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Malaysia
Your Profit Centre in Asia
www.mida.gov.my
Preface This guidebook for the pharmaceutical industry in Malaysia serves as an important source of information for investors intending to invest in this industry. It also spells out the procedures and requirements for the various applications for licences and permits for the setting up of a business in the pharmaceutical industry. The Malaysian Investment Development Authority (MIDA) is the Government’s principal agency under the Ministry of International Trade and Industry (MITI) responsible for the promotion and coordination of industrial development in Malaysia. MIDA assists companies which intend to invest in the manufacturing and services sectors in the country. MIDA has a global network of 23 overseas offices covering North America, Europe and Asia Pacific to assist investors. Within Malaysia, MIDA has 12 branch offices in the various states to facilitate investors in the implementation and operation of their projects. For more information on investment opportunities in Malaysia and contact details of MIDA, visit www.mida.gov.my. Published by
Contents Fact Sheet of Malaysia 2 - Background of Malaysia - Key Economic Indicators Healthcare in Malaysia 3 - The Pharmaceutical Industry in Malaysia - Investment Opportunities - Infrastructure Support - Intellectual Property (IP) Protection Why Malaysia 12 Getting Started in Malaysia 13 - Starting a Business - Taxation - Approval of Manufacturing Projects - Approval of Expatriate Posts Incentives for Investment 19 - Incentives for Manufacturing Companies - Incentives for High Technology Companies - Incentives for Strategic Projects - Incentives for Research & Development (R&D) - Incentives for the Principal Hub - Other Incentives Regulatory Control in the Pharmaceutical Industry 21 - Regulatory Agency - Drug Control Authority - Product Registration - New Application Processing Procedures - Application Formalities - Application Processes - Regulatory Outcome - Registration Maintenance - Online Registration System - Licence Issued for Registered Products - Manufacturing Licence Application Procedures - Bioavailability and Bioequivalence Study for Pharmaceutical Products Useful Contacts 45 - MIDA Overseas Offices - MIDA State Offices - MITI Overseas Offices - MATRADE Overseas Offices - MATRADE State Offices - Ministry of Health and Relevant Division/Agencies
2 Fact Sheet of Malaysia
Background of Malaysia
Malaysia covers an area of about 330,396 square kilometres, consisting of 13
states, namely Johor, Kedah, Kelantan, Melaka, Negeri Sembilan, Pahang, Perak,
Perlis, Penang, Sabah, Sarawak, Selangor and Terengganu. Apart from the 13
states, there are three Federal Territories, which are Kuala Lumpur, Putrajaya
and Labuan. Kuala Lumpur is the capital of Malaysia. Malaysia lies entirely in the
equatorial zone and the average daily temperature throughout Malaysia varies
from 21°C to 32°C.
Malaysia is a multi-ethnic country. The principal ethnic groups are Malays, followed
by Chinese and Indians. Other significant groups are the indigenous people of
Sarawak and Sabah, including the Dayaks, Kadazans, Bajaus, Melanaus and
Muruts.
MALAYSIA
Major exports of Malaysia are manufactured goods such as electrical and Kuala Lumpur
electronics products, machinery and appliances, chemicals, plastic products,
iron, steel and metal products, and petroleum-based products. In January 2016,
the share of exports of manufactured goods to total exports is 82.2%. Imports
comprise mainly intermediate goods such as primary and processed industrial
supplies, thermionic valves and tubes, parts and accessories of capital goods,
primary and processed fuel lubricants, and parts and accessories for transport
equipment.
PERLIS
KEDAH
PENANG KELANTAN
SABAH
PERAK
TERENGGANU
SELANGOR
Kuala Lumpur PAHANG
NEGERI
SEMBILAN
MALACCA SARAWAK
JOHORE
Key Economic Indicators
2016 f
Population 31.4 million
Labour force 14.6 million
Unemployment rate 3.3 – 3.5%
GDP RM1,106.10 billion
GDP growth 4.0 – 4.5%
Per capita income RM37,930
Inflation rate (CPI) 2.5 – 3.5%
Total export (f.o.b.) RM707.6 billion
Total import (c.i.f.) RM608.1billion
f: forecast
Sources: Bank Negara Malaysia Annual Report 2016
Exchange rate: USD1 = RM3.20 (Source : Bank Negara Malaysia)
Healthcare in Malaysia 3
Healthcare in Malaysia
Malaysia’s primary care model has been acknowledged by the World Health
Organisation as a viable system to achieve “Health for All”. The demand for quality
healthcare continues to rise in Malaysia with increasing affluence and rising consumer
awareness. Currently, about 7.25% of the country’s GDP is expected to be spent on
healthcare. This is expected to increase with the growing population and a longer life
expectancy, as well as the Government’s increasing expenditures on provision of better
healthcare facilities and services.
Healthcare remains a priority of the Malaysian Government. For 2016, the Government
had increased the budget allocation for healthcare to RM23.03 billion. A total RM21.4
billion for the budget will be spent on healthcare development to enhance health
facilities and provide medical equipment, increase supply of medicines, develop human
resources, intensify research and enforcement activities, as well as to build more
hospitals, clinics and quarters.
Demographics
Crude Birth Rate (per 1000 population) 16.9*
Crude Death Rate (per 1000 population) 4.8*
Infant Mortality Rate (per 1000 live births) 6.2*
Life Expectancy - Male (age in years) 72.5*
Life Expectancy - Female (age in years) 77.4*
* Provisional/Preliminary data (as at August 2016)
Health Facts
Number of registered doctors (Government & Private) 46,491
Population per doctor 1:656
Number of hospitals 469*
Number of clinics 13,917**
Number of beds 61,370
Number of dental chairs 5,263***
* Includes Government hospitals, special medical institutions, non-MOH Government
hospitals & private hospitals.
** Includes MOH dental clinics, MOH mobile dental clinics (including mobile and pre-school
team); MOH Health Clinics, MOH Community Clinics, MOH maternal & child health clinics,
MOH mobile health clinics, private medical clinics & private dental clinics.
*** Includes MOH dental clinics and MOH mobile dental clinics.
Source: Ministry of Health Malaysia, (as at August 2016)
4 Healthcare in Malaysia
The Pharmaceutical Industry in Malaysia
The pharmaceutical industry is one of the new growth areas targeted for promotion
and development by the Government. The products manufactured by the Malaysian
pharmaceutical industry are broadly categorised into four categories, i.e prescription
medicines, over- the- counter (OTC) products, traditional medicines and health/
food supplements. The pharmaceutical companies are mainly small and medium-
sized companies engaged in the production of generic drugs, traditional medicines
and herbal supplements as well as contract manufacturing for foreign multinational
corporations (MNCs).
According to the Drug Control Authority (DCA) of
the Ministry of Health, as of October 2014, there
are 252 manufacturing companies licenced by DCA
comprising 161 traditional medicine companies,
85 pharmaceutical companies and 6 veterinary
premises.
Among the major local companies are Pharmaniaga
Manufacturing Berhad, Hovid Berhad, CCM
Duopharma Biotech Sdn Bhd, and Kotra Pharma
(M) Sdn Bhd. These companies focus mainly on
generic drugs, particularly antibiotics, painkillers,
health supplements and injectables. Some of the
foreign- owned companies with manufacturing
presence in the country include Y.S.P. Industries (M)
Sdn Bhd (Taiwan), Sterling Drug (M) Sdn Bhd (the
manufacturing arm of GlaxoSmithKline from UK),
Ranbaxy (M) Sdn Bhd (India), Xepa- Soul Pattinson
(M) Sdn Bhd (Singapore) and SM Pharmaceutical
Sdn Bhd (India).
The large MNCs such as Pfizer, Schering Plough, Novartis, Eli Lilly, Astra Zeneca
are mainly licenced importers. Their products, which are mostly branded drugs, are
distributed by locally incorporated companies.
The Malaysian pharmaceutical industry has the capability to produce almost all dosage
forms, including sterile preparations such as eye preparations, injections, soft gelatine
capsules and time release medications. In January 2002, Malaysia was admitted as the
26 th member of the Pharmaceutical Inspection Cooperation/Scheme (PIC/S)*. This
would facilitate exports of Malaysian pharmaceutical products to the member countries
which include EU, Australia and Canada.
* The PIC/S provides an active and constructive co-operation in the field of Good Manufacturing
Practice(GMP) between countries and pharmaceutical inspection authorities. It leads the
international development, implementation and maintenance of harmonised GMP Standards
and Quality System of Inspectorates in the field of medical products.
Healthcare in Malaysia 5 Investment Opportunities Biopharmaceuticals / Biogenerics (Biosimilars) The potential expansion of biosimilars is expected to have a major implication on the biopharmaceutical industry. The impact of biosimilars on the biopharmaceutical industry is expected to be similar if not greater than the impact of generics on the pharmaceutical industry. Currently biopharmaceuticals are considerably more expensive than conventional medications. However, Malaysia offers a more competitive cost option to investors due to the available ecosystem. A large number of first generation biopharmaceutical products are nearing maturity and major biopharmaceutical companies are likely to move these out to countries like Malaysia that offer a good value preposition. Currently, in Malaysia, local and foreign players are already engaged in activities like biopharmaceutical APIs, FDA / EMEA cGMP compliant services, specialising in monoclonal antibodies and recombinant proteins. In addition, specialised research, development and commercialisation of biopharmaceutical products is on- going. The government is further encouraging potential investors to move up the value-chain. Contract Manufacturing The current trend among the major global drug companies is to outsource their manufacturing operations to enable them to concentrate on time consuming and costly `gene hunting’ methods of R&D for new drug discovery. The pharmaceutical industry in Malaysia could capitalise on this development by manufacturing generic and patented products of these companies on contract basis. A number of local companies are keen to provide contract manufacturing services to interested parties. Generic Drugs Foreign pharmaceutical companies are encouraged to set up facilities in Malaysia to manufacture off-patented drugs. Herbal Medicines Foreign pharmaceutical companies could enter into collaborations with local companies and research institutions to produce new medicinal drugs. Manufacturing of Active Pharmaceutical Ingredients (API) There is huge demand for API to be used in the manufacturing of local pharmaceuticals as well as for export. Other higher value-added products and services The products include innovator drugs, vaccines, biopharmaceuticals, inhalation products drug discovery activities or new chemical entity (NCE) and novel delivery systems.
6 Healthcare in Malaysia
Infrastructure Support
Efficient Logistics
and Well-Developed
Infrastructure
The prime advantage to
manufacturers in Malaysia
has been and continues to
be the nation’s persistent
drive to develop and upgrade
its infrastructure. Integrated
logistics have ensured that
Malaysia’s pharmaceutical
products reach markets in Asia
and worldwide on time, enabled
by the extensive infrastructure that includes world-class airports, seaports and
sophisticated telecommunications network.
Availability of
Industrial Estates and
Specialised Parks
Industries in Malaysia are mainly
located in over 200 industrial
estates or parks and 13 Free
Industrial Zones(FIZs) developed
throughout the country. FIZs are
export processing zones which have been developed to cater to the needs of export-
oriented industries such as pharmaceutical industry. Companies in FIZs are allowed duty
free imports of raw materials, components, parts, machinery and equipment directly
required in the manufacturing process. In areas where FIZs are not available, companies
can set up Licenced Manufacturing Warehouses (LMWs) which are accorded facilities
similar to those enjoyed by establishments in FIZs.
Malaysia has also developed specialized parks to cater to the needs of specific
industries which are technology-intensive and research-intensive. Examples of these
parks are the Technology Park Malaysia in Bukit Jalil, Kuala Lumpur and the Kulim
Hi- Tech Park in the northern state of Kedah. These parks comprise state-of-the-art
buildings with specific functions and fully-integrated high technology park.
Healthcare in Malaysia 7
Perlis
Kedah Labuan International Business
Kulim Hi-Tech Financial Centre
Park Penang
Kelantan Labuan
Perak Sabah
Terengganu
Pahang
Technology
Park Malaysia Selangor M A L AY S I A
Kuala Lumpur
N. Sembilan
Port Klang Melaka
Free Zone Johor Sarawak
Enstek
Nusajaya
Other specialised parks developed by the Malaysian government agencies are as
follows:
Bio-XCell Malaysia
Bio-XCell is a premier biotechnology park and ecosystem dedicated to healthcare and
industrial biotechnology developed by Malaysian Bio-XCell Sdn. Bhd. (a joint venture
company formed between BiotechCorp and UEM Land Berhad).
Bio-XCell is strategically located on 160 acres in Nusajaya, within the Iskandar region of
Johor, Malaysia, and close to the border with Singapore providing global connectivity
through a network of five seaports and two international airports, all within 59 km.
Bio-XCell offers an environment conducive for the development and manufacturing
of biologics, pharmaceuticals, bio-based/green chemicals and other solutions to
heal, fuel and green the world. As a managed park, Bio-XCell provides its clients and
investors with a range of value added benefits including comprehensive infrastructure,
high speed internet access, park maintenance and security as well as core facilities to
nurture the ecosystem.
Key facilities of the park include:
• Central Hub: A multipurpose complex with a variety of office and lab space for rent.
The focal point of the park providing amenities such auditorium, business centre,
training facilities, Food & Beverage and retail outlets.
• Central Utilities Facility: Providing utilities for biomanufacturing such as industrial
steam, chilled water and waste water treatment service to clients on a user pays
basis.
• Standard Shells: These buildings providing 20,000 sq. ft. of space, can be fit-out
to clients’ needs and are available for rent or purchase.
• Plots of freehold land: Available for sale, enabling clients to build their own customised
facilities.
For further information on Boi-XCell,
visit www.boi-xcell.my
8 Healthcare in Malaysia
Penang Science Park
Penang Science Park is designed with good infrastructure and amenities to cater for
strategic industries such as high technology, biotechnology, halal industries and SMI park.
A total of 48 acres has been allocated for the biotechnology and pharmaceutical
industries.
Facilities / Centres Distance / Driving Time
Penang International Airport 42 km (40 minutes)
Penang Port (Butterworth) 23 km (20 minutes)
North-South Highway 5 km (5 minutes)
Urban Centres 19 km (20 minutes)
Butterworth 10 km (15 minutes)
Seberang Jaya 5 km (5 minutes)
Batu Kawan (new township)
University Technology Mara 10 km (10 minutes)
University Science Malaysia 20 km ( 25 minutes)
Japan Malaysian Tech, Institute within the park
For further information on
Penang Science Park, visit
www.pdc.gov.my
Kulim Hi-Tech Park (KHTP)
The Kulim Hi-Tech Park (KHTP), officially opened in 1996, is the first Hi-Tech Park in
Malaysia. The KHTP is situated in the district of Kulim, in the state of Kedah, in the
north-west of Peninsular Malaysia. Currently, the development of KHTP covers an area
of approximately 1,700 hectares (approximately 4,000 acres).
The KHTP is conceived and developed as one of the national strategies of Vision 2020
for Malaysia to become a fully-industrialised nation by 2020. Envisioned to be the
‘Science City of The Future’, the KHTP has continually being developed and promoted
as an integrated science park targeting clean, capital-intensive, and high value-added
technology-related industries primarily in the f fields of advanced electronics, mechanical
electronics, telecommunications, semiconductors, optoelectronics, biotechnology,
advanced materials, research and development and emerging technologies.Healthcare in Malaysia 9
PERLIS
Right from the onset, the development of KHTP incorporates 6 elements or Zones, namely:
• industrial; KEDAH
• R&D and training; PENANG
KELANTAN
• amenity;
• housing; PERAK TERENGGANU
• urban; and PAHANG
• institutional. SELANGOR
Kulim Technology Park Corporation Sdn Bhd (D-44351), a whole-subsidiary of the Kedah
NEGERI
SEMBILAN
NUSAJAYA
State Development Corporation, is the developer and manager of the MELAKA KHTP; while
JOHOR
the Malaysian Federal Government fully supports the KHTP development by way of
dedicated development funds, as well as, other critical advisory and promotion support.
For further information on
Kulim Hi-Tech Park, visit
www.khtp.com.my KEDAH
PENANG
KELANTAN
Enstek PERAK TERENGGANU
techpark@ enstek is currently the
PAHANG
technology park with the highest number
SELANGOR
of Biotechnology and Medical Industrial
Companies in Malaysia. NEGERI
SEMBILAN
MELAKA
Located within the township of Bandar JOHOR
Enstek, techpark@enstek is just 10 minute
away from Kuala Lumpur International ENSTEK Technology Park
Airport (KLIA) and only 38 minutes from
downtown Kuala Lumpur via the Express
Rail Link (ERL).
Bandar Enstek consists of 4 main components; residential area, technology land park,
commercial hub and institutional zones.
techpark@enstek is envisaged to become a world-class technology hub catering for
the need of high technology and eco-conscious industries such as biotechnology,
green technology and information technology (ICT) industries. It is also endowed with
ready infrastructure and amenities to support such sectors.
For further information on
Enstek, visit
www.techpark.enstek.com10 Healthcare in Malaysia
Availability of Clinical Trials and Bioequivalence Centres
The Clinical Research Centre (CRC), comprising a network of 17 centres around the
country, acts as a one-stop-centre by providing a single point of contact to access
all Ministry of Health hospitals and clinics to conduct clinical trials in Malaysia. These
clinical trial centres have linkages to more than 50 general and district hospitals, and
more than 100 health clinics as potential sites for clinical trials with access to 550
clinical investigators and 17 million patients from diverse therapeutic areas in the public
healthcare system in Malaysia.
The private entities which conduct clinical trials are as follows:-
• Infokinetics Research Centre Sdn. Bhd.
• International Medical University
• University Malaya Medical Centre
• NCI Hospital
• Universiti Kebangsaan Malaysia Medical Centre
• Hospital Universiti Sains Malaysia
• Sunway Medical Centre
• Universiti Teknologi Mara, Selayang and Sungai Buloh
• Mahkota Medical Centre
• Lam Wah Ee Hospital
• Mount Miriam Cancer Hospital
• Gleneagles Medical Centre
• Columbia Asia Medical Centre
• Island Hospital
• Penang Adventis Hospital
• Pantai Hospital Penang
• Loh Guan Lye Specialist Centre
• Monash University Sunway Campus & Johor Bahru Campus
Bioequivalence Centres
• University Malaya Medical Centre
• School of Pharmaceutical Sciences,
Hospital Universiti Sains Malaysia
• Infokinetics Research Centre Sdn BhdHealthcare in Malaysia 11
Intellectual Property (IP) Protection
Malaysia has strong IP protection in place and is committed to safeguarding IP on
inventions. To ensure IP protection in Malaysia is in line with international standards
and provides protection for both local and foreign investors, Malaysia is a party to the
following treaties:
• World Intellectual Property Organisation (WIPO), 1967;
• Paris Convention for the Protection of Industrial Property 1883;
• Berne Convention for the Protection of Literary and Artistic Works (1886);
• Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement;
• Patent Cooperation Treaty (PCT) 1970
For further information on
IP protection in Malaysia, visit
www.myipo.gov.my
IP in Malaysia comprises:
• Patents
• Trade Marks
• Industrial Designs
• Copyrights
• Geographical Indications
• IC Layout Designs12 Healthcare in Malaysia
“Why Malaysia”
Supportive Government Policies Vibrant Business Environment
• Pro-business policies • Market-oriented economy
• Responsive government • Well-developed financial and banking
sector, including the Labuan International
• Liberal investment policies
Financial Exchange
• Attractive tax and other incentives
• Wide use of English, especially in business
• Liberal exchange control regime Legal and accounting practice based on
the British system
• Intellectual property protection
• Large local business community with a
long history in international business links
• Large foreign business community in all
An Educated Workforce business sectors
• Extensive trade links - country’s total trade
• Talented, young, educated and productive was valued at RM1.485 trillion (2016)
workforce
• Multilingual workforce speaking two or
three languages, including English
• Comprehensive system of vocational and
industrial training, including advanced
skills training.
• Harmonious industrial relations with
minimal trade disputes Quality of Life
• Friendly and hospitable Malaysians
• Safe and comfortable living environment
Developed Infrastructure • Excellent housing, modern amenities,
good healthcare and medical facilities
• Network of well-maintained highways and
railways • Excellent educational institutions including
international schools for expatriate children
• Well-equipped seaports and airports
• World-class recreational and sports
• High quality telecommunications network facilities
and services
• Excellent shopping with goods from all
• Fully developed industrial parks, including over the world
free industrial zones, technology parks
and Multimedia Super Corridor (MSC)
• Advanced MSC Malaysia Cybercities and
CybercentresWhy Malaysia 13
Getting Started in Malaysia
Starting a Business
In general, the overall cost of doing business in Malaysia is competitive. In Malaysia,
the process is facilitated by experienced and reputable agencies that exist both within
and outside the Federal and local governments. For starting a business in Malaysia, the
main fees which need to be paid are fees to the Companies Commission of Malaysia
(SSM) and fees for company secretarial services.
Main fees to be paid to the Companies Commission of Malaysia
RM USD
Reservation of a name 30 8.50
For registration of a company, fees range according to nominal share capital, e.g.:
- Below RM100,000 1,000 313
- RM100,001 - RM500,000 3,000 938
- RM500,001 - RM1,000,000 5,000 1,563
- RM1,000,001 - RM5,000,000 8,000 2,500
- RM5,000,001 - RM10,000,000 10,000 3,125
- RM10,000,001 - RM25,000,000 20,000 6,250
- RM25,000,001 - RM50,000,000 40,000 12,500
- RM50,000,001 - RM100,000,000 50,000 15,625
- Exceeding RM100 million 70,000 21,875
USD1 = 3.20 (Source:Bank Negara Malaysia)
Source: Companies Act, 1965 (Act 125) & subsidiary legislations.
For the full range of fees, please visit SSM website at www.ssm.com.my
Other costs of doing business in Malaysia that investors need to know are rental rates
for prime office space, cost of industrial land, cost of ready-built factory and average
construction costs of factory building. The costs will depend on the business location
selected by the investors. For example, if it is in Kuala Lumpur, the rental rate for prime
office space is in the range of RM64.60 - RM102.25 (USD20.77 – USD32.88) / square
metre/month.
For more details on these costs,
visit www.mida.gov.my14 Getting Started in Malaysia
Registration of Business/ Companies Commission
Incorporation of Company of Malaysia (SSM)
www.ssm.com.my
• Sole proprietorships
• Partnerships
• Company
Application for Manufacturing Malaysian Investment Development
Licences and/or Tax Incentives Authority (MIDA)
www.mida.gov.my
Application for Other Approvals and Permits
Approvals at the level of Approvals at the level of
State Governments and Federal Ministries /
Local Authorities Departments / Agencies
• Acquire land and premise (Industrial • Good Manufacturing Practice (GMP)
land /Premise / Factory Approval) & Registration of Products from
• No Objection Letter for location National Pharmaceutical Control
of projects Bureau (NPCB), Ministry of Health
(www.bpfk.gov.my)
• Planning Permits
• Department of Occupational Safety
• Building Plans and Health (www.dosh.gov.my)
• Certificate of Fitness (CF) • Fire and Rescue Department
• Business Licence (www.bomba.gov.my)
• Department of Environment
(www.doe.gov.my)
Utilities • Electricity supply - Tenaga Nasional Berhad
(www.tnb.gov.my)
• Water supply - Local Water Authority
(www.jba.gov.my)
• Telecommunication - Telekom Malaysia Berhad
(www.tm.com.my)
Immigration • Expatriates - MIDA (www.mida.gov.my) or
Immigration Department (www.imi.gov.my)
• Foreign Workers - Immigration Department
(www.imi.gov.my)Getting Started in Malaysia 15 Taxation Generally, all income of companies and individuals accrued in or derived from sources outside Malaysia and received in Malaysia is liable to tax. However, effective from the year of assessment 2004 income remitted to Malaysia by resident companies (other than companies carrying on the business of banking, insurance, air and sea transportation), resident individuals, non-resident companies and non-resident individuals are exempted from tax. Income tax in Malaysia is assessed on income earned in the current year. The self- assessment system was implemented for companies, sole proprietors, partnerships, cooperatives and salaried groups to streamline the tax administration system. Corporate Tax Resident and non-resident companies 25% Resident companies with paid-up capital of RM2.5 million (USD811,688.31) and less at the beginning of the basis period for a year of assessment • on the first RM500,000 (USD162,337.67) chargeable income 20% • on subsequent chargeable income 25% Personal Income Tax Resident individuals with chargeable income of RM16,667 1%-26% (USD4,722) and above per annum (after deduction of personal reliefs) Non-resident individuals (not entitled to any personal reliefs) 26% Withholding Tax (Non-resident persons) Special classes of income (use of moveable property, technical 10% services, installation services on the supply of plant and machinery, etc.) Interest 15% Royalty 10% Contract payment on: - account of contractor 10% - account of employee 3% Other income such as commission, guarantee fees, 10% agency fees, brokerage fees, introducers fees etc. Source: Inland Revenue Board – www.hasil.org.my USD1 = RM3.20 (Source: Bank Negara Malaysia)
16 Getting Started in Malaysia
Good and Services Tax (GST)
The implementation of a goods and services tax (GST) of 6% is to replace the current
consumption tax comprising of Sales and Services Tax (SST) and to eliminate its
inherent weaknesses such as cascading and compounding effects, transfer pricing and
value shifting, no complete relief on goods exported, discourage vertical integration,
administrative bureaucratic red tape, classification issues and etc.
GST, also known as value added tax (VAT) in many countries is a multi-stage consumption
tax on goods and services. GST is levied on the supply of goods and services at each
stage of the supply chain from the supplier up to the retail stage of the distribution. Even
though GST is imposed at each level of the supply chain, the tax element does not
become part of the cost of the products because GST paid on the business inputs is
claimable. Hence, it does not matter how many stages where a particular good and
service goes through the supply chain because the input tax incurred at the previous
stage is always deducted by the businesses at the next step in the supply chain.
With GST, businesses can benefit from recovering input tax, thus reducing cost of
doing business. 22 General Policies, Facilities and Guidelines GST is a broad based
consumption tax covering all sectors of the economy i.e all goods and services made
in Malaysia including imports except specific goods and services which are categorised
under zero rated supply and exempt supply orders as determined by the Minister
of Finance and published in the Gazette. GST can only be levied and charges if the
business is registered under GST. A business is not liable to be registered if its annual
turnover of taxable supplies does not reach the prescribed threshold. Therefore, such
businesses cannot charge and collect GST on the supply of goods and services made
to their customers. Nevertheless, businesses can apply to be registered voluntarily. For
further information on GST, visit http://gst.customes.gov.my
Rates of Capital Allowances
Capital allowances are given on qualifying capital expenditure. Initial allowances
are given only once while annual allowances are given every year by the straightline
method. Some of the items accorded allowances are shown below. For plant and
machinery, companies are advised to verify with the Inland Revenue Board on the
specific items which qualify.
Initial Annual
Allowance Allowance
Industrial buildings 10% 3%
Plant and machinery 20% 14%
Heavy machinery and motor vehicles 20% 20%
Computer and IT equipment 20% 40%
Environmental control equipment 40% 20%
Others 20% 10%
Source: Inland Revenue Board - www.hasil.org.myGetting Started in Malaysia 17 Approval of Manufacturing Projects The Industrial Co-ordination Act 1975 (ICA) requires companies manufacturing pharmaceutical products with shareholders’ funds of RM2.5 million and above or engaging 75 or more full-time paid employees to apply for a manufacturing licence for approval by the Ministry of International Trade and Industry (MITI). Foreign investors can now hold 100% of the equity in all investments in new projects, as well as investments in expansion/diversification projects by existing companies. Malaysia’s commitment in creating a safe investment environment has convinced more than 5,000 international companies from over 80 countries to make Malaysia their regional and global operations. A company whose equity participation has been approved will not be required to restructure its equity at any time as long as the company continues to comply with the original conditions of approval and retain the original features of the project.
18 Getting Started in Malaysia
Approval of Expatriate Posts
Manufacturing companies are allowed to bring in expatriate personnel where there
is a shortage of trained Malaysian to safeguard their investment in the country. i.e
“time posts” and “key posts”. Key posts refer to posts that are permanently filled
by foreigners. The current guidelines on the employment of expatriate personnel for
manufacturing companies are as follows:
Foreign paid-up capital of USD2 million and above:
• A maximum of 10 expatriate posts, including five key posts.
• Can be employed for up to a maximum of 10 years for executive posts*, and 5
years for non-executive posts**
Foreign paid-up capital of more than USD200,000 but less than USD2 million:
• A maximum of five expatriate posts, including at least one key post.
• Can be employed for up to a maximum 10 years for executive posts*, and 5 years
for non-executive posts**
Foreign paid-up capital of less than USD200,000:
• Key posts can be considered where the foreign paid-up capital is at least
RM500,000.
• Time posts can be considered for up to 10 years for executive posts* and 5 years
for non-executive posts**
• The number of key posts and time posts allowed depends on the merits of each case
* that require professional qualifications and practical experience
** that require technical skills and experience.Getting Started in Malaysia 19 Incentives for Investment The manufacturer of pharmaceuticals and related product is categorised as “promoted activities” or “promoted products”. Please refer to the List of Promoted Activities and Products in MIDA website at www.mida.gov.my Some of major tax incentives available for the pharmaceutical industry are as follows:- • Incentives for Manufacturing Companies • Incentives for High Technology Companies • Incentives for Strategic Projects • Incentives for Research & Development (R&D) • Incentives for the Principal Hub • Other incentives Incentives for Manufacturing Companies • Pioneer Status with income tax exemption of 70% or 100% on statutory income for a period of 5 years, or • Investment Tax Allowance (ITA) of 60% or 100% on qualifying capital expenditure incurred for a period of 5 years, or • Reinvestment Allowance (RA) of 60% on qualifying capital expenditure (to be offset against 70% or 100% of statutory income) for 15 consecutive years Incentives for High Technology Companies • Pioneer Status with full income tax exemption on statutory income for 5 years, or • ITA of 60% on qualifying capital expenditure for 5 years to be offset against 100% of statutory income Incentives for Strategic Projects • Pioneer Status with full income tax exemption on statutory income for 10 years, or • ITA of 100% on qualifying capital expenditure for 5 years to be offset against 100% of statutory income Incentives for Research & Development (R&D) Contract R&D Company • Pioneer Status with 100% income tax exemption on statutory income for 5 years, or • ITA of 100% on qualifying capital expenditure for 10 years to be offset against 70% of statutory income R&D Company • ITA of 100% on qualifying capital expenditure for 10 years to be offset against 70% of statutory income In-house Research • Investment Tax Allowance of 50% on qualifying capital expenditure for 10 years to be offset against 70% of statutory income
20 Incentives for Investment
Incentives for the Principal Hub
A Principal Hub refers to a locally incorporated company that uses Malaysia as a
base for conducting its regional and global businesses and operations to manage,
control, and support its key functions including management of risks, decision making,
strategic business activities, trading, finance, management and human resource.
Incentives
An approved Principal Hub company is eligible for a 3-tiered corporate taxation rate as
follows:
3-tier Incentive Tier 3 Tier 2 Tier 1
Blocks (years) 5 +5 5 +5 5 +5
Tax rate 10% 5% 0%
* Effective from 1st May 2015, the Principal Hub incentive, replaces the International Procurement Centres
(IPC), Regional Distribution Centres (RDC) and Operational Headquarters (OHQ) incentive schemes.
** For further information, please contact :
Regional Establishment & Supply Chain Management Division
Level 27, MIDA Sentral
No. 5, Jalan Stesen Sentral 5, Kuala Lumpur Sentral
50470 Kuala Lumpur, Malaysia
Tel: 603-2267 3633 (ext. 6676) Fax: 603-2274 5483
E-mail: investmalaysia@mida.gov.my Website: www.mida.gov.my
Other Incentives
i. Incentives for Export
• Double Deduction for the Promotion of Export
• Single Deduction for the Promotion of Export
• Double Deduction on Export Credit Insurance Premium
• Special Industrial Building Allowance for Warehouses
• Double Deduction on Freight Charges
• Incentive for the Implementation of RosettaNet
• Double Deduction for the Promotion of Malaysian Brand Names
ii. General Incentives
• Exemption from Import Duty on Raw Materials/Components
• Exemption from Import Duty and Sales Tax on Machinery/Equipment, Spare
Parts and Consumables
For further information on incentives for
investment, visit www.mida.gov.my21 REGULATORY CONTROL IN PHARMACEUTICAL INDUSTRY
22 Regulatory Control in Pharmaceutical Industry
Regulatory Agency
National Pharmaceutical Control Bureau (NPCB) / Biro
Pengawalan Farmaseutikal Kebangsaan (BPFK)
The regulatory control of pharmaceutical products and traditional medicines in Malaysia
is carried out by the National Pharmaceutical Control Bureau (NPCB), an institution
under the Pharmaceutical Services Division (PSD) Ministry of Health, which ensures the
quality, efficacy and safety of pharmaceutical products as well as the quality and safety
of traditional medicines and cosmetics marketed in the country.
The NPCB, formerly known as the National Pharmaceutical Control Laboratory, was
set up in October 1978 to implement quality control on pharmaceutical products. The
infrastructure and facilities were designed to meet the requirements for testing and
quality control activities.
The NPCB has in place a well-structured and comprehensive regulatory system. This
system handles the registration of pharmaceutical products and traditional medicines as
well as the notification of cosmetic products under the Control of Drug and Cosmetics
Regulations 1984.
The introduction of these regulations in June 1984 was an important milestone in the
history of drug regulatory activities in Malaysia as it provides for the establishment of
the Drug Control Authority ( DCA) to regulate the pharmaceutical industry. The DCA,
an executive committee which is responsible for product registration and licensing
of manufacturers, importers and wholesalers was established in 1985, whereby the
NPCB functions as the operational arm and the secretariat to the DCA.Regulatory Control in Pharmaceutical Industry 23 Since 1985, the NPCB has been given the task of ensuring the quality, efficacy and safety of pharmaceuticals through the registration and licensing scheme. This is achieved through evaluation of scientific data and laboratory tests on all products before they are marketed. A system to monitor products in the market was also setup. In addition, the Adverse Drug Reactions (ADR) monitoring program was launched in Malaysia in 1987 to carry out pharmacovigilance activities. Under the surveillance program, registered products are routinely sampled to ensure compliance with regulatory requirements. Under the ASEAN Technical Co-operation among Developing Countries (ASEAN TCDC) Program, the NPCB has been chosen and recognised by the ASEAN countries as the regional training centre for quality control of pharmaceuticals. NPCB has been the host for various training programs in quality control and has successfully conducted such trainings since 1986. In addition, the NPCB has also been receiving trainees from ASEAN countries as well as various other countries. In view of the technical expertise and training capabilities of NPCB, it received the recognition as a “WHO Collaborating Centre in the Regulatory Control of Pharmaceuticals” on 10th May 1996 . As a WHO Collaborating Centre for Regulatory Control of Pharmaceuticals, the NPCB will continue to provide training in pharmaceutical quality assurance and regulatory affairs to fellows from other countries. Due to its commitment and technical expertise, this institution is redesigned as WHO collaborating centre effective 1st August 2011 for a period of 4 years. In Addition, the NPCB successfully gained accession as the 26th member of the Pharmaceutical Inspection Co-operation Scheme (PIC/S) on 1st January 2002. Since then, NPCB has been actively involved in International Good Manufacturing Practice (GMP) and Quality Assurance programmes. Drug Control Authority (DCA) The Drug Control Authority (DCA) is the executive body established under the Control of Drugs and Cosmetics Regulations 1984 . The main task of this Authority is to ensure the safety, quality and efficacy of pharmaceuticals, traditional medicines, health supplements, veterinary products and personal care products that are marketed in Malaysia. This objective is being achieved through the following: • Registration of pharmaceutical products, natural products (traditional medicines) and veterinary products • Control of cosmetic products via the notification process • Licensing of premises for importers, manufacturers and wholesalers • Monitoring the quality of registered products in the market • Adverse Drug Reaction Monitoring
24 Regulatory Control in Pharmaceutical Industry
NATIONAL PHARMACEUTICAL CONTROL BUREAU
MINISTRY OF HEALTH MALAYSIA
DIRECTOR OF REGULATORY PHARMACY
CENTRE FOR CENTRE FOR
CENTRE FOR PRODUCT
ORGANISATIONAL QUALITY CONTROL
REGISTRATION
DEVELOPMENT
Complementary
Information Bio-Pharmaceutical
Medicines &
Technology Section Testing Section
Veterinary Section
Biotechnology Quality System Natural Products
Section Section Testing Section
New Drug Section Human Resource Reference Standard
Section Unit
Pharmaceutical
Regulatory
Chemistry Testing
Coordination Section
Section
Generic Medicines
Section
Non-Prescription
Medicines Section
CENTRE FOR POST CENTRE FOR
CENTRE FOR
REGISTRATION COMPLIANCE &
ADMINISTRATION
OF PRODUCTS LICENSING
Good Manufacturing
Pharmacovigilance Practice & Licensing Development Unit
Section
Clinical Research & Administration
Surveillance &
Compliance Section Services &
Complaints Section
Store Unit
Finance &
Cosmetic Section
Revenue Unit
Product Variation
SectionRegulatory Control in Pharmaceutical Industry 25 Product Registration Introduction The guidelines outlined in the Drug Registration Guidance Document (DRGD) primarily drawn up in accordance with the legal requirements of the Sale of Drugs Act 1952 and the Control of Drugs and Cosmetics Regulations 1984. Although the legal requirements of other related legislations have been included, applicants are reminded that it is their responsibility to ensure that their products comply with the requirements of these legislations, namely: • Dangerous Drugs Act 1952; • Poisons Act 1952; • Medicine (Advertisement & Sale) Act 1956; • Patent Act 1983; and • any other relevant Acts. Definition of a Product Under the Control of Drugs and Cosmetics Regulations 1984, a ‘product’ as defined in the Regulations, means a ‘drug’ in a dosage unit or otherwise, for use wholly or mainly by being administered to one or more human beings or animals for a medicinal purpose. Under the Sale of Drugs Act 1952, ‘drug’ includes any substance, product or article intended to be used or capable, or purported or claimed to be capable of being used on humans or any animal, whether internally or externally for a medicinal purpose used in humans (and animals). Drug Registration • Regulation 7 ( 1 ) (a) of the Control of Drugs and Cosmetics 1984 (Amendment 2006) requires all products to be registered with the DCA prior to being manufactured, sold, supplied, imported or processed or administered, unless the product is exempted under specific provision of the Regulations. • Any drug in a pharmaceutical dosage form intended to be used, or capable or purported or claimed to be capable of being used on humans or any animals, whether internally or externally for a medical purposes is required to be registered with the DCA.
26 Regulatory Control in Pharmaceutical Industry
• Medicinal purpose means any of the following purposes:
- Alleviating, treating, curing or preventing a disease or a pathological condition, or
symptoms of a disease
- Diagnosing a disease or ascertaining the existence, degree or extent of a
physiological or pathological condition;
- Contraception;
- Inducing anaesthesia;
- Maintaining, modifying, preventing, restoring or interfering with, the normal
operation of a physiological function;
- Controlling body weight;
- General maintenance or promotion of health or well-being
• The Regulations do not apply to the following products:
- Diagnostic agents and test kits for laboratory use
• Medical devices:
- Non-medical medic and contraceptive devices;
- Non-medical bandages, surgical dressing, plaster, dental fillings;
- Instruments apparatus, syringes, needles, sutures, catheters;
- Food, ( as defined under Food Act 1983 and Food Regulations 1985 , includes
every article manufactured, sold or represented for use as food or drink for
human consumption or which enters into or is used in the composition,
preparation, preservation, of any food or drink and includes confectionery,
chewing substances and any ingredient of such food, drink, confectionery or
chewing substances. This includes food for special dietary use for persons
with a specific disease, disorder or medical condition, and food which contain
quantities of added nutrients allowable under the Food Act and Regulations).
- Cosmetics, (in conformance with the harmonisation of cosmetic regulations i n
the ASEAN region and in compliance to the ASEAN Cosmetic Directive, cosmetics
are regulated via the notification process starting 1 January 2008).
- Instruments, apparatus, syringes, needles, sutures, catheters.
• Products which are not registered with the DCA and are intended to be imported for
the purpose of clinical trial shall have a Clinical Trial Import Licence (CTIL).
• Products which are not registered with the DCA and are intended to be manufactured
locally for the purpose of clinical trial should apply for exemption by the DCA (Clinical
Trial Exemption) from the provisions of Regulation 7(1) of the Control of Drugs and
Cosmetics Regulations 1984.
• Any person who wishes to manufacture any product solely for the purpose of
producing a sample for the sole purpose of registration should apply for an exemption
for manufacture of sample ( Applies to locally manufactured products only).Regulatory Control in Pharmaceutical Industry 27
New Application Processing Procedures
A Application Type
Application for a new product registration may be categorised as follows:
i. Application for an innovator product (NCE/Biotech)
ii. Application for a generic product (Controlled Poisons & Non-Controlled Poisons)
[a generic product is a product that is essentially similar to a currently registered
product in Malaysia. The term generic is not applicable to biological and biotech
products]
iii. Application for product registration via the abridged procedure (for certain categories
of OTC products and traditional medicines)
B Data Requirements
The data required to support an application is divided into:
i. Administrative data (Part I)
ii. Data to support product quality (Part II)
iii. Data to support product safety (Part III)
iv. Data to support product efficacy (Part IV)
Applicants are advised to read the explanatory notes in Section 2 of Drug Registration
Guidance Document, and also the relevant ASEAN or ICH Guidelines (www.ich.org) and
checklists, for full information on product data requirement. The DCA may request for
supplementary information.
C Data Submission
Data to be submitted will be based on the application type:
i. Innovator product – Parts I to IV (For existing chemical or biological entity(s) in a new
dosage form, only Parts I and II, together with pharmacokinetic data will be required)
ii. Generic product – Parts I & II only
iii. Abridged procedure – Part I only
The applicant should make available the requested information within the specified
period. Failure to do so may result in the rejection of the application.28 Regulatory Control in Pharmaceutical Industry
Application Formalities
The DCA only accepts applications which are being submitted through web- based
online system at http://www.bpfk.gov.my. The applicant for product registration must
be registered with Malaysian Registrar of Business (ROB) or Companies Commission of
Malaysia (SSM). The applicant, (if the said company is not the product owner) should be
authorised in writing by the product owner to be the holder of the product registration
certificate and be responsible for all matters pertaining to the registration of the product.
Responsibility of Marketing Authorisation Holder
(i.e. the applicant for product registration)
• The applicant shall be responsible for the product and all information supplied in
support of his application. He shall be responsible for updating any information
relevant to the product/application during the course of evaluation and after product
registration.
• Any person who knowingly supplies any false or misleading information in connection
with his application commits an offence under the Control of Drugs and Cosmetics
Regulations 1984. The applicant is responsible for the quality, safety and efficacy of
his products.Regulatory Control in Pharmaceutical Industry 29 Application Fee Every application for registration shall incur a processing fee: Product Category Processing Fee Laboratory Fee * Traditional Product/ Traditional RM500 RM700 for Health Supplement (each product) laboratory tests Pharmaceutical Product/ RM1,000 RM1,200 Pharmaceutical Health (1 active ingredient) or Supplement RM2,000.00 (2 or more active ingredient) as fee for analytical validation evaluation method New Chemical Entities/Biotech RM1,000 RM3000 (1 active ingredient) or RM4,000 (2 or more active ingredient) as fee for analytical validation evaluation method Veterinary Product RM1,500 Not applicable (each poison / OTC product, inclusive of laboratory tests) RM1,200 (each natural product, inclusive of laboratory tests) Cosmetic Product RM50 Not applicable (each product) * The DCA will charge the applicant such costs as it may incur for the purpose of carrying out laboratory investigation relating to the registration of any product. (Any payment made is not refundable once an application has been submitted and payment confirmed)
30 Regulatory Control in Pharmaceutical Industry
Accompanying Documents
i) The following documents are to be submitted together with the application:
• Authorisation from the product owner
• Letters of authorisation of contract manufacture and acceptance as well as from
the manufacturer and also each sub-contractor, where a product is contract
manufactured, if applicable (e.g. repacker).
ii) The letter of authorisation or acceptance from the manufacturer should be on the
product owner’s original letterhead and be dated and signed by the Managing
Director, President, CEO or an equivalent person who has overall responsibility for
the company or organisation
iii) The letters should state the name of the product concerned, name and actual plant
address of the manufacturer(s) involved in the manufacture of the product.
iv) Imported products will also need to be accompanied with either:
• Certificate of Pharmaceutical Product (CPP) from the competent authority in the
country of origin; OR
• Certification for Free Sales (CFS) and Good Manufacturing Practice (GMP) from
the relevant authorities for traditional medicines and dietary supplements
For more information, please refer
to the ‘Drug Registration Guidance
Document’ in the NPCB’s website at
www.bpfk.gov.myRegulatory Control in Pharmaceutical Industry 31
Application Process
Initiation of Review
Review of applications will follow a queue system. There will be separate queues for the
different categories of products:
• New Chemical Entity (NCE)
• Biotech
• Generics (full evaluation procedure)
• Abridged Evaluation Procedure Pharmaceuticals (OTC, Health supplements)
• Traditional Products
Time Frame
The time frame for registration of products excludes stop-clock time.
Full Evaluation Timeline
Prescription Drugs (Poison) 210 working days
Non-prescription (Non-poison) Drugs 210 working days
NCE 245 working days
Abridged Evaluation Timeline
Health Supplement Products Single active
Natural Products (Traditional) ingredient:
60 working days
Cosmetic Products (Notification Note)
• The time frame for each product is calculated from the date of final and complete
submission.
• Priority review may be granted where the product is intended for treatment of a
serious or life-threatening disease (where the likelihood of death is high unless the
course of the disease is interrupted).32 Regulatory Control in Pharmaceutical Industry
Regulatory Outcome
Decisions of the DCA
An application may be approved or rejected and the DCA decision will be sent via
e-mail to the marketing authorisation holder.
Product Registration Number
• A Registration Number, which is specific for the product registered, will be given via
e-mail when an application is approved by the DCA. Registration is valid for a period
of 5 years.
• Product Notification Number will be given to a cosmetic product after the notification
process.
Rejection, Cancellation, Suspension of Registration
The DCA may reject, cancel or suspend the registration of any product if there are
deficiencies in safety, quality or efficacy of the product or failure to comply with
conditions of registration.
Appeal against DCA decisions
Any applicant aggrieved by the decisions of the DCA may make a written appeal to the
Minister of Health. Appeals MUST be made within fourteen days from the date of the
DCA notification. A period of 180 days from the date of appeal is given for submission
of any supporting data or documents for NCE and biotechnology products and 90 days
for other products. The appeal is closed if all the required information is not submitted
within the stated time given.
Decision of the Minister
The decision made on any appeal is final.Regulatory Control in Pharmaceutical Industry 33
Registration Maintenance
Conditions for Registration
The affixing of the security device, one of the conditions for product registration, to
product labelling has been identified as a means to verify and authenticate that the
product has been duly registered with the DCA.
The DCA may specify certain conditions for registration for a particular group, amend
any conditions for registration and may lay down specific product labelling requirements.
The DCA may cancel the registration of any product if the conditions for registration are
not complied with.
Validity Period
The registration of a product is valid for 5 years or such period as specified in the
registration certificate.
For cosmetic products, the Notification Note is valid for 2 years or such period as
specified in the Notification Note.
Renewal of product registration should be done six months prior to the expiry of the
validity period of product registration. Upon expiry of the validity period of registration,
the module for renewal of product registration will no longer be accessible and
application for re-registration of the product can no longer be submitted.
Change In Particulars of Registered Products
Changes in particulars of a Registered product require DCA approval. Changes refer to
any changes in product name, product specifications, packing, indications, contents
of product label, package insert, or product literature, or any relevant particulars of the
registered product.
• Any changes in excipients, such as change in lubricant, preservative, solvent in film
coating, etc to improve product formulation requires prior approval of the DCA.
• Explanation/reason for the changes should be given. All relevant supporting data
related to the above changes should be updated accordingly.
• The registration of a product may be cancelled if changes are made without prior
approval of the DCA.
For information on product conditions
for registration, please refer to
Appendices 1, 1.1, 2 & 3 of the Drug
Registration Guidance Document from
www.bpfk.gov.myYou can also read
