It is no secret: ASEAN is the marketplace that healthcare businesses are keeping their eyes on. Besides being the world’s third largest market, the region’s population of almost 700 million, rapid urbanization and an aging society are enticing.
At the recent 2018 International Pharmaceutical Regulatory and Market Workshop in Taipei, I presented my thoughts on what healthcare companies should consider when entering ASEAN. Let me share the key points with you:
With an annual growth rate of over nine percent between 2016 and 2021 pharmaceutical companies still enjoy high growth in the USD 20 billion ASEAN pharmaceutical market. With a forecasted growth of five percent through 2021, growth exceeds many western markets.
According to Nicholas Hall, Asia represents the largest region with USD 42 billion of the USD 122 billion global over-the-counter (OTC) drugs market. There are still a significant number of healthcare companies that currently do not have any presence in this part of the world and are struggling to identify and define the most suitable entry strategy for their brands.
Understanding your target markets is obviously a key first step when shaping your entry strategy. It is important to look beyond market size, growth levels and standard healthcare indicators such as private and public expenditure, reimbursement systems, disease prevalence and other aggregated market data.
In addition, it is also crucial to understand local consumer behavior, patient pathways, hospital and pharmacy landscape and the intended country’s specific market regulations.
The region’s regulatory requirements are very diverse with specific regulations and registration processes in each country. Meeting these requirements can be a tedious and time-consuming task.
For example, an OTC product may be classified as functional health food in China, a dietary supplement in Korea, a herbal medicine in Vietnam and a food product in Hong Kong. You must then decide which claims are feasible for your product and the type of claims your competitors use in the intended market. This is vital for your communication strategy and the positioning of your brand.
Having supported dozens of companies with their ASEAN market entry, we have observed and clustered three options for entry strategies, all with their own advantages and disadvantages:
With everyone from independent pharmacies to specialist healthcare providers stepping ahead to modernize trade, the channels are becoming more complex and fragmented. Therefore, I recommend paying special attention to the channel economics in the ASEAN market you are entering.
For example, in Cambodia, wholesalers play a key role in the retail of healthcare products, while in more developed markets like Singapore, the majority of trade sales come from four to five large pharmacy chains. Over in Vietnam, as there are no big international or large local chains, sales are derived from the presence of several thousand independent pharmacies.
Therefore a trade channel launch in a developed ASEAN market often starts with exclusive listing in one chain pharmacy before expanding to others, while in emerging markets companies apply a geographic expansion from key accounts in larger cities to smaller more rural areas.
On top of that, healthcare companies are now increasingly looking at omni-channel access which includes e-commerce channels to satisfy consumers’ demand for information, speed and accessibility. They must explore how to use e-retailers and marketplaces as well as social media platforms to capture consumer’s attention and provide broadest possible product availability.
Here are some of the typical pitfalls I have witnessed healthcare companies doing when entering ASEAN:
Having considered all the above aspects, for me, the key success factors for expanding into ASEAN are: