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Over the last ten years, the world has looked on while countries in Asia have turned their economies around and experienced enormous successes. Although the growth rates in Japan leveled off in the 1990s, the countries of East and Southeast Asia and China have continued to grow at impressive rates, often in the double-digits per year. And despite the recent baht crisis in Thailand in July of this year, historically high growth rates will probably go no lower than a very respectable 5-7% per year for the foreseeable future. The Economist predicts that by the year 2020, six of the ten largest economies in the world will be in Asia; China, Japan, India, Indonesia, Thailand and Taiwan. Such economic successes in these countries have already begun to improve the standard of living, which has, in turn, increased the demand for services such as health care and education. Asian countries that have, until recently, been surviving with poor or no formal health care systems now have the funds to make major improvements to their health care systems. Governments which play a major role in the economic changes in their countries are now making commitments to improving national health care services. For instance, in Thailand, the government’s Seventh National Health Development Plan (1992-1996) increased the health care budget by 54% in just five years. In Taiwan, the government recently implemented a comprehensive national health insurance program to provide medical care to all of its 21 million citizens. The increased wealth in the region has also spurred the private sector to invest in health care services. In Indonesia, private health care expenditures have increased more than 25% a year over the last few years, while in Singapore the government has pushed the restructuring and privatization of many of its formerly public hospitals. As their economies have grown, these countries have moved from rural agrarian societies to urban industrial societies. This has created whole new areas of health care concerns. They’ve witnessed the dominant disease patterns change from problems associated with malnutrition, tropical disease, and cholera to those of heart disease, AIDS, and cancer. While some of these countries still have the original problems to deal with, the new health problems brought by industrialization are on the rise, and their health care systems are struggling to offer the higher quality of health care needed to fight these new diseases. Cancer Markets in Asia The incidence of cancer has increased significantly in Asia over the last ten years and has become a major concern of many Asian health care systems. Environmental factors associated with economic development, such as smoking, higher fat diets, and pollution are partially to blame. Although the societies are not willing to give up their rapid development in the hopes of lowering cancer rates, the health care systems in Asia have recognized the problem and are working to educate the public on the causes of cancer, as well as improve their facilities for treating the disease. Cancer is now one of the leading causes of death in Asia. In South Korea, Taiwan, Singapore, Hong Kong, and urban China, cancer is the top killer, accounting for about 20-25% of all the deaths. In Shenzhen, China for example, the incidence of cancerous tumors has more than doubled over the past decade and continues to increase. By 1994, cancer was the cause of death for 20% of South Koreans; an increase of over 30% from one decade earlier. In Taiwan, cancer has been one of the leading causes of death since 1982. By 1993 it was responsible for 20.4% of the total number of deaths and has continued to grow steadily over the last three years. In Singapore, cancer accounts for 25% of deaths and is still on the rise. It is no coincidence that the countries in Asia where cancer is the primary killer were also the first to experience the rapid economic growth during the 1980s. Countries that were in the second wave of development in Asia, such as Malaysia, Indonesia, and Thailand, are following in their footsteps and are also experiencing huge increases in the number of cancer cases. In Malaysia, incidents of cancer increased from 8.6% of deaths in 1993 to 11% in just two years. In Thailand, cancer is the number two cause of death and is increasing each year. In Indonesia, cancer is the fifth major cause of death, and there are about 200,000 to 360,000 new cases of cancer a year there. Due mainly to the fact that smoking is a popular habit in Asia and pollution is increasing with industrialization, lung cancer is one of the most prevalent cancers in the region. It is the leading form of cancer in Hong Kong, Singapore, Malaysia, and China. In China, the incidence of lung cancer is increasing at 4.5% a year. This rise can mostly be attributed to the large percentage of individuals who smoke (70% of Chinese males), and the fact that the average Chinese smoker smokes 16.5 cigarettes a day, which are generally unfiltered with higher tar contents. Liver, colorectal, stomach, breast, cervix/uterus, and nasopharyngeal cancers are also very common in the region. Korea has the highest incidence of liver cancer in the world. China has the highest incidence of stomach cancer in the world. Most of the countries in the region have also been experiencing large increases in breast and colorectal cancer, attributed to diets higher in fat. Nasopharyngeal cancer (cancer of the nose), often called the “Hong Kong cancer,” is very common in Asia, affecting mainly those of southern Chinese descent. In southern China and Hong Kong, the disease is the fourth most common cancer in men. It is also a common cancer in countries such as Singapore, where there are many overseas Chinese. Due to the incidence of nasopharyngeal cancer, researchers in Singapore and Hong Kong are hard at work trying to find a cause and a cure for this type of cancer. Both environmental factors, such as diet, and hereditary factors are being tested as the cause. Taxol is now being tested for nasopharyngeal cancer, although radiation therapy is still the main mode of treatment. Some Approaches to Treatment As incidence of cancer has increased over the past decade, the governments in the region have made efforts to improve and increase options for treatment. Most of the developing countries in Asia have opened clinics and special hospitals devoted to cancer therapy. These cancer hospitals serve as both research institutions and treatment centers. Patients in the region are primarily treated with surgery, chemotherapy, radiotherapy, or a combination of these. New treatment methods are entering the region from the West and from local R&D efforts, thus improving the therapy for cancer. Surgery is probably the most common treatment, due to the fact that most Asian doctors receive significant fees for performing these procedures. One cancer hospital in Shanghai, China has been using a combination of surgery, radiation, and chemotherapy to treat women with breast cancer. According to Chinese sources, which are probably biased, they have had an astounding success rate, performing over 4,500 successful cancer operations. Radiation therapy is also a well established method of treatment in Asia. The importance of this treatment option was illustrated by Thailand’s 1995 purchase of a complete radiation therapy equipment package from Phillips Electronics NV. The system includes a dual-energy linear accelerator, and ex-ray simulators and a 3-D computer treatment planning system. In South Korea, scientists have developed two new products through their research in radiation treatments for cancer. The first treatment, which is used for liver cancer, includes an injection of ethanol and a suspension of holmium-166 macroaggregates. In testing, this product was successful in eliminating more than 90% of cancer cells. Another treatment, which was developed by the Korea Atomic Energy Research Institute, is a patch-type radioactive treatment for skin cancer. Chemotherapy is also a common treatment for cancer in the region. Most of the cancer centers use chemotherapy for both long term and outpatient treatment. Many foreign firms have had great success selling their chemotherapy drugs in Asia, and recently, locally produced chemotherapy products have also begun to gain popularity. Besides the traditional therapies for cancer, a few new ones have also begun to grow in popularity. One of these is photodynamic therapy (PDT). This therapy consists of a combination of drugs in laser treatment. Drugs are administered intravenously and then migrate to the tumor. Shortly thereafter, a laser that enters the body via fiber optics is directed at the tumor. The laser activates the drug, which eliminates the cancer cells. Companies beginning to introduce PDT therapy in the region includes QLT Photo Therapeutics, Dusa Pharmaceutical Inc., and ALA Corp. PDT techniques
have been used in China for the last 14 years. However, the versions used in
China are less echnologically advanced than those currently in use in the West.
Some Western PDT manufacturers are now introducing their products throughout
Asia, where they have sparked some interest in the local oncology communities.
However, the shortage of PDT-capable lasers is still a serious problem that
has slowed the use of this therapy in the region. Because of the huge increases of cancer in Asia, the demand for quality products to treat cancer has skyrocketed. Many Western firms have introduced their products to Asian marketplaces with great success. One such company is Pharmacia & Upjohn Inc. They’ve already become one of the top sellers of anti-cancer drugs in many countries in Asia, and in 1995, they announced plans to invest $70 million in a joint venture in China. The joint venture will consist of factory in the Wuxi high-tech industrial zone, which will produce cancer treatment drugs. Teamed with the Wuxi municipal government and a local pharmaceutical producer, the joint venture will export its products to the US and Europe in addition to markets in the Asian region. Another example of a Western firm entering the Asian market is Neoprobe Corp. Their RIGS products are used for ascertaining when cancer surgery is needed. In 1995, Neoprobe signed an agreement with Damon Pharmaceutical Corp. of Seoul to be their exclusive marketing and distribution partner in Korea. Damon will conduct marketing and clinical trials and will have exclusive marketing rights in other key Asian markets, including Singapore, Thailand, and Taiwan. A third successful approach is used by Schering-Plough Corp. Their cancer products have had great success in Asia and are considered to be the leading treatments throughout the region. In May of 1995, SP broke ground on a $200 million facility in Singapore. This pharmaceutical manufacturing plant is their second in Asia. The other is a $37 million joint venture in China. The Singapore plant will produce the active ingredients for the drugs, which will then be shipped to other Schering-Plough affiliates for finishing and sale. SP has ranked among the top five corporations in cancer product sales in nearly every country in Asia over the last five years. Another company to market its cancer products in Asia is International Cancer Diagnostics LLC (ICD), a joint venture between AMDL Inc. and Briana Bio-tech Inc. In 1996, ICD entered into a series of agreements with distributors in various Asian countries to market their DR-70 cancer tumor marker detection kit. Under an agreement with their Indonesian distributor, ICD will receive a minimum payment of US $5.4 million from Stocs Inc., their Indonesian partner. A similar agreement with Comet Medical Technologies Inc., ICD’s Chinese partner, stipulates that Comet will receive exclusive the distributorship as long as they meet minimum purchasing schedules, escalating annually to US $27 million over a five-year period. ICD has also entered into distribution agreements with companies in the Philippines and Brunei. Phytogen Life Sciences Inc., a Canadian pharmaceutical research and development company, has also entered the Asian cancer market. In 1996, PLS signed a memorandum of understanding with Chemical Co. of Malaysia BHD, agreeing to subscribe up to 20% of its capital to a joint venture company in Malaysia. The venture will either expand an existing CCM facility or build a new plant to manufacture pharmaceutical products, including anti-cancer products developed by PLS. The Role of Traditional Chinese Medicine Many Asian societies have used traditional medicines to treat cancer for centuries, such as ginseng, which has recently been found to help prevent cancer. Traditional Chinese medicine practitioners are now looking into herbs that will prevent the formation of cancer cells. One traditional approach to medicine is to identify a disease as either “hot” or “cold” and, based on the yin and yang theory, to treat it by balancing the two out. Some traditional Chinese doctors have concluded that cancer is a cold disease rather than a hot one, as had been thought in the past. By treating cancer with herbs and “warming” therapies, one doctor claims to have cured more than 2,000 patients over the last decade. He claims to completely cure around 30% of his patients and improve the health of many others. Though some of these diagnoses and treatments seem unusual, many Western pharmaceutical companies realize that it may be worth studying traditional medication more closely. Today, Western scientists are actively participating in international efforts to study traditional medicines and their effects on cancer and HIV. Thus, Paracelsian Inc. in Ithaca, NY, has obtained seven anti-cancer compounds from two Chinese research institutions, compounds procured from various herbs and fungi used traditionally for the treatment of neoplastic diseases. They are unrelated to current cancer treatment compounds in Western medicine. Paracelsian will extensively test the seven compounds, and then sign a formal agreement granting them exclusive rights to those deemed most promising. Developing therapies from natural sources is, of course, not new to Western medicine; Taxol, well-known in the West, is extracted from century-old yew trees and has been proven effective in treating various types of cancer. In the East, this type of research has yielded several new products from components of traditional medicines. One such discovery comes from a pharmaceutical manufacturer in Korea that has used an extract from unripe cottonseeds to prevent the formation of solid tumors. Another product was jointly developed with professors of the China Military Science Academy and the Beijing Jinjian Xini Pharmaceutical Co. It is made from a combination of traditional Chinese medications which the developers claim are useful for treating AIDS, preventing and treating various types of cancers, nourishing the kidneys, and generally strengthening the body. A Chinese company, Kanglaite, has launched mass production of a new anti-cancer drug that inhibits development of cancer cells and improves the body’s immune system. Administered by injection, this herbal medicine is especially effective on advanced lung and liver cancers. Kanglaite has obtained Chinese and US patents for its new drug, through it does not yet have approval from the FDA to sell in the US. Still, notwithstanding the potential for some of these traditional medications to be used in fighting cancer, many doctors throughout the Asian region are worried that cancer patients may be giving up conventional Western treatments and seeking alternative, traditional therapies. Some of these treatments may prove to be very good in fighting cancer, but doctors caution that until they are thoroughly studied, the risk of unknown side effects and the possibility that they will be a waste of money remain. Paying for Cancer Treatment Although many of the countries in Asia have developed similar strategies to increase their health care capacities via both public and private facilities, there are still significant differences in each country’s health care reimbursement systems. Each country has its own understanding of what roles government and insurers should play in their society and how cancer treatments are viewed within that context. These countries can be divided into three general categories: those with well-developed reimbursement systems, those with less generous insurance systems, and those which lack effective coverage. In Korea and Taiwan, the reimbursement systems are relatively well-developed, and insurance pays for a significant amount of cancer treatments. Taiwan enacted the National Health Insurance Program on March 1, 1995, which has increased the insured percentage of the population to 93% in 1996 (up from 57% in 1993). In Taiwan, the Bureau of National Health Insurance sets a price for the product after an 18-month examination period. The price is usually set at the median of the reimbursement prices of the top ten industrialized countries in the world. Korea has had a mandatory health insurance system since 1977 and achieved universal coverage in 1989. Imported drugs in Korea are reviewed and approved by the Health Authorities before the hospital can reimburse expenses via the Medical Insurance Federation. In Korea today, about 40-80% of the cancer treatment is reimbursed by the hospitals with the remainder being paid by the patient. In Hong Kong, Singapore, and Thailand, insurers generally pay for less than those in Korea and Taiwan do, and cancer is not an exception. Private health insurance is not prevalent in Hong Kong, and there is no public reimbursement program. The Hong Kong government does, however, subsidize the public hospitals to the point that a charge of about $7-13 a day covers most hospital stays, as well as some treatments and drugs. Patients who go to private hospitals either have private health insurance or pay for the medicine themselves. In Singapore, there is a compulsory life-long medical savings plan called Medisave which covers hospitalization and outpatient treatment. There are also other insurance plans for those who have little in their Medisave accounts and another form of low-cost insurance for people with catastrophic illnesses. These plans cover most Singaporeans’ insurance needs at least to some degree. In Thailand, the government provides nearly all citizens with some very limited free medical care, which is primarily used by the poor. The Thai government instituted a compulsory job-based health insurance program, which takes some of the pressure off the state to pay for health care costs, but there is still a relatively large problem in serving the rural areas of Thailand and in getting those in need to seek professional treatment. Indonesia and the Philippines fall in the third category of Asian countries with little or no health care insurance. The vast majority (98%) of Indonesia’s population is not covered by any health insurance. Government hospitals are heavily subsidized to make basic health care available to the general population, but treatments for cancer are considerably more expensive, and a majority of people are unable to afford them. The government of the Philippines, like that of Indonesia, is more concerned with providing basic health services to all individuals, which leaves little money for funding expensive treatment programs, like those for cancer. Although there are a significant number of HMOs in the Philippines, the ability of most citizens, except for the wealthiest, to pay for private treatment of cancer is limited. Getting Past the Regulatory Hurdles Much like their health care reimbursement systems, each of the countries in Asia has developed its own rules for approving the use of cancer products in their country. While some countries use the United States, Europe, and Japan as judges or barometers for approving medical products others have their own medical regulatory rules. Working through each country’s system and steps for approval can be a long, tedious, and expensive process. Many countries require clinical testing of a product to prove not only consistent quality, but also safety of its use, and some countries in the region, such as China and Taiwan, require local clinical testing in the country of sale. Product registration for pharmaceuticals in Taiwan is very difficult and requirements are both manufacturer- and product-specific. Regulations in Taiwan require that foreign manufacturers provided a very detailed master plant file. Many companies are reluctant to do this, or camouflage key information to prevent copying. Taiwan also requires companies to conduct local clinical trials, with minimum requirements that there be 20 patients on the tested drug and 20 in the control group. Normally, initial indications are the same as in the country manufacturing the drug and / or indications obtained from local clinical trials. Once in the system, a product can take anywhere from a few months to a few years to gain approval. On a friendlier note, some Asian countries are content with clinical trials performed in the West, and will approve these products fairly easily in their own systems, if given the proper documentation. In general, prior US FDA approval makes all Asian registrations easier. To sell a medical product in an Asian marketplace, it is usually necessary to get an import license. Along with this, each country can then require a company to do anything from registering the product with the local public safety board, to requiring labeling in the local language, to spending a few years in product testing. In most cases, there are more restrictions on products that enter the patient’s body, such as medication and surgical devices, and less for products that are used for diagnosis from outside the body or are tools used by the physicians. Products that use radioactive elements are also sometimes subject to special requirements before they can be used locally. With the entrance of many of the countries in the region to GATT, many of the regulations and approval practices are being looked at in a closer light and being forced to become more transparent. This has generally had a positive effect on foreign medical manufacturers trying to sell their products in the Asian marketplace. Patents, Copyrights, and Intellectual Property Protection Any company considering selling its product in a foreign country needs to consider how the laws of that country protect its product and its business. For this reason the issue of intellectual property rights (IPR) has become a major issue between the United States and many of the countries Americans do business with. Asia has been one of the focal points of this issue. Singapore
has the strongest IPR record in Asia. IPR laws are generally well-enforced there.
The only complaint the international community has called to the attention of
the Singaporean government is the patent law that allows government hospitals
to purchase “pirated” generic medicines even before the patents
have expired. The United States has taken up this issue, but the Singaporean
government has been slow to change this practice. South Korea
has also made significant progress in instituting protections of IPR. In 1992
Korea was put on the US priority watch list for IPR violations. This caused
the Korean government to make major efforts to improve and enforce its IPR laws.
They have made some changes, but the US government recommends that foreign firms
should register for IPR protection with appropriate government agencies before
doing business in Korea. A Business Built on Relationships The first thing that any experienced person who has worked in Asia will tell you about is the importance of relationships in doing business in the region. In the US, most business deals are backed up by principles of law, but in Asia it is personal trust and the strength of a relationship that hold business deals together. As evidence of this, agreements in Asia are often done via people who know each other or are introduced, and are consummated with a handshake rather than with a group of lawyers wrangling over a written contract. In order to be successful in the Asian marketplace, firms must understand that partners cannot be picked from a phone book. Asian business people value the development of personal relationships and the building of trust over many years as the most essential element in a good business deal. Foreign firms must learn to be patient and take time to cultivate relationships. Although known by many different names throughout Asia, guan xi, as it is known in China, is a complicated set of rules and relationships that develop between individuals. Although it may take significant time and patience to develop, a good relationship in Asia has the ability to solve a host of other problems that could develop anywhere along the way for a company doing business in the region. The importance placed on relationships is also tied into the Asian notion of time. One of the reasons given for Japan’s economic miracle of recent years was its ability to look to the long term. This is a common principle held in much of the region. Asian firms are constantly looking 10 and 20 years down the road. They’re not interested in maximizing short-term profits if it means giving up long-term growth. In both their business plans and their business relationships, they want partners and strategies that will ensure their continued success down the line. Partnerships are expected to last for more than just one deal and are expected to grow and develop over the years. It is important for foreign firms that want to do business in Asia to recognize this, and be willing to change their strategies to cultivate these long-term business plans. These are just two of many cultural differences that can cause conflicts and misunderstandings for foreign medical companies doing business in the region. It is important for foreign companies to understand that cultural issues can mean the difference between a failed and a successful marketing strategy in Asia. In short, Western companies looking to sell cancer products need to court local cancer doctors, clinics, and government officials with tender loving care. Ames Gross is president and founder of Pacific Bridge Inc., a Washington based consulting company specializing in Asian business matters.
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