Coronavirus: Thailand offers tax perks to spur pharma investments
BANGKOK — Thailand-based firm Bionet-Asia is racing with other companies and institutes across the world to produce a vaccine for the Covid-19 virus. It has diverted all its resources, including 200 people, to accelerate development of a gene-based vaccine.
“We have already ordered millions of vials even though we don’t know yet if the vaccine could work in humans,” Bionet chief executive Pham Hong Thai told The Straits Times. In fact, Bionet chose to ship the vials by air rather than sea, despite the flight restrictions around the world.
“No one wants to be in a situation where they have the vaccine working in humans but then discover they are missing the passage containers or stoppers to supply the vaccine,” he said. “So there is a race, there is restriction, there is shortage of materials – not only of active ingredients.”
While Thailand hosts one of the largest pharmaceutical sectors in Southeast Asia, it imports some 90 percent of the ingredients for finished products, said the Bank of Ayudhya in its research report last month.
Within the region, Thailand’s pharmaceuticals market was smaller only than Indonesia’s from 2013 to 2018.
Last year, Thailand’s domestic market for pharmaceuticals was worth 184.1 billion baht (S$8.2 billion), while pharma exports generated 13 billion baht in receipts. Research and development in the kingdom tends to focus on vaccines for Aids, bird flu and influenza.
Most of Thailand’s conventional medicine-makers are end-stage producers of generic drugs which mix active ingredients imported from abroad.
No more than 5 percent of accredited domestic pharmaceutical producers can manufacture active ingredients like aluminium hydroxide, aspirin or sodium bicarbonate. Those that do, use these ingredients in-house.
The Bank of Ayudhya report warned that Thai producers will face rising prices for pharmaceutical inputs as exporters grapple with the coronavirus.
China, the source of 2.7 percent of Thailand’s pharmaceutical imports last year, suspended production of precursors and other ingredients earlier this year. India, which accounts for 8.1 percent of Thai imports, banned the export of some inputs and medicines like paracetamol. The rest of its imports come from countries such as Germany, the United States and France.
Meanwhile, leading manufacturers of patented medicines in the US, Germany and Britain have halted research and trials on other products to concentrate on producing a Covid-19 vaccine.
“This might cause a shortage or price hikes for raw materials and precursor chemicals, which would lift production costs for Thai operators, most of which depend on imported input and patented drugs,” the report said.
Asked how badly impacted Thailand would be if supplies from China and India were disrupted, Ms Narin Tunpaiboon, an assistant vice-president at Bank of Ayudhya’s research division, told The Straits Times: “We see limited impact because most of the imports from the two countries are cheap generics and active ingredients. As such, Thailand would not find it difficult to seek other alternative sources.”
Bangkok is also targeting investments in the pharmaceuticals sector, and this will help “reduce dependence on imported high-cost inputs and patented drugs in the future”, she said.
Thailand’s Board of Investment in April approved measures to speed up development in this sector. Apart from giving three-to eight-year tax holidays, the government will also halve corporate income tax for an additional three years for qualified investments. These include production of diagnostic test kits and active pharmaceutical ingredients started by the end of this year.
Those producing pharmaceutical-grade alcohol will also be exempted from corporate income tax for eight years.
Researchers at Chulalongkorn University, meanwhile, have made the fastest progress in developing a Covid-19 vaccine, and started testing their prototype on macaques last month.
Working with Professor Drew Weissman from the University of Pennsylvania, the Chulalongkorn team aims to start clinical trials by the end of this year, said lead researcher Kiat Ruxrungtham.
If the vaccine proves successful, technology licensing restrictions would limit its distribution to seven Asean countries, excluding Singapore, and Pakistan, he told The Straits Times.
While acknowledging that national needs take priority, Professor Kiat stressed that countries would need to work together to make a vaccine more accessible to all.
“Right now we are just trying to get the best immunogen for a clinical trial,” he said. “When we get to larger-scale production, we will just have to see what obstacles we will face in the long run.”
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