The Pharmaceutical Intellectual Property and Competition Law Review: Malaysia


The pharmaceutical industry in Malaysia generally comprises three levels in the supply chain: (1) importers of originator and generic medicines and manufacturers of generic medicines; (2) wholesalers and distributors, which are generally categorised into large independent distributors, Bumiputera agents2, those that are subsidiaries of manufacturers, and retail pharmacies that also operate at the wholesale level; and (3) providers who provide medicines to patients and end users such as general practitioners' and specialists' clinics, private hospitals, retail pharmacies and public hospitals and clinics. In the public sector, a private company is given exclusive concession to supply a large part of medical supplies to the government. Private doctors have the dual role of prescribing and dispensing medicines.

The Competition Act 2010 (CA) came into effect on 1 January 2012 and is administered by the Malaysia Competition Commission (MyCC). The MyCC has previously investigated several pharmaceutical companies for abuse of dominance and carried out a market review in the pharmaceutical sector; these are discussed in further detail below.

In this chapter, we set out the legislative and regulatory framework in respect of pharmaceutical patent protection and product authorisation, which sets the scene for an overview of the competition law landscape in Malaysia in respect of the pharmaceutical industry.

Legislative and regulatory framework

i Authorisation

In Malaysia, pharmaceutical products are primarily regulated by the Malaysian Sale of Drugs Act 1952 (SODA) and its subsidiary legislation. The National Pharmaceutical Regulatory Agency (NPRA), under the Ministry of Health (MOH), is the competent authority tasked with safeguarding the quality, efficacy and safety of pharmaceutical products through the registration and licensing scheme. The Drug Control Authority (DCA) is the executive body of the NPRA responsible for the registration of pharmaceutical products as well as licensing for importers, manufacturers and wholesalers.

ii Patent protection

Patent protection is governed by the Malaysian Patents Act 1983 (PA). Once granted, patents have a maximum protection period of 20 years from the date of filing, subject to payment of annual renewal fees.3

In order to obtain a grant of patent, an invention must comply with the following requirements:

  1. the invention must be 'new' in that it must not have been made known to the public, whether in Malaysia or elsewhere before the priority date of the application;
  2. the invention must involve an 'inventive step' in that it must not be obvious to a person reasonably skilled in the art, having regard to all matter forming part of the state of the art; and
  3. the invention must be capable of being made or used in any kind of industry.

Furthermore, the invention must not fall into one of the following categories of excluded subject matter:

  1. discoveries, scientific theories or mathematical methods;
  2. plant or animal varieties or essentially biological processes for the production of plants or animals (other than man-made living microorganisms, microbiological processes and the products of such microorganism processes);
  3. schemes, rules or methods of doing business, performing purely mental acts or playing games; and
  4. methods for the treatment of human or animal body by surgery or therapy, and diagnostic methods practiced on the human or animal body (although products used in any such methods are patentable).

Malaysia is a member of the Paris Convention and Patent Cooperation Treaty and therefore accepts priority filing dates and international patent applications. Malaysia is also a member of the ASEAN Patent Examination Co-operation programme which expedites search and examination of patents within the Association of Southeast Asian Nations (ASEAN) and has Patent Prosecution Highway (PPH) agreements with the intellectual property offices of Europe, Japan, China and Korea.

iii Pricing and public purchasing

There is presently no price control mechanism for pharmaceutical products in Malaysia. While the Malaysian Cabinet has previously announced in 2019 that price control measures for pharmaceutical products would be implemented, there has not been any medicinal price regulations introduced to date. The Pharmaceutical Services Programme published a Consumer Price Guide that does not have legal effect but serves as a public reference for consumers when purchasing medicines in the private sector to allow consumers to make informed choices.

As for public purchasing, Malaysia's public sector manages medicine procurement through: (1) national concession agreements; (2) national tenders; and (3) direct purchases by healthcare facilities, subject to the procurement policies and directives issued by the Ministry of Finance.

iv Incentives

Companies engaged in the manufacture of pharmaceuticals and related products are eligible for investment tax allowance (ITA) or recognition as 'pioneer status'4 as these are recognised as 'promoted activities' or 'promoted products' under the Promotion of Investment Act 1986 (PIA) administered by the Malaysian Investment Development Authority (MIDA). There are various tax incentive schemes available for the pharmaceutical industry including those pertaining to research and development (R&D) that encourage innovation. For example, contract R&D companies could apply for pioneer status with 100 per cent income tax exemption of statutory income for five years or ITA of 100 per cent of qualifying capital expenditure incurred within 10 years (to be offset against 70 per cent of the statutory income in each year of assessment). Companies conducting in-house research could apply for ITA of 50 per cent of qualifying capital expenditure incurred within 10 years (to be offset against 70 per cent of statutory income for each year of assessment).

New drugs and biologics – approval, incentives and rights

i Drugs

Prior to placing any new drug or pharmaceutical product in the Malaysian market, an application must be made to the DCA, irrespective of whether it is a generic, biologic, health supplement or natural product. Generally, to obtain approval for a new drug, the applicant must complete the relevant steps as prescribed in the Drug Registration Guidance Document (DRGD) issued under the Control of Drugs and Cosmetics Regulations 1984 (CDCR). When registering a product, the applicant must determine the category of the product, evaluation route and other specific requirements applicable to the product before submitting the application online via the QUEST system.5 An initial screening will be undertaken upon submission of the application to ensure that the submitted application is complete with the required data. Further evaluation shall take place once payment for the application is confirmed. An applicant will be notified of the regulatory decision of the application via email or official letter. As stipulated under the CDCR, the DCA may, at any time, reject, cancel or suspend the registration of any product if there are deficiencies in safety, quality and efficacy of the product or failure to comply with the conditions of registration.6 Upon registration of a product, the product registration holder will be notified by DCA and a product registration number (i.e., MAL number) will be assigned to the registered product via the QUEST system. The registration of the product is valid for five years or such period as specified (unless the registration is suspended or cancelled).

Under the DRGD, a new drug product (NDP) is defined as any pharmaceutical product that has not been previously registered in accordance with the CDCR. An NDP is further classified into two categories, namely, new chemical entities7 and hybrids8. In addition to the general approval pathway described above, specific registration requirements apply to NDP, namely, compliance with the ASEAN Common Technical Dossier (ACTD) module and consultation with local clinical specialists.9 The processing fee for NDP is 1,000 ringgit while the analysis fees are 4,000 ringgit where there is a single active ingredient and 5,000 ringgit where there are two or more active ingredients.

ii Expedited approval

The DRGD provides for expedited approval where an applicant can apply and be granted with priority review for a new drug application by submitting a formal letter addressed to the director of NPRA upon screening. Note that such priority reviews are still subject to the decision of the Drug Evaluation Committee Meeting (under the DCA) upon submission of complete product registration documentation and does not exempt applicants from any product registration requirements.

An application may be granted priority review if any of the following conditions are met:10

  1. the product is intended for:
    • unmet medical needs or life-saving reasons with no treatment options locally available;
    • life-saving such as for treatment or prevention of serious medical conditions with no treatment options locally available;
    • treatment or prevention in pandemic or endemic situations, for the interest of public health;
    • emergency supply or crucial for treatment purpose according to current needs in Malaysia; or
    • supply to the MOH under circumstances where alternative product with the same active ingredient is unavailable;
  2. the product involves a change in the formulation as a result of the decision or instruction by the DCA for the purpose of formulation improvement with appropriate scientific justification;
  3. new application for a product that has been registered with the same active ingredient for which the registration has been cancelled or withdrawn because of issues other than safety issues;11 or
  4. the product is the first (or first locally manufactured) generic or biosimilar product.

In response to the covid-19 outbreak and the need for any medicines (including vaccines) aimed at prevention or cure of covid-19, the Guidance Document on Conditional Registration for Pharmaceutical Products during Disaster was developed pursuant to the Directive on the Implementation of Fast-Track Conditional Registration issued by the MOH.12 With respect to new pharmaceutical products (including vaccines) for use during a disaster, the Guidance Document provides that applications meeting the eligible conditions will be given priority review status, which is 120 working days from the date the complete application is received.

iii Rights

In general, once a product is registered with NPRA, the applicant becomes the product registration holder and is authorised to market that registered product in Malaysia. Registration of a new drug product does not automatically accord a party with patent rights. In order to obtain a patent in respect of a new drug product, an applicant must separately apply to the Patent Registration Office of the Intellectual Property Corporation of Malaysia (MyIPO). Further information on filing patents and the relevant fees can be found at MyIPO's official portal.13

For completeness, by virtue of the Directive on Data Exclusivity14 issued by the Director of Pharmaceutical Services (Director) on 28 February 2011, undisclosed, unpublished and non-public domain pharmaceutical test data of (1) a NDP containing a new chemical entity;15 or (2) second indication of a registered drug product,16 may be protected upon application via a letter of intent addressed and submitted manually to the Director of NPRA. The data exclusivity application should be made in conjunction with the application for a NDP containing a new chemical entity or second indication of a registered drug product within the specified timelines. The period of data exclusivity accorded is granted on a case-to-case basis but will not exceed five years for a NDP containing a chemical entity and three years for a second indication of a registered drug product. Any person aggrieved by the decisions of the Director may submit an appeal to the Minister of Health within 14 days of the date the Director's decision is made known to the applicant; the decision of the Minister on the appeal will be final.

iv Generic and follow-on pharmaceuticals

A generic product is one that is essentially similar to a currently registered product in Malaysia. Generic products are further classified into two categories, namely, products that are (1) scheduled poison, which are subject to full evaluation, and (2) non-scheduled poison or 'over-the-counter' medicines. Certain non-scheduled poisons are subject to abridged evaluation that requires a shorter evaluation timeline as compared to the typical full evaluation. Appendix 5 of the DRGD provides a non-exhaustive list of categories of generic products such as antiseptics, oral care and topical anti-bacteria that are subject to the abridged evaluation given that such products are typically recognised as low-risk pharmaceutical goods. As detailed above, the general approval requirements and pathway prescribed in the DRGD will also apply to generic products. No exclusivity is granted to registered generic drugs.

v Biologics and biosimilars

The DRGD recognises biologics as new products that are considered high risk. The requirements for registration of biologics must be in accordance with the ACTD format and in adherence to the general regulatory requirements under the DRGD, which covers (1) administrative information, (2) product quality data, (3) product safety data and (4) clinical data. Note that the presence or absence of animal-derived materials or products must also be accounted for in biologics. In addition to the general requirements under the DRGD, there are additional requirements that differ according to the specific type of biologics as detailed under Appendix 4 of the DRGD, namely: (1) vaccines; (2) biotechnology products; and (3) blood products. For example, an application for a biotechnology product must include, among others, production processes, information relating to host cell and gene construct, clinical and non-clinical studies and a robust post-marketing surveillance plan.17 As with the general rights afforded to product registration holders, the product registration holders of biologics shall similarly have marketing authorisation in relation to the registered biologics. There are no additional rights specifically accorded to a product registration holder upon approval of registration of a biologic product.

Separately, applications to register biosimilar products must be submitted to the NPRA as well. The Guidance Document and Guidelines for Registration of Biosimilars issued by the NPRA introduces the concept of biosimilars and provides applicants with a guide on the relevant scientific information required for applications.18 Generally, biosimilar products are approved based on a comparability exercise that establishes the similarity to an already approved reference product in Malaysia. Comparative quality, non-clinical and clinical studies are required to substantiate the similarity of structure, quality, safety and efficacy between a new biosimilar product and the reference product. The data for submission must be made in accordance with the ACTD, which requires a full quality dossier plus comparability exercise, abridged studies of the non-clinical and clinical components and a detailed post-marketing risk management plan. Notwithstanding, the type and quantity of data required for each application will vary given the spectrum of molecular complexity among the various products concerned. In Malaysia, there is no exclusivity for interchangeable biologics.

Patent linkage

Malaysia signed off on the Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP) in March 2018, which imposes an obligation on the DCA to implement a patent linkage system. However, as the CPTPP has yet to be ratified, there is presently no patent linkage system in Malaysia. Should the CPTPP be ratified, the patent linkage system implemented in Malaysia will place the onus on originators to enforce their rights. The patent linkage system, if implemented, would require the DCA to stay the issuing of a marketing approval for generic drugs until the patent holder either consents or acquiesces to the registration of the generic drugs.

Notwithstanding the absence of a patent linkage system, owners of pharmaceutical patents in Malaysia (originators) rely on alternative methods to protect their rights, including (1) monitoring the notifications published by the NPRA with regard to new drug products that have been approved and registered, (2) cross-checking the newly approved drug products with any patents owned by the originator, and (3) commencing legal proceedings for patent infringement against the manufacturer of the generic drug if that drug is found to have infringed any patents owned by the originator.

As Malaysia does not have an administrative opposition procedure for patents, manufacturers of generics and biosimilars who wish to challenge originators' patents may file an invalidation suit against the patent in question. Proceedings for the invalidation of a patent may only be initiated post-grant on the following grounds: (1) the invention is not patentable; (2) the description or claim does not comply with the Patents Regulations 1986; (3) any drawings necessary for the understanding of the invention were not furnished; (4) the right to the patent does not belong to the person to whom the patent was granted; and (5) incomplete or incorrect information of a foreign patent search or application was deliberately provided. Successful declaration of invalidity may be partial or full and is effective back to the date of grant.

It is not common in Malaysia for parties to use any pre-litigious or alternative dispute resolution methods for patent disputes as they are generally considered to be ineffective.

Competition enforcers

The Malaysian Competition Commission is the national competition authority and has the following powers under the Act:

  1. require any person to provide information or documents to the MyCC in connection with an investigation;19
  2. search and seizure powers with warrant (i.e., power to conduct dawn raids) to gather evidence of any infringement.20 The MyCC may also require access to computerised data whether stored in a computer or otherwise and must be provided with the necessary password, encryption code, decryption code or other means required for such access;21
  3. search and seizure powers without warrant if there is reasonable cause to believe that the delay in obtaining a search warrant would adversely affect the investigation or evidence is likely to be tampered with, removed, damaged or destroyed;22
  4. order interim measures where the investigation is not yet completed but MyCC has reasonable grounds to believe that there is an infringement or a likely infringement of the Act and it is necessary to act as a matter of urgency to previous serious and irreparable damage or to protect public interest;23
  5. issue infringement decisions and impose financial penalties (which shall not exceed 10 per cent of the worldwide turnover of an enterprise over the infringement period) and other directions as the MyCC deems appropriate;24
  6. accept undertakings from parties and close investigations without any finding of an infringement;25 and
  7. conduct market reviews.26

Merger control

Currently, there is no merger control regime of general application in Malaysia. As such, the MyCC only has powers to regulate ex-ante behaviour of the merging parties. However, the MyCC has initiated the process to amend the CA to introduce merger control regulations and was planning to table the amendments in parliament by the end of 2021.27 This timeline is likely to be delayed given that the parliament of Malaysia was suspended for seven months in 2021 as a result of covid-19 emergency ordinances. MyCC has also indicated that it is inclined to introduce a mandatory merger control regime,28 which means that once certain thresholds are exceeded, a legal obligation to notify the transaction to MyCC is triggered.

Anticompetitive behaviour

i Chapter 1 Prohibition against Anti-Competitive Agreements

Section 4(1) of the Act prohibits anticompetitive agreements that have the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services in Malaysia.

Section 4(2) of the CA provides that agreements that have the object to:

  1. fix, directly or indirectly, a purchase or selling price or other trading conditions;
  2. share market or sources of supply;
  3. limit or control
    • production;
    • market outlets or market access;
    • technical or technological development; or
    • investment; or
  4. perform an act of bid rigging, are deemed to have the object of significantly preventing, restricting or distorting competition in any market for goods or services.

The MyCC has indicated in its Guidelines on Chapter 1 Prohibition29 that in general, anticompetitive agreements will not be considered 'significant' if:

  1. the parties to the agreement are competitors who are in the same market and their combined market share of the relevant market does not exceed 20 per cent; or
  2. the parties to the agreement are not competitors and each of the parties individually has less than 25 per cent share in any relevant market.

Parties to anticompetitive agreements can invoke Section 5 of the Competition Act 2010 to be relieved of their liabilities if:

  1. there are significant identifiable technological, efficiency or social benefits directly arising from the agreement;
  2. the benefits could not reasonably have been provided by the parties to the agreement without the agreement having the effect of preventing, restricting or distorting competition;
  3. the detrimental effect of the agreement on competition is proportionate to the benefits provided; and
  4. the agreement does not allow the enterprise concerned to eliminate competition completely in respect of a substantial part of the goods or services.

ii Chapter 2 Prohibition against Abuse of Dominance

Section 10 of the Act prohibits abuse of a dominant position, whether independently or collectively in any market for goods or services in Malaysia. The MyCC had issued its Guidelines on the Chapter Two Prohibition,30 which provides that generally, a market share of above 60 per cent would indicate that an enterprise is dominant. However, market share, on its own, is not conclusive and the MyCC has indicated that it will also take into account other factors to assess whether an enterprise is dominant such as existence of barriers to entry, the number and effectiveness of competitors, excess capacity, predatory pricing and the state of the market.

Merely holding a patent to a pharmaceutical drug does not confer dominance on the originator company and, as such, is not definitive within the dominance analysis. A case-by-case analysis of the market definition if required to determine dominance. Even so, more than mere dominance is required for an infringement of the Chapter Two Prohibition; there must be an act of abuse.

In 2016, the MyCC commenced an investigation against several pharmaceutical companies for alleged abuse of dominance arising from price discrimination of several types of drugs sold to general practitioners and pharmacists. Ultimately, the MyCC found that there was insufficient evidence to show that the discriminatory conduct by the pharmaceutical companies affected competition in the market and closed the investigation in 2020.31 However, the MyCC's decision to close the investigation must not be taken to imply that the MyCC would stop monitoring anticompetitive behaviour in the pharmaceutical sector.

iii Market review of the pharmaceutical sector

In 2017, the MyCC carried out a market review of the pharmaceutical sector in Peninsular Malaysia (Review), focusing on controlled medicines. The objectives of the Review include to identify any anticompetitive practices in the industry and whether government intervention is required to change the anticompetitive practices.32

The final report of the Review identified the following anticompetitive conduct in the pharmaceutical industry:

  1. the use of patent strategies (e.g., pay-for delay agreements) and product life-cycle management measures (e.g., vexatious litigation purely to harass rivals, influencing government procedures and disparaging rivals' products) to maintain dominance and delay the entry of generic medicines;33
  2. originator companies questioning the efficacy of genetic products e.g., by providing incomplete or inaccurate information on risk and effects of medicines to doctors to influence prescribing habits;34
  3. price discrimination whereby pharmacists were charged higher than clinics or private hospitals;35 and
  4. the sole concession system in product procurement that restricts competition in the public health sector.36

The Review made several recommendations to encourage competition within the pharmaceutical sector, which includes:

  1. collaboration between the relevant government ministries to develop policies and align legislations and guidelines to, among others, address anticompetitive issues in the industry and increase patent transparency by requiring originator companies to disclose patent information in other jurisdictions when making patent applications;37
  2. adopting a coherent price policy to increase price transparency at all levels of the supply chain;38 and
  3. splitting large procurement tenders to allow for participation by more suppliers.39

The Review will likely be used by the MyCC as the basis for its analysis and findings of anticompetitive practices by pharmaceutical companies in Malaysia.

iv Guidelines on Intellectual Property Rights and Competition Law

In 2019, the MyCC issued the Guidelines on Intellectual Property Rights and Competition Law40 (Guidelines) to provide guidance on MyCC's approach in respect of competition issues arising from matters relating to intellectual property (IP). The Guidelines seek to address the inherent tension between IP and competition law and illustrate conduct involving IP rights that may potentially infringe the Chapter 1 Prohibition (e.g., price-fixing, market sharing, certain activities of patent pooling and cross-licensing) or the Chapter 2 Prohibition (e.g., excessive pricing, predatory pricing, obligation to pay royalty post-expiry, non-compete clauses that limit or control production or technical developments, tying and bundling).

Outlook and conclusions

One of the most debated issues in the pharmaceutical industry relates to dispensing separation, or the separation of the professional responsibilities of doctors and pharmacists. The dual role of private doctors in prescribing and dispensing medicine is often considered by market players as one of the contributing factors to the increasing cost of private healthcare services in Malaysia. The heated debate has continued for more than a decade; however, it remains to be seen whether Malaysia will implement such a significant change in its healthcare system anytime soon.

Pharmaceutical companies should also be aware of the recent issuance of the Guidelines on Registration of Medicinal Gases in February 2021 (Guidelines) which provides clarity on the classification and registration procedures for medicinal gases (i.e., gases or gas mixtures which mode of action is achieved primarily based on pharmacological, immunological or metabolic action in or on the body). The Guidelines broadly classify medicinal gases into two categories, namely (1) medicinal product or drug, which falls within the purview of the DCA; and (2) medical devices, which falls within the purview of the Medical Device Authority. Licensing and registration of medicinal gases commence on a voluntary basis starting 1 January 2022 and are mandatory from 1 January 2023.

As merger control has been glaringly missing from MyCC's enforcement tools since the coming into effect of the CA, the introduction of a general merger control regime in Malaysia will be a key development in the antitrust space and will impact mergers and acquisitions within the industry.


1 Sonia Ong and Lydia Kong are partners at Wong & Partners, a member firm of Baker & McKenzie International.

2 Bumiputera agents act as tender agents for non-Bumiputera local and foreign pharmaceutical companies to bid for government contracts in accordance with the public procurement rules in Malaysia.

3 Section 35 of the Patents Act 1986.

4 Pioneer status is a special status that will provide the company with a fixed percentage of income tax exemption that the company may enjoy for a specific period of time.

5 The QUEST system is accessible here:

6 Regulation 11 of the Control of Drugs and Cosmetics Regulation 1984.

7 New chemical entities are single or combination products with an active substance never registered by DCA.

8 Hybrids are single or combination products with registered active moieties; these are essentially products that are NDP but do not fall under the category of new chemical entities.

9 See Appendix 3 of the Drug Registration Guidance Document.

10 See Appendix 12 of the Drug Registration Guidance Document.

11 Priority reviews for such products shall be considered on a case-to-case basis and the product must be crucial for treatment purpose.

15 A new chemical entity means a product that contains an active moiety that has not been registered in accordance with the provisions of the Control of Drugs and Cosmetics Regulation 1984.

16 A second indication for a registered drug product means a single or cluster of therapeutic indications applied subsequent to the first indications approved at the point of registration of the product. The application for approval of the second indication contains reports of new clinical investigations other than bioavailability studies.

17 See Appendix 4 of the Drug Registration Guidance Document.

18 See the Guidance Document and Guidelines for Registration of Biosimilars in Malaysia.

19 Section 18 of the CA.

20 id., Section 25.

21 id., Section 27.

22 id., Section 26.

23 id., Section 35.

24 id., Section 40.

25 id., Section 43.

26 id., Section 11.

28 Contribution to Global Forum on Competition – Merger Control in Dynamic Markets from Malaysia, 6 December 2019, available at

31 Decision to close an investigation into suspected infringement of Competition Act 2010 in the Pharmaceutical Sector dated 23 July 2020 by the Malaysian Competition Commission, available at

32 Market Review on Priority Sector Under Competition Act 2010 Pharmaceutical Sector, published by MyCC dated 27 December 2017.

33 id., page 158, paragraph 6.3(A).

34 id., page 165, paragraph 6.3(D).

35 id., page 167, paragraph 6.4.

36 id., page 174, paragraph 6.6(A).

37 id., page 216, paragraph 8.2(C).

38 id., page 217, paragraph 8.2(D).

39 id., page 218, paragraph 8.2(F).

40 Guidelines on Intellectual Property Rights and Competition Law issued by the MyCC, available at

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