2. BACKGROUND: Malaysian Pharmaceutical Industry Health is a fundamental human right and that accessibility to health care, including drugs essential in creating, promoting and maintaining health, is central to realizing this right.

3. Pharmaceuticals or drugs are different from other commodities in that they are consumed based wholly on the implicit trust that they are safe, of the desirable quality and efficacious.

4. Drugs can save lives and improve health but if used inappropriately, they can be harmful and even fatal. Thus, due to its direct impact on the health and well-being of its consumers, drugs are one of the most highly regulated industries in the world.

5. There is a strong demand for pharmaceuticals as well as healthcare products and services in general, particularly in the market of emerging economies.

6. Realizing its vast opportunities and immense growth potential, the Malaysian Government has adopted a cluster approach to develop the pharmaceutical industry under its Seventh Malaysian Plan (7MP: Year 1996- 2000) and Second Industrial Master Plan (2nd IMP: Year 1995-2005).

7. In the attempts to realize its market potential optimally and swiftly, a number of issues need to be clearly addressed: Malaysia is not and will not be a very big consumer of pharmaceuticals in the region, and to promote the growth of the pharmaceutical industry in the country, a market beyond the boundaries of Malaysia is definitely required.

8. It has been quoted that about 75% of the pharmaceutical finished products consumed in Malaysian is imported. In addition, the pharmaceutical raw materials utilized in the local manufacture of pharmaceutical finished products are almost 100% imported.

9. Thus, it appears that the country is extremely import dependent with regards to pharmaceuticals, be it raw materials, intermediate or finished products. This does not auger well from the nation’s security or economic perspectives in the long term.

10. THE NEED TO DEVELOP PHARMACEUTICAL INDUSTRY The need to develop the pharmaceutical industry form various key perspectives namely:  strengthening national security  improving technological self-reliance  inculcating a strong research & development base development base  optimizing the natural resources  proven economic growth sector

11. Pharmaceuticals is, without question, one of the basic needs of any nation, apart from food and shelter. As such, the pharmaceutical industry is a key contributor to the security and health status of the nation...... As such, the pharmaceutical industry is a key contributor to the security and health status of the nation.

12. Due to the high quality assurance demanded and the complexity of the drug products themselves, the manufacture of pharmaceuticals requires high capital investment and high technological input provided by a team of competent and knowledgeable staff, supported by a strong research & development base.

13. Acquisition of such a technology is highly desirable as: it will widen the local product range capability, it will widen the local product range capability, elevating technology self-reliance elevating technology self-reliance improve the chances of securing certain niche beyond the domestic market, through a better competitive edge. improve the chances of securing certain niche beyond the domestic market, through a better competitive edge.

14. “Malaysia has a good potential of becoming a regional player in pharmaceuticals and other healthcare products.”

15. The rationale for the above statemen can been summarized as follows:  Significant value-added high technology industry.  Strategic industry - nation’s health and security.  Reduce trade deficit (RM 500 million annually and increasing).  Industry has high Good Manufacturing Practice (GMP) compared to neighbouring countries.  Good export potential - large regional market.  Potential world market of RM 55 billion due to patent expiration by the year 2005.  Spin-off in support industry development e.g. packaging.