With a new government and progress being made against Covid-19, Malaysia has a golden opportunity to reinvigorate its economy, generating the funds necessary to boost the health system and improve health for all.
The Covid-19 pandemic has accelerated global economic structural shifts, in which increasing proportions of economic growth come from knowledge-based industries – biopharmaceuticals, the creative industries, chemicals, software and ICT.
The continued development and support of such sectors and processes will be crucial for Malaysia’s transition from an upper-middle-income to a high-income nation, which is expected to occur between 2024 and 2028.
Commentators were surprised therefore when recently it emerged the government is co-sponsoring a potential deal at the World Trade Organization in Geneva to suspend intellectual property rights for all Covid-19 technologies (including vaccines). This development raises genuine questions over the new government’s commitment to the reforms necessary to secure the country’s economic future.
Malaysia’s economic restructuring has been going well over the past few decades, moving away from low-value and unsustainable sectors such as basic manufacturing, agriculture and commodity exports, and tapping into knowledge-intensive global manufacturing value chains, attracting foreign investment, technology and knowledge. This has driven genuine improvements in living standards, with GDP per capita doubling over the last twenty years, putting Malaysia on the cusp of high-income status.
Although lagging behind regional neighbours such as Singapore, large biopharma multinational corporations (MNCs) such as Pfizer are increasingly looking and considering investing in Malaysia. A young but promising ecosystem of knowledge-intensive Malaysian companies from contract research organisations to specialist manufacturers is emerging, encouraged by numerous national development initiatives focused on the biotechnology and biopharmaceutical sectors.
The 12th Malaysian Plan (12MP) 2021 – 2025 recently tabled in Parliament saw the announcement of the National Vaccine Development Roadmap which aims to ensure that this country is able to develop and produce its own human vaccines as part of increasing pandemic preparedness and resilience.
A key component of these successes and aspirations are an improving environment for the protection of intellectual property (IP) rights. This protection encourages and gives confidence to companies to invest in Malaysia and form partnerships with local companies in which valuable technical knowledge and proprietary technology are shared and transferred. Good national IP protection also gives companies certainty that they can invest in launching new products safe in the knowledge they won’t immediately be copied by commercial rivals.
The need to protect intellectual property rights also featured prominently in the 12MP, with an emphasis of translating the fruits of research and development into high value-added products. This will undoubtedly include potentially hundreds of millions of ringgit in innovations and products in the life sciences.
For countries such as Malaysia increasingly dependent on a knowledge-based economy, the quality and strength of the IP framework is fundamental to economic success.
Recognising its importance, Malaysia has over the last ten years strengthened IP laws. Copyright has been reformed to clamp down on broadcast signal and software piracy. Trademarks are now more easily enforceable to prevent counterfeit goods, and there are generous R&D and IP-specific incentives in place to encourage innovation from Malaysian companies. On paper, this country has one of the best IP frameworks in the region.
Yet Malaysia’s IP environment sits halfway down the 2021 Global IP Index, comparable to countries such as the Dominican Republic and Russia – and well behind regional leader Singapore.
Malaysia faces challenges related to health-related IP where its actions are currently perceived to not reflect its commitments. The use of government-use licensing of the innovative Hepatitis C drug sofosbuvir as a cost-containment measure, earned Malaysia an unhelpful “out of cycle” review from the United States government.
Such moves compromise Malaysia’s ambition to be a powerhouse among the knowledge-based economies of the region. It sends a signal to investors, both foreign and domestic, that the country is an increasingly risky proposition for investment, commercial partnership, or product launch in the life sciences. Such perceptions will also not be helpful in creating the quality high paying jobs needed in Malaysia’s economy.
OECD countries, which Malaysia aspires to join, tend to resolve drug pricing issues through negotiation and collaboration. The OECD’s latest recommendations on how members should approach drug price negotiations for innovative medicines makes no mention of the abrogation of intellectual property rights, suggesting instead a range of non-coercive approaches.
Malaysia’s success in procuring COVID-19 vaccines from multiple manufacturers for more than 130% of its population, in stark contrast to its neighbours and many developed countries, is evidence that it certainly has the capacity, skills and knowledge to succeed in a negotiated approach.
Unfortunately, perceptions of this country as a risky location for biopharma investment will also be heightened by the government’s decision to co-sponsor the WTO waiver on Covid-related IP.
While popular amongst civil society, IP experts are extremely sceptical that this proposal would even be workable given that most of the new technologies behind Covid vaccine manufacture are embodied in trade secrets rather than patents. This technology is already being widely shared amongst partners – including competitor companies – all over the world in the quest to boost manufacturing. IP makes this collaboration possible.
IP is clearly not a constraining factor given that global Covid vaccine manufacturing capacity has increased tremendously in recent months. As of September, 7bn vaccine doses were available around the world, with the total expected to rise to 12bn by December, according to health industry research group Airfinity. Today, the real Covid vaccine issue facing the world is not production, but delivery and logistics.
With the right IP environment, the potential and opportunities for Malaysia are huge. Due to the COVID-19 crisis, investments in the life-sciences research and development sector are piling into the region. However, much of it is going to Singapore where standards of IP protection are world-class.
BioNTech — a German biotechnology company that developed an mRNA Covid-19 vaccine jointly with US drugmaker Pfizer — announced last May that it will build a manufacturing facility in Singapore to produce mRNA vaccines and drugs to treat infectious diseases and cancer. BioNTech also plans to set up its Southeast Asia headquarters in Singapore.
Malaysia need not continue losing out to Singapore, given its advanced science base, good regulatory quality, decades of experience in managing disease outbreaks, and existing capacities in high-tech manufacturing.
By ending its ambivalence towards the protection of intellectual property rights, especially in the life sciences, the government can bridge the gap towards achieving its aspirations to be a globally competitive, high-income knowledge-economy.
About Geneva Network
Geneva Network is a research and advocacy organisation focusing on international innovation, trade and development policy. Website: https://geneva-network.com/
About Galen Centre
The Galen Centre for Health and Social Policy is an independent public policy research and advocacy organisation based in Malaysia dedicated to discussing health and social issues through the lens of public policy. We are a non-partisan and not-for-profit organisation. We work to improve health and social conditions through research, advocacy, networking and relationship-building.