Indian pharma companies make Malaysia a hub to tap Asean

South-East Asian nation offers incentives to manufacturing, discovery and biotech sectors which has attracted Ranbaxy, Cipla, Dr Reddy's, Biocon and Strides

Malaysia is fast emerging as a major manufacturing hub for Indian pharmaceutical companies, especially for exports to South-East Asian countries.

Malaysia is seen as a cost-competitive country. It is drawing Indian companies with a 10-year tax holiday, duty exemptions, customised incentives for large investments, access to Asean markets through free-trade agreements and no restrictions on equity. Such incentives, and the reliable infrastructure there, have encouraged Indian drug makers to make the move, at a time when emerging markets hold the promise of growth.

Ranbaxy, Cipla, Dr Reddy’s Labs, Biocon and Strides Arcolab have started operations there, while others may follow soon.

ASEAN ATTRACTION

• Malaysia is seen as a cost-competitive country
• It is drawing Indian companies with a 10-year tax holiday, duty exemptions, customised incentives for large investments, access to Asean markets through free-trade agreements and no restrictions on equity
• Malaysian pharma market pegged at around $3 billion, growing at 10-12 per cent annually
• Investments from Indian pharma and biotech companies in Malaysia so far is estimated to be over $1 billion
• There are over 100 Indian companies, including 61 Indian joint ventures, operating in Malaysia
• Malaysian investment in India is estimated to be $ 7.8 billion

Ranbaxy — one of the early entrants in Malaysia with a drug manufacturing facility through subsidiary Ranbaxy Malaysia Sdn Bhd — is now working on a second unit. The company recently announced approval for setting up its second plant in the country with an investment of $40 million (Rs 220 crore today).

“We believe that Malaysia is a promising market, and looking at the potential we recently announced our plans to set up our second manufacturing facility in the country,” Ranbaxy Chief Executive Officer and Managing Director Arun Sawhney said. “The new facility will further enhance our production capacity, and in addition to catering to the local market, will also be developed as a hub for Asean.”

He said the Malaysian government provides free medication in all its hospitals and polyclinics — for innovator and generic products. Upon patent expiry, there is a switch from innovator drugs to generics. “The government of Malaysia provides a favourable climate to the generic pharmaceutical industry.”

Biocon and Strides Arcolabs have announced investments in Malaysia in the past six months. Biocon is setting up its first overseas facility in Malaysia, while Strides entered into an agreement with Bio-XCell of Malaysia in 2011 to build a facility to manufacture biopharmaceuticals and sterile injectibles. Biocon claims that its proposed facility in Malaysia will be Asia’s largest integrated insulin production unit.

Lupin is eyeing Malaysia as a favoured market for future. “Lupin is the largest supplier of anti-tuberculosis drugs to the country and we would look at ramping up our presence in other therapy segments as well,” said Chief Financial Officer Ramesh Swaminathan.

The government of Malaysia is looking at providing benefits in the form of faster registration of products and market access opportunities under the umbrella of specified entry point project, which is attracting Indian pharma companies. The opportunity for a market take-off agreement was a key facet of the public-private partnership for Ranbaxy’s project.