Myanmar’s Pharmaceutical Industry and Healthcare

Visit any physician’s clinic or hospital in Myanmar and the bag of medicines handed over at the pharmacy is inevitably full of tablets and capsules that have been imported. A closer look at the label will reveal the name of an Indian, Thai, Bangladeshi or Chinese pharmaceutical company. This is not surprising in a country where domestic industrial production is in its nascent stages and even more so in the pharma sector which has only 4 local pharmaceutical production units. In sharp contrast, are the hundred odd distributors of foreign drug companies, importing over 5000 types of western allopathic drugs. Inevitably local demand for medicines and health supplements is fed by imports.

Medicines are lifesaving, lifestyle-changing, health improving magical potions taken to cure illnesses and maladies, alleviate moods, and generally set right, all that is going wrong physiologically and psychologically in our system. The aim is a longer, improved quality of life, reduced pain and suffering, and of course, a huge monetary loss, since medicines are not cheap. The key to health and wellness in Myanmar lies in access to medicines manufactured in one of the neighboring ASEAN nations or far off European countries.

The healthcare industry is one of the fast growing, high potential sectors that needs reform, extension, and improvement to ensure better healthcare facilities so as to prevent the outflow of patients to other countries. The pharma sector is one part of the larger healthcare sector which incorporates all the drugs, medicines, tonics and injections needed for treatment and health improvement.

For the country’s population of 57 million, per capita expenditure on medical needs is low and access to medical care is difficult in rural areas where people have to travel long distances to get treatment and medicines. According to the World Health Organization, 93% of all medical expenses are borne by patients themselves since government cover and health insurance have yet to be initiated.

Unlike other countries where pharmacies, drug stores and medicine shops are seen around every corner, the number of such medicine outlets in Myanmar is very small. It is customary for all doctors’ clinics, polyclinics and hospitals to provide medicines, and they have their own sources of procurement from a network of preferred distributors. Over 60% of drug sales take place in the two big cities, Yangon and Mandalay.

Pharmaceuticals market

According to market research agencies the total pharmaceutical expenditure in Myanmar has been growing at 11-12% per annum, and has increased from USD 390 million in 2014 to USD 440 million in 2015. However, these values are lower than most ASEAN nations including Singapore whose population is one tenth that of Myanmar. Growth prospects with governmental initiatives are high and the market is expected to touch USD 1.12 billion by 2023.

However, most of the pharmaceutical products sold come from countries like India, Bangladesh, China, Indonesia, Pakistan, Thailand and Vietnam. Research figures indicate that total pharmaceutical imports accounted for 85% of the drug market and India takes the lead with a strong 40-45% market share.

All imported drugs have to be registered and authorized by the FDA that inspects pharmaceutical plants and importers and also tests the quality of drugs. At present, approximately 5000 drug varieties are imported into Myanmar.

There is a vast market for generic drugs and all types of prescription drugs including steroids and antibiotics can be purchased over the counter. This is responsible for big Indian companies like Sun Pharmaceuticals, Dr. Reddy’s and Cipla capturing a significant market share of the local market. Another reason for the success of Indian companies is the lower price levels they can be procured at, compared to bigger international brands. When funding is not available and the patient has to pay out of his pocket, cheapest options are sought – and this comes from Indian manufacturers. India also happens to be a neighboring country and trade across the border also takes place. Additionally, doctors and physicians are comfortable prescribing affordable Indian medicines since they are trusted for quality.

The role of traditional medicine

The belief in turning to nature to heal and cure, is strong in Myanmar. Traditional medicine treatments have been followed for generations and continue to be popular, more in remote rural areas, not least due to non availability of western (allopathic) medicines. Herbs and medicinal plants are found in abundance and serve as highly affordable remedies for diseases. According to statistics provided by the World Health Organization, nearly 75% of Myanmar’s population still uses traditional medicines for healing and wellness.

However, there is increasingly a distinct preference for western medicines subject to affordability and availability. This is because they feel the quality is better and they also have a higher efficacy than local herbal products. Traditional medicine cannot also be used for life threatening diseases, where western medication and treatment becomes imperative at least for those who can afford it.

Domestic production and the distributor network

The country’s own pharmaceutical industry is grossly underdeveloped with most of the local supplies, accounting for only 20% of the demand, come from the state owned Myanmar Pharmaceutical Factory that comes under the purview of the Ministry of Industry. The factory has been set up to manufacture tablets, capsules, injections, powders and lotions to initiate the import substitution process. A single private player named Fame Pharmaceutical has a GMP certified facility but produces herbal and organic medicines used to treat serious diseases like cancer and tuberculosis. Its product range includes 45 different kinds of herbal medicines that are exported to countries like Japan, Thailand, Singapore, Taiwan and South Korea.

There are over 100 pharmaceutical distributors operating in Myanmar, whose sales force manage to reach even the most remote corners of the country. Significant among these are distributors like the Swiss owned DKSH and Maxxcare which distribute both prescription and over the counter drugs. DKSH has a strong presence in many Asian countries and in addition to drugs, is also a distributor for medical devices. The company has been operating in Myanmar for 15 years, having established a network of 60 sub-distributors through whom its products reach 19000 retail outlets, has 7 warehouses, including 2 with cold chain capabilities. This reach of DKSH makes it the preferred choice for multinationals like Roche, Bayer and Sanofi to expand their sales without having to be concerned about compliance issues. Maxxcare has also created a towering presence in the pharmaceutical world and is the first distribution company that has received ISO 9001:2000 certification, and its sales force has access to the most remote parts of Myanmar. Some of the pharmaceutical brands under the company include Lupin, Novartis, Pfizer, GSK, MSD and Kalbe.

Pharmaceuticals-promise of growth

Awareness about health is increasing among the Myanmar people and the growing middle class is veering away from traditional medicines towards western drugs, due to their conviction about their quality and efficacy. This demand is being met through imports and the biggest volume of imports is of vitamin C tablets and antibiotics. Price remains an issue but manufacturers know the limited paying capacity of local customers, and therefore keep their prices at lowest possible levels. Additionally, drugs that reach the market through cross border trade come at cheaper prices.

International pharmaceutical companies are flocking into Myanmar since they see a barely tapped market of over 57 million people. Official figures indicate a USD 100-120 million, but pharma specialists put the figure at USD 400 million since data available is based on customs value and not on the actual sales volume, and figures not incorporated are the illegal cross border trade and the under reporting of goods actually brought into the  Myanmar market.

New hospitals with foreign private participation are coming up. Under the new rules formulated by the government the healthcare sector will permit 70% foreign ownership in clinics and hospitals. This has attracted private hospitals like Bumrungrad and Bangkok Hospital to set up representative offices and Samitivej Hospital has tied up with Parami Hospital to set up an international clinic which promises services that match international standards. Efforts are on to improve medical college education as well. The healthcare industry is getting an impetus from the government as well through increased allocations in the budget, and relaxation of rules for foreign investment.

The market is expanding in terms of the quality and range of drugs available, to include supplements and some of the newer, safer drugs. For the first time perhaps, the residents of Myanmar have the luxury of choice. It is only a matter of time before we see local manufacturing begin and people of Myanmar getting the entire range of the latest drugs in local markets,  no longer needing to travel overseas for treatment, or having to carry back packages of medicines from trips abroad.

Myanmar- The Big Rural Urban Divide

The beautifully vibrant city of Yangon is the epitome of urban living in Myanmar. The country’s commercial capital, Yangon is home to over 5 million people, forming a big chunk of Myanmar’s population. The city juxtaposed against vast expanses of arable land and dry areas, with shanties and hutments in hamlets in the country side, brings out the stark contrast in life and living in Myanmar.

Like many other countries, a prominent rural-urban divide is visible in Myanmar. Inequalities are evident in all developing economies with higher dependence on agrarian activities, and till this dependence on agriculture reduces with alternative sources of employment coming up, the pace of development remains slow and the division between the haves and the have-nots unlikely to reduce. The gap between rural and urban development can be partly attributed to an urban bias and governmental policies which focus more on developing cities and urban areas. This is true of other countries like India, and neighboring Thailand which has seen urbanization centered around the Bangkok Metropolitan Region.

Myanmar today, is a country on the threshold of rapid development. According to the Asian Development Bank, the country’s GDP growth reached 7.5% in the fiscal year 2013-14. With foreign investment pouring in, and favorable government regulations, growth rates are expected to be even higher in the current fiscal year. The outside world is upbeat about the developmental prospects of Myanmar with its rich reserves of natural resources, an untapped market for consumer goods, and a strategic location.

But the ground reality reveals a country struggling with poverty with approximately twenty-three percent of its population living below the poverty line, overdependence on agriculture for subsistence and small-scale farmers forming the economy’s backbone, not to mention the acute dearth of skilled labor.

The Rural Scenario

According to World Bank estimates based on UN World Urbanization Prospects, in 2012, Myanmar’s rural population forms 67% of the total population of 57 million that resides in its 40,000 odd villages.  Regional disparities are clearly evident and poverty in rural areas is a big concern. According to a UNDP report, rural poor account for 84% of the total poor population.  Rural poverty is the result of a series of factors like small or no farms, poor output which is sold at low prices, limited availability of non agrarian jobs, and lack of credit facilities. Majority of the farmers own less than ten acres of land and this fragmentation of holdings prevents higher yields at lower costs. 37% of the villagers do not own any land or livestock, and live and work in quite the same way as their forefathers did. The use of bullock carts for plowing fields, bamboo houses without access to electricity, safe drinking water and sanitation facilities, are some of the features of rural life that need to be urgently addressed.

Life in the rural areas of Myanmar today is medieval and slow-paced. The people lead simple lives, with no mechanization, their homes spartan and basic. Even electricity and water sources at home are available to a very select few. Communication, infrastructural facilities and healthcare all need to be improved and enhanced to extend their reach to remote and border areas of the country.

There has been an exodus of young men and women from villages to neighboring Thailand, Singapore and Malaysia for more lucrative work prospects. Their remittances have served as a boon and savior to families back home. Typically, the development process sees such migration to cities and towns nearby, but since industrialization and work opportunities have been limited within the country, the demand for semi-skilled and domestic labor has lured them beyond Myanmar borders. A larger number of women have joined the work force in neighboring Asian countries. It is only recently that rural women have begun migrating to garment factories coming up in and around Yangon.

The Urban Scene

At present, Myanmar’s urban population is roughly 30% of the total, with only 13% living in big cities. According to the McKinsey report on Myanmar, this percentage could increase sharply to 25% by the year 2030, with around ten million people migrating to large cities. Urban activity in Myanmar is concentrated primarily in Yangon and Mandalay.

Urbanization is the first step towards industrialization of an economy as the labor looks for work beyond farms in factories and companies. It offers employment opportunities almost absent in villages, a better standard of life and access to basic amenities like better housing, education and health care. Cities have better roads and transport facilities, besides higher availability of goods and services, despite being more densely populated. This makes life in cities more appealing and attractive. The attire and food habits of city folk are similar to their rural counterparts, but the urban poor are worse off in some ways, since they do not have access to agricultural produce that the rural poor can consume even as they cope with a higher cost of living.

The Rural-Urban Divide

Myanmar’s rural urban divide is conspicuous in every aspect of the common man’s life, be it access to education and healthcare, infrastructure, power, communication, or even general living standards. Since occupational fields in rural and urban domains are so diverse, there is a distinct contrast in earning capacities. It inevitably translates into economic inequality, lop-sided development and a widening gap between the rich and the poor.

  • The power gap- The electrification ratio in Myanmar is much lower than that of its neighboring Asian countries in both rural and urban areas. Per capita electricity consumption is about one-twentieth of Thailand. Only 60% of the total power supply is reliable. The use of renewable energy sources like hydropower for approximately 70% of the total supply, makes it vulnerable to the vagaries of nature, and a dry spell leads to major shortages.  Rural access to power is more disturbing with over 72% villages still un-electrified, according to the MOEP report on rural electrification in Myanmar. Villages see only a small number of households connected with a tangle of wires to electricity poles. With only 16-18% of the rural people having access to power, the setting sun plunges the countryside into blackness. In sharp contrast, 89% of the urban population has access to electricity, which facilitates industrial production as well. With foreign investment being allowed, the power situation is expected to improve in the next 3-5 years.
  • Water and sanitation- Access to safe drinking water in rural Myanmar was 65% in 2010 compared to 81% in urban areas. Not that there is any dearth of water resources in the country. Myanmar has abundance of water with potential annual volume of surface water being 1082 cubic km besides 495 cubic km of ground water. Unfortunately, only 5 % of the potential water supply is used and access of safe drinking water or its use for sanitation is at disturbingly low levels.  Villages get most of their water from springs, open wells and rivers, with dwindling supply during the dry season, which forces people to consume even contaminated water. Urban areas have water sources in most homes, but national figures reveal that only 10.5 % of the poor have a water source in their homes. Sanitation facilities are available to 77% of the rural residents and 84% of the urban population.  International organizations like UNICEF, Red Cross, Asian Development Bank and countries like Japan are assisting the country in improving water and sanitation works.
  • Education – The rural urban difference is evident even more in the field of education though the country has a literacy rate of 89.7%. While every village does have at least one school, in remote and border areas, the number reduces to one school for five villages. The presence of monastic schools helps bridge the gap. Enrolment into primary schools is high, with 85% of children of primary school age attending school in urban areas, compared to 76% in rural areas. However, all the enrolled children do not complete primary school education. The dropout rate is higher in rural areas due to problems of transportation and access to schools, among other reasons. Attendance in secondary schools is lower with 69% of secondary school age children attending school in urban areas, compared to only 34% in rural areas. The 156 institutes of higher education are all in cities. Training facilities for teachers and availability of school supplies in rural schools are much lesser than their urban counterparts.
  • Healthcare- Myanmar’s healthcare services leave a lot to be desired, even though the government is refurbishing the system of providing basic medical facilities, with increased government spending of 3.9% of the annual budget in 2013, up from 1.9% in 2012. Rural areas have health centers, and the Township Health System introduced in 1964, continues. Both traditional herbal medicine and modern medicine practices are followed here, and preference for the former is evident. The rural areas have limited access to healthcare since very basic health problems can be resolved in their villages, and have to rush to neighboring cities for specialist treatment at Station Hospitals or Township Hospitals with 25-50 beds depending on the population of the township. Villages have primary health care centers, which have midwives and health assistants. All these come under the Township Health Department that is responsible for providing primary and secondary healthcare. Serious illnesses and deteriorating conditions push people towards specialist hospitals in Yangon and Mandalay, after traditional herbal medicines have also been tried and failed. The rural poor often seek treatment from untrained health workers since doctors are not easily available. Insufficient salaries, lack of learning opportunities and difficult conditions are some of the deterrents that discourage doctors from serving in rural areas. A few international NGOs provide free medical aid in rural areas. Hospitals are found in cities with specialist, children and women’s hospitals established only in Yangon and Mandalay.  Of late, private medical institutes including polyclinics have mushroomed in Yangon. The facilities, equipment and supplies, are not still state-of-the-art even in these private startups.  Foreign hospitals especially those from neighboring Thailand and Singapore have also set up representative offices with the aim of promoting medical tourism in their country. The contrast is striking.
  • Telecommunications- Telecommunication is the key to growth and development of economies. The telecommunication network in Myanmar is being built with participation of foreign companies like Qatar based Ooredoo, and Norway’s Telenor. At present telecommunication services are poor compared to other countries, and have been monopolized by MPT, the state owned enterprise. As of now, there is a single telephone for 169 people, and a SIM card for mobile phones costs between USD100-200. Oredoo has released its first lot of SIM cards costing only 1500 kyats. However, service issues, poor connectivity and other teething problems need to be addressed before it can be a threat to the reigning MPT.

Till these companies start full scale operations, less than 10% of the population has access to mobile phones, and the internet penetration is less than 1% of the total population, and this too is confined to big cities like Yangon, Mandalay, Nay Pyi Taw and Bagan. Only around 10,000 users exist beyond Yangon and Mandalay. Internet cafes are common, but again only in cities. The situation in rural Myanmar can only be imagined, with villagers and farmers having little or no access to telephones, leave alone internet. Till end 2012, most villages were without fixed line telephone services. In the last one year, with SIM card prices falling, the number of subscribers has increased, but connectivity remains poor due to lack of supporting infrastructure to cater to a larger clientele. People in rural areas who can afford handsets costing between $45-350, have started buying mobile phones, but service remains poor and it is not always possible to stay connected.

The rural urban divide is not going unnoticed and the government is keen to address this issue and efforts are on, to bridge the gap so as to improve economic efficiency. President U Thein Sein addressed the National Workshop on Rural Development Strategic Framework in November last year, and elaborated on making rural development a key focus area with emphasis on providing food security, poverty reduction and sustainable economic development.

The rural urban divide can be a potential cause of social and economic instability, since inequalities provide for an unhealthy climate for growth. With new laws being formulated, and regulations being put in place, the process of change, improvement and development is irreversible. The only way seems upwards and with it will come, rural development, which will improve the quality of life and work of the rural folk, bringing them closer to at least urban, if not, international living standards.