Indonesia is home to 240 million people and one of the fastest growing pharmaceutical markets in Asia.
- Growth in the pharmaceutical industry expected to reach 12–13 percent per year.
- The pharmaceutical market is worth about US$5 billion and should reach $9.9 billion by 2020.
- The Indonesian Pharmacists Association reports that about 95% of raw material for medicine is imported.
- Presidential Regulation No 39/2014 changed foreign ownership from 75% to 85% in the pharmaceutical industry.
- Indonesia is home to about 30,000 medicinal plants out of the 40,000 globally known medicinal plants.
In 2014, Indonesia launched its national health insurance program (JKN) which aims to provide universal health coverage for all Indonesians by 2019. According to data from Pacific Bridge Medical, the country’s 2014 health care market is about $24 billion and is projected to grow to $31 billion in 2016.
Indonesia Pharmaceutical Drug Consumption
Pharmaceutical spending per capita in Indonesia is increasing rapidly. Historically, Indonesia has had one of the lowest rates of drug consumption in Asia. In 2010, pharmaceutical spending per capita was just US$18, if compare to US$47 in the Philippines and US$104 in Vietnam. As per capita income rises over the next decade, Indonesians will be spending more on healthcare. The pharmaceutical market is worth about $5 billion and should reach $9.9 billion by 2020. The increasing incidence of chronic illnesses and the growing spending power of the middle class are also factors that are likely to contribute to a greater demand for medications. By 2015, it is expected that the average Indonesian will spend US$150 per year on their healthcare needs.
Nearly 75 percent of Indonesia’s drug needs are met by domestic companies. Foreign companies make up the remaining 25 percent. Kalbe Pharma — Indonesia’s largest domestic drug manufacturer — holds a 15 percent share of the market. Together, Bayer, Pfizer, and GlaxoSmithKline have 8 percent of the market. In term of raw materials, however, about 95% of the raw material for medicine is still imported, according to Indonesian Pharmacists Association. The main obstacle is the lack of investment because the cost of drug development is quite high.
Indonesia Pharmaceutical Market Size
Indonesia holds great promise in terms of market size, but it is saddled with numerous rules that protect domestic drug firms. For example, a 2008 law mandates that all drugs registered in Indonesia must be locally manufactured. But Peraturan Presiden (Presidential Regulation) No 39/2014 increased the foreign ownership limit from 75% to 85% in the pharmaceutical industry. The government hopes this regulation will encourage more rapid foreign investment in the pharmaceutical sector.
Another great prospect is that Indonesia is home to about 30,000 medicinal plants out of the 40,000 globally known of medicinal plants, according to the Indonesian Science Board. This is because Indonesia has so many rain forests, jungles, and swamps that are home to 10% of the world’s plant species, 12% of its mammals, 16% of its reptiles, 17% of its birds, and 25% of its fishes. About two-third of the medicinal herbs in Indonesia are grown in Java (concentrated in the Bandung Area, Garut, Sukabumi and Tasikmalaya highlands). Another major herbal and natural ingredient production base includes in Some provinces. Those provinces are Lampung, North and West Sumatera on the island of Sumatra, the island province of Nusa Tenggara. And lastly in the special administrative Province of Yogyakarta.
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