st AsiaThe pharmaceutical market has expanded by 10% per year worldwide in recent years. The three largest markets - the United States, Europe, and Japan - comprise 80% of worldwide sales. Southeast Asia, together with China, consumes approximately 8% of the world's pharmaceuticals and has become the fourth largest pharmaceutical market6 and the fastest growing. Asia's newly industrialized countries, such as Singapore, South Korea, Taiwan, and Hong Kong, have become attractive pharmaceutical markets because of high per capita incomes and fairly well developed health service systems. Traditionally, the most demanded pharmaceuticals in Southeast Asia have been antibiotics. Governments have spent the majority of their funds on antibiotics, vaccines, vitamins, and blood products. However, as the area's economies have advanced, the demand for gastrointestinal, respiratory, and contraceptive preparations has increased. Many foreign pharmaceutical firms have chosen to compete in the markets of Southeast Asia through joint ventures and local distributors, because local firms are more familiar with marketing channels and consumer expectations. A major barrier for foreign competitors in the Southeast Asian market is the lack of patent protections. China is one of the worst patent offenders in the world; generic and pirated drugs constituted 90% of the Chinese market in 1992. Restrictions on distribution also are very frustrating. Foreign companies must partner with local joint ventures and cannot cooperate with other foreign firms or implement their own distribution operations. Such regulations make it more difficult for foreign pharmaceutical firms to establish wholly owned subsidiaries in Southeast Asian countries and may make an effective market nearly impossible. Despite these barriers, however, the Southeast Asian pharmaceutical market holds great promise for Japanese and Western firms. Regulatory authorities in the United States or Europe...
