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Growing Demand for Halal PharmaceuticalsWith increase in awareness for implementation of Sharia-approved healthcare products, modern lifestyle and rising income levels, the demand for Halal medicines also soared in recent times. Siddharth Dutta explains how.

In the Middle East and North Africa (MENA)

region, one of the prominent traditional forms of

medicine called “Unani” or “Yunnai” (originating

from Greece) gave birth to the traditional Muslim

pharmaceutical industry in the time of Galen (131-

210 AD), a prominent Greek physician, surgeon

and philosopher who had a huge influence on

Muslim physicians.

Later, this form of medicine was developed

by Arab physicians Rhazes (850-925 AD)

and Avicenna (980-1037 AD). The traditional

medicine preferred by Muslims struggled to pick

up due to poor R&D, lack of market demand and

investment, and low-quality finished products.

With growing awareness for implementation of

Sharia-approved healthcare products, modern

lifestyle and rising income levels, the demand

for Halal medicines has also increased in recent

years. Countries like Australia, the US and

Singapore have started investing in Halal

pharmacies, and it is likely that this trend will

grow to other regions as well.

Malaysia has been one of the major contributors

in upgrading the processing and quality of Halal

pharmaceuticals. The government has been

working on this since 1975, and recently has

come out with the world’s first Halal certification

for pharmaceuticals in 2012. Malaysia is closely

followed by Indonesia and Thailand.

Market overviewHalal pharmaceutical has strong growth

Traditional and modern pharmaceutical

industries have co-existed for a long

time. On one hand, modern medicine

is more technology based, while the traditional

form is more herbal approach (sometimes animal

products).

Halal vaccines for meningitis, hepatitis and meningococcal are expected to enter the market by 2019. (Photo courtesy of DXfoto.com)

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opportunities for investors due to the existing niche population,

high disease prevalence, and increased awareness of Sharia

approvals for these products. More than 25 percent of the global

population are Muslims—an estimated 1.8 billion people. Of the

total Muslim population, approximately 48 percent live in MENA,

24 percent in Asia-Pacific, 7 percent in sub-Saharan Africa, and

the rest in Europe and America.

Out of faith, Muslims prefer pharmaceuticals which are permitted

by the Sharia. Broadly speaking, pharmaceuticals for Muslims are

categorised as “Halal” (in Arabic), which is lawful and permitted by

Sharia; “Haram”, which means prohibited; and finally “Mashbooh”,

which means doubtful or questionable.

The global Halal market is estimated at US$2.3 trillion (excluding

Islamic banking), of which the pharmaceutical industry has a

share of US$0.5 trillion (market share of 22 percent). Malaysia,

Indonesia and Singapore are some of the prominent markets for

Halal pharmaceutical manufacturers, while retail outlets have

been operational in countries in other regions.

Factors that favour growthInvestors who are looking at Halal pharmaceuticals as their next

business should ask these questions:

• What are the challenges?

• Where is the addressable market?

• How can I benefit from this?

Currently the biggest challenge faced by pharmaceutical

companies is finding the origin or source of the medicines.

Most antibiotics are sourced from bacteria, and whether they

be can Halal is highly debatable. This can be an opportunity

for manufacturers to supply synthetic molecules with similar

composition and efficacy. Strong R&D can only drive such a

situation.

Halal vaccinesThe vaccine market is lucrative since there is a pressing demand

for vaccines amongst the population which heads to Mecca

for their annual pilgrimage (Hajj). Since the existing vaccines

for meningitis, hepatitis and meningococcal are pork-based

(pork is forbidden or “Haram” in Islam), the Malaysian Industry

Development Corporation (HDC), in collaboration with a Saudi

Arabia-based partner, is now developing Halal vaccines for such

diseases. These vaccines are expected to enter the market by

2017.

Entry point marketsCompanies who are eyeing to set up new manufacturing

facilities have to take a lot of factors into consideration, such

as environmental regulation compliance, incentives for new

investors (tax rebates), reliable infrastructure, and skilled

manpower.

Most antibiotics are sourced from bacteria, and whether they be can Halal is highly debatable.

Products with Halal certifi cation can also be consumed by non-Muslims due to their high quality and hygiene. This means Halal medicine is not a niche market.

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In the last few years, several countries have become sought-after

places for new investors of Halal drug manufacturing. Some of

them are:

1. Malaysia: The country is one of the few which has been

favouring the Halal industry. Halal Industrial Parks in Penang

have been opened for pharmaceutical investors to set up

manufacturing plants. In addition, there is a Halal Penang port

with warehouse and cold storage facilities for export.

Due to the high cost of medical services and drugs, there is a

high demand for low-cost medicines, herbals and biosimilars

in the domestic market. So besides exporting Halal medicines,

investors consider Malaysia as an alternative market for end users

(non-Muslims and Muslims alike).

Sixty percent of the population in Malaysia are Muslims and

can be considered a huge potential market for Halal

pharmaceuticals. Chemical company Malaysia (CCM) Berhad

is one of the leading Halal pharmaceutical companies in the

country. It reported a net export of US$10.8 billion in 2012

with its 200 Halal-certified products. CCM — including its three

subsidiaries, namely CCM Pharmaceuticals Sdn Bhd, Upha

Pharmaceutical Manufacturing (M) Sdn Bhd, and Duopharma

(M) Sdn Bhd) – is also the first and only company to have been

awarded this certification.

Malaysia started its process of Halal pharmaceutical long back

in 1975. In fact it is the first country in the world which created the

halal certification for pharmaceutical products, MS2424, certified

by JAKIM (Islamic Development Department of Malaysia).

2. Indonesia: The Indonesian government is currently indecisive

in passing the Halal law for medicines, and it is unlikely that the

law will be passed before 2016.

Many drug manufacturers (including vaccines) in the country

import raw materials and hence the origin of products (Haram

or Halal) is unclear. This will likely slow down Halal investment

pickup in Indonesia.

3. Brunei: There are Halal pharmaceutical manufacturers in

Brunei as well. Simphor Pharmaceutical, an emerging Halal

pharmaceutical company, is aiming to enter the Middle East and

ASEAN markets for its Halal nutraceuticals and pharmaceutical

products. The company, which operates as a joint venture with

Canada’s Viva Pharmaceutical Inc., has invested US$32.6 million

Dr Siddharth Dutta is the Industry Manager for Life Sciences at Frost and Sullivan, Malaysia.

for this project and currently awaiting certifications from local

governments.

Final wordHalal consumption is a principal focus of Islam. With the awareness

and availability of Halal medicines, the market demand has also

increased. However, it remains to be seen if Asia-Pacific would

take over MENA in terms of manufacturing and export. It would

be also interesting to observe if Halal vaccine development can

change the market perception.

Products with Halal certification can also be consumed by non-

Muslims due to their high quality and hygiene. This means Halal

medicines is not a niche market. PA

The traditional medicine preferred by Muslims struggled to pick up due to poor R&D, lack of market demand and investment, and low-quality fi nished products.