Pharma Industry E-Invoicing implementations Solutions in Malaysia

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The pharmaceutical industry in Malaysia is rapidly growing and plays a vital role in the country’s economy. As Malaysia continues to develop its pharmaceutical sector, e-invoicing is becoming a crucial part of its digital transformation. This shift will help pharma companies increase efficiency and improve compliance with regulations. In this blog, we will look at the growth of the pharma industry in Malaysia, how e-invoicing is transforming business operations, and why it is important for companies to adopt it.

1. Pharma Industry Growth in Malaysia

The pharmaceutical industry in Malaysia has contributed over MYR6 billion to the country’s Gross Domestic Product (GDP). By 2024, this contribution is expected to reach MYR10 billion, showing the industry’s fast growth. With over 445 pharmaceutical companies in Malaysia, the market is valued at MYR7.5 billion (as of 2018). These companies work across various parts of the healthcare supply chain, from medicines to medical devices.

The country’s healthcare system is divided into two sectors: public and private. Malaysia is also becoming a popular destination for medical tourism, providing modern healthcare services at competitive prices. This growth in medical services and tourism is boosting the demand for pharmaceutical products.

2. E-Invoicing in the Pharma Industry

The pharmaceutical industry is now implementing e-invoicing, which is a way to send and receive invoices digitally. This is part of Malaysia’s push for digital transformation. During the COVID-19 pandemic, it became clear that the traditional paper-based system for managing finances had many issues, including inefficiencies and illegal practices. E-invoicing solves these problems by making the process more transparent, secure, and easier to manage.

For the pharmaceutical sector, e-invoicing ensures that all financial transactions are clearly tracked, helping to improve transparency and control. The Inland Revenue Board of Malaysia (LHDN) has also set guidelines to make sure companies comply with the new e-invoicing rules.

3. Common E-Invoicing Challenges in the Pharma Industry

E-invoicing in the pharmaceutical industry comes with its own set of challenges due to the complex nature of the sector. Here are some of the main issues and how e-invoicing can help solve them:

• Dual Billing (Insurance Companies and Patients): Pharmacies and hospitals often bill two parties—insurance companies for the covered amount and patients for the balance. E-invoicing allows companies to easily issue separate digital invoices for both parties, making it easier to track and manage payments.
• Proforma Bills and Final Guarantee Letters (FGLs): Proforma bills are issued to insurance companies to request a Final Guarantee Letter (FGL) to cover the patient’s medical expenses. With e-invoicing, these proforma bills can be turned into official e-invoices once the FGL is approved.
• Consultants' Invoices: Doctors and medical consultants send bills to hospitals for their services. While there is no major change in the process, consultants will now issue e-invoices to hospitals.
• Contracts for Service: When hospitals work with individual doctors or companies that provide medical services, they sign contracts for service. Doctors will need to issue e-invoices for these services, ensuring that financial transactions are accurately recorded.

4. Key Benefits of E-Invoicing for Pharma Companies

E-invoicing offers many advantages for pharmaceutical companies and can help them operate more efficiently. Here are some of the main benefits:

• Faster Payments: E-invoicing helps companies receive payments faster because invoices are processed more quickly and are less likely to have errors.
• Improved Accuracy: Since e-invoicing is automated, it reduces the chance of human errors that are common with manual, paper-based invoices.
• Cost Savings: By eliminating paper invoices and reducing manual work, e-invoicing helps companies save money on administrative costs.
• Compliance with Regulations: E-invoicing makes it easier for companies to comply with Malaysia’s tax regulations. The system allows companies to submit invoices directly to the Inland Revenue Board (IRBM), ensuring that all tax rules are followed.
• Transparency: E-invoices are traceable, allowing companies to monitor and manage financial transactions more effectively. This ensures that all operations are transparent and accounted for.

5. E-Invoicing Solutions for the Pharma Industry

Companies in the pharmaceutical sector can benefit from using platforms like Complyance for e-invoicing. These platforms offer several features to help companies comply with Malaysia’s e-invoicing rules and streamline their invoicing process. Key features include:

• Automated E-Invoice Generation: This feature allows companies to create and send digital invoices automatically, reducing manual errors and speeding up the invoicing process.
• Direct API Connection to IRBM: Companies can submit e-invoices directly to the IRBM in the required formats (XML or JSON), ensuring they meet government requirements.
• Real-Time Tracking: Companies can track their e-invoice submissions, validations, and statuses in real-time, making it easier to manage financial operations.

By using platforms like Complyance, pharmaceutical companies can ensure they comply with Malaysia’s e-invoicing mandate and enjoy smoother operations.

6. Conclusion

The pharmaceutical industry in Malaysia is growing rapidly and is expected to continue playing a significant role in the country’s economy. With the introduction of e-invoicing, pharmaceutical companies can benefit from streamlined financial processes, improved accuracy, and greater compliance with tax regulations.

E-invoicing is not only a tool for improving business efficiency but also a requirement to ensure that companies are following government rules. By adopting e-invoicing early, pharmaceutical companies can stay ahead of their competitors and ensure they are ready for the future of digital finance.

If you're in the pharmaceutical industry and want to improve your invoicing process, explore e-invoicing solutions like Complyance to ensure smooth operations and compliance. Contact us today to learn more about how e-invoicing can benefit your business.

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