The Philippines is emerging as a key hub for pharmaceutical research, digital health and manufacturing in Southeast Asia, as more global players set up operations in the country, a market report said Friday.

According to BMI, a unit of market analyst Fitch Solutions Company, the planned establishment of the country’s first Pharma Innovation Hub, alongside the existing operations of Merck Business Solutions and Royale Life Pharma in PEZA-accredited zones, “underscores the Philippines’ established position as a key pharmaceutical manufacturer in the Southeast Asia region.”

BMI expects the country to maintain its leadership as the largest pharmaceutical market in the region over the medium term. The report forecasts the local pharmaceutical market to grow to P438 billion (USD7.5 billion) by 2029, up from P352 billion (USD6.1 billion) in 2024, representing a five-year compound annual growth rate (CAGR) of 4.5 percent in peso terms and 4.1 percent in US dollars.

Earlier this week, the Department of Trade and Industry highlighted a partnership between PEZA and AstraZeneca Pharmaceuticals (Philippines) to establish the Pharma Innovation Hub, initially focused on oncology. Modeled after AstraZeneca’s UK innovation center, the hub aims to leverage artificial intelligence for early cancer detection, expand patient-support programs, develop healthcare workforce capacity, and promote evidence-based policy initiatives.

Despite strong growth prospects, BMI noted challenges remain. Key risks include “considerable gaps in both financial resources and skilled human capital necessary for advanced pharmaceutical research,” as well as regulatory hurdles that may affect the sector’s expansion.