking emails to online chatting and browsing local new media websites. Online games have also increased. Majority of the internet users are in the age group of 20 to 29 years. Approximately 47% of internet users access the internet at educational institutions, 33.4% at home and 29% at work. The government established the Government Information Network (GIN) to promote information communication technology (ICT). As of 2013, the mobile penetration has increased to 131.8%.

1.3.5 Employment

Thailand’s unemployment rates have been lower than that of its peer nations. The employment-to-population ratio has been stable at approximately 72%. Agriculture has been the largest employment-providing sector in Thailand. The agriculture sector employed approximately 40% of the total workforce in 2012, with fishery constituting a key sub-segment. However, the percentage of people employed in agriculture sector has been dwindling as the young Thai population migrates to urban areas in search of greener pastures. The percentage of people employed in agriculture sector is similar to that of Indonesia and Philippines. The productivity of agriculture sector measured as GDP per capita is lowest compared to other sectors.

Figure 18: Employment to population ratio (15+ age), Thailand, 2009 – 2012

100

80 71.7 71.7 71.9 71.9

(%) ratio 40

20 Employment Employment to population 0 2009 2010 2011 2012

Source: World Bank

Table 17: Employment to population ratio (15+ age), Thailand, 2009 – 2012

Year 2009 2010 2011 2012 % 71.7 71.7 71.9 71.9

Source: World Bank

The services sector employed approximately 40% of the working population, with the manufacturing industry sector employing the rest. There was a rapid increase in the number of women shifting from agriculture to the service sector. In terms of the gender employment ratio, both male and female were equally employed. The employment rate declined due to the financial crisis in 2009. However, it made a recovery in 2011. The industry sector employed 21% of the workforce and has been stable since 2009.

Amongst peers, Thailand has the second highest employment-to-population ratio after Vietnam. Employment prospects in Thailand seem optimistic and the rate of unemployment is expected to decline further due to containment of population. Moreover, growth in the service sector would provide new avenues for jobs. However, political stability coupled with the global economic situation will play an important role in employment prospects.

Figure 19: Employment by sector (%), Thailand, 2009 – 2012

60%

40% 41% 41% 39% 40% 40% 39% 38% 39% 20% 21% 21% 21% 21%

% of total employment % total of 0% 2009 2010 2011 2012 Agriculture Industry Service

Source: World Bank

Table 18: Employment by sector (%), Thailand, 2009 – 2012

Year 2009 2010 2011 2012 Agriculture (%) 39.0 38.2 38.7 39.6 Industry (%) 20.8 20.6 20.7 20.9 Service (%) 40.2 41.0 40.7 39.4

Source: World Bank

Unemployment rate in Thailand declined from 2009 to 2012. The total unemployment rate stood at 0.7% (0.7% for male and 0.6% for female). The National Statistics Office (NSO) of Thailand estimates that approximately 62.3% of total workforce was employed by the informal sector in 2011. According to the figures from the Bank of Thailand, working hours in the country are low with many people working less than 20 hours a week. Figure 20: Employment by sector (%), Thailand, 2009 – 2012

2 1.5 1.5 1.0 1.5 1.0 1 0.70.7 0.6 1.0 0.7 % of labor force labor of % 0.7 0.7 0 2009 2010 2011 2012

Total Male Female

Source: World Bank

Table 19: Unemployment rate (% of labor force), Thailand, 2009 – 2012

Year 2009 2010 2011 2012 Total (%) 1.5 1.0 0.7 0.7 Male (%) 1.5 1.0 0.7 0.7 Female (%) 1.5 1.0 0.7 0.6

Source: World Bank

1.4 Political structure and environment

1.4.1 Political history

Thailand was under the absolute rule of kings for over seven centuries until 1932, after which a democratic revolution compelled Thailand to officially became a democratic constitutional monarchy.

Since becoming a constitutional monarchy in 1932, the county has been troubled by military coups. The rule of military governments severely compromised Since becoming a political freedom, freedom of speech and basic human rights in the first three constitutional quarters of the twentieth century. There have been a total of twelve military coups monarchy in 1932, till 2014, conferring on Thailand the dubious distinction of being one of the Thailand has been world’s most coup vulnerable countries. The student-led uprising in 1973 laid the one of the world’s foundation for a new vision to liberate the country from military interventions. most coup vulnerable Another uprising in 1992, known as Black May, led to more reforms in the countries having faced twelve military political landscape of Thailand. Post the Black May uprising, the People's coups till 2014. Constitution was promulgated in 1997. The constitution of 1997 created a sense of ownership among the Thais as it included significant principles such as protection of human dignity and religious freedom. Moreover, the new constitution was envisioned to radically alter the governance system in terms of executive stability, accountability and participation. The greatest beneficiary of the political reforms was businessman turned politician Thaksin Shinawatra of Thai Rak Thai Party (TRT), who was democratically elected to lead Thailand for six years from 2001 to 2006.

Another constitution called the People's Constitution was adopted in 2007 due to violent protests in 2006. The new constitution was drafted by the military junta- appointed drafting assembly and retained some aspects of the 1997 constitution. But, it was alleged that it was designed to enhance bureaucratic and elite powers. The constitution of 2007 restored constitutional monarchy and introduced sweeping political and institutional reforms. Abhisit Vejjajiva of the Democrat party formed the coalition government in 2008 against which Thaksin supporters staged numerous protests till 2011. Yingluck Shinawatra of pro-Thaksin Pheu Thai party, sister of Thaksin Shinawatra, became the Prime Minister with a landslide victory in the 2011 elections. Allegations of corruption spurred the people to stage another protest. As a result, Prime Minister Yingluck Shinawatra was sacked in May 2014 and the army seized power. Thailand adopted an interim constitution in July 2014 in which the junta retained significant powers.

1.4.2 Political structure

Thailand is a constitutional monarchy where the king serves as the nominal Head of State and the Prime Minister functions as the leader of the parliamentary government. The King serves as a spiritual leader but does not exert any absolute political authority.

The political structure is divided into three branches:

• The Executive

• The Legislative

• The Judicial The Executive branch is headed by the Prime Minister, who is selected by elected representatives to the parliament. The Prime Minister is the the head of the government and is responsible for the functioning of the executive arm of the government. The Prime Minister is assisted in running the government by various ministers and deputy ministers.

The Legislative branch of the government (Parliament) is entrusted with the responsibility of formulating laws to govern the country. Legislative bodies are further divided into the House of Representatives and the Senate, which is also called the Upper House of Parliament.

The Judiciary consists of all the courts and is intended to act as a regulatory authority on the functioning of both the executive and legislative branches of the government.

Thailand has a multi-party system and 34 parties registered to contest in the 2014 election. The major political parties are:

• Democrat party - The party was founded in 1946 and is conservative, pro- monarchy and pro-establishment, backed by the military and most of the Bangkok-based elite.

• Pheu Thai Party - The party was founded by former Prime Minister Thaksin Shinawatra in 2008 after TRT was disbanded for violations of electoral laws by the Constitutional Tribunal. The party is facing the prospect of being banned by the junta rulers. The military seized • Bhumjai Thai Party - The party is controlled by Newin Chidchob, the power after the influential power broker who was Thaksin's right hand man before turning government of Yingluck Shinawatra against him was ousted from 1.4.3 Current government power on May 07, 2014. Currently, The government of Yingluck Shinawatra was ousted from power on May 07, 2014, General Prayuth after the Thai Constitutional Court ruled that the Prime Minister had violated the Chan-Ocha, a former constitution. The Prime Minister was accused of abusing powers of its office to military official, heads the country as pass an amnesty bill that would facilitate her brother, former Prime Minister Prime Minister. Thaksin Shinawatra, to return to power. In November 2013, the protestors took to streets to protest against the proposed amnesty bill. The military seized power in May 2014 after six months of political stalemate between protesters and government that paralyzed the government functioning.

General Prayuth Chan-o-cha, a former military official, now heads the country as Prime Minister. He was selected as the Prime Minister by the National Legislative Assembly whose members were chosen by the junta that has the power to control the prime minister. The General was the head of the army when the coup took place in May 2014. It is not clear when democracy will be restored in Thailand, although the current military government has made its intentions clear to conduct elections in October 2015. If Thailand has to prosper and return to the economic growth trajectory, it will be vital that sweeping political reforms are carried out to evolve a participatory democracy and reduce the interference of the army.

1.5 Trade associations

Thailand has many trade associations formed to promote trade between various countries. The pharmaceutical sector has three prominent associations engaged to promote the interest of the players operating in the pharmaceutical domain.

1.5.1 Pharmaceutical Research & Manufacturers’ Association

Pharmaceutical Research & Manufacturers’ Association (PReMA) was established in 2004 as a successor of The Pharmaceutical Producers’ Association. Based out of Bangkok, it is a non-profit organization with members engaged in research and development of innovative therapies to combat incurable diseases and improve the existing treatment options. PReMA is primarily for foreign companies. PReMA’s main objectives are:

• To promote healthy lives by scientific advancements through research and development of high quality medicines by its members.

• To comply with international standards and ethics.

• To facilitate timely access to innovative medicines through collaboration with key stakeholders.

• To enhance the knowledge of parties dealing in public health systems.

• To promote intellectual property rights. 1.5.2 Thai Pharmaceutical Manufacturers’ Association

Thai Pharmaceutical Manufacturers’ Association (TPMA) is an association of local manufacturers and produces a wide range of medical drugs and pharmaceuticals for the human and veterinarian sectors. The association acts as a major source of supply for foreign pharmaceutical companies and promotes the interests of domestic pharmaceutical companies.

1.5.3 The Thai Cosmetic Manufacturers’ Association

The Thai Cosmetic Manufacturers’ Association (TCMA) came into existence in 1966. Its main objectives are to:

• Maintain the integrity and dignity of its members.

• Raise the standards of products, production, distribution processes and trading.

• Help and maintain its members’ benefits.

• Provide consultation and advice to its members in commerce, industry and finance.

1.5.4 Thai Self‐Medication Industry Association (TSMIA)

Thai Self‐Medication Industry Association (TSMIA) was established in 2009 with an intention to support and promote the health industry in non-prescription medicines (OTC), herbal / traditional medicine and health supplements in Thailand. TSMIA also promotes the engagement of enterprises related to non- prescription drugs, herbal medicines and other health products that can be used for prevention and initial treatment of diseases.

1.6 Opportunities and challenges

1.6.1 Opportunities

A population of 67 million, majority of which is young and universal health coverage for almost the entire population make Thailand an attractive destination Well-developed with a plethora of investment opportunities. Thailand has a resilient economy that infrastructure, low- has weathered years of political and economic instability. The economy of cost labor, high Thailand comprises various large and strong economic sectors that reduces its literacy rate and vulnerability to external and domestic shocks. Moreover, Thailand has strong forex increasing English reserves that can take care of eight months of import. speaking population make Thailand an Thailand has good physical infrastructure and is well connected to other countries attractive destination through air, sea and road. The well-developed infrastructure has played a pivotal for foreign investors. role in attracting global tourists. Thailand offers the advantage of low-cost labor work force that has been pivotal in increasing FDI, especially in the manufacturing, automotive, consumer electronics and supporting industries. The high quality of medical services provided at a low cost by Thailand is globally recognized, as is evident from its flourishing medical tourism industry. Further, the high literacy rate and increasing English speaking population make Thailand attractive for foreign companies.

As Thailand primarily relies on imported power, there is huge demand for power generation within the country. This represents a significant opportunity for power generation, especially by exploring non-conventional sources such as solar and wind power. The agriculture sector has been a strong contributor to the Thai economy and acts as a buffer to absorb additional labor from urban areas during cyclical downturns.

1.6.2 Challenges

The most prominent challenge that Thailand has faced in the past and will continue to face in the near future is political instability. The unstable political climate has Political unrest, bureaucratic red tape, adversely impacted tourist arrivals resulting in decline of economic growth. The dearth of skilled persistent interference of the army in the political landscape of Thailand further technical work force compounds the problem. Bureaucratic red tape hampers the process of key and a high cost of approvals for many foreign companies. Lack of cooperation between different power supply government departments adds to the problem. continue to be major challenges that From a pharmaceutical market standpoint, the government favors the state-run Thailand needs to Government Pharmaceutical Organization (GPO) and limits the scope of address in order to competition from foreign pharmaceutical companies. Although Thailand is a improve business signatory of the World Trade Organization (WTO), the weak intellectual property sentiments. laws and increasing counterfeit medicines pose a major challenge to foreign pharmaceutical companies. The gradually ageing population is also likely to pose a

formidable challenge for the healthcare authorities as it will put additional strain on healthcare resources.

Dearth of skilled technical work force is a major limitation in Thailand. It is difficult for companies to find and retain skilled technical work force. The relatively high cost of power supply is a major challenge in Thailand and companies often shy away from investing due to this reason. Thailand needs to formulate strategies to prevent the exodus of technically qualified work force to other countries that offer better financial incentives. Threat of terrorism is another challenge that the country needs to address in order to improve business sentiments.

2 Healthcare Infrastructure

2.1 Healthcare system

World Bank reports reveal that Thailand falls under the upper-middle-income economy group and in 2012 had a population of approximately 67 million. The The healthcare majority of the population (more than 60%) resides in rural areas. The country is system in Thailand is divided into 76 provinces, 877 districts and 7,255 sub-districts that are known as highly centralized Tambon. Thailand has a good healthcare system that takes care of nearly all its and consists of both public and private citizens and serves as a model for countries in the low-middle income group. Over players with a period of five years (2008 - 2012), the healthcare expenditure (as a percentage of government hospitals GDP) has been around 4%. offering a majority of the healthcare Thailand’s healthcare system consists of both public and private players with services. government hospitals offering a majority of the healthcare services. The public sector contributes to the majority of healthcare expenditure (over 70%) while the private sector accounts for approximately 25%. The healthcare system in Thailand is highly centralized and there have been reforms to decentralize and empower the local governments, which has met with little success. The healthcare sector functions under a three-tier system comprising:

• Sub-district (Tambon) health care centers, providing primary care.

• District hospitals providing secondary care.

• University / regional / general / large private hospitals providing tertiary care.

Figure 21: Levels of health services in Thailand

TMC

SMC Province (regional / general / university hospitals, PMC large private hospitals and specialized hospitals)

PHC

SMC District (community hospitals, small private PMC hospitals, health centers under BMA and

PHC municipalities and private clinics)

Tambon (health centers and community health PMC posts) PHC Drugstores

Village (VHVs and community primary health PHC care centers)

Self-care Family

Source: MoPH Thailand

Thailand’s rural healthcare system, which caters to a majority of the rural population, consists of district and sub-district hospitals. The primary health care services consist of those organized by the community in order to prevent outbreak of diseases and promote good health. The hospitals located in the sub-district hospitals serve as the first point of contact and provide primary care to patients and consist of nurses and primary care workers. The sub-district hospitals cater to a population of 5,000 while the district hospitals cover a population of about 50,000 people. Primary care is provided by health personnel and general practitioners (GPs) and consists of community health posts (CHP) and health centers (HC). A CHP is a village level health service unit predominantly in remote areas and covers a population of 500 to 1,000 with only one community health worker (a MoPH permanent employee). An HC is a health service unit located in a sub-district or a village and covers a population of 1,000 to 5,000 and includes a health worker, a midwife and a nurse.

District hospitals provide secondary care and play a vital role in referring patients to upper-tier hospitals like the regional hospitals. The secondary care level includes the community hospitals (CH), general hospitals (GH) and private hospitals (PH). A CH is located in a district or sub-district and covers a population of 10,000 or more with 10 to 150 inpatient beds. The staffs include doctors, nurses, pharmacists and other health professionals. General hospitals and other large public hospitals have medical specialists treating different diseases and consist of 200 to 500 beds whereas a regional hospital has more than 500 beds.

Tertiary care includes university hospitals, large private hospitals and regional hospitals. Services are provided by specialists and super-specialists. University hospitals are run by the Ministry as a local administrative organization. Private hospitals are an important destination for medical tourists and provide superior facilities compared to university hospitals.

The Ministry of Public Health (MoPH) is responsible for the overall functioning of the public healthcare sector in Thailand and is in charge of shaping and Due to low salaries implementing healthcare policies. As of 2010, there were 1,025 government and increasing work hospitals with 109,025 hospital beds. Other public health services are delivered by pressure, government medical school hospitals and general hospitals functioning under various ministries sector doctors are (e.g. Ministry of Defence, Interior Ministry, etc.). The public health sector in moving to private Thailand provides good medical facilities to Thai citizens but government hospitals hospitals, causing a are often crowded, leading to long waiting times and resulting in improper shortage of doctors. treatment. Treatment is completely free for Thai citizens holding a Universal Health card in government hospitals. Most doctors in Thailand are specialists and it is difficult to find a general practitioner (GP) for treatment of minor ailments. Government hospital doctors also practice in private clinics after their hours in government hospitals. Due to low salaries and increasing work pressure, government doctors are moving to private hospitals, causing a shortage of doctors and compounding the problem of shortfall in healthcare workers. Urban areas face

issues of accessibility and availability of doctors, while rural areas face issues of proximity of hospitals and doctors’ availability in clinics.

The private health sector in Thailand is dominated by corporate hospitals and hospital chains. In 2010, there were 261 private hospitals with a capacity of 24,658 hospital beds. Facilities in these private hospitals are excellent with well-qualified staff. Private hospitals have helped Thailand become a favored destination for medical tourism.

In addition to public and private players, there are non-profit health organizations that provide healthcare services to the people of Thailand. Examples include Red Cross, World Vision and Médecins Sans Frontières.

The National Health Security Office (NHSO) allocates funds for compulsory healthcare insurance in Thailand. Initially, the source of funding for health insurance was the general tax and a minimum co-payment of 30 Bahts ($0.7) per visit. The 30 Baht co-payment scheme was discontinued from 2007 and it was made free for Thai citizens. The capitation rate has consistently increased over the years and in 2010 it was approximately THB 2,500.

Based on World Bank reports, approximately 99% of Thailand’s population has health protection coverage under some or the other health schemes. There are three Healthcare services public schemes that provide health care cover to the people of Thailand: in Thailand are not uniformly spread • Civil Servants Medical Benefit Scheme (CSMBS) is intended for welfare of across the country civil servants (government employees) their families and pensioners. and there is a • Social Security Scheme (SSS) is intended for private employees. concentration of healthcare services • Universal Coverage Scheme (UCS) is the largest healthcare scheme and is and professionals in meant especially for poor people. and around urban Healthcare services in Thailand are not uniformly spread across the country and areas. there is a concentration of health care services and professionals in and around Bangkok. Thailand needs to address these inequalities in healthcare professional distribution and address the shortage of skilled healthcare professionals to ensure quality healthcare access to all citizens, especially for the rural population.

The following picture depicts the overall healthcare system and its financing in Thailand.

Figure 22: Overall healthcare system and its financing, Thailand

Government

Payroll tax

Enterprise Contribution General tax

Contribution General tax

Local SSS CSMBS UC scheme government

FFS for OP Capitation for OP Capitation DRG for IP DRG with global OP&IP budget for IP

Public and

private contract

Matching fund for

Contribution prevention and Benefit package Benefit

indirect tax Service promotion

Direct and and Direct

Insured / Equity Health and uninsured and access well-being population

Activity Financial resources Performance HA = Hospital accreditation

Source: WHO

Figure 23: Number of primary healthcare centers, Thailand, 2006 - 2010

2,000

1,500 1,290 1,338 1,286 1,239 1,179 1,000 healthcare centers healthcare Number Number of primary 500

0 2006 2007 2008 2009 2010

Source: PReMA

Table 20: Number of primary healthcare centers, Thailand, 2006 – 2010

Year 2006 2007 2008 2009 2010 Number 1,290 1,338 1,239 1,179 1,286

Source: PReMA

Table 21: Health facilities in the public sector, Thailand, 2010

Administrative Health facility Number Coverage level Medical school hospitals 5 General hospitals 26 ̶ MoPH 4 ̶ Royal Thai Police 1 ̶ Ministry of Justice 4 Bangkok ̶ Ministry of Defense 5 100% Metropolis ̶ Bangkok Metropolitan 8 Administration (BMA) 4 ̶ State enterprises Specialized hospitals / institutions 13 Public health centers / branches – BMA 68/76 Medical school hospitals – MoE 6 Regional level Regional hospitals – MoPH 25 and branches Specialized hospitals – MoPH 48 General hospitals, under MoPH 71 100% Under MoPH 69 Under MoE 2 Provincial Military hospitals under the Ministry of level 59 (75 provinces) Defense Under the Royal Thai Police 1 Under local administration organizations – 3 MoI Community hospitals 734 83.60% 878 districts Municipal health centers (2009) 284 7,255 Health centers (2009) 9,768 100% sub-districts Community health posts 151 Community primary health care centers 74,954 Villages 48,049 68.45% ̶ Rural 3,108 ̶ Urban

Source: WHO

2.2 Health status

Over the years, Thailand has achieved remarkable development in health outcomes, largely on the back of a thriving economy that has underpinned growth in healthcare infrastructure and healthcare personnel. Decline in mortality rates and Mortality rate has declined and life poverty and an increasing per capita GDP are indicators of the impressive health expectancy has status of Thailand. Infant mortality (per 1,000 live births) fell from 13.2 in 2008 to increased in Thailand 11.4 in 2012, while the GDP per capita growth (annual percentage) increased from due to expanded 2.3% in 2008 to 6% in 2012. Life expectancy at birth (LEB) also improved from access to healthcare 73.3 years in 2008 to 74.1 years in 2012. The introduction of the Universal Health services. Coverage (UHC) scheme in 2001 has expanded access to health services and has contributed to greater and more equitable utilization of healthcare resources. Thailand uses taxation on alcohol and tobacco to finance its healthcare activities. Thailand was one of the first countries to endorse the Framework Convention on Tobacco Control (FCTC) under the auspices of WHO and most of the health- related goals set under Millennium Development Goals (MDG) have been met. The 11th National Development Plan, 2012 - 2016, intends to provide quality and universal healthcare security to all citizens of Thailand. Non-communicable diseases are the main burden in terms of mortality and morbidity, while TB, resistant malaria and road accidents also pose serious risks.

2.2.1 Life expectancy

Life expectancy (at birth) in Thailand improved from 73 in 2008 to 74 in 2012. Female life expectancy saw gradual improvement from 76.8 in 2008 to 77.6 in 2012, mostly because of the flourishing economy that created more job opportunities for women, especially in the tourism sector.

Figure 24: Life expectancy (years), Thailand, 2008 – 2012

100 77 77 77 77 78 80 70 73 70 74 71 74 71 74 71 74

Years 40

0 2008 2009 2010 2011 2012 Male Female Both

Source: World Bank

Table 22: Life expectancy (years), Thailand, 2008 – 2012

Year 2008 2009 2010 2011 2012 Male 70 70 71 71 71 Female 77 77 77 77 78 Both 73 74 74 74 74

Source: World Bank

2.2.2 Mortality rate

The overall mortality rate, particularly that of children under five, decreased over a period of five years in Thailand. Infant mortality rate, an important national health index, declined from 13.2 in 2008 to 11.4 in 2012. In terms of infant mortality rate (per 1,000 live births), among peer countries, Thailand ranks at number three with Singapore having the lowest mortality rate, followed by Malaysia. The improvement in the mortality rate has been the result of improved access to healthcare facilities for women. According to Millennium Development Goals, Thailand set an ambitious target to reduce under-five child mortality rate by two- thirds by 2015. There is a greater emphasis on reducing infant and maternal mortality rates by half in selected northern provinces and the three southernmost provinces which have high rates compared to rest of the country.

Figure 25: Mortality rate (per thousand), Thailand, 2008 – 2012

20 15.3 14.7 14.2 13.7 15 13.2

10 13.2 12.7 12.2 11.8 11.4 5

0 2008 2009 2010 2011 2012 Infant Under 5

Source: World Bank

Table 23: Mortality rate (per thousand), Thailand, 2008 – 2012

Year 2008 2009 2010 2011 2012 Infant 13.2 12.7 12.2 11.8 11.4 Under-5 15.3 14.7 14.2 13.7 13.2

Source: World Bank

2.2.3 Total fertility rate

As per the World Bank definition, total fertility rate (TFR) represents the number of children that would be born to a woman if she were to live to the end of her childbearing years and bear children in accordance with current age-specific fertility rates. Despite registering a high population growth, TFR in Thailand has declined remarkably, chiefly because of the National Family Planning Program that created greater awareness about and access to contraception. Since 2010, the TFR has been stagnant at 1.4, which is a cause of concern as it is below the generally accepted level of 2.1 children born per woman, necessary to maintain existing population levels in the long term. Among peer countries, Thailand has the second lowest TFR with Singapore having the lowest (1.20) while Philippines has the highest TFR (3.1).

2.3 Healthcare policy

The Thai government believes in upholding two basic human rights - the right to health and the right to social justice. To achieve the said objective, the Universal To achieve the Coverage Scheme (UCS) was launched in 2001. Before the introduction of UCS, objective of ‘right to health’, the Thai more than 25% of Thailand’s population was not covered under any healthcare government launched scheme. The Medical Welfare Scheme (WHS) was the first to provide health care the Universal to poor people in the country. Coverage Scheme (UCS) in 2001. For nearly four decades, Thailand invested heavily in infrastructure development Approximately 99% and also in designing and implementing various risk protection schemes. It was in of the population has 2002, that Thailand achieved universal coverage, that is, more than 99% of health protection Thailand’s population was covered under guaranteed health insurance. The UCS coverage under achieved 75% coverage within the first year of its launch, covering 47 million different health people. The success of UCS held a lot of significance as it was pursued in the schemes. aftermath of the Asian financial crisis of 1997 during which the GNI plummeted to $1,900 per capita and against the advice of external experts who cast shadow over its financial viability. The UCS was able to cater to the healthcare needs of 18 million people who were previously not under the ambit of any healthcare cover. Within a decade of its launch, the UCS drastically improved the access of necessary healthcare services and prevented medical impoverishment. The number of outpatient visits per capita per year increased from 2.8 to 3.2 over a period of 2008 to 2011. The number of inpatient admissions per 100 per year also increased from 11.0 to 11.4 from 2008 to 2011. The most remarkable achievement of UCS was that it reduced the out-of-pocket expenditure disparity between the rich and the poor. The UCS has three components that ensures its sustainability - a tax- financed scheme that provides services free of charge (the 30 Baht co-payment was terminated in 2006), a comprehensive package with focus on primary care and a fixed budget with necessary caps in place to control costs.

Health insurance schemes in operation in Thailand are:

• Universal Coverage Scheme (UCS): This scheme is meant for the population not covered by SSS and CSMBS and covers a majority of the population Health insurance cover is primarily (more than 75%). The source of funding is the general tax and is managed provided through by the National Health Security Office (NHSO). With a focus on primary three public schemes: care, the benefit package under this scheme includes disease prevention and Universal Coverage health promotion. Per capita expenditure of UCS for the year 2010 was $79. Scheme (UCS), Social Security • Social Security Scheme (SSS): This scheme primarily covers private sector employees (excluding dependents), who account for 16% of the population. Scheme (SSS). and Civil Servant It is financed through contributions from the employee, employer and Medical Benefit government. The benefit package includes comprehensive inpatient and Scheme (CSMBS). outpatient care with accident and emergency services. As of 2010, per capita expenditure of SSS was $71.

• Civil Servant Medical Benefit Scheme (CSMBS): This scheme was established in 1980 and caters to government employees and their dependents (parents, spouse, and children) and accounts for 9% coverage. Its per capita expenditure as of 2010 was $367. This scheme is financed by general taxes. Although Thailand has achieved universal healthcare coverage with relatively low levels of spending on health, it faces barriers such as inequalities in coverage, rising healthcare costs and duplication of resources. Furthermore, there is a pressing need to clearly demarcate the roles of central (MoPH) and local governments in issues pertaining to health.

The table below encapsulates all the healthcare insurance schemes operational in Thailand.

Table 24: Healthcare insurance schemes, Thailand

CSMBS SSS UCS Nature of Fringe benefit Mandatory Citizen entitlement scheme Government Formal-sector private The rest of the employees, employees, population not establishments / firms establishments / firms covered by SSS and Population of more than one of more than one CSMBS worker since 2002 worker since 2002 5 million (8%) 9.84 million (15.8%) 47 million (75%) General tax (~323 Tripartite from General tax $/Cap*) employer, employee, government rate Source of 1.5% of salary finance (maximum salary: (62 $/cap) $441) (health care 37 $/cap, total 63 $/cap) Comptroller General Social security office National Health Management under Ministry of under ministry of Security Office organization Finance labor and welfare (NHSO) No preventive care Small number of Small number of No explicit exclusion limited conditions limited conditions Benefit Special bed e.g., non-medical package plastic surgery Include prevention and promotion Public provider only, Public and private Public and private Service private in emergency, hospital with more contracting unit for delivery selected disease than 100 beds (50% primary care (CUP) (2011) private) OP: Fee-for-service Capitation both OP OP: Capitation and IP Payment IP: DRGs IP: DRGs with global budget

Source: WHO

2.4 Healthcare financing and expenditure

Thailand has been relentlessly striving to strengthen its healthcare infrastructure and improve the quality of life of its people. The MoPH is responsible for the The MoPH was majority of financing. In 2012, 76% of Thailand’s total healthcare expenditure was responsible for the from the public sector while the private sector contributed 24%. Major sources of majority of financing. healthcare funding in the country include: In 2012, 76% of Thailand’s total • Public sources: healthcare expenditure was from Ministry of Public Health (MoPH) o the public sector o Other ministries while private sector contributed 24%. o Public employee medical benefits • Workmen’s compensation fund

• State enterprise employee medical benefits

• Private insurance

• Foreign aid

• Private households Over the years, there has been a marked increase in government spending on healthcare whereas the proportion of out-of-pocket spending has declined. The challenge in the Government spending on healthcare increased from THB 200 bn in 2007 to future will be to approximately THB 300 bn in 2010. There has been a shift in the choice of maintain quality and healthcare financing agents with the increase of government and private insurance effectiveness of healthcare payers in Thailand. The healthcare financing increased at a CAGR of healthcare while 8.7% from 2002 to 2010. Out-of-pocket health expenditure (percentage of total keeping expenses under control. expenditure on health) declined to 13% in 2012 from 15% in 2008.

Public sources of healthcare financing in the nation include budget allocated to MoPH, other government ministries, CSMB, universal coverage, local government expenditures, SSS and workmen compensation fund. Public sources of finances increased on the back of the high average per capita growth rate of 9.7%. Among peer nations, Singapore ranks number one in terms of healthcare per capita expenditure (current $) followed by Malaysia and Thailand.

In 2013, the public health sector was allocated THB 255 bn (10.6% of the overall budget). Healthcare-related expenditure has been on the rise and was 12 - 13% of the government’s total spending in 2013. Expenses on pharmaceutical drugs are a relevant part of the overall healthcare spending. Total drug expenditure increased to 46% in 2009 from 35% in 1993. Thailand will need to contain the bourgeoning healthcare expenditure, especially medical insurance schemes and device mechanisms to curb increased pressure on government hospitals to deliver quality services. The challenge in the future will be to maintain quality and effectiveness

of healthcare while keeping the expenditure under control. Thailand will need effective mechanisms and policies to address challenges in healthcare.

2.4.1 Healthcare expenditure as a percentage of GDP

Healthcare expenditure constitutes around 4% of GDP and has been nearly stagnant over a period of five years. Although Thailand has undergone various Thailand spends financial, political and natural hardships, it has not compromised with the budget approximately 4% of allocated to the healthcare sector. A major portion of the allocated healthcare its GDP on budget goes towards maintenance of the three medical insurance schemes, namely, healthcare. the Universal Coverage Scheme (UCS), Social Security Scheme (SSS) and Civil Servant Medical Benefit Scheme (CSMBS).

Among peer group nations, in terms of healthcare expenditure as a percentage of GDP, Vietnam (6.6% in 2012) tops the table, followed by Singapore (4.7%) and Philippines (4.6%). With a per capita expenditure (PPP) of $385, Thailand ranks at number three amongst its peers in terms of health expenditure per capita (PPP). Singapore led the table with an expenditure of $2,881, followed by Malaysia ($676), Thailand ($386), Vietnam ($233), Philippines ($203) and Indonesia ($150) in 2012.

Figure 26: Healthcare expenditure (% of GDP), Thailand, 2008 – 2012

5.0

4.0 3.9 4.1 4.1 3.9 3.0 3.8

2.0

1.0

Healthcare expenditure 0.0 2008 2009 2010 2011 2012

Source: World Bank

Table 25: Healthcare expenditure (% of GDP), Thailand, 2008 – 2012

Year 2008 2009 2010 2011 2012 % of GDP 3.9 4.1 3.8 4.1 3.9

Source: World Bank

Figure 27: Healthcare expenditure per capita, PPP ($), Thailand, 2008 – 2012

400

372 385 300 324 334 338

200 expenditure per per expenditure 100 capita, PPP PPP ($)capita,

0 Healthcare 2008 2009 2010 2011 2012

Source: World Bank

Table 26: Healthcare expenditure per capita, PPP ($), Thailand, 2008 – 2012

Year 2008 2009 2010 2011 2012 Healthcare expenditure 324 334 338 372 385 per capita ($)*

Source: World Bank *constant 2005 $

The government intends to trim down healthcare spending, especially that of medical insurance, as healthcare costs have increased faster than the GDP and takes up 12 - 13% of the government’s total healthcare spending. For the year 2013, approximately THB 200 bn ($6.5 bn) was allocated for three main health insurance plans. In the recent past, the government tried to curb the expenditure for the above mentioned insurance schemes, but could not attain the desired levels. The government planned to limit the total budget of CSMBF to THB 60 bn in 2013 and that of National Health Security Fund (NHSF) to THB 2,755 per-head for three years from 2012 - 2014. The government also planned to reduce CSMBF by controlling the spending on glucosamine sulphate used to treat arthritis. Through a regulation issued in 2012, the government succeeded in reducing glucosamine reimbursement from THB 600 mn to THB10 mn in 2013.

The healthcare expenditure, as a percentage of GDP, will continue to rise and is projected to reach 4.5% of GDP by 2020. Projected healthcare expenditure is expected to be within the fiscal capacity of the Thai government.

2.5 Shares of public and private sectors

The majority of healthcare expenses in Thailand is financed by the government, which is in stark contrast to other low-middle income countries where the private sector finances the bulk of healthcare spending. Over the years, the contribution of Thailand’s private sector to healthcare expenditure has been hovering around 24%. Amongst peers, Thailand (76% in 2012) leads in terms of public healthcare outflow followed by Malaysia (55%) and Vietnam (43%).

In the upcoming years, as the number of private hospitals in Thailand proliferates, participation of private players in Thailand is likely to surge, consequentially leading to more private healthcare spending.

Figure 28: Public-private share of healthcare expenditure (%), Thailand, 2008 - 2012

Public Private 100 80 78 60 76 74 75 76 40 % % of total) ( 20 24 26 25 22 24

Healthcare expendture 0 2008 2009 2010 2011 2012

Source: World Bank

Table 27: Public-private share of healthcare expenditure (%), Thailand, 2008 – 2012

Year 2008 2009 2010 2011 2012 Public (%) 76 76 76 76 76 Private (%) 24 24 24 24 24

Source: World Bank

2.6 Pharmaceutical expenditure

Pharmaceutical spending constitutes the bulk of healthcare expenditure as Thailand relies heavily on drug imports. Domestically manufactured pharmaceuticals add up Although 60% in to 60% by volume of the total pharmaceutical products but due to imports of costly terms of volume, medicines, their contribution remainsr only 30% by value. Pharmaceutical costs domestically produced have been on an upsurge chiefly because of rising drug costs due to a fragile pharmaceutical system to regulate these costs. products add up to only 30% by value. Amongst peers, Singapore ($369) had the highest pharmaceutical expenditure per capita (in PPP terms), followed by Thailand ($144), Vietnam ($104), Malaysia ($55), Philippines ($47) and Indonesia ($18) in the year 2009.

For pharmaceutical expenditure as a percentage of total health expenditure, Thailand spends Vietnam (51%) registered the highest numbers followed by Thailand (44%), approximately 44% of Philippines (35%), Indonesia (17.8%), Singapore (17.5%), and Malaysia (9%). its total healthcare outflow on medicines.

2.7 Spending in pharmaceutical R&D

Most of the domestic pharmaceutical companies are engaged in packaging of imported drugs and production of generics and do not give desired prominence to Domestic companies R&D. Due to the government’s predilection to endorse generics to shrink the are mainly engaged healthcare burden, domestic pharmaceutical companies shy away from investing in in production of R&D. There are bottlenecks that prevent foreign players from investing in their generics and subsidiaries form the R&D perspective. The feeble patent system is one of the packaging of biggest deterrents for pharmaceutical companies. There have been cases in the past imported drugs. They shy away from where the government has canceled the patent of drugs and resorted to compulsory investing in R&D. licensing, thus denting the profitability of foreign pharmaceutical companies. Also, Further, feeble IP the patent approval process is lengthy and private companies have urged the protection has government to streamline the process. Additionally, the legislation binds deterred foreign government-run hospitals to purchase most of their medicines from the MNCs from investing Government Pharmaceutical Organization (GPO), creating a monopoly scenario, in R&D. resulting in an uneven playing field for other pharmaceutical companies. The Thai government has identified the pharmaceuticals arena as a priority sector and is keen on promoting R&D in the sector. The government has started offering incentives to pharmaceutical companies to encourage R&D. For e.g., the government has allotted a 200% corporate tax deduction for eligible expenditure incurred by R&D activities carried out in Thailand by approved R&D service providers and government entities.

2.8 Health insurance

Thailand was one of the few countries in the lower-middle income group (now upper-middle income country as per World Bank upgrade in 2011) that achieved The Universal universal health insurance for almost 99% of its citizens. The Universal Coverage Coverage Scheme Scheme (UCS), which was launched in 2001, proved to be the masterstroke in (UCS), launched in providing health insurance to all Thai citizens, especially the poor population. The 2001, proved to be success of UCS was the result of decades of healthcare infrastructure development the masterstroke in and various risk protection schemes. The National Security Act was passed in 2002 providing health as part of healthcare reforms in Thailand. The healthcare insurance started as a ‘30 insurance to all Thai citizens. especially Baht scheme’ which was later discarded in 2006 and made free of cost for all Thai the poor population. citizens. The UCS covers the population that is not under the ambit of CSMBS and It covers the SSS. The National Health Security Office (NHSO) finances the UCS through population that is not general tax revenues. covered by CSMBS and SSS. More than 25% of Thailand’s population did not have health insurance prior to the introduction of UCS in 2001. The Medical Welfare Scheme (WHS) was the largest before the UCS was introduced and covered 33% of the population, followed by the Health Card Scheme (HCS), the Civil Servants Medical Benefits Scheme (CSMBS) and the Social Security Scheme (SSS) covering approximately 12%, 11% and 10% respectively. The WHS provided coverage to the poorer and weaker sections of the society while the HCS was for non-poor people who were not covered under WHS. The CSMBS was meant for current and retired civil servants whereas SSS was intended for formal sector private employees and was financed by contributions from employees, employers, and central government.

Table 28: Health insurance coverage in Thailand, 2012

Insurance scheme Coverage (% of population) Universal Coverage Scheme (UCS) 75% Social Security Scheme (SSS) 16% Civil Servant Medical Benefit Scheme (CSMBS) 9% Not insured 0.5%

Source: WHO Country Cooperation Strategy 2012 - 2016

Apart from the government offered health insurance, there are health insurances offered by private companies. Approximately 10% of the total population in Thailand subscribes to private health insurance. The private insurance market was pegged at THB 20.2 bn in 2010 and is growing fast. The leading private health insurers in Thailand include Bupa, LMG Pacific, NZI InterGlobal, PIH, Thaivivat, American International Assurance Co. Ltd. (AIA), and AXA Insurance Public

Company. A large number of expatriates who visit Thailand mostly opt for private medical cover.

Non-Thai migrant workers (2-4 million) can also avail health insurance benefit under the migrant health insurance scheme provided they are registered and have a work permit. But, a majority of non-Thai workers do not have access to quality healthcare and insurance as enjoyed by a Thai citizen.

Figure 29: Health insurance model, Thailand

Tax

UCS CSMBS SSS Contribution

Comptroller NHSO SSO General

Private room

Public / private Non-essential Insured, right providers holder drug

Source: Joint Learning Network for Universal Health Coverage (JLN)

2.9 Hospital sector

Public hospitals in Thailand are run by the MoPH while private hospitals are regulated by the Medical Registration Division under the MoPH. There are other hospitals that are managed by other government ministries (defence) and public organizations such as the Red Cross and local governments.

The hospital sector in Thailand registered respectable growth till 2008, predominantly due to the ’30 Baht scheme’ that improved accessibility. The World Bank identified that the public sector composed over two-thirds of hospitals and beds in the state. The private hospital sector contracted in 2009 due to the global financial crisis but since then has rebounded. In the first half of 2013, there were 1,050 public hospitals and 327 private hospitals in Thailand. There are 33 Joint Commission International (JCI) accredited and certified hospitals in the nation.

Government hospitals: Government hospitals in Thailand are the main source of treatment for the general public. Government hospitals in Thailand are categorized in four tiers:

• Community hospitals that are located in districts or in sub-districts (tambon) and can be further categorized by size: o Large community hospitals with 90 to 150 beds. o Medium community hospitals with 60 beds. o Small community hospitals with 10 to 30 beds. • General hospitals that have approximately 200 to 500 beds. • Regional and other large public hospitals that have at least 500 beds and medical specialists to treat patients. • Tertiary care hospitals that include university and regional hospitals and may include general hospitals. The largest university hospital has 300 beds and there are 15 university hospitals in Thailand

Leading government hospitals include: Siriraj Hospital (2,223 beds), Maharat Nakhon Ratchasima Hospital (1,000 beds), Phramongkutklao Hospital (1,200 beds), King Chulalongkorn Memorial Hospital (1,479 beds) and Maharaj Nakorn Chiang Mai Hospital (1,800 beds). In terms of bed Private hospitals: The number of private hospitals increased in Thailand from 218 capacity, the public sector hospitals make in 1986 to 491 hospitals in 1997 due to tax incentives offered by the government up majority of the during 1992 - 1997 to promote the involvement of private sector in health services. share (70%) while Private hospitals faced economic hardships during the financial crisis of 1996 - the private sector 1997 and consequently only 298 private hospitals were left by 2004. This forced (including both for- private hospitals to devise innovative marketing strategies and they started profit and not-for- targeting foreign patients. Due to competitive pricing, top-quality services and profit) composes the excellent hospitality, there was a surge in the number of foreign patients. In 2012, remaining 30%. an estimated 2.5 million patients paid $4.9 bn to avail healthcare facilities in

Thailand. Today, Thailand is one of the top destinations for medical tourism in Asia.

In terms of beds, public sector hospitals make up a majority of the share (70%) while the private sector (including both for-profit and not-for-profit) composes the remaining 30%. Leading private hospitals in Thailand are Bangkok Dusit Medical Services (BDMS) Hospital, Bangkok Chain Hospital (BCH), Bumrungrad Hospital (BH), the Chularat Hospital Group (CHG), Thonburi Hospital, Mahidol University - Ramathibodi Hospital, Sikarin Hospital and Vejthani Hospital.

Apart from the type of ownership (public and private), the hospitals sector in Thailand is segmented into four categories based on the hospital positioning and class of patients catered to:

• Premium market hospitals: These are private hospitals that provide high- end medical services catering to the affluent population. The target customers include medical travelers, expatriates and the high income population. Bumrungrad, Bangkok Hospital and BNH hospitals are examples of such hospitals. • Upper mid-tier market: These are private multispecialty hospitals positioned for middle income group patients. Medical travelers, corporate customers and middle income groups are catered to by this segment of hospitals. The Phyathai, Piyavej, Vejthani, Vibhavadi, Ramkamhaeng and Vichaiyut hospitals fall under this segment. • Mid-tier market: These are private multispecialty hospitals with a provincial referral network and cater to corporate customers, particularly industrial workers. The hospitals under this segment are positioned for the low to middle income group customers. Paolo, Kasemrad, and Chularat hospitals fall under this segment. • Not-for-profit hospitals: These are government-owned hospitals that cater to the low-to-middle income population and have a competitive pricing structure. Examples include Siriraj, Ramathibodi and King Chulalongkorn Memorial.

The following are some trends that are likely to impact the hospital sector in Thailand:

• Political unrest: Thailand has witnessed many political coups in the last few years. This unstable political climate can adversely impact the hospital sector of Thailand. Thailand registered $4.3 bn in revenues from medical tourists in 2013. Of the 26.5 million tourists in 2013, approximately 10% came for medical reasons. Due to the protracted political unrest, medical tourists are losing confidence in Thailand and are seeking treatment in other countries. The Department of Tourism estimated the number of foreign tourists to fall to a five-year low of 26.3 million in 2014. • Fiscal deficits: A majority of the public hospitals continue to face financial deficits that have impacted their service of quality. There were 91 hospitals

that were reported to be in serious financial crunch in October 2010. The pressure on government hospitals to deliver quality healthcare services against the backdrop of financial deficit and rising demand will continue, especially from UCS patients. • Increasing geriatric population: Another challenge that hospitals face is the surging geriatric population that is leading to increased frequency in hospital visits and spending as well due to surging complicated illnesses. The Health Insurance System Research Office (HISRO) estimated that healthcare spending for the elderly in Thailand was likely to increase from 34% to 37% of the total spending in the next decade. • Increasing competition: Private hospitals in Thailand continue to witness intense competition not only from domestic players but also from international medical tourism providers, thus forcing hospitals to improve efficiency. It will be a difficult task for hospitals to maintain competitive advantage and differentiate services. • Dearth of healthcare professionals: The booming medical tourism has resulted in increased demand for qualified and multi-linguistic healthcare professionals. Intense competition and spiraling demand (in both private and public hospitals) have resulted in a scarcity of quality healthcare professionals. It is likely to increase staffing costs, thus denting profitability. Perennial problems like brain drain compund the problem and hence it is of paramount importance for the hospital sector to retain the best talent available. • Risk of lawsuit: In 2008, the government introduced the Act on Court Proceedings for Consumer Cases that empowered consumers and patients to sue healthcare service providers. Albeit most healthcare service providers are insured, they run the risk of litigation costs due to increased customer awareness. Figure 30: Number of hospitals, Thailand, 2006 – 2010

1,500

1,000 1,290 1,338 1,239 1,179 1,286 hospitals 500 Number ofNumber

0 2006 2007 2008 2009 2010

Source: PReMA

Table 29: Number of hospitals, Thailand, 2006 – 2010

Year 2006 2007 2008 2009 2010 Total hospitals 1,290 1,338 1,239 1,179 1,286

Source: PReMA

Figure 31: Number of private and public hospitals, Thailand, 2008 – 2010

1,500

1,286 1,000 1,239 1,179

500 1,025 967 272 944 235 261

Number Number of hospitals 2011 2012 2013 Public Private Total Source: PReMA

Table 30: Number of private and public hospitals, Thailand, 2008 – 2010

Year 2008 2009 2010 Public hospitals 967 944 1,025 Private hospitals 272 235 261 Total hospitals 1,239 1,179 1,286

Source: PReMA

Figure 32: Number of beds, Thailand, 2006 – 2010

300 212 220

205 201 210 200 190 200 190 177 100 180 (in thousands)

Number Number of beds 135 140 134 126 118 170 100,000 population 100,000 Number Number of beds per 0 160 2009 2010 2011 2012 2013 Beds Number of beds per 100,000 population Source: PReMA

Table 31: Number of beds, Thailand, 2006 – 2010

Year 2006 2007 2008 2009 2010 Number of beds 134 140 125 117 133 (in thousands) Number of beds per 205 212 190 177 201 100,000 population

Source: PReMA

2.9.1 Major hospital profiles

The following are the profiles of some of the major hospitals in Thailand:

2.9.1.1 Siriraj Hospital

Siriraj Medical School is the largest government hospital in Thailand. It was established in 1888 by H.M. King Chulalongkorn and was the first medical school in Thailand. It was initially called Pathayakorn School and its name was subsequently changed to Royal Medical College in 1901. The name was further changed in 1969 to Faculty of Medicine Siriraj Hospital. The hospital is affiliated to Mahidol University and conducts research in various fields of disease management.

The hospital had 80 buildings and a capacity of 2,223 hospital beds, treated approximately 2.4 million outpatients and 69, 945 inpatients in 2011, had approximately 14,539 employees (871 were full-time faculty and 2,900 registered nurses) and generated revenues of THB 18 bn in 2011 (75% from hospital income and rest from governement budget).

2.9.1.2 Bangkok Dusit Medical Services

Bangkok Dusit Medical Services (BDMS) is one of the largest private hospital groups in Thailand, with 29 hospitals in Thailand and two hospitals in Cambodia. The company that manages BDMS operates six hospital groups, namely, Bangkok Hospital Group, Samitivej Hospital Group, BNH Hospital, Phyathai Hospital Group, Paolo Memorial Hospital Group and Royal Hospital Group. It caters to all segments of customers, from the premium to middle and lower income groups.

The hospital generated total revenues of THB 49.1 bn in the year 2013. The group as a whole had an approximate bed capacity of 6,100. The hospital registered 22,076 outpatient visits per day in 2013, a 6% increase from 2012. In terms of revenue, inpatients contributed 55% whereas outpatients contributed 45%.

2.9.1.3 Bangkok Chain Hospital

Bangkok Chain Hospital (BCH) was incorporated in 1984 and is the largest player primarily catering to the low to mid-range segment of the population, although it has opened new hospitals for premium segment customers. BCH has a total of eight hospitals, with five located in Bangkok (Prachacheun, Bang Kae, Rattanathibet, Sukaphiban and Chaengwattana), two in the provinces of Saraburi and Chiang Rai. With the addition of the World Medical Center (WMC) hospital in Bangkok, the hospital now has three brands to cater to all segments of clients.

The three brands include:

• World Medical Center Hospital Group (WMCHG) focuses on high-income patients. • Kasemrad Hospital Group (KR) caters to mid-income patients. • Karunvej Hospitals Group (KVR) focuses on social security patients.

To promote referrals, it has formed alliances with more than 50 hospitals across the country. BCH is controlled by the Harnphanich family, headed by Dr.Chalerm Harnphanich. It was listed on the Thailand Stock Exchange in November 2004.

The hospital generated total revenues worth THB 4.8 bn in 2013. The group had approximately 1,965 beds for inpatients and 374 examination rooms for outpatients. In the year 2013, the hospital registered an average of 530 inpatients and 7,730 outpatients per day.

2.9.1.4 Bumrungrad Hospital

Bumrungrad Hospital (BH) is one of the most famous hospitals in Thailand, especially among the premium segment and medical tourists, principally due to its international accreditation. BH has only one hospital, which is located centrally in Bangkok. It is known for its intensive quality care adhering to best international practices. It operates in 15 countries and has 20 international offices. Further, it has 1,064 doctors who can handle 4,500 outpatients per day. BH was established in 1980 and was listed on the stock exchange in December 1989. It planned to expand its operation with a new hospital with a capacity of 220 beds on Petchaburi Road in Bangkok, specializing in women and children’s healthcare needs. The construction was expected to kick-off in the first half of 2014 and concluded by December 2016.

The hospital generated THB 14.2 bn in 2013 and had a licensed capacity of 563 beds, which stood at 538 in 2012. Further, it had 1,200 doctors.

2.9.1.5 Chularat Hospital

The Chularat Hospital (CHG) is owned by the Plussind family and was established in 1986. It has three hospitals and seven clinics with 86 outpatient rooms. The hospitals are located in the industrial belt (eastern provinces of Samut Prakarn. Prachinburi and Chachoengsao), where the concentration of industrial workers is high. It caters predominantly to the low-income segment of the population and 42% of the revenue is generated by social security members. The hospital’s area of specialization includes hand surgery, neonatal nursing, cardiology and oncology. The hospital was listed on the stock exchange in July 2013.The CHG hospital group has a total capacity of 386 beds. The total revenue generated from the hospital business stood at THB 1.9 bn in 2013, up from THB 1.4 bn in 2012. The company had a medical staff of approximately 1,180 in 2012. The total number of inpatients in 2012 was 104,569 and the outpatients numbered 1,464,299.

2.9.1.6 Thonburi Hospital

Thonburi Hospital is located in Bangkok and was established in May 1977. It caters to about 1,500 outpatients and 400 inpatients a day. Apart from the hospital in Bangkok, the hospital has a network of 19 hospitals throughout Thailand. The hospital has a dedicated section for bone and joint diseases, heart center, neuro center and liver center. The hospital has 400 full-time consulting physicians, 308 nurses and 1,787 staff.

2.9.1.7 Mahidol University - Ramathibodi Hospital

Ramathibodi Hospital was established in 1969 and has two buildings. It services 5,000 outpatients per day and has more than 1,000 beds. The hospital provides tertiary care for severely ill patients with specialized units. The staff includes 649 doctors (professors, associate professors, assistant professors and lecturers).

2.9.1.8 Sikarin Hospital

Sikarin Hospital was established in March 1979 as Samrong Karnphat Co., Ltd. It has 215 beds providing inpatient and outpatient services. The hospital is owned and operated by the Sikarin Public Company Limited, listed on Thailand’s Stock Exchange. Itl has three buildings with a bed capacity of 235 and on an average handles 2,800 outpatients per day. The Rattarin Hospital is also a part of the Sikarin Company. It has 100 beds and can on an average handle 700 outpatients per day.

2.9.1.9 Vejthani Hospital, Bangkok

The hospital was established in 1994. It has 263 beds and handles a patient volume of over 300,000 patients per year. The hospital has over 700 full-time employees, approximately 300 physicians, dentists and 200 nurses. The hospital is accredited by JCI and has ten operating theatres, a radiology department, neonatal critical care and other special facilities.

2.10 Healthcare personnel

Healthcare personnel are crucial channels of healthcare delivery and are an integral part of any healthcare system. Typically, they comprise doctors, dentists, pharmacists, physiotherapists, nurses and others. Granting that the number of healthcare personnel has been multiplying every year, Thailand is till encountering obstacles to improve its distribution for the rural population, since most of the personnel are intense in and around Bangkok. The total number of registered physicians increased to 42,890 in 2011 up from 41,015 in 2010. It is estimated that Thailand is destined to meet the set target of one doctor per 1,800 and one per 1,500 people by 2016 and 2020 respectively. But, as per overall estimates, there is bound to be a shortage of healthcare in the years to come.

There has been an increasing loss of physicians over the last decade and it is projected that by 2020 the expected physician supply will be 47,081, resulting in a The demand of physician to population ratio of 1:1,491. Over the years, there has been a shift of healthcare personnel doctors from the government sector to the private sector because of healthier will increase as monetary prospects. Nevertheless, the majority of the doctors (approximately 80%) medical tourism gains are employed by the government sector who simultaneously practice in private pace, buoyed by the hospitals too. The current trends clearly indicate that the numbes are adequately improving global moving in the right direction to meet the national goals of physician density of financial scenario. 1:1,800 by 2016 and 1:1,500 by 2020. Apart from this, a key issue affecting the country’s growth prospects is the concentration of physicians in and around Bangkok, leading to a poor doctor-to-patient ratio in rural areas. Based on the statistics supplied by the MoPH, in 2010, doctors practicing in urban areas made up 82.1% of the total practicing doctors while doctors practicing in rural area constituted 17.9%. The doctors per 1,000 population in urban area were 0.74 while in rural areas they were only 0.14. The government created diverse policies and doled out financial incentives to persuade doctors to service the rural areas.

The budding popularity of medical tourism in the country buoyed by the improving glocbal scenario has opened up avenues for other healthcare personnel like nurses, dentists and pharmacists, who are in demand more than ever.

Figure 33: Number of physicians, Thailand, 2006 – 2010

40 36 34 33 33 34 30 32 population population -

32 to 29 - 20 23 21 22 22

umber of 30 n 10 100,000) (per ratio 19 28 Physician Total 0 26 physicians (in thousands) (in physicians 2006 2007 2008 2009 2010 Total physicians Physician to population ratio (per 100,000)

Source: PReMA

Table 32: Number of physicians, Thailand, 2006 – 2010

Year 2006 2007 2008 2009 2010 Total physicians 21,051 22,651 21,569 19,089 22,019 Physician-to-population 32 34 33 29 33 ratio (per 1,00,000)

Source: PReMA

When it comes to other healthcare personnel, Thailand is portraying a robust growth. The Institute of Health Human Resources, under the MoPH divulges that the total number of nurses per 100,000 population increased to 1,154 from just 705 in 2010. Besides, the number of dentists saw a positive and steady growth to reach 47 per 100,000 population in 2013, up from 36 in 2010. Similarly, the number of pharmacists also grew from 75 per 100,000 in 2010 to 161 in 2013.

Figure 34: Healthcare personnel (per 100,000 population), Thailand, 2006 – 2010

200

150 179 181 166 161 154 100

50 12 13 13 12 14 7 7 6 Number Number of personnel 0 6 2006 2007 2008 2009 2010 7 Nurses Pharmacist Dentist

Source: PReMA

Table 33: Healthcare personnel (per 100,000 population), Thailand, 2006 – 2010

Year 2006 2007 2008 2009 2010 Dentists 6 7 7 6 7 Pharmacists 12 13 13 12 14 Nurses 161 179 166 154 181

Source: PReMA

3 Overview of pharmaceutical market

3.1 Market overview

An ageing population, presence of a universal healthcare system, high spending on The pharmaceutical healthcare and a burgeoning economy coupled with a flourishing medical tourism market of Thailand industry, Thailand has all the relevant ingredients to be billed a lucrative was pegged at $4.7 in pharmaceutical market. Growing health awareness among its citizens and the rise 2013 and is expected in disposable income add to its already emergent stature. The per capita GDP (in to be attain $9 bn by PPP) increased by 70% since 2000 and the annual healthcare spending rose to 2020. $205 per person in 2012 from a meager $74 per person in 2002.

Thailand’s pharmaceutical industry has come a long way since its inception. Today, it is an imperative source of employment and revenue generation. The government of Thailand has branded the pharmaceutical sector as a ‘Product of Excellence’ business line to craft more income-earning prospects.

In 2011, the per capita pharmaceutical sales was $64 (33.1% of pharmaceutical sales as a percentage of healthcare expenses). The pharmaceutical market of Thailand was pegged at $4.7 bn (THB 151.7 bn) in 2013 and is expected to attain $9 bn by 2020. The hospital sector constituted the bulk of pharmaceutical sales and in 2011 made up 78% of the total pharmaceutical sales while the retail sector comprised a mere 12%.

Thailand produces 25 active pharmaceutical ingredients and has its own pharmaceutical production plants. But, it relies heavily on pharmaceutical imports to meet its drug demands. In the last few years, pharmaceutical imports have The hospital sector increased rapidly while the exports have not been able to meet expectations. From constitutes the bulk of 2008 to 2012, pharmaceutical imports grew at a CAGR of 11% while exports grew pharmaceutical sales. at a CAGR of 12%. Each year, on an average, Thailand imports more than $1 bn and exports $268 mn worth pharmaceutical products. The US, France, Germany and Switzerland comprise 45% of the imports while Vietnam, Belgium, Myanmar, Cambodia and Malaysia are the top destinations for pharmaceutical exports (57% of Thailand’s pharmaceutical exports).

The pharmaceutical industry of Thailand has been plagued by counterfeit drugs, eroding profitability and denting the country’s image. To combat the menace, the government established the Center for Combating Counterfeit Drug.

Figure 35: Imports and exports of pharmaceuticals ($bn), Thailand, 2008 – 2012

2.00

1.60

1.20 1.87 0.80 1.54 1.69 1.23 1.34 0.40 0.27 0.27 0.33 0.35 0.42

Imports Imports and exports ($bn) 0.00 2008 2009 2010 2011 2012 Import Export

Source: Thailand Board of Investment

Table 34: Imports and exports of pharmaceuticals ($bn), Thailand, 2008 – 2012

Year 2008 2009 2010 2011 2012 Imports 1.23 1.34 1.54 1.64 1.87 Exports 0.27 0.27 0.33 0.35 0.42

Source: Thailand Board of Investment

Thailand’s pharmaceutical sector is regulated by the Thai Food and Drug Administration (TFDA), which functions under the Ministry of Public Health (MoPH). The TFDA is responsible for the licensing of drugs, registration and post- market surveillance. From a regulatory environment standpoint, the landscape is favorable for foreign manufacturers but weak protection of intellectual property rights remains an area of concern for multinational companies (MNCs). The pharmaceutical industry has a mix of both public and private pharmaceutical companies with domestic and foreign players vying for a share of the pharmaceutical market.

3.2 Industry structure

The pharmaceutical industry of Thailand is predominantly production oriented and does not invest excessively in research and development (R&D). The industry is dominated by domestic companies. Pharmaceutical drug manufactures in Thailand can be broadly classified into:

• MNCs that are involved in the production and development of active pharmaceutical ingredients (APIs) and finished dosages.

• Pharmaceutical companies that are Thai-owned and mostly involved in the development of pharmaceutical formulations.

• Government run agencies, the Governement Pharmaceutical Office (GPO) and the Defense Pharmaceutical Factory (DPF), which prepare pharmaceutical formulations for public medical establishments.

• Companies manufacturing and selling traditional Thai medicines. Figure 36: Pharmaceutical industry structure, Thailand

Thai pharmaceutical industry

Government enterprises Private enterprises

Government Defense Local Multinational Pharmaceutical Pharmaceutical companies companies Office (GPO) Factory (DPF)

Source: Fiscal Policy Research Institute and Teera Chakajnarodom

In 2011, there were approximately 700 domestic and foreign pharmaceutical companies in operations and a majority (almost 75%) of them were owned by the citizens of Thailand. Among foreign pharmaceutical companies, Switzerland constituted a major 7.3% and other main investors included US, France, Japan, UK, Denmark and Netherlands. Major MNC players in Thailand are Pfizer, GSK, Merck, Sanofi-Aventis, Roche and AstraZeneca. Leading domestic players include Berlin Pharma, Greater Pharma, Siam Pharmaceuticals, Biolab and Thai Meiji. The Government Pharmaceutical Organization (GPO) and Defense Pharmaceutical Factory (DPF) are the premier government-owned enterprises.

The government of Thailand, through its hospitals, is the major customer of the pharmaceutical industry. Government regulation mandates that GPO manufactured The government of drugs should be given preference for supply to state-owned hospitals. Government Thailand, through its hospitals procure the drugs mostly through tenders, predominantly for generic hospitals, is the major drugs. The hospital segment sold 70% while the OTC or the drugstore market sold customer of the 30% of the drugs. pharmaceutical industry.

3.3 Market segments

To contain the spiraling healthcare costs, the government of Thailand favors the usage of generics and traditional Thai medicines in government-run hospitals. The Generics dominate MoPH has instructed hospitals under its supervision to intensify the usage of the market (50% traditional and alternative medical services to shrink the usage of allopathic share), mainly bought medicine. by tenders of government A policy of generic substitution has been adopted in some insurance programs due hospitals. The share to the government’s inclination towards generics. The generics market share was of generics will further rise as the 50% in 2011 and was expected to gradually increase in the future. In terms of government favors it volume, generics dominated the market with tenders of government hospitals to contain costs. comprising the bulk of generic drug purchases. OTC medicines and patented drugs made up for the rest (50%).

The competition is fierce when it comes to the the pricing of generics and OTC drugs. The emerging popularity of herbal or traditional Thai drugs and a rise in the number of drug manufacturers in Thailand are the reasons for the price war. The price warfare is further fueled by doctors and pharmacists so that they can stock generic drugs with high profit margins compared to branded generics and patented products. The biosimilar market in Thailand is also proliferating due to affordable prices. There were 14 biosimilars that were licensed to market in 2009. These biosimilar products were from various countries such as India, China, Argentina and South Korea. But, the regulatory mechanism for biosimilar approval is not well-defined, especially since biosimilar approval follows a simplified new product approval pathway. There have been issues with biosimilars in Thailand leading to undesirable side effects. The government expects to bring in the legislation to regulate the biosimilar segment and streamline the approval process.

To have a level playing field, pharmaceutical companies will have to counter the monopoly of the government. There have been concerted efforts by pharmaceutical companies to free and open the market from the preferential treatment given to government-run pharma companies, especially the GPO. It is expected that the Thai pharmaceutical market will be free from government dominance due to ASEAN integration in 2015.

3.4 Opportunities and challenges

3.4.1 Opportunities

Thailand offers a plethora of opportunities for the pharmaceutical industry as it is a high growth market expected to grow at double-digits (CAGR in $) in the coming An aging population, years. Fueling the pharmaceutical sector’s growth is the government sponsored swelling healthcare Universal Healthcare Scheme (UCS) that will increase the demand for enhanced funds, demands for healthcare treatment, further increasing the use and penetration of generics. Other better treatment and factors that will contribute to the growth are an ageing population, swelling growth in medical tourism are the main healthcare funds and demands for better treatment. drivers that will boost The private hospital segment is poised to grow in the coming years on the back of the pharma industry. medical tourism. The medical tourism sector garnered estimated revenues of THB 140 bn and 2.5 million people visited the country to seek treatment in 2012. The medical tourists grew at a CAGR of 13% from 2010 to 2012 and the number is expected to grow further in the future. Japan has the most number of medical tourists touring Thailand followed by the US, the UK, Middle East and Australia.

To cater to the growing number of health tourists, hospitals will have to dispense authentic and quality pharmaceutical drugs. Consequently, since Thailand relies heavily on the import of drugs to meet its internal demands, investment opportunities are going to thrive in the nation .

3.4.2 Challenges

The pharmaceutical industry of Thailand faces the following challenges:

• Counterfeit drugs: Thailand’s pharmaceutical industry has long been plagued with the menace of counterfeit drugs. To tackle this problem, the Counterfeit drugs, government of Thailand inked a memorandum of understanding with nine weak enforcement of concerned government agencies in 2010. Who estimates disclosed that 10 IP laws and lack of a proper pricing policy – 30 % of the drugs sold in poorer countries were fake, signifying the are key challenges rapidly growing netwrok of counterfeit drugs. In 2009, the Thailand for the pharma government seized counterfeit drugs worth THB 58 mn and this figure industry. could be worse if illegal products sold across the border were included.

Counterfeit drugs have severely dented the of Thailand and have led to an erosion of profit margins. The Center for Combating Counterfeit Drugs, established by the government, will be critical for the government to contain the rising counterfeit drug industry and improve the confidence of pharmaceutical companies.

• Patent and intellectual property rights (IPR) rules: Investments by foreign pharmaceutical companies in Thailand have been impacted due to the stringent patent and IPR policies adopted by the government of

Thailand. The compulsory licensing scheme under which the Thailand’s Ministry of Public Health (MoPH) authorizes the manufacture or import of a patented drug to anybody other than the patent holder to reduce costs and ensure access of patented medicines, has created severe discontentment among foreign pharmaceutical companies.

In November 2006, the MoPH issued compulsory licenses for pharmaceutical products without consulting patent holders. Also, the Thailand FDA does not have a formal patent linkage system to prevent the copy version of a patented drug from getting regulatory approval. Patent litigation process in Thailand is lengthy and results in financial loss for the patent holder. The average time for granting a patent in Thailand is 12.6 years. It is paramount that issues pertaining to patents and IPR are addressed in a manner that will not impact foreign pharmaceutical companies and at the same time will not deprive patients from access to quality drugs.

• Pricing challenges: There is no pricing policy to regulate the prices of medicines in the public and private sectors. Generics and branded medicines are sold at higher prices than international reference prices.

There is a huge discrepancy in the pricing of branded generics and non- branded generics. Due to the absence of a pricing policy, public hospitals in Thailand procure the same product at varying prices. Furthermore, among different public hospitals the same product is sold to patients at different prices. To sell generic drugs, manufacturers are forced to compromise on profit margins, thereby raising questions of sustainability. A proper pricing policy is required to streamline the pricing of generics and branded generics so that manufacturers can earn decent profits and sustain in the long term.

Other than the above mentioned challenges, companies have to go through a lengthy process to register their drugs with regulatory agencies.

3.5 Major players

The following are the major pharmaceutical companies operating in Thailand:

3.5.1 Government Pharmaceutical Organization (GPO)

The GPO is a government owned pharmaceutical company engaged in manufacturing of vital drugs for Thailand’s citizens. The GPO was established by a Parliamentary Act in 1966. It manufactures about 200 drugs comprising 132 essential drugs and purchases 800 drugs. The main responsibility of GPO is to produce medicines and pharmaceutical products supporting the country’s public health sector. The GPO supplies medicines to all government owned hospitals and other healthcare facilities.

The GPO clocked total revenues worth THB 11.7 bn in 2011, majority of which came from pharmaceutical products and medical supplies worth THB 11.4 bn. The revenues ncreased at 20.6% from 2010 to 2011. Major product categories included medicines, anti-AIDS, chemicals, test kits, natural products and preventive medicines. The total strength of employees working for the GPO was 2,840 in 2011. Figure 37: Products at cost according to categories (THB mn), GPO, Thailand, 2011

153 90

1,059 2,180

Medicines Anti-AIDS (ARV) Chemical/Test Kits/Natural Product Preventive Medicines

Source: GPO Annual Report 2011

3.5.2 BIOLAB Pharma

Biolab was established in 1981 and is one of the principal pharmaceutical companies in Thailand. It specializes in the manufacture of a wide variety of pharmaceutical formulations such as powders, tablets, capsules, liquids, ointments, creams and sterile preparations. Biolab pharma is part of the Bio group, which has other subsidiaries such as Bio Manufacturing Co., Bioland & Development Co. and Thakolsri Farm. Biolab has its manufacturing plants certified by major local and global certifications such as ISO 9001:2008, ISO/IEC 17025, Thai FDA

Quality Award, 2009 and 2011, Halal certificate and PIC/S GMP certificate issued by HAS Singapore (identical to the EU GMP Guide), 2009.

The company posted sales worth THB 1.1 bn in 2011 and employed nearly 700 employees. It signed a contract with Pfizer in 2011 to produce and supply Pfizer’s products in Thailand. Biolab also signed another contract with the Nichi-Iko Group in September 2013.

3.5.3 GlaxoSmithKline Pharmaceuticals

GlaxoSmithKline Pharmaceuticals (GSK) has been a key player in Thailand’s pharmaceutical industry for the last five decades and is one of the foremost establishments in the market today. GSK is the local subsidiary of the main British pharmaceutical company and produces drugs for almost all disease segments. In Thailand, GSK is a market leader in several product categories such as vaccines, asthma, antibiotics, oncology and anti-viral therapy. Apart from prescription drugs, GSK also markets over-the-counter (OTC) drugs such as antacids, analgesics, cod liver oil and dental products such as Sensodyne. GSK has a strength of approximately 350 employees in Thailand. The company clocked revenues of more than THB 4 bn in 2011. GSK spends approximately THB 200 mn a year to support clinical trials of medicines for tuberculosis, malaria and vaccines for tropical diseases.

To make medicines more accessible to the general public, the company implemented massive price cuts of its medicines in the Thai pharmaceutical market, (as much as 50%, in 2011). The price cuts assumed significance since many of the products commanded a market share of more than 70% and were occupying the number one slot. The reduction in prices dented the profitability of GSK.

In 2013, GSK became the first company in the private sector in Thailand’s pharmaceutical sector to receive the ‘Collective Action Coalition Against Corruption’ certification under the umbrella of the Thai Counter Corruption Commission. In 2011, GSK also received the Thai Chamber of Commerce Business Ethics Standard Test Award.

GSK also launched an access program for two leading brands - Seretide and Augmentin, to increase their reach to more patients. The access to patients went up with the reduction of prices up to 20 – 40% for both products and also with the diminishing inequalities in the distribution channel. Government hospitals adopted a more flexible reimbursement policy and private hospitals also reduced the prices.

3.5.4 Pfizer Thailand

Pfizer Thailand was established in 1958 by Pfizer USA and is one of the prominent pharmaceutical concerns operating in Thailand today. Pfizer Thailand employs around 521 employees in various segments such as sales, marketing, medical research, human resource, corporate affairs and finance. The company has business

affiliates such as the Animal Health Group, Capsule Gel Co., Ltd. and Adams Co., Ltd. Pfizer had allocated THB 260 bn ($8.1 bn) in 2006 for research and development of new products, higher than the amount allocated by any other pharmaceutical company operating in Thailand. The company manufactures and markets a broad range of pharmaceutical products for the treatment of ailments such as heart diseases, related to the central nervous system (CNS), erectile dysfunction (ED) and lipid lowering.

Since its inception, Pfizer Thailand has piloted many projects and activities aimed at promoting a superior quality of life for the people of Thailand. The company runs one of the largest projects to support medical and pharmaceutical education with an intention to keep both physicians and patients abreast of developments in modern medicine. The project is run in cooperation with the Arthritis Foundation of Thailand, Diabetes Association of Thailand, Center for Continuing Medical Education (CCME) and Thailand Advanced Seminar in Infectious Diseases (TASID). In collaboration with the Ministry of Health, the Medical Council and other healthcare bodies, Pfizer Thailand also conducts programs to support various training projects and medical research. The company also runs a Pfizer foundation, which is a non-profit organization, to support the medical fraternity in strengthening disease knowledge.

3.5.5 Merck Thailand

Merck started operations in Thailand in 1991 as a joint venture between Merck KGaA and B. Grimm (Thailand). Since then, it has continuously improved its presence in Thailand and has a presence in various therapy areas. Merck Thailand has subsidiaries known as Merck Serono (biopharmaceuticals), Consumer Health (over-the-counter drugs), Performance Materials (high-tech chemicals) and Merck Millipore (life sciences tools).

The company markets products for therapeutic areas such as diabetes, cardiovascular, gastro-intestinal and central nervous system. Apart from pharmaceuticals, the company has a major product line for chemicals such as laboratory chemicals, analytical reagents, food and environmental analysis products, microbiology products, chromatography products, coating and cosmetics.

3.5.6 Greater Pharma

Greater Pharma was started as a grocery store named ‘Moek Hua’, subsequently changed to ‘Ouiheng’, from which the Ouiheng group of companies took shape. The company ventured into wholesale drug distribution and soon became one of the two biggest wholesalers of pharmaceutical products in Thailand. As its sales volume grew, Ouiheng was sought by a number of foreign pharmaceutical companies for partnership ventures. Entering the import business, it marked its second most important turning point in its history and in 1967 rechristened itself as Greater Pharma Ltd. The company manufactures and markets pharmaceutical products for most of therapeutic classes such as anti-viral, anit-fungal, analgesics,

antipyretics, beta blockers, dietary supplements and cosmetics. The company is also a distributor of ethical pharmaceutical products, diagnostics and biotechnology products and is also an exporter of pharmaceutical products.

3.5.7 Sanofi Thailand

Sanofi started its operations in 1959 through the Hoechst pharmaceutical company and is part of the Sanofi global venture today. Sanofi’s core strength lies in segments such as diabetes, vaccines, rare diseases and animal healthcare. The company has adopted the organic as well as the mergers and acquisitions route to propel its growth in the Thai pharmaceutical industry. It employs approximately 450 employees. In Thailand, the Sanofi group encompasses:

• Sanofi-Aventis (Thailand) is a player in the pharmaceutical and consumer healthcare markets and has a presence in the rare disease segment. • Sanofi Pasteur’s core strength in the human vaccines segment. A joint- venture was established between Sanofi Pasteur and the Government Pharmaceutical Organization (GPO) in 1997 to manufacture vaccines for the domestic as well as foreign markets.

3.5.8 Roche Thailand

Roche operated in Thailand through its affiliate Deithelm Company Limited (DKSH) and registered the affiliate company in January 1971. Subsequently, the name was changed to Roche Thailand Ltd. in August 1974. The company is a leading player in the diagnostic devices and oncology segments. The partnership of Roche with DKSH was extended through an agreement signed in October 2014.

3.6 Key products

The leading product in Thailand’s pharmaceutical industry remains Lipitor (atorvostatin), which is marketed by Pfizer and is used to reduce cholesterol. Recormon (epoetin beta), marketed by Roche pharmaceuticals for treating Hepatitis and Crestor (rosuvastatin), marketed by AstraZeneca are the other leading products. The other key products include Seretide (fluticasone + salmeterol), marketed by GSK, Pegasys peginterferon alfa-2A, marketed by Roche, Plavix (clopidogrel) of Sanofi and Onsia (ondansetron) of Siam Bhaesaj.

3.7 Supply channel

3.7.1 Distribution / wholesale

The drug distribution system in Thailand follows the traditional route of pharmaceutical manufacturers to wholesalers to retailers and finally to consumers. To manufacture or import drugs, a manufacturing or import license is mandatory, obtainable from the government. Primary manufacturers are those involved in the production of active pharmaceutical ingredients used in the manufacture of finished dosage forms. Primary manufacturers thus act as suppliers to secondary manufacturers, who in turn use the active pharmaceutical ingredients to produce the finished dosage forms such as capsules, tablets and syrups. The finished dosage forms are then distributed to pharmaceutical companies, who then distribute it to designated wholesalers or third-party organizations. The drug is then supplied to healthcare providers such as hospitals, physicians and pharmacists. Finally, the drug is dispensed to the end consumer (payers, including patients, the government and employees). Figure 38: Pharmaceutical drug distribution channel, Thailand

Raw material importers

Finished product Foreign sources of Drug manufacturers importers raw materials

Private / public Modern drugstores Modern drugstores hospitals and clinics

Patients with prescriptions

Source: WHO

In Thailand, the license to manufacture or import drugs is awarded by the Drug Control Division (DCD), which functions under the domain of Thailand’s FDA (TFDA). There are specific criteria that need to be satisfied in order to get the license and the license differs by the type of pharmaceutical product. For example, there is a separate license for traditional medicines and modern medicines. Manufacturing and import licenses carry a validity of one year and must be renewed annually. Leading distributors of pharmaceutical products in Thailand are Zuellig, DKSH, Pacific Vet Group, Healol and Bioscience.

3.7.2 Retail

The pharmacy sector in Thailand is fragmented and approximately 30, 000 pharmacies are broadly classified into three groups:

• Modern community pharmacies that have a qualified pharmacist at all times. • Pharmacies operating without a registered pharmacist and typically include old-fashioned pharmacies. • Pharmacies dispensing traditional Thai and alternative medicines.

A majority of the pharmacies (approximately 70%) consist of traditional non- organized outlets and only 3% of modern community pharmacies are chain stores. A majority of the retail pharmacies Retail pharmacies dispense both prescription and OTC drugs. The drugs are (approximately 70%) supplied directly to hospitals through wholesale distributors and in case of are traditional non- government hospitals are supplied directly by GPO. Private and government organized outlets. hospitals follow the tender process for drug procurement. Most often, the lowest price quoted in the tender is granted the tender. OTC products formed a major chunk of retail sales (70%) while prescription drugs formed 9% and medical equipments constituted 6% of the sales in the year 2011. The average sale of standalone pharmacies amounted to approximately THB 200,000 per month per store and the average traffic at pharmacies was approximately 2,200 visits per month. The retail pharmaceutical distribution segment is dominated by two chain drug stores – Watson’s and Boots. Both drug stores dispense prescription and OTC OTC products formed products and have stores in more than 100 locations. Watson’s drug stores are a major chunk of retail larger in size and mostly stock generic drugs while the Boots pharmacy stores are sales (70%) while smaller in size and sell branded drugs. There are over 260 stores of Watson’s that prescriptions formed offer products from consumer goods to health and beauty products. The first store 9%. of Boots was opened in 1997 and the last estimated number was 249 stores in Thailand. Boots launched a loyalty program in 2011 and the sales from the loyalty program makes up 50% of the total Boots sales numbers in Thailand. In the initial months of 2014, Boots’ pharmacies generated revenues worth $170 mn.

Further, the Thai FDA has ordered retail pharmacies not to sell alprazolam without authentic prescriptions. Selling alprazolam illegally leads to an imprisonment of 5 – 20 years and a fine of THB 100,000. The challenge for retailers is to maintain a prescription record and to identify authentic prescriptions.

3.8 Sales and marketing

In Thailand, the Drug Act regulates the sales, marketing and promotion of drugs and is overseen by the Thai FDA. Sale of pharmaceutical drugs happen through the Tenders play a key traditional route of stockists and retailers. Tenders play a key role in the sales of role in the sales of drugs. Government drugs, especially in government run and private hospitals. Sales of drugs classified run hospitals are as dangerous is prohibited without a valid prescription and must be dispensed by a supposed to purchase registered pharmacist or a doctor. Government run hospitals are supposed to drugs based on a purchase drugs based on a three-year procurement plan. However, a majority of three year hospitals purchase drugs on an annual basis. The GPO is the preferred supplier of procurement plan. drugs through tenders to government hospitals. The hospital has to invite a tender However, a majority if the amount of drugs procured exceeds THB 100,000. Government tenders can be of hospitals purchase broadly classified into the national tender and individual hospital tenders. National drugs on an annual tenders typically involve a large amount of supplies whereas individual hospital basis. tenders supply to only a handful of hospitals. Private hospitals also rely on tenders to procure drugs but unlike government hospitals, the focus is on quality and not solely on price. As the number of hospitals increase to cater to medical tourists, there will be a greater emphasis on streamlining the tender process. Pharmaceutical companies will need to focus on effectively securing and sustaining tenders from various hospitals.

Marketing of prescription drugs to the general public is prohibited and is allowed only for healthcare professionals. Drugs falling under the household remedy The marketing of category may be advertised directly to consumers or the general public. The prescription drugs to mushrooming number of online sites selling drugs to the people in Thailand is a the general public is huge challenge for the Thai FDA as almost 85% of the advertisements on the prohibited and is allowed only for internet function without the permission of the Thai FDA. healthcare Drugs are regularly tested to ensure efficacy, safety and quality. These tests are professionals. carried out in the laboratory of the Medical Sciences Department, Ministry of Public Health. Other than legal obligations, members of the Pharmaceutical Research and Manufacturers Association (PReMA) have to abide by the PReMA code of sales and marketing. The PReMA code describes standards to be adopted while conducting promotional events like conferences, doctor symposiums and product launches. It has become a practice to follow PReMA guidelines even among non-PReMA members to ensure transparency and healthy competition. The Thai FDA does not have any authority over PReMA guidelines. But, violations of the guidelines can lead to sanctions on members by PReMA committees.

Marketing channel: For prescription drugs, the marketing channels are the doctors who are canvassed by medical representatives through detailing. The doctors are also campaigned through seminars and articles in various magazines. Direct consumer marketing is allowed for OTC and traditional drugs. TV, radio and newspapers are the main channels to reach the customers.

3.9 Events

Table 35: Recent events in pharmaceutical industry, Thailand

Event title Event description The Thai FDA and pharmacist representatives held discussions in October 2014 to chalk out a new bill on medicines. The pharmacists’ association wanted more clarity New bill on medicines on the classification of drugs adopted by Thai FDA. The concern was that the wording used in the classification could lead to misunderstanding. The new bill was expected to be submitted to the MoPH after a month. To celebrate its 50th anniversary in Thailand, GSK launched the ‘GSK Medicine Bank for Hardship Relief’ program in Thailand. The objective of the program was to improve GSK launches access to medicines and treatment for the underprivileged medicine bank and victims of disaster. A memorandum of understanding (MOU) was signed between GSK Thailand and Thai Red Cross Society's Relief and Community Health Bureau (RCHB) to collaborate on the project. The Direction for Thailand's Reform forum organized an event in September 2014 to push for reforms in the Push for reforms in pharmaceutical and healthcare sectors of Thailand. The pharmaceutical reforms were aimed at the need to find cheaper drugs to sector ensure the access of medicines to the masses and on the pressing need to improve the quantity of healthcare manpower in Thailand, especially doctors and nurses. Acquisition of Silom The deal was signed in January 2014 and will catapult Medical Company of Actavis into the list of the top five generic players in the Thai Thailand by Actavis pharmaceutical market. The deal was pegged at $100 million. The Japanese firm Fuji Pharma acquired Olic Thailand, Fuji Pharma acquires which is the largest contract manufacturer in Thailand. The Thai contract acquisition will help Fuji Pharma to grow overseas and manufacturer Olic provide a competitive edge.

Source: Company news and press releases

3.10 Major diseases

Over the years, as Thailand experienced economic prosperity, it was adversely affected by globalization, causing increased disease burden and an surge in lifestyle-related diseases such as diabetes and hypertension. The disability-adjusted life year (DALY) is a measure of overall disease burden, expressed as the number of years lost due to ill-health, disability or early death. DALY quantifies both premature mortality (YLLs) and disability (YLDs) within a population.

The table given below (WHO statisitics) depicts the leading causes of disability- adjust life years (DALYs) lost Thailand for the year 2004. The table is segregated based on the sex ratio.

Table 36: Leading cause of disability-adjusted life years (DALYs lost by sex), Thailand, 2004

Male Female

Rank DALYs DALYs Cause lost % Cause lost % (‘000) (‘000) 1 HIV / AIDS 652 11.5 Stroke 316 7.7 2 Traffic injuries 592 10.5 HIV / AIDS 295 7.2 3 Stroke 336 6.0 Diabetes 293 7.1 Alcohol 333 5.9 Depression 191 4.6 4 dependance 281 5.0 Ischemic heart 141 3.4 5 Liver cancer disease Ischemic heart 184 3.3 Osteoarthritis 131 3.2 6 disease Chronic 183 3.2 Traffic injuries 126 3.1 7 obstructive pulmonary disease 8 Diabetes 181 3.2 Liver cancer 126 3.1 9 Cirrhosis 145 2.6 Deafness 111 2.7 137 2.4 Chronic 109 2.6 10 Depression obstructive pulmonary disease

Source: WHO

3.10.1 HIV/AIDS

Sex tourism is an important component of Thailand’s economy. It has unfavorably affected the country since it has resulted in an increase in the number of HIV / AIDS cases. HIV / AIDS is the leading cause of DALYs lost in male (11.5%) and second leading cause in case of females (7.2%). Although the government has taken steps to curb the rise in HIV infections with increased focus on spreading awareness among sex workers, increased condom usage and lessening the prevalence of sexually transmitted diseases (STDs), the menace of HIV / AIDS remains strong. But, the programs initiated by the government have borne fruit as seen in the decline of HIV infection cases from 1,43,000 in 1991 to 10,853 in 2010.

The government increased the access to the antiretroviral therapy (ART) to people living with HIV/AIDS through more than 900 public hospitals. The government focused on sensitizing tourists in taking precautions for avoiding HIV/AIDS and allocated special funds for non-Thai residents. Further, the government also set up a National AIDS Committee to tackle the menace of AIDS and align its national AIDS strategy with UNAIDS. The committee intends to get Thailand to zero new HIV infections, zero discrimination and zero AIDS-related deaths.

The Center for Disease Control and Prevention (CDC) has been an important organization that has collaborated with the MoPH for over 30 years in controlling HIV/AIDS and various other diseases. The CDC has produced new disease prevention and intervention strategies that have played a major part in curbing HIV and other diseases. The partnership hopes to introduce more effective strategies and contain the spreading of HIV infection.

The government has also collaborated with the WHO, the UN and other agencies to combat HIV/AIDS and make Thailand ‘AIDS Zero’.

3.10.2 Stroke

Stroke is a leading cause of death and disability in Thailand. It is estimated that each year there are more than 250,000 new stroke cases and approximately 50,000 lives are lost annually. Stroke has the highest rank for disease burden in females in Thailand and the third rank in males, measured by disability-adjusted life years (DALYs). In Thailand, stroke causes more deaths than ischemic heart diseases. It was the third leading cause for hospital admission among cardiovascular diseases with 11.9% mortality rate.

In Thailand, the rate of mortality from stroke increased from 20.8 in 2008 to 31.7 per 100,000 population in 2012. The prevalence of stroke in people above 45 years of age was 1.88% with higher prevalence in men compared to women in all age groups. Factors associated with higher stroke prevalence include old age, occupation class, history of hypertension, diabetes mellitus and hypercholesterolemia.

Figure 39: Stroke mortality per 100,000 person-years, Thailand, 2008 – 2012

35 30.0 31.7 30 27.5 25 20.8 21.0 years

- 20 15 10 per 100,000 100,000 per person 5 Stroke mortality mortality Stroke 0 2008 2009 2010 2011 2012

Source: MoPH

Thai Stroke Society is the leading organization involved in the management of stroke incidents in Thailand and has pioneered many programs in Thailand to create awareness. The Neurological Society of Thailand also plays an important role in creating awareness and treatment of stroke.

3.10.3 Diabetes

With increasing economic prosperity leading to a sedentary lifestyle, the prevalence of diabetes has been increasing in Thailand. According to WHO figures, one in 13 adults in Thailand has diabetes and last estimates depict it as 9.6% (2.4 million people) of the total adult poulation. In 2009, the government initiated a nationwide screening campaign, with technical collaboration from WHO, to screen people for diabetes. By 2011, more than 90% of the population had been tested for diabetes. The screening campaign led to a greater awareness about diabetes and it was discovered that 1.5 million people were at risk and 350,000 new cases were diagnosed. It is estimated that approximately one-half of all cases of diabetes go undiagnosed, which poses a serious challenge for healthcare professionals in Thailand.

Cases of type-2 diabetes are higher compared to the type-1 and the common factors associated are:

• Family history of diabetes

• Overweight

• Unhealthy diet

• Physical inactivity

• High blood pressure

• Impaired glucose tolerance (IGT) The other increasing problem in Thailand is childhood obesity and based on statistics divulged by the MoPH, the percentage of obese pre-school children rose from 5.8% in 2008 to 7.9% in 2012.

The Diabetes Association of Thailand is the leading organization engaged in the management of diabetes. The organization issued the Clinical Practice Guidelines for the management of diabetes with the National Health Security Office and the Department of Medical Service under MoPH. The association conducts surveys and publishes books and articles such as the Diabetes Situation in Thailand, Handbook on Diabetes Education for Self-Management and Healthy Diet for Diabetic Patients.

The main focus of the association is to serve as an up-to-date and trustworthy source of knowledge for healthcare professionals and a channel for disseminating information to the general public and to liaison with relevant national and international bodies in organizing activities related to diabetes awareness and care.

3.10.4 Cancer

Cancer has become one of the leading causes of disability in Thailand. There were 123, 800 newly diagnosed cases of cancer in 2012 and the incidence rate per 100,000 people per year was 137.5. Cancer caused 85,000 deaths in 2012. The highest incidence of cancer cases were for liver, lung, colon and rectum. The National Cancer Institute was created to enhance cancer treatment and spread awareness about the disease. The goal of the institute is to become a leading national institute for cancer control and patient care. A cancer registry was initiated in 2002 under the National Care Institute.

3.10.5 Traffic Injuries

Traffic injuries form the second biggest cause of DALYs lost in males and are the seventh biggest cause for females. The government has launched many social campaigns to spread awareness about safe driving but the mortality rate from road traffic injuries remains high at 18.2 per 100, 000 people. The major fatalities (over 70%) in road accidents are related to two and three wheelers. Thailand lacks a comprehensive policy and rules to combat increasing road accident cases. Although there are legislations in place, enforcement is an area of concern. For example, Thailand has a helmet law but the compliance rate is as low as 27% and Thailand has no law against prohibiting child driving. Drunk driving is one of the major causes of deaths and a majority of them take place during the New Year eve and Songkran celebration (Thai New Year during mid-April). Motorcyclists comprised about 80 – 85% of road traffic crash victims during 2008 – 2010 and the remaining casualties were of car drivers. Thailand has partnered with various government and non-government agencies to develop health perception and reduce diseases. There are 23 agencies and two development banks that run programs in Thailand. This includes the Asian Development Bank (ADB), Food and Agriculture Organization (FAO) and International Labor Organization (ILO). Other key partners include the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), the Bill and Melinda Gates Foundation, Bloomberg Initiative, Rockefeller Foundation and various UN agencies.

4 Market Access

4.1 Stakeholder landscape

Thailand falls in the upper-middle-income group based on World Bank’s definition. Almost the entire population is covered under government sponsored health insurance. Further, the governement spends more than an ample amount on healthcare, Hence, Thailand presents a lucrative market for pharmaceutical companies. Moreover, the varied demography of Thailand in terms of patient profile increases the appeal for pharmaceutical companies.

The market access landscape in Thailand has evolved constantly over the years. There are multiple stakeholders who play a crucial role in the healthcare landscape of the nation. The following are the stakeholders that impact pharmaceutical market access in Thailand:

4.1.1 Physicians

Traditionally, Thai people have placed great faith in the medical profession and it continues to hold true even today. Patients honor prescriptions written by doctors without questioning their integrity. Pharmaceutical companies approach doctors for product approval and uptake in the market. The government also takes doctors into confidence while framing policies. Yet, the influence of doctors has waned in recent years and they are under increasing pressure to justify their prescriptions of costly drugs. Allegations of corruption and unethical practices have dented the image of doctors in Thailand. Doctors, however, will continue to remain important influencers in the pharmaceutical market access landscape in Thailand.

4.1.2 Regulatory bodies and government agencies

Through FDA, the MoPH has increased its influence and control over almost all aspects of pharmaceutical market access. The focus of the government has shifted from merely providing universal healthcare to containing healthcare spending costs. The government has formulated guidelines to trim down the budget allocated to various public health insurance schemes. The MoPH is also taking cues from other countries and including pharmacoeconomics and health technology assessment (HTA) in the drug approval process. The influence of regulatory bodies will continue to increase over a period of time as sustainability of healthcare initiatives and weeding out corruption in the pharmaceutical sector become key priorities for the government. Pharmaceutical companies, especially MNCs, need to align with government regulatory agencies and collaborate with them to smoothen the product approval process.

4.1.3 Supply channels

Supply and distribution of pharmaceutical products have traditionally been routed through stockists and distributors. MNCs collaborate with local players for drug distribution and it has worked in their favor so far. Pharmacies, especially chain pharmacies, will ply a significant role in generic drug substitution while dispensing. Channels of product availability assume greater significance for companies looking to penetrate Thailand’s rural pharmaceutical market as they are the growth drivers in the future.

4.1.4 Patients / patient advocacy groups

The patient has been the fulcrum of all activities of the pharmaceutical industry. Traditionally, the patient followed the doctor’s advice and prescription religiously It will be prudent for without questioning. The patient has been at the end of the pharmaceutical value pharmaceutical chain. However, the scenario is changing in Thailand as patients are beginning to companies to exert influence on both doctors and pharmaceutical companies. Two Thai citizens understand patients’ drivers of treatment infected with HIV sued a pharmaceutical MNC in 2001 for their HIV patent drug and effectively on the premise that the drug was not accessible to patients due to its high cost. In a engage with them for historic judgement, the Thai Central Intellectual Property and International Trade product Court ruled in favor of the patients and revoked the patent of the HIV drug in commercialization 2002, paving way for producing the generic version of the drug. due to their growing influence. This was the first case in which patients successfully sued a pharmaceutical company in the court of law. Moreover, patient advocacy groups / activists had submitted a letter to the US government demanding that the US not retaliate with trade sanctions if a compulsory license was issued for the HIV drug. This is a testimony to the growing clout of patients in Thailand’s pharmaceutical market access landscape. The influence of patients will further grow in the years to come as a result of increased disease awareness and justification demands for drug prescription. Thus, it will be prudent for pharmaceutical companies to understand patients’ drivers of treatment and effectively engage with them for product commercialization.

4.1.5 Pharmaceutical companies

Pharmaceutical companies are key stakeholders of the market access landscape and Pharmaceutical are the main beneficiary in terms of revenue generation. Traditionally, companies will need pharmaceutical companies’ role has been confined to production and marketing of to shift their focus drugs. However, companies are increasingly beginning to shift their focus from from merely merely manufacturing and marketing to policy shaping in collaboration with manufacturing and government / regulatory agencies and physicians. Companies no longer want to be marketing to policy perceived as merely profit-oriented entities but are striving to be seen as partners in shaping in collaboration with providing healthcare solutions to the people and the government. government / Various associations such as the Thai Pharmaceutical Manufacturers’ Association regulatory agencies. promote the interest of domestic Thai pharmaceutical companies whereas

associations such as the Pharmaceutical Research and Manufacturers’ Association (PReMA) engage with government bodies to promote the interest of MNCs. Pharmaceutical companies in Thailand, especially MNCs, are keenly persuading the government to reduce the preference for drugs produced by the Government Pharmaceutical Organization (GPO) and thus make the pharmaceutical sector a level playing field.

4.1.6 Payers

The term ‘payers’ in healthcare domain refers to bodies or organizations that reimburse the cost of healthcare services availed by a patient. Thus, payers can be As the government both traditional (government bodies and insurance companies) as well as other adopt stricter bodies that act like payers (e.g. employers). Since nearly all of Thailand’s measures to rein in population is covered by at least one or other government run health insurance burgeoning healthcare scheme, the government acts as a de facto payer in Thailand. There are also private expenditure, it will be payers in Thailand, albeit fewer in number, confined to people subscribing private crucial for the insurance schemes. As the government of Thailand grapples to rein in burgeoning pharmaceutical healthcare expenditure, there will be stricter measures adopted by the government companies, especially for reimbursement of healthcare expenses. The government intends to pursue MNCs, to correctly major reforms in the healthcare domain to streamline healthcare services and weed identify payer needs out corruption. Pharmaceutical companies need to establish a symbiotic and attitude and relationship with public payers and help them ease the burden of healthcare provide plausible outflow by providing them with comprehensive solutions. solutions.

The solutions can range from developing material to supporting their product uptake to partnering with the government in healthcare delivery system. Private payers will also evolve in the market access landscape of Thailand given the voids in the public health insurance schemes coupled with the booming medical tourism industry. It will be crucial for pharmaceutical companies, especially MNCs, to correctly identify payer needs and attitude and provide plausible solutions.

4.1.7 Healthcare service providers

The healthcare providers act as a channel for delivery of healthcare services. Healthcare providers can be traditional, such as hospitals and healthcare personnel It will be important (nurses, pharmacists etc.) or allied healthcare providers, such as physiotherapists, for pharmaceutical speech therapists etc. Healthcare service providers play a crucial role in providing companies to medical services to patients and serve as a bridge between government sponsored correctly identify and health initiatives and patients. segment healthcare providers based on In Thailand, the central and local governments act as major providers of healthcare their importance in services through their hospitals and clinics. Healthcare providers are highly the healthcare significant in rural areas where there is a paucity of reliable and quality medical delivery value chain care services. Moreover, there are private hospitals that play a pivotal role in and address their providing healthcare services to Thai citizens as well as medical tourists. It will be needs profitably. important for pharmaceutical companies to correctly identify and segment

healthcare providers based on their importance in the healthcare delivery value chain and address their needs profitably.

Although the pharmaceutical market of Thailand has been attractive for companies, there are market access barriers that limit the growth of companies, especially MNCs. These barriers mainly include:

• Discriminatory government policies The government of Thailand has mandated that government run hospitals (while using public funds) must procure drugs produced or supplied by the The government’s Government Pharmaceutical Organization (GPO), even if it is sold at mandate for public higher prices. Moreover, GPO is exempted from obtaining licenses from sector hospitals to procure most of their FDA in order to produce, sell or import pharmaceutical products. These drug needs from special privileges bestowed on the GPO by the government of Thailand GPO is the major limits the scope of business for other pharmaceutical companies. hurdle in market Pharmaceutical players have urged the government to allocate similar access for pharma privileges to all organizations by allowing other companies to compete companies, especially with the GPO. foreign MNCs. • Civil Service Medical Benefits Scheme reform The CSMBS has been an important part of public employment in Thailand, reimbursing complete costs incurred on civil servants’ healthcare treatment. Recent measures initiated by the cabinet to contain costs by price negotiations of non-national list of essential drugs (NLED), non- NLED prescription criteria, reimbursable indications and prior authorization for high-cost drugs have been developed without a transparent process. The October 2013 order by the Comptroller General caused discriminatory markup rates for generics and innovator drugs. Moreover, strict reporting and audit requirements to prescribe innovator drugs have affected physicians’ practice of prescribing drugs on NLED that are mostly generics. • National list of essential drugs The NLED is based on cost containment thus favoring generic medicines. There is not much attention given to the efficacy and safety of drugs. Besides, there have been instances of delisting of drugs without prior thoughts. It is important that the government of Thailand focuses on including drugs not only based on price but also based on efficacy and pharmacoeconomics benefits. • Counterfeit medicines The pharmaceutical market in Thailand is plagued with counterfeit drugs. The government has taken a note of this and has initiated reforms to curb the menace. Though, laws are not enforced in letter and spirit and the lax attitude of officials compound the problem. The government needs to take

stern action against counterfeit drugs and restore confidence in pharmaceutical companies. The pharmaceutical market access in Thailand is bound to become complex with the evolution of new policies and stakeholders. Pharmaceutical companies will require a robust market access strategy to navigate the challenges posed by various market access stakeholders.

4.2 Regulatory landscape

4.2.1 Regulatory agencies

The Food and Drug Administration (FDA) is the main regulatory agency in Thailand responsible for overseeing the drug approval and registration process. The Food and Drug Administration The Thai FDA functions under the ambit of the Ministry of Public Health (MoPH). (FDA) is the main The main role of the Thai FDA is to ensure safety, quality and efficacy of health regulatory agency in products. The categories that fall under the purview of FDA are food, drugs, Thailand responsible psychotropic substances, narcotics, medical devices, volatile substances, cosmetics for overseeing the and hazardous substances. The legislative basis of the Thai regulatory system is the drug approval and Drug Act BE 2510 (1967) and its amendments. registration process.

The Drug Control Division, functioning under the aegis of the Thai FDA, is the main body responsible for handling all aspects pertaining to pharmaceutical drugs. The roles and responsibilities of the FDA can be broadly classified into five main areas:

• Pre-marketing control: This encompasses activities that are carried out before the product is launched in the market. E.g., control of manufacturing facilities, product quality etc. It is mandatory to comply with the relevant regulations at every step. • Post-marketing control: This is to ensure that the product adheres to previously approved standards by investigating manufacturing facilities and conducting product quality checks. E.g., samples of drugs are taken at regular intervals to ascertain their efficacy, quality and safety. • Surveillance program for consumers' safety: This program intends to identify and report any adverse or undesirable event arising out of any product usage by a customer. The data of the adverse event is collected, analyzed and reported. The Adverse Product Reaction Monitoring Center (APRMC) and the International Program on Chemical Safety (IPCS) are the operational centers for adverse data gathering and analysis. • Consumer education: The FDA provides information to consumers to empower them to choose products wisely. Information is disseminated through various modes such as television, radio, newspapers, leaflets, internet and others. The FDA also conducts regular campaigns on priority topics in schools, villages, department stores and in other parts of the country. • Technical support and cooperation with other agencies: In collaboration with both public and private agencies, the FDA conducts various workshops and events. The Good Manufacturing Practice (GMP) program is an example where universities and drug manufacturers cooperate for a better insight into GMP and its deployment.

4.2.2 Organization structure

The FDA comes under the cluster of the Public Health Support Services, functioning under the auspices of the MoPH. The cluster of Public Health Support Services comprises three main departments, namely, the FDA, Health Service Support and Medical Sciences.

The Thai FDA consists of two main groups:

The Health Product Control Division group: This group consists of the Bureau of Cosmetic and Hazardous Substances Control and five other divisions including Drug Control, Food Control, Medical Devices Control, Narcotics Control and Import and Export Inspection

The Support Division group: This group consists of three divisions, namely, Public and Consumer Affairs, Rural and Local Consumer Health Products Protection Promotion, Technical and Planning, and the Office of the Secretary.

Figure 40: Organization structure of FDA, Thailand

Ministry of Public Health

Secretary General, Food and Drug Administration

Deputy Secretary - General (3)

• Drug Control Division Cosmetic and • General Medical Import and Hazardous Narcotics Administration Device Export Substance Control • Policy and System Control Inspection Control Division • Development Division Division Bureau • Pre-marketing Control • New Drugs • Generic Drugs • Veterinary Drugs • Biological Products • Traditional & Herbal • Medicines Food Hazardous Control Cosmetic • Advertisement Substance Division Control Control Control Group • Post-marketing Group Control

Technical and Public & Rural and Local Consumer Office of Planning Consumer Health Product Protection the Secretary Division Affairs Division Promotion Division

Source: Thai FDA, MoPH

4.2.3 Market authorization for pharmaceutical products

The Thai FDA is the governing body that grants market authorization for pharmaceutical products marketed in Thailand. The market authorization for The Thai FDA is the pharmaceutical products is based on the Drug Act BE 2510 (1967), whereas the governing body that new Drug Act of B.E.2546 (2003) is in the final stages of promulgation. The Drug grants market authorization for Committee, appointed by the Minister of Public Health for a tenure of two years, pharmaceutical advises the Minister on both regulatory and technical aspects pertaining to the products. administration of pharmaceutical control. The Drug Committee has the power to approve or withdraw pharmaceutical registration, alter criteria and guidelines, suspend or withdraw licenses to manufacture, import, distribute or sell drugs. Also, the committee can appoint sub-committees to support them with certain tasks.

The Drug Act mandates that a valid license needs to be obtained before manufacturing, selling or importing drugs in Thailand. There are nine different categories under which the applicant can apply for drug registration. Market authorization for pharmaceutical products in Thailand can be broadly divided into two phases - pre-marketing and post-marketing. The pre-marketing phase involves licensing and drug registration, whereas the post-marketing phase includes inspection, surveillance and adverse drug reaction (ADR) monitoring. The approval process for biological products is similar to that of pharmaceutical products.

The following chart depicts the drug approval and review process in Thailand:

Figure 41: Drug approval and review process, Thailand

Applicant

Application

Completeness Pre-filing screening review

Technical review Review by experts / sub-committee / committee

Decision by FDA

Approved Revised Rejected

Source: Thai FDA, MoPH

Drug Registration:

The drug registration is applicable to only authorized licensees and is necessary to ensure the quality, safety, and efficacy of drugs marketed in Thailand. The Thai The Thai FDA allows FDA allows pharmaceutical companies to submit bioequivalence studies data from pharmaceutical foreign institutes or laboratories for approval of generic and new generic drug companies to submit approval. bioequivalence studies data from Manufacturing plants have to be good manufacturing practice (GMP) compliant foreign institutes or and are subjected to inspection. According to the new Drug Act of 2003, the laboratories for approval of generic certificate for product registration is valid for a period of five years from the date and new generic drug of issue of license. approval. Based on the degree of control and type of dossier submitted, there are two channels through which a product can be registered in Thailand:

• Registration of general medicines. • Registration of Thai traditional medicines.

The registration of general medicines can be further divided into three types based on the requirements for dossiers to be submitted:

• Generics: These are ‘me-too’ type of products. Under this category, a dossier on product manufacturing and quality control along with product For innovative drugs, information is required. standard review takes around 210 – 280 • New medicines: This category includes products of new chemicals, new days while priority indications, new combinations or new delivery systems and new dosage review takes around forms. Registering drugs under this category is the most stringent of all 100 – 130 days. registrations and requires a complete set of product dossiers. All new drug products are subjected to a two year safety monitoring program (SMP), i.e., new drug products are first approved for use in hospitals or clinics for at least two years. The safety data for two years is analyzed and if found satisfactory, the drug is granted permission for marketing. • New generics: This category includes medicines with the same active ingredients, dose and dosage forms as those of the new compounds registered after 1992. The registration under this category requires dossiers to be submitted on bio-equivalence studies in addition to the required dossiers for generic submission as well as literature documents supporting the safety and efficacy of the drug.

Process of new medicine drug registration: The following process is followed by the Thai FDA in order to approve a new drug:

• Track 1: Standard review: The application under this section is reviewed within 210 – 280 working days. • Track 2: Accelerated or priority review: This applies for drugs mandatory for public health or life threatening diseases. The time frame for approval under this category is 100 – 130 working days.

For new drug registration, based on the ASEAN Common Technical Dossiers (ACTD), the following documents must be submitted in four parts:

• Part 1: Administrative data and product information • Part 2: Quality document • Part 3: Non-clinical document • Part 4: Clinical document

The following image outlines the new drug registration process followed by Thai FDA:

Figure 42: New drug registration process followed by Thai FDA

New drug

Experts / sub-committee approval Step I Conditional approval

SMP and limited distribution (2 years)

Unconditional approval

Voluntary spontaneous ADR reporting system Step II

Source: Thai FDA, MoPH

Process of new generic drug registration: Given below is the process to be followed for new generic drug registration: Standard review for generic drugs takes • Track 1: Standard review: Registration in this category takes 110 working around 110 days days. while priority review • Track 2: Accelerated or priority review: Approval under this category takes around 70 days. takes 70 working days and is applicable to drugs used to treat life- threatening diseases or public health problems.

Marketing approval is granted after the review of the application and the process might take at least nine months. There are different timelines for granting marketing authorization for new drugs and generic drugs. If the new drug was not submitted for marketing license previously, the review can take up to two years.

The timelines also depend on the reliability and completeness of the data submitted along with the application form.

The product registration certificate remains valid as long as the product marketing remains active. If the product is not marketed for more than two years, the FDA will automatically cancels its registration.

The marketing registration process for generics is similar to that of registration for new drugs. The generic registration process can take up to a year for obtaining marketing authorization. The marketing authorization for a drug issued in a foreign country does not lead to fast-track approval of an application filled with the FDA. Nevertheless, the applicant is required to inform the FDA of any approval or pending marketing approval in any other country. If the country in which the marketing approval has been granted is credible and is globally accepted, it Delay in approval enhances the chances of getting an approval. due to understaffing and large volume of Thailand follows the ASEAN Common Technical Dossier (ACTD) guidelines that applications at FDA are intended to streamline the drug approval process and reduce the timelines in is a major concern for granting drug approval. pharma companies. Complexity of There are substantial challenges encountered by pharmaceutical companies in supporting Thailand during the drug registration process. Prolonged timelines for drug documents required approval is a major area of concern since without Thai FDA approval, companies for filing aggravates can’t market their product. A considerable amount of delay can be attributed to the problem. complexity of supporting documents required for filing.

Another challenge that the pharmaceutical companies face is regular follow-up with FDA officials to track applications, which results in extensive time loss. As the Thai FDA is understaffed and burdened with large volumes of other applications, there is a high probability that the registration process will be delayed. A thorough knowledge about the filing procedure and documents required for submission help pharmaceutical companies save precious time.

4.2.4 Clinical trial regulations

Clinical trials in Thailand are conducted under the aegis of the Ministry of Public Health (MoPH) and FDA. Regulations to govern clinical trials are well established. Thailand has a national policy on clinical studies. In order to achieve the policy’s goals, Thailand implemented The International Conference on Harmonization (ICH) Good Clinical Practice (GCP) as a guideline implemented throughout the country by investigators.

The following are the regulatory agencies in Thailand that have jurisdiction over clinical trials:

• FDA under the ambit of MoPH. • Department of Medical Sciences of the MoPH. • Department of Communicable Diseases Control of the MoPH.

• Ethical Review Committee for Research in Human Subjects of the MoPH. • National Sub-Committee of HIV Vaccine of the MoPH. • Medical schools and hospitals with specific regulations and/or ethics committee.

To initiate a clinical trial, prior approval has to be sought from the Ethical Review Committee for Research in Human Subjects of the MoPH (ERC) and the institutional review board (IRB) or the ethics committee (EC) of the research institute or university that conducts the trial. This process usually takes two to three months to complete.

After receiving approval from the appropriate committees, the sponsor can apply to the FDA for a license to import the drug into Thailand for research. Labeling and A sponsor must GMP requirements have to be followed while importing the drug. Thai is the obtain a license to preferred language for labeling. If the IP is to be administered solely by the site import drugs for staff then labels in English are also accepted. But, the label ‘for clinical trial use research. It takes only’ must be in Thai. approximately 15 weeks to get The license to import the drug is valid for a period of one year and if the clinical permission from trial is not completed within a year, a fresh import license needs to be sought from various agencies to the authorities concerned. It is mandatory that the clinical study is carried out initiate a clinical trial within the ethical framework. Moreover, it is mandatory that the safety report must in Thailand. list any adverse events, adverse drug reactions, suspected or unexpected adverse reactions and should be submitted to the ethics committee. It takes approximately 15 weeks to get permission from various agencies in Thailand to initiate a clinical trial.

Challenges in conducting clinical trials in Thailand

The Thai healthcare environment is congenial for clinical trials primarily due to the availability of quality investigators, high compliance by investigators and participants, good infrastructure, enhanced regional cooperation and acceptance of data. Also, a lower trial cost per patient compared to the US and European Union (EU) has made Thailand a favorite destinations for clinical trials. A total of 1,240 clinical studies and 961 clinical trials were conducted in Thailand from 2001 to 2012. The number of clinical trials in Thailand increased from approximately 150 to 200 from 2008 to 2012.

In spite of a favorable clinical trials climate, pharmaceutical companies face challenges in conducting clinical trials in Thailand. Obtaining permissions to import drugs for initiating clinical trials is a tedious process. This is compounded by cultural and language barriers that make it difficult for smooth conduct of clinical trials. Pharmaceutical companies also find it difficult to get quality investigators as the majority of Thai investigators are on academic payroll and monetary reward is not a strong motivation for them to pursue clinical trials, resulting in them not giving sufficient time and attention to clinical trials.

4.2.5 Licensing process for pharmaceutical manufacturing

The Thai FDA is the agency that grants manufacturing license to pharmaceutical manufacturing plants in Bangkok and its territories. For other provinces, respective provincial public health offices issue the licenses. Manufacturing Manufacturing licenses are granted only to Thai citizens or Thai companies and licenses are granted foreigners cannot file for manufacturing licenses. A foreigner can apply for a only to Thai citizens manufacturing license only if he is a resident of Thailand. or Thai companies and foreigners cannot If a company wishes to engage in the production of drugs in Thailand, it has to file for have a registered manufacturing plant. After the submission of application to the manufacturing Drug Control Division of FDA, the MoPH inspects the manufacturing premises / licenses except for plant of the applicant. The inspection is done to ensure that manufacturing permanent residents. facilities of the applicant comply with the Pharmaceutical Inspection Cooperation Scheme (PICS) and Good Manufacturing Practices (GMP). After the inspection, the MoPH determines whether the manufacturing facility meets the set criteria for pharmaceutical manufacturing. The application fee varies according to the type of manufacturing license being sought for modern medicines and traditional medicines.

Licenses falling under the modern medicine category are valid up to December 31 of the year in which they are issued. To renew the license, an application needs to be submitted before the expiry of the current license. The manufacturing plant can be subjected to inspection for GMP compliance and manufacturing process. The license can be suspended by regulators if there are any violations of the rules.

Figure 43: Process of obtaining drug manufacturing license, Thailand

Send documents for license to produce drug 1 Day

Officers consider

7 Days Corrections and Approve Reject adjustments

Tell applicant to

Send result to prepare plant for Reconsider applicant officer’s investigation

20 Days

Officers investigate plant

Sub-committee considers

Correct and adjust

12 Days Applicant receives Approve license to produce drug

Source: Thai FDA, MoPH

4.2.6 Licensing for pharmaceutical import and export

The pharmaceutical company that wants to import drugs into Thailand must comply with requirements as mandated by law. There are exceptions for ministries, sub-ministries, the Thai Red Cross Society and the Government Pharmaceutical Organization (GPO) that can import drugs without applying for an import license. The company intending to import the drug must submit an application to the FDA along with necessary documents. The FDA under the MoPH is the licensing authority for importing and exporting drugs. Apart from import and export licenses, business operators must comply with Thai Exchange Control laws. The processing time for granting an import license is lengthy and costly. The pharmaceutical import licenses have to be renewed yearly.

Figure 44: Process of obtaining drug import license, Thailand

Send documents for license to produce drug

1 Day

Officers consider documents, plan and picture of storage place 10 Days

Approve Correct and adjust Reject

4 Days Applicant receives Send result to license to import Reconsider applicant drugs

Source: Thai FDA, MoPH

4.2.7 Post-marketing regulations

The Medical Science Department of the MoPH is the designated government body accountable for maintaining quality and safety of drugs marketed in Thailand. The samples are tested on a regular basis at the drug analysis laboratory of the Medical Sciences Department, MoPH. Apart from government laboratories, there are laboratories of universities that assist the MoPH in scrutinizing the drug quality.

The following are the surveillance tasks that are carried out:

• Inspection of manufacturing plants for GMP compliance. • Examination of the manufacturing processes to ensure safety and efficacy of drug. • Inspecting the marketed drugs for any adverse or unexpected effects on public health. • Receiving and handling of complaints. • Safety monitoring program for new drugs. • Reevaluation of pharmaceutical products.

The pharmaceutical company has to submit a protocol of Safety Monitoring Program (SMP) to the FDA. The SMP has to be followed for a period of at least two years for new drugs and during this period, the drug can be dispensed only at designated hospitals and clinics. After the SMP, if there are any adverse events, the pharmaceutical company should report to the authorities immediately. The Medical Science Department has the power to remove drugs from the market or revoke the license of the company if the drug fails to meet quality, safety and efficacy

standards. The licensees have 30 days to appeal to the Minister of Public Health from the date of suspension or revoking of license.

4.2.8 OTC products

There are no guidelines categorizing pharmaceutical products as over-the-counter (OTC) products in Thailand. Modern drugs are divided into four categories: There are no clear household remedies, ready-packed drugs, dangerous drugs and specially controlled guidelines categorizing drugs. All drugs, apart from specially controlled drugs, can be sold as OTC drugs. pharmaceutical Household remedies can be sold without license while ready-packed drugs can be products as OTC sold in drugstores by nurses or other medical professionals. Although dangerous products in Thailand. drugs can be bought without a prescription, it must be dispensed by a pharmacist. It needs to be seen The new Drug Act, which is under consideration, can potentially create a new whether the proposed category designated as OTC. new Drug Act results in the creation of an Companies have tried switching prescription drugs to OTC category by using OTC category. supporting data from other countries but have met with little success in the absence of clear regulations categorizing OTC products. It needs to be seen whether the proposed new Drug Act legislates creation of an OTC category.

4.2.9 Labeling and advertising

The packaging and labeling falls within the purview of MoPH and is governed by the Drug Act. Enforcement is handled by the Drug Control Division of FDA. In order to obtain marketing approval, documents pertaining to packaging and labeling must be mandatorily submitted to the FDA.

Information requirements: The Drug Act requires that a patient information leaflet or a package insert containing the summary of the product be submitted for labeling. The package insert must contain the following information:

• Product name • Name and strength of active pharmaceutical ingredients • Product description • Pharmacodynamics / pharmacokinetics • Indications • Recommended doses • Instructions on how to use the drugs / route of administration, general precautions and warnings • Dosage form and packaging available • Name and address of manufacturing / marketing authorization holder • Date of revision of package insert

It is mandatory for a package label to include the following information:

• Product name • Registration certificate number

• Content • Composition or active ingredients with the quantity / potency • Lot / batch number • Manufacturer's name and country of origin • Date of manufacture • If applicable, and on a red label, a statement that the drug is classified as a specially controlled drug, dangerous drug or common household drug in Thailand • Expiration date and the word ‘expiry’ in Thai

The above mentioned information can be in English or Thai, except for the information that needs to be in Thai mandatorily. There will be ministerial notifications from time to time on the labeling requirements that need to be adhered to.

4.2.10 Pharmaceutical advertising

The advertising of medicinal products is governed by Sections 88 to 90 of the Drug Act and is enforced by the FDA. The Consumer Protection Act 1979 is also taken into consideration when regulating the advertising of medicinal products. The Pharmaceutical Research and Manufacturers Association (PReMA) code is applicable to all member companies who must comply with it. The FDA does not have any authority to ensure adherence to the PReMA code and if the companies violate the code, only the PReMA committee has the power to sanction its members.

For prescription medicines or those dispensed by the pharmacies, advertisements For prescription can only be targeted towards healthcare professionals. The advertisement can be medicines or those broadcasted directly to the consumers or general public for drugs falling under the dispensed by the household remedy category. However, the advertisement has to undergo FDA pharmacies, scrutiny before it is disseminated to the general public. Drugs falling under the advertisements can category of dangerous drugs can’t be advertised to consumers directly. only be targeted towards healthcare According to Section 88 of the Drug Act, an advertisement should not: professionals.

• Claim that a drug can miraculously cure or treat or prevent a disease or illness. • Overstate or wrongly declare the properties of medicines. • Gives false information about a drug substance in terms of quality or quantity. • Give impression that a drug is abortifacient, or a strong emmenagogue, or an aphrodisiac, or a birth control drug. • Advertise dangerous drugs or specially controlled drugs. • Be endorsed or certified by other person of its therapeutic efficacy.

Also, the advertisement must not:

• Contradict local beliefs, norms, morals and traditions. • Persuade patients to consume more than what is required or promote its regular use. • Defame other products by way of comparisons. • Promote that the drug is equivalent to that of other products such as food or cosmetics. • Promote acts or activities that are contrary to law.

There are no well-defined rules for advertising drugs on the internet or on social media platforms. Though, all advertisements through internet, social media or mail Online order must be approved by FDA. It is estimated that approximately 85% advertisements remain a menace for pharmaceutical advertisements on the internet are being run without the permission the FDA as 85% of of FDA. The FDA has made it a priority to curb the menace of online advertising ads online are of pharmaceutical products. unauthorized. A majority of the pharmaceutical companies relies heavily on medical representatives to promote drugs to pertinent stakeholders such as doctors, pharmacists and distributors. Other modes used for drug promotion are continuing medical education (CMEs) programs, symposiums, international congress etc. The Drug Act doesn’t address distribution of free drug samples for promoting to the healthcare professionals. But, the PReMA Code mandates that drug samples can be provided to healthcare professionals only with their consent.

Restrictions on marketing practices such as distributing gifts and incentive schemes to healthcare professionals or establishments are not addressed in the Drug Act. For government healthcare officials such as doctors and pharmacists, the anti-corruption rules prohibits accepting gifts exceeding THB 3,000. For private sector healthcare professionals, the PReMA code of sales and marketing is applicable which prohibits payments of cash or cash equivalents (such as gift vouchers) and gifts to healthcare professionals for personal benefits. Still, gifts can be given to healthcare professionals and institutions on special occasions and as customary greetings. It is permitted to sponsor healthcare professionals to attend international meetings such as a congress or a satellite symposium at a congress. Pharmaceutical companies can engage with patient bodies or advocacy groups to disseminate disease information provided they don’t promote their product at patient meetings. Pharmaceutical companies that are members of PReMA are expected to comply with the PReMA code of sales and marketing. But, in practice, the code is not enforced in letter and spirit as PReMA is not considered to be a law and the Thai FDA does not have authority to enforce it.

4.2.11 Intellectual property rights

Patent: Patent system in Thailand dates back to 1979 (Patent Act B.E. 2522) and it acknowledged only process patents. This patent lead to the adoption of the ‘reverse engineering’ process by Thai pharmaceutical companies and mushrooming of generic drugs production. The Patent Act of 1979 was revised to introduce product patents in 1992 and this changed the intellectual property rights (IPR) landscape in Thailand. Thus, all drugs discovered after 1992 could be patented in Thailand under the product patent regime. Patent in Thailand is awarded on the criteria adopted by WTO. These are:

• Novelty • Non-obviousness • Industrial applicability or usefulness

Apart from the standard guidelines, the Department of Intellectual Property (DIP) and ministerial regulations publish notifications from time to time.

Scope of protection: Pharmaceutical patents are treated the same as inventions in other field. According to the Patent Act, Section 9, the following are the criteria for not granting a patent:

• Micro-organisms that naturally exist and their components, animals, plants or extracts from animals or plants. • Scientific and mathematical rules and theories. • Computer programs. • Methods for diagnosing, treating, or curing human or animal diseases. • Inventions that are contrary to public order or morality, public health or welfare.

For the pharmaceutical sector, issues exist in relation to the patents of biologics, diagnostics methods and methods of treatment. If conditions of novelty, non- obviousness and usefulness are satisfied then the following can be patented:

• Polymorphic forms (such as solvates or different crystalline forms of a known chemical compound) • Formulations (pharmaceutical compositions) • New therapeutic use of a known chemical compound • Combination and dosage form • Methods to prepare medicinal products or related substances

Although Thailand has been a member of WTO since 1995 and is a signatory to various conventions and international agreements on IPR, there are issues with the enforcement of IPR. There have been complaints in the recent past from IPR holders regarding lax enforcement of IPR laws in Thailand.

For the pharmaceutical sector, there were no specific examination guidelines till September 2013. The Department of Intellectual Property issued patent examination guidelines for the pharmaceutical sector in order to clear long pending backlog applications of pharmaceutical and chemical inventions.

Patent application: All patent applications are submitted to the Patent Office of the Department of Intellectual Property, under the Ministry of Commerce. The information on filing for patents along with fees is mentioned in both Thai and English.

As Thailand is a signatory to the Patent Cooperation Treaty (PCT), international patent applications can be submitted. This is in place since December 2009. The fee for filing the patents are nominal and vary depending on the type of patent A patent is valid for a sought. After the grant of the patent, there is a patent maintenance fee which is maximum of 20 years applicable from the fifth year. from the date of filing. The patent Process and timelines: After submitting the patent application to the Patent cannot be extended Office, there is a preliminary inquiry by the Patent Office. The patent application is beyond 20 years. The published in the Official Patent Journal, which is in Thai. After subsequent process to grant the reviews, the final patent is granted anywhere between a period of three to five patent can take six to years. For pharmaceutical products, the patent process can take six to eight years eight years and may and may stretch up to ten years. The protracted process for granting stretch up to ten pharmaceutical patents in Thailand has been an area of concern for pharmaceutical years. companies.

According to the section 35 of the Patent Act, the patent for an invention is valid for a maximum of 20 years from the date of filing for the patent. The patent cannot be extended beyond 20 years by other means such as supplementary protection certificates or data exclusivity periods that are not available in Thailand. The only The IPR environment exemption in this regard is for new drugs, which must undergo a two year safety in Thailand continues to be non-conducive monitoring period (SMP) during which no generic can be launched. This two year for foreign SMP period serves as a market exclusivity extension. pharmaceutical A limited form of data protection is provided under the trade secrets law to the data companies due to lax enforcement of IPR submitted to the Thai FDA. The Trade Secrets Act BE 2545 enacted in 2002 laws, backlog in provides a legal framework for the protection of trade secrets and other patent applications, confidential information. absence of meaningful The legitimacy of a patent can be challenged in the Intellectual Property and regulatory data International Trade Court (IP & IT Court). The patent can be revoked if: protection laws and threat of compulsory • The invention is not new, lacks an inventive step or is not capable of licensing. industrial application. • The subject matter of the invention is not patentable. • The patent applicant did not have the right or was not eligible to apply for the patent.

If a patent is found to be infringed or violated, the patentee has a legal right to sue the person or a company in the IP & IT court. The patentee will be compensated for the loss caused by the infringement of the patent.

Issues and challenges in IPR: The IPR environment in Thailand continues to be non-conducive, especially to foreign pharmaceutical companies who have voiced their concerns in this regard to the government. The following are some of the key issues that the foreign pharmaceutical companies face in Thailand with regard to IPR laws:

• Lax enforcement of IPR laws: There have been instances in the recent past where patents have been revoked and the compulsory license (CL) clause was invoked by the government of Thailand. The Pharmaceutical Research and Manufacturers of America (PhRMA) member companies have urged the government to include the pharmaceutical industry in the discussion, along with the construction of the Patent Examination Guidelines.

• Patent examination backlog: To streamline the patent filing process and to reduce time in the grant of patents, the Thai Patent Office drafted new chemical and drug patent examination guidelines to be applicable from September 2013. The new draft complemented the Thai Patent Act. It was aimed at enhancing transparency in patent registration and reducing the backlog of patent applications. Yet, there are high numbers of patent backlog applications and considering the resources, it will be difficult to clear the pending applications.

The patent grant process is unpredictable and on an average takes ten years after submission of application. The long delay in award of the patent leads to uncertainty and enhances the risk of infringement during patent review periods. Moreover, there are no patent term adjustments available in Thailand to compensate for patent delays that further aggravates the IPR scenario.

• Regulatory data protection: The Thai FDA’s Trade Secret Act of 2002 does not provide regulatory data protection that would prevent generic drug applicants from using an innovators regulatory data, for a particular period of time, to gain approval for generic versions of the innovator product. The act only aims to protect against ‘physical disclosure’ of confidential information submitted by the innovator company.

PhRMA‘s member companies strongly feel that the Thailand government must establish meaningful regulatory data protection laws that are consistent with international standards. PhRMA members have urged the Thailand government to implement new regulations that do not permit generic producers to use the innovator’s data unless consent has been given

by the innovator company. The protection should extend to new indications. Moreover, Thai FDA must ensure that innovator’s data is not made public or used by the subsequent producer of generic drugs.

• Counterfeit medicines: The Thai government has made efforts to curtail the hazard of counterfeit drugs but a lot more needs to be done as it dents the profitability of companies, particularly of innovator products. There is a pressing need to address the issue of counterfeit drugs and increase the penalties to deter manufacturers of counterfeit medicines. The Thai government signed a memorandum of understanding (MoU) for ‘Cooperation on Prevention and Suppression of Trademark Infringing Pharmaceuticals’ in 2010 but it has not been implemented in letter and spirit so far.

• Threat of compulsory licensing: The government of Thailand has resorted to compulsory licensing (CL) to provide access to patented drugs by allowing other pharmaceutical companies to produce generic versions. The government’s argument in resorting to CL is that patented drugs command high prices and cannot be afforded by the common man. But, the government did not consult patent holders and resorted to CL unilaterally.

The patent act amendment is expected to be ratified soon and specific provisions for CL, which are in line with WTO Doha declaration, might soon be introduced so that CL should be allowed for specific cases to address public health problems. This will help import drugs that are still under patent for treatment of specified diseases when the drug can’t be produced in Thailand.

Likewise, production and export of the patented drug to another country for treatment of certain diseases when the drug can’t be manufactured in the other country is allowed. But, export and import of drug under CL for commercial purpose is not allowed. Once ratified, the said amendment will help Thailand produce essential drugs used to treat diseases such as HIV / AIDS and Hepatitis and increase the affordability for the lower strata of the patient population.

4.3 Pricing

4.3.1 Pricing system

There is no policy in place that regulates the prices of medicines in private and public sectors in Thailand. There are indirect ways in which the government There is no set price controls the prices of medicines. The Department of Internal Trade (DIT) under the regulation policy. Ministry of Commerce regulates the pricing and all price increases over 10% have But, prices are managed indirectly to be approved. The request for a drug price increase has to be supported by a by the Department of proper justification and it is at the sole discretion of the DIT to approve or Internal Trade, which disapprove the price increase. regulates price increase and through The other way of controlling the price is through the National List of Essential NLED which is Drugs (NLED) that is predominantly based on a policy of cost containment. The predominantly based prices of medicines in the public sector are regulated by government guidelines on a policy of cost when the medicines are listed on the NLED. Government hospitals must select containment. drugs from the NLED and 80% drug purchase of all public hospitals must be fulfilled from the NLED. The drug prices under the NLED are based on the median pricing mechanism. The median pricing is arrived at by surveying the prices of a drug form / strength and then setting the median price. The NLED list poses a major challenge for foreign pharmaceutical companies whose drugs are priced higher compared to generic drugs. In order to enhance the product uptake, If a pharmaceutical company fails to get its drug listed on the NLED, it has the many pharmaceutical option of listing the drug on individual hospital formularies where there are no companies offer heavy discounts for a restrictions. For non-NLED drugs, there is pressure to reduce the prices of drugs newly launched drug and there are plans to cap the prices of drugs through median pricing policy. To in the market and enhance the product uptake, many pharmaceutical companies offer heavy increase the prices discounts for a newly launched drug in the market and increase the prices later. In the private subsequently. sector, the prices of drugs are set by the In the private sector, the prices of drugs are set by the pharmaceutical industry pharmaceutical comprising manufacturers and retailers. A majority of retailers intend to command industry. a markup of 10% and the prices are set keeping in mind the market sentiments of that particular therapeutic segment.

4.3.2 Pricing policy

There is no policy to govern the pricing of drugs in the public as well as the private sector. But, the government of Thailand is pursuing policies that will indirectly curtail the rising drug expenditure. Policy measures include creation of a National Drug List, the National Health Insurance Schemes and utilization of the Drug Related Group (DRG) to reimburse the inpatient expenses for government workers. Apart from this, the government has resorted to compulsory licensing (CL) to allow generic versions of highly priced patented drugs. Generic substitution policies have been adopted in some of the insurance schemes.

Moreover, some hospitals have introduced the concept of mandatory generic substitution in inpatient settings. The pending new The government intends to extend the median pricing mechanism to all non-NLED Drug Act has a provision that lists in order to cap the prices of drugs. The government is also seeking detailed mandates information from MNCs regarding the cost structure used to price the original pharmaceutical brands to reduce exorbitant pricing and set realistic prices. Government hospitals companies to submit are allowed to markup prices on original products by more than 3% from January full financial details 2014, a move that is highly likely to impact the CSMBS. Moreover, the pending to disclose the cost new Drug Act has a provision which mandates pharmaceutical companies to structure of newly submit full financial details to disclose the cost structure of newly launched drugs launched drugs for for registration process. registration process.

Recently, Thailand’s Prime Minster’s Office constituted six official and three unofficial cabinet working groups to suggest ways to curb rising drug expenditure. The official cabinet group looks into the promotion of generics and NLED drugs, drug pricing and development of guidelines for disease-related costing for inpatients (DRG). The unofficial cabinet group is tasked with developing a mechanism to promote rational use of medicines and to encourage use of traditional medicines. The prices of branded and generic drugs are 4.3.3 Price trends higher as compared to the international The government of Thailand has started to monitor drug prices closely and is reference prices. In exploring mechanisms to control the bourgeoning pharmaceutical expenditure. As the public sector, Thailand relies heavily on imports to meet the domestic pharmaceutical demand, prices vary among there is increased pressure on pharmaceutical companies to curtail the prices of different public drugs. hospitals for the same product. Prices differ The prices of branded and generic drugs are higher as compared to the even at private international reference prices, a trend that is observed in many developing and pharmacies. middle income countries. The prices are higher partly because of absence of mechanisms to control prices and markups. For public sector, the prices vary among different public hospitals for the same product. The price at which the There are efforts to medicines were sold to the patient in the private sector was approximately 43% apply uniform pricing and 37% higher compared to prices in the public sector for innovator and generic approach (median drugs respectively. Even private pharmacies sold the same product at different pricing) to both prices. NLED and non- NLED lists. It is There is also considerable variation in product markups. The markups on generic widely anticipated products were pointedly higher compared to innovator brands. But, the prices of that there will be innovator brands were four times higher compared to the generic drugs resulting in increased thrust on a higher profit margin. The percent markups in the public sector were higher (25 -4 pharmacoeconomics 6%) compared to that of the private sector for innovator brands. as a means to curtail prices, especially that There are unconfirmed reports that hint at the government’s intent to harmonize of innovator drugs. drug prices across the public sector. There are efforts to apply uniform pricing approach (median pricing) to both NLED and non-NLED lists. Additionally, there

are indications that the government is considering adopting international reference pricing mechanisms to cap the pricing of drugs. The government is exerting pressure on pharmaceutical companies to be more transparent in drug pricing and share the mechanism of arriving at a cost structure. It is widely anticipated that there will be increased thrust on pharmacoeconomics as a means to curtail prices, especially that of the innovator / patented drugs. Government intervention in the private sector to reduce exorbitant drug prices cannot be ruled out entirely in the near future.

4.3.4 Discount and margins

The discount and margins offered in the public and private sector vary considerably. As mandated by the legislation, government hospitals must procure On average, drug drugs from the government run GPO if it manufactures the drugs required by them. procurement prices in Hospitals usually charge a markup in the range of 10 – 30% on drugs that are the private sector are dispensed to civil servants and formally employed workers. On an average, for 67% and 29% higher innovator drugs, drug procurement prices in the private sector are 67% higher than than public sector for innovator drugs and that of the public sector procurement prices. For generics, the procurement prices generics respectively. are approximately 29% higher in the private sector compared to the government sector.

The public retail markups for originator brands (OB) was in the range of 31 – 41% while the markups for lowest price generic (LPG) varied by a wide margin of 20 – 567%. Private wholesale markups for OB were 1.6% and for LPG it was in the range of 6.7 – 31%. Private retail markups for OB were 13 – 40%, whereas it was in the range of 20 – 150% for LPG.

The margins charged at the retail level are significantly higher than the wholesale level. Retailers offer discount to patients and drugs are dispensed at a price below the maximum retail price (MRP). This practice of dispensing below MRP is more prominent for the non-branded generics due to intense competition, as compared to branded generics. An illustrative price build up for an imported pharmaceutical product is shown below:

Table 37: Illustrative price build up ranges for an imported pharmaceutical product in Thailand

Tax rate / Originator Tax rate / Lowest Mark-up brands Mark-up priced

range (Index) range generics (approx.) (approx.) (Index) Price to patient 7% 159 – 207 7% 180 – 471 after VAT Price to patient 20% – 13% – 40% 149 – 193 168 – 440 at mark-up** 150% Price to customer after 7% 132 – 138 7% 140 – 176 VAT Price to customer at 1% – 3% 123 – 129 7% – 31% 131 – 164 mark-up Ex-distributor 3.5% ¬– 3.5% – 122 – 125 122 – 125 price at mark-up 6.5% 6.5% Landed cost 7% 117.7 7% 117.7 after VAT

Import duty* 10% 110 10% 110

Invoice price to distributor at - 100 - 100 import

Source:phamax

* Nil for life-saving drugs, 10% if no local generic available, 20% if there is local generic available

** Max markup may vary from 50% to 200% in private hospitals

4.4 Reimbursement landscape

4.4.1 Reimbursement process

Drug reimbursement in Thailand is overseen by the MoPH that lays the guidelines for drug reimbursement and prepares the reimbursement list in consultation with All three major the FDA. The Health Intervention and Technology Assessment Programs (HTAP) insurance schemes are also used to evaluate the benefit of the drug to decide whether to include it in have their own the reimbursed drug list or not. reimbursable package along with their own All three major insurance schemes have their own reimbursable package along payment systems. with their own payment systems. Under CSMBS scheme, prospective payment (DRG) for inpatient services and fee-for-service type of payment for outpatient services is used. The CSMBS limits the usage to only public hospitals for its beneficiaries. On the lines of CSMBS, the UC scheme provides similar coverage for inpatient health services under the DRG type of payment. The SSS scheme gives liberty to its subscribers to use either public or private hospitals. The mode of payment is capitation for both inpatient and outpatient services.

The process followed to develop the reimbursement list is as follows:

Steps:

• Industry submission of application • Clinical benefit and safety assessment • Pharmacoeconomics evaluation and budget impact analysis • Price negotiation • Receiving approval from ministry

The decision-making criteria are based on the following:

• Safety and efficacy score • Cost index • Cost-effective threshold, e.g., GDP per capita for each quality-adjusted life-year • Budget impact

The outcome of all the above steps is the reimbursement list called the NLED, developed by the National Drug Committee. The list includes drugs, vaccines, radioactive substances and disinfectants that are required for prevention and treatment of major health problems.

Over the past few years, the drug reimbursement decision making in Thailand has undergone drastic changes and continues to be dynamic. Due to resource constraints, the pharmacoeconomics approaches have been used to help the Thai government efficiently allocate resources and draft rational policies.

4.4.2 Insurance providers

Thailand is one of the few countries in the upper-middle income group to have achieved high healthcare insurance penetration despite low levels of spending. The government-sponsored universal healthcare insurance scheme along with other schemes covers nearly all of 67 million population of Thailand.

The private health insurance market of Thailand is growing and there is a balanced presence of both domestic and foreign players. The penetration of private health insurance is increasing slowly. As of 2010, approximately 10% of the population subscribed to private health insurance.

Public insurance

There are three main public health insurance schemes covering the citizens of Thailand. The Universal Coverage Scheme (UCS) was launched in 2001 and within one year of its launch it covered 75% of Thai citizens (50 million). The Civil Servant Medical Benefit Scheme (CSBMS) for government employees covers approximately 9% of the population. The Social Security Scheme (SSS) covers approximately 16% of the population and is applicable to private sector employees. There is pressure on the government to trim down the budget allocated to public health insurance schemes.

Table 38: Public insurance schemes, Thailand

Civil Servant Social Security Universal Coverage Scheme Medical Benefit Scheme (SSS) Scheme (UCS) Scheme (CSMBS) Government Private sector The rest of employees plus employees, population not dependents (parents, excluding covered by SSS and Population spouse and up to two dependents CSMBS coverage children age <20)

16% 9% 75%

Payroll tax financed, tri-partite Financing contribution General tax, non- General tax sources 1.5% of salary, contributory scheme equally by employee and government Comprehensive: outpatient, inpatient, Comprehensive: accident and Similar to SSS, emergency, Comprehensive: Benefits including prevention high-cost care with Slightly higher than package and health promotion minimal exclusion SSS and UCS for the whole list; excludes population prevention and health promotion Reimbursement model: fee for Contract model: Contract model: service, direct capitation for Purchasing inclusive capitation disbursement to outpatients and relation for outpatient and public providers for global budget plus inpatient services outpatients; DRG for inpatients conventional DRG for inpatients Registered public Registered contractor Free choice of public and private provider, notably Access to service providers, no competing within the district registration required contractors health system Per capita $71 $367 $79 expenditure2010

Source: Health Insurance System Research Office, Thailand

The public health insurance faces the daunting task of funding and a dearth of resources. The National Health Social Office (NHSO), which oversees the healthcare system in Thailand, has curtailed the budget allocated to various public health insurance schemes. The aging and ailing Thai population further aggravates the problem by placing more strain on health insurance services. Thailand needs to address the problem of funding and sustaining health insurance schemes.

Private insurance

Although public health insurance schemes cover nearly the entire Thai population, quality standards are not at optimum levels. The void created by public health insurance schemes has resulted in a ‘white space’ for private health insurance players. Increasing economic prosperity has resulted in many Thai citizens subscribing to private health insurance schemes to compensate for the lack of facilities provided by public health insurance schemes. Besides, the growth of medical tourism in Thailand has fuelled the growth of the private health insurance market. Coupled with medical tourism, the 850,000 odd expatriate population’s demand for health cover further makes the health insurance market lucrative for private players. Nevertheless, the Thai population accounts for a major chunk of the private health insurance sector.

There are more than 30 companies offering medical insurance to the Thai population as well as expatriates. Leading international players include Bupa International, Cigna and AxaPPP followed by home grown players such as Bangkok Insurance, Dhipaya Insurance and Thai Health Insurance. In terms of total premiums collected, various estimates pegged the size of private health insurance sector at THB 20 bn in 2010.

The World Bank intends to appoint Thailand as an insurance hub of the ASEAN region in order to boost growth and regulate the insurance market of South East Asian region. The private health insurance sector is expected to witness increased mergers and acquisitions, especially among domestic players so as to develop a competitive edge over large foreign players. The government of Thailand is also promoting health insurance by spreading awareness about the need asnd benefits of having one. The ‘30 Baht’ co- 4.4.3 Co-payment payment system was started in 2001 along The ‘30 Baht’ co-payment system was started in 2001 along with the introduction with the introduction of the UCS scheme. The co-payment system was withdrawn in 2006 and the of the UCS scheme. patients under UCS were not charged anything. However, the ‘30 Baht’ co- It was withdrawn in payment was reintroduced in 2012 for patients who received prescriptions and 2006 and no fees were charged from were willing to pay. But, there is no co-payment at government primary care the UCS patients. centers. The co-payment fee is also not applicable to certain sections of the However, the ‘30 population categorized as disadvantaged groups or poor. UCS members must Baht’ co-payment shoulder the entire expense if he / she visits hospitals other than those designated was reintroduced in by the government. 2012 for patients who received SSS members have a free choice of public and private contractors within the prescriptions and designated network. Services are free of cost at the point of delivery within the were willing to pay. network. However, in case of an emergency, SSS members can choose any hospital, even outside the contracted network.

CSMBS members are free to choosea healthcare provider for ambulatory and inpatient care mainly in public hospitals. CSMBS members need not make any co-

payment in designated public hospitals except for expenses that do not fall under the purview of medical treatment.

There are unconfirmed reports suggesting that the National Council for Peace and Order (NCPO) intends to introduce co-payments to reduce the healthcare expenditure and scrap the universal healthcare system. This move will adversely impact approximately 50 million members of the Thai population.

4.5 Prescribing and dispensing

4.5.1 Prescribing guidelines

Prescription guidelines in Thailand are limited to the government sector hospitals. There are no prescription guidelines for the private sector. To a large extent, the The prescription NLED dictates the prescription behavior of doctors in the government run guidelines in hospitals. Most often doctors prescribe generic drugs falling under the NLED to Thailand are limited patients covered by government sponsored health insurance schemes. But, there is to the government sector hospitals no prescription control over the drugs prescribed in the CSMBS scheme and largely dictated by traditionally branded / innovator drugs have been prescribed to CSMBS patients. NLED. But, it is not The government has initiated measures to control the drug expenditure under the strictly adhered to. CSMBS scheme by promoting the use of generic drugs and drugs falling under There are no NLED. Government hospitals are mandated to prescribe 80% of their total prescription medications from the NLED, which in practice is not adhered to. The government guidelines for the intends to conduct prescription audits for inpatient and outpatient visits by the private sector. hospitals’ Drug and Therapeutic Committees (DTC). Additionally, there is an increasing thrust on using electronic database systems to record patient diagnosis and treatment.

In private sector hospitals, prescription behavior is the prerogative of a doctor. The propensity of a doctor to prescribe branded and innovator drugs is much higher in private hospitals in comparison to government hospitals. Private sector hospitals generally prescribe drugs that are listed in the hospital formularies.

The Thai government is looking for ways to promote the use of generics and to contain the use of brands in the government run hospitals. It is widely anticipated that the government will look to strictly harmonize the prescription habits of doctors so as to cap the rising health expenditure and strictly impose the prescription of drugs from the NLED.

4.5.2 Prescribing influences

As observed widely, the prescription behavior of doctor in Thailand is largely influenced by promotional activities of pharmaceutical companies, which lure The prescription them with attractive incentives and schemes. Although there is a ceiling on the behavior of doctor in amount of gifts that can be given to doctors, pharmaceutical companies spend huge Thailand is largely amounts of money to entice doctors into prescribing their brands. Apart from influenced by promotional activities doctors, pharmaceutical companies forge strong ties with pharmacists, nurses and of pharmaceutical hospital staff to influence the prescribing and dispensing of drugs. companies, which After finishing their work in government run hospitals, many doctors often work in lure them with attractive incentives private hospitals in the evenings. Pharmaceutical companies influence these and schemes. doctors to prescribe their drugs not only in private hospitals but also in government run hospitals. This results in excessive and unwanted drugs being prescribed to patients in private and public hospitals. Studies revealed that university hospitals

prescribed 45% of non-NLED drugs compared to 35% in hospitals under the MoPH.

There have been initiatives to curb unethical prescribing behaviors of doctors and curtail the influence of pharmaceutical companies. At the Second National Health Assembly in 2009, former health minister Dr. Mongkol Na Songkhla raised the guidelines to cease non-ethical sales promotions by pharmaceutical companies.

4.5.3 Dispensing

Drug dispensing in Thailand is done by a registered pharmacist. Yet, dispensing without a registered pharmacist is also common. Additionally, there have been instances where drug dispensing happens without a valid prescription. Dispensing of drugs from the hospital sector accounts for the majority of dispensing. There are doctors who stock medicines and dispense drugs in private clinics but they account for a miniscule percentage of total drug dispensing. But, the new drug bill, which will replace the 1967 Drug Act, contains a provision which allows dispensing of drugs by all healthcare professionals – from doctors, nurses, dentists and veterinarians to physical therapists, Thai traditional medicine doctors and practitioners. Pharmacists have protested against the new drug bill due to fears that drugs dispensed without pharmacists might pose a risk to the health of the consumer as other health professionals may lack adequate medical knowledge. The new drug bill is yet to be passed.

4.6 Reimbursement drug lists

In Thailand, the reimbursement list varies according to the type of government sponsored health insurance and is limited to the drugs falling under NLED. Private The reimbursement insurers have their own list of drugs that can be reimbursed. list varies according to the type of 4.6.1 National List of Essential Drugs government sponsored health The NLED has been a key component of the Thai National Drug Policy (NDP). insurance and is The NLED has been used as a tool to promote rational use of drugs, drug limited to the drugs procurement for government run hospitals and for drug reimbursement. The NLED falling under NLED. drug inclusion criteria is based on safety, efficacy, compliance, quality, total Private insurers have their own treatment cost, cost-effectiveness, affordability and healthcare needs of the Thai reimbursement lists. population. The premise of the NLED is based on the drugs that are required to resolve health problems of Thai citizens at various levels of care. Apart from allopathic drugs, the NLED also contains herbal drugs and hospital formulary. The NLED is supposed to be revised annually and contains approximately 800 drugs as of 2010. Most of the drugs included in the NLED are generics and are domestically manufactured. The MoPH endeavors to have 100 medicinal herbs included in the NLED by 2015, up from 71 in 2012, to promote traditional Thai medicine and also to reduce the spending on allopathic drugs.

The NLED contains five sub-lists, aiming to promote rational drug use ranging from standard drugs to specialized and high cost drugs. The process of drug Most of the drugs inclusion in the NLED has been designed to be transparent and free from included in NLED are influence. generics and are domestically There are three levels that are followed for drug inclusion in the NLED list. They manufactured. are:

• The first level includes a selection of 18 National Expert Panels (NEPs) that select NLED for various therapeutic classes of drugs, including herbal drugs. • The second step involves the coordination and consolidation of NLED through a working group. • The final decision is taken by the sub-committee based on the recommendation of the above mentioned committees. The decision to include a drug in NLED is also supported by the Health Economics Working Group and Price Negotiation for NLED selection Working Group (PWG) that supports relevant economic data .

The NEPs consider all drugs that are proposed to be included in NLED. Apart from safety and efficacy, the frequency of drug administration scoring system (ISafE) and NLED adjusted cost index (EMCI) are used for drug selection. If the drug is very costly, then the sub-committee will seek local cost-effectiveness analysis studies as well as total budget implications. In case local studies do not exist, the sub-committee will lay emphasis on criteria such as burden of disease

and life-saving drugs. All studies are mandatory to comply with the guidelines laid down by Thai Health Technology Assessment (HTA). The recommendations on the study conducted will be based on the assessment made by the Health Economics Working Group. Moreover, the drug prices will be negotiated concurrently by PWG in order to support the NLED decision-making.

Given below is a pictorial representation of the NLED inclusion process:

Figure 45: Drug inclusion process for NLED list, Thailand

17 specific working groups for NLEM selection – reviewing evidence and generating evidence for ISafE scoring

Working group for coordination and consolidation of NLEM – gathering information and making recommendations to the sub-committee

2 weeks Sub-committee for development of NLEM – setting criteria for drug selection and prioritizing those drugs for economic evaluation

6 weeks 6 weeks

Drugs listed on top priority Drugs not listed on top priority

The health economics working group The health economics working group – informing a non-profit organization next round – informing nominators to conduct

to conduct economic evaluation Sustaining for the economic evaluation

6 weeks 20 weeks Drugs nominators – rejecting to conduct the studies

Drug nominators – Non-profit organizations 20 20 The health economics conducting economic – conducting economic weeks weeks subgroup – evaluation studies by evaluation studies by assessing quality of the precisely observing precisely observing economic evaluation studies national HTA national HTA guidelines guidelines

6 weeks Need some revisions Revising studies Revising studies Unacceptable quality Reconducting studies Reconducting studies Acceptable quality 4 weeks The health economics working group Considering those economic evaluation studies and developing policy recommendation 4 weeks

The working group for coordination and consolidation of NLEM

The sub-committee for development of NLEM

Source: Health Intervention and Technology Assessment Program

The final decision is taken by the National Drug System Development Committee, which delegates the task to a sub-committee on NLED. The meeting of the sub- committee takes place once a month to make a final decision based on the recommendations from the two levels. The final decision on NLED is published in the royal gazette and posted on the Thai FDA website

Challenges in NLED: The NLED is grappling with challenges such as pressure from the pharmaceutical industry, conflict of interest among committee members, Lack of transparency transparency in drug inclusion and irrational use of drugs not listed on NLED. It is in inclusion and exclusion of drugs is a felt that the selection process should be transparent, rational and free from any major issue with the commercial influence. There have been instances in the past where the NLED NLED. selection process was flouted to include costly drugs. Moreover, if the drug is not listed on the NLED, there is no explanation provided to the applicant who is left without any option. The list does not contain many innovator drugs, thus depriving patients. For example, costly treatment options for cancer do not feature in the list and hence are not reimbursed. It has been observed that a large proportion of the hospital budget is being spent on non-essential drugs. While there have been delisting of drugs from the NLED, there is no clear criteria for delisting.

4.7 Drug procurement

All healthcare facilities at the community-level and above have to procure most of their medicines themselves through the budget allocated by the National Health Hospitals are Security Office (NHSO). Community hospitals supply medicines to the health required to purchase according to the three centers. Government run hospitals are mandated to purchase most of their essential year procurement drugs from the government run GPO (accounts for approximately 50 – 70% of the plan. However, in drugs). Apart from the GPO, public hospitals can purchase drugs outside but the actual practice, purchase has to be done at the median price or below published by the Pharmacy hospitals purchase Section of the Office of the Permanent Secretary. All the procurement and prices based on a yearly are monitored by the Pharmacy Section. plan.

The hospitals are supposed to purchase according to the three year procurement plan. Every hospital has a Drug and Therapeutic Committees (DTC) to ensure compliance with the NLED. However, in actual practice, hospitals purchase based on a yearly plan. According to the rules, the procurement plan should be ratified by provincial health offices for provincial and community hospitals and compulsorily for general hospitals. However, the director of each hospital facility may accept the drug procurement plan. A tendering process must be initiated and procurement committee must be formed if the procurement order exceeds THB 100,000 or more. Therefore many hospitals purchase drugs less than THB 100,000 but more frequently and often weekly.

There are two types of tenders for government hospitals – national and individual hospital tenders. Price and quality of the drug are very important while awarding the tender. The hospitals collaborate at a provincial or regional level for pooled procurement (national tender) for drug procurement. For example, four provinces in a region may group together to purchase 100 items with each province undertaking actual procurement of some items and conducting tendering process together. Drugs are delivered directly by the supplier to the hospital. Community hospitals must procure 90% of their drug requirement from NLED, and general hospitals and regional hospitals should procure 80% and 70% of their drugs respectively from the NLED.

E-auctions were introduced by former Prime Minister Thaksin Shinawatra in 2005 with an aim to streamline the tendering process and enhance transparency. But, the process is complicated and is considered opaque. There have been instances in the past where companies have submitted false data through e-auction in order to win the tender. The government is expected to streamline the e-auction process and ensure transparency so as to curtail tender rigging. Tenders in private hospitals are based on brands / innovator products and are less price sensitive compared to government sector tenders. The focus of private hospital tenders is on quality as they cater to the affluent class and medical tourists. Group / chain hospitals call for a common tender and then supply drugs to their subsidiaries.

4.8 Hospital formulary

All hospitals in Thailand have their own formulary comprising essential as well as non-essential drugs. The formularies are drawn based on the opinions and All hospitals in recommendations given by the hospital doctors depending on which the hospital Thailand have their procurement department initiates the purchase. Pharmaceutical company own formulary representatives visit hospitals to convince doctors and procurement departments to comprising essential as well as non- include their drugs in the formulary particularly under non-essential drug category. essential drugs. Many hospitals find it difficult to comply with regulations concerning procurement based on NLED and hence purchase non-NLED drugs from their revenue from private insurance, out-of-pocket payments and other fee-for-service activities.

5 Appendix

5.1 Glossary

ACTD Asean Common Technical Dossiers ADB Asian Development Bank ADR Adverse Drug Reaction AEC Asean Economic Community AIDS Acquired Immune Deficiency Syndrome APIs Active Pharmaceutical Ingredients ASEAN Association Of Southeast Asian Nations BCH Bangkok Chain Hospital BDMS Bangkok Dusit Medical Services BH Bumrungrad Hospital BMA Bangkok Metropolitan Administration BOT Bank of Thailand CAGR Compounded Annual Growth CCME Continuing medical education CDC Center for Disease Control And Prevention CH Community Hospital CHG Chularat Hospital CHG Chularat Hospital Group CHP Community Health Posts CL Compulsory License CME Continuing Medical Education CNS Central Nervous System CSMBS Civil Servants Medical Benefit Scheme CUP Contracting Unit for Primary Care DALY Disability-adjusted Life Year DIT Department of Internal Trade DPF Defense Pharmaceutical Factory DRG Drug related group DTC Drug and Therapeutic Committees ED Erectile Dysfunction ERC Ethical Review Committee EU European Union FAO Food and Agriculture Organization FCTC Framework Convention on Tobacco Control FDI Foreign Direct Investment GCP Good Clinical Practice GDP Gross Domestic Product GFATM Global Fund to Fight AIDS, Tuberculosis and Malaria GH General Hospital GIN Government Information Network GMP Good Manufacturing Practice GNI Gross National Income GPO Government Pharmaceutical Organization GPs General Practitioners GS Generic Substitution

GSK Glaxosmithkline Pharmaceuticals HC Health Centers HCS Health Card Scheme HISRO Health Insurance System Research Office HIV Human Immunodeficiency Virus (HIV) HTA Health Technology Assessment HTAP Health Intervention and Technology Assessment Programs ICH International Conference on Harmonization ICT Information Communication Technology IGT Impaired Glucose Tolerance ILO International Labor Organization IP Intellectual Property IPR Intellectual Property Rights IRB Institutional Review Board ITD International Institute for Trade and Development JCI Joint Commission International KR Kasemrad Hospital Group KVR Karunvej Hospitals Group LEB Life Expectancy at Birth MDG Millennium Development Goals MNCs Multinational Companies MOE Ministry of Education MOI Ministry of Interior MoPH Ministry of Public Health MOU Memorandum of understanding NCPO National Council for Peace and Order NDP National Drug Policy NEPs National Expert Panels NHSO National Health Security Office NLED National List of Essential Drugs NSO National Statistics Office OP Outpatients OTC Over-the-counter PCT Patent Cooperation Treaty PH Private Hospital PhRMA Pharmaceutical Research and Manufacturers of America PICS Pharmaceutical Inspection Cooperation Scheme PPP Purchasing Power Parity PReMA Pharmaceutical Research and Manufacturers Association R&D Research and Development RCHB Thai Red Cross Society's Relief and Community Health Bureau SMP Safety Monitoring Program SSS Social Security Scheme STDs Sexually Transmitted Diseases TASID Thailand Advanced Seminar in Infectious Diseases TB Tuberculosis TCMA Thai Cosmetic Manufacturers Association TFDA Thai Food and Drug Administration TFR Total Fertility Rate THB Thai Baht

TPMA Thai Pharmaceutical Manufacturers Association TRT Thai Rak Thai Party TSMIA Thai Self‐Medication Industry Association UAE United Arab Emirates UCS Universal Coverage Scheme UHC Universal Health Coverage UN United Nations US United States WHS Medical Welfare Scheme WMC World Medical Center WMCHG World Medical Center Hospital Group WTO World Trade Organization YLDs Years Lived with Disability YLLs Years of Life Lost

5.2 Sources

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health Thailand; WHO; Available from: http://www.who.int/sdhconference/resources/draft_background_paper10_thailand.pdf; [Accessed October, 2014] • Thailand facts and figures; 2012; The Pharmaceutical Research and Manufacturers Association; Available from: http://www.prema.or.th/health/new/PReMa_Region_1.pdf; [Accessed October, 2014] • Thailand; 2014; Country Cooperation Strategy at a Glance; WHO; ; Available from: http://www.who.int/countryfocus/cooperation_strategy/ccsbrief_tha_en.pdf; [Accessed October, 2014] • Lindelow M, Hawkins L & Osornprasop S; 2012; Government Spending and Central-Local Relations in Thailand’s Health Sector; The World Bank; Available from: http://www- wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/03/01/000333037_201 30301110543/Rendered/PDF/756800WP0GovtS00Box374342B00PUBLIC0.pdf; [Accessed October, 2014] • Lyager M; 2010; Fertility Decline and Its Causes: An Interactive Analysis of the Cases of Uganda and Thailand; Available from: http://ps.au.dk/fileadmin/Statskundskab/Dokumenter/subsites/Uland/FertilityDeclineAndItsCau ses.pdf; [Accessed October, 2014] • Pitayarangsarit S; 2004; The Introduction of the Universal Coverage of Health Care Policy in Thailand: Policy Responses; London School of Hygiene and Tropical Medicine; Available from: http://www.coopami.org/en/countries/countries_partners/thailand/social_protection/pdf/social_p rotection03.pdf; [Accessed October, 2014] • Thailand: health care for all, at a price; 2010; Bulletin of the World Health Organization; Available from: http://www.who.int/bulletin/volumes/88/2/10-010210/en/; [Accessed October, 2014] • Supakankunti S; 1997; Takemi Program in International Health, Harvard School of Public Health; Available from: https://www.hsph.harvard.edu/wp- content/uploads/sites/114/2012/10/RP131.pdf; [Accessed October, 2014] • Antos R J & Taylor H Wilson; 2007; Health Care Financing in Thailand: Modeling and Sustainability; Available from: http://siteresources.worldbank.org/INTTHAILAND/Resources/333200- 1182421904101/2007aug-health-financing-modeling.pdf; [Accessed October, 2014] • Shintavanarong P; 2013; HealthCare System in Thailand: Past Present and Where is the Future; Ministry of Public Health Thailand; Available from: http://www.hpc4.go.th/director/data/region57/Pradit11oct2013.pdf; [Accessed October, 2014] • Saiyasombut S & Voices S; 2012; Thailand’s budget 2013: Where will the money go?; Asian Correspondent; Available from: http://asiancorrespondent.com/88179/siam-intelligence- thailands-budget-2013/; [Accessed October, 2014] • Saengpassa C & Sarnsamak P; 2013; Thai govt to rein in healthcare budget; Asia News Network; Available from: http://www.asianewsnet.net/Thai-govt-to-rein-in-healthcare-budget-- 40873.html; [Accessed October, 2014] • Tangcharoensathien V, Swasdiworn W, Jongudomsuk P et al.; 2010; Universal Coverage Scheme in Thailand: Equity Outcomes and Future Agendas to Meet Challenges; World Health Report; Available from: http://www.who.int/healthsystems/topics/financing/healthreport/43ThaiFINAL.pdf; [Accessed October, 2014] • Health at a Glance: Asia/Pacific 2012; 2012; OECD/World Health Organization; Available from: http://www.oecd- ilibrary.org/docserver/download/8112131e.pdf?expires=1418642790&id=id&accname=guest& checksum=6F4F825A8060393717538F7FCE2977FE; [Accessed October, 2014]

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November, 2014] • Merck Thailand; 2014; Available from: http://www.merck.co.th/en/index.html;jsessionid=E72F7DCF5BD8899FFB82DB1D01FADDB 6; [Accessed November, 2014] • GREATER PHARMA Co.,Ltd.; 2010; ; Available from: http://www.greaterpharma.com/page_a.php?cid=13&cname=Company%20History; [Accessed November, 2014] • DKSH Management Ltd.; 2014; Available from: http://www.dksh.co.th/htm/388/en_TH/DKSH-extends-relationship-with-Roche-across- Asia.htm?Id=608040; [Accessed November, 2014] • Boots Thailand; 2014; Available from: http://www.allianceboots.com/health-and-beauty/boots- thailand.aspx; [Accessed November, 2014] • FDA Thailand; Available from: http://www.fda.MoPH.go.th/eng/drug/index.stm; [Accessed November, 2014] • Thailand launches new AIDS strategy to ‘Get to Zero’; 2012; Available from: http://www.unaids.org/en/resources/presscentre/featurestories/2012/june/20120622thaizero/; [Accessed November, 2014] • CDC in Thailand; 2013; Centers for Disease Control and Prevention; Available from: http://www.cdc.gov/globalhealth/countries/thailand/; [Accessed November, 2014] • Thai Stroke Society; 2013; Available from: http://thaistrokesociety.org/; [Accessed November, 2014] • Suwanwela C. N; 2014; Stroke Epidemiology in Thailand; Journal of Stroke; Available from: http://j-stroke.org/upload/JOS_16_1_13_36_2012600018.pdf; [Accessed November, 2014] • Progress in diabetes control in Thailand; 2012; WHO; Available from: http://www.who.int/features/2012/story_diabetes_thailand/en/; [Accessed November, 2014] • Diabetes Association Of Thailand; Available from: http://www.idf.org/membership/wp/thailand/diabetes-association-of-thailand; [Accessed November, 2014] • Ford N, Wilson D, Bunjumnong O, Angerer von S T; 2004; The role of civil society in protecting public health over commercial interests: lessons from Thailand; Lancet; Available from: http://msf.openrepository.com/msf/bitstream/10144/18246/1/lancet%20ford%202004%20civil %20society%20protecting%20public%20health.pdf; [Accessed November, 2014] • CHAWANON S; 2010; Thai FDA; Available from: http://www.conceptfoundation.org/files/meeting/14.%20Chawanon%20- %20Drug%20Registration%20Thailand.pdf; [Accessed November, 2014] • Thailand and the WTO; 2014; Available from: http://www.wto.org/english/thewto_e/countries_e/thailand_e.htm; [Accessed November, 2014] • Pharmaceutical Research and Manufacturers of America (PhRMA) Special 301 Submission 2013; 2013; Available from: http://www.phrma.org/sites/default/files/pdf/PhRMA%20Special%20301%20Submission%202 013.pdf; [Accessed November, 2014] • WHO Guideline on Country Pharmaceutical Pricing Policies; 2013; Available from: http://www.who.int/childmedicines/publications/WHO_GPPP.pdf; [Accessed November, 2014]

5.3 Methodology

5.3.1 Secondary research

In-depth and extensive secondary research was conducted to capture quantitative and qualitative information by a team of experienced consultants with advanced analytical skills and expertise in the pharmaceutical industry. The data was collected from multiple credible and authentic sources within public domain, including but not limited to: • Websites of Ministry of Health and its affiliates as well as various regulatory and government bodies. • Company websites, annual reports, investor presentations and press releases of various pharmaceutical companies and hospitals. • Reports of various healthcare and pharmaceutical trade associations. • Reports published by various internationally recognized bodies such as World Health Organization (WHO), United Nations (UN), and others. • Reports and articles published by globally accredited institutions such as the World Bank, International Monetary Fund (IMF), Asian Development Bank (ADB), the Organization for Economic Cooperation and Development (OECD), Central Banks of respective countries and many more. • News, press releases and bulletins of domestic as well as foreign newspapers and magazines. • Publications in various scientific, healthcare and other related journals.

5.3.2 Primary research

To address the data gaps and further consolidate the secondary research findings, phamax collected primary data through e-mails, telephone calls and interviews with various sources including: • Ministry of Health officials. • Key officials serving in government agencies. • Healthcare and Pharmaceutical trade associations and other similar bodies. • Pharmaceutical distributors/stockists/retailers. • Hospitals and their affiliates. • KOLs in therapy area and disease management. • Industry experts. • Executives of both domestic and foreign pharmaceutical companies.

In addition to the above mentioned primary sources, phamax leveraged the experience and expertise of its ‘Dendron Network’, which comprises top KOLs and scientific experts in respective countries.

5.3.3 Data validation

Both the primary and secondary data was validated by a panel of experts including industry experts, KOLs, thought leaders and members of phamax Dendron Network.

5.4 Disclaimer

All information contained in this publication has been thoroughly researched and compiled from various sources that are believed to be accurate and credible at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, phamax accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions from any part of the publication. All information is provided without warranty, and phamax makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.

The information contained in this report is strictly confidential and has been provided to the client under a non-exclusive and non-transferable license for the client’s direct benefit and use only. The report should not be copied, electronically transmitted, sold or divulged to any other party without the prior written consent of phamax.

5.5 Contact us

All communications pertaining to this report should be addressed to:

SWITZERLAND OFFICE

phamax AG Passage 6, 4104 Oberwil (BL), SWITZERLAND Phone: +41 61821 5687 Fax: +41 61821 5836 E-mail: [email protected]

INDIA OFFICE

phamax Analytic Resources Pvt. Ltd. #19, “KMJ Ascend”, 1st Cross, 17th C Main, 5th Block, Koramangala, Bangalore 560 095, INDIA Phone no: +91 80 6745 1100 Fax no: +91 80 6745 1122 E-mail: [email protected]