Indonesia. Pharmaceutical market outlook 2016
Inexpensive production and labour, and increasing foreign investments are strengthening the Indonesian Pharma market, despite its volatile socio-political system. Environmentally, Indonesia is particularly prone to natural disasters, as the recent earthquakes, tsunamis and volcanic eruptions have illustrated. Indonesia’s economy is projected to become the sixth largest in the Asia Pacific region by 2016, but if the rupiah continues to devaluate against the dollar it could affect the Indonesian pharmaceutical market in US dollar terms. Legally, Indonesia remains on the United States Trade Representative’s (USTR’s) Special 301 Priority Watch List in 2011, due to the prevalence of counterfeit pharmaceuticals.
Demographically, the population will be the third largest in the Asia Pacific region by 2016. The Indonesian Pharmaceutical Manufacturers Association (GP Farmasi) announced that 20 of its members had increased the price of certain drugs by up to 10.0%, at the start of the 2011.
Members of GP Farmasi have raised their drug prices in response to rising inflation, a decision by regional authorities to increase the minimum wage and an import tax imposed on raw materials for drug manufacturing. In February 2011, the Ministry of Health announced that it would review the prices of generic drugs, in light of the fact that the increase in tax on raw materials has prompted pharmaceutical companies to raise the prices of branded drugs. Many pharmaceutical companies have stated that, in their view, the prices of generic drugs are unreasonably low.
Due to the sheer size of the population, Indonesia cannot simply be dismissed. There are around 240 domestic pharmaceutical manufacturers in Indonesia, with the vast majority located in Java. However, despite the country possessing huge manufacturing capabilities, the complete lack of R&D in domestic companies could affect the market, especially if IPR regulations were tightened. Although multinationals will be unhappy at the legislation requiring all drugs in the Indonesian market to have been manufactured in Indonesia, it could potentially reduce costs in the long term for both the manufacturer and the consumer. Despite concerns over counterfeiting and low efficacy of generic products, Intellectual Property Rights (IPR) protection and manufacturing standards are improving with effective national regulations, foreign investment and joint-ventures with multinational companies.
Source: TECTURA
Leave a Comment