The Association of South East Asian Nations (ASEAN) region is currently undertaking multiple initiatives for the growth of the pharmaceutical industry. These include prioritising new regulatory measures through the AEC accord and rolling out universal healthcare schemes, particularly in Indonesia, which under its Social Security Organising Body (BPJS), target to have the world's largest healthcare system by 2019.
The Indonesian pharma market – a central hub for pharmaceuticals in South East Asia – has become one of the world’s fastest growing and has caught the attention of global players. Last year, the Indonesian pharma industry was valued at $6.5 billion following tremendous growth from 2007 to 2013 when the industry grew by 85 per cent
The composition of Indonesia’s pharma industry continues to evolve and expand, with changing market conditions set to shape the future of the industry. For example, the election of President Jokowi is forecast to have a positive influence on the Indonesian Government that has historically bestowed minimal funds to the healthcare sector compared to neighbouring countries.
As a result, healthcare expenditure will double by 2018 and an initiative to improve accessibility to healthcare is already underway. The initiative is expected to run for five years, providing access to drugs for a population forecast to be 257.5 million by 2019 and will create a huge demand for prescription generics as the Government takes on the financial burden of drug sourcing. This rise in the prescription generic demand will come into play as OTC demand – which has increased steeply over recent years – becomes progressively more linear once Government initiatives are implemented.
According to a new analysis from market research firm Frost & Sullivan, Indonesia is rapidly evolving into one of the most attractive healthcare markets for investors. Companies in the healthcare sector, including hospitals, medical devices, pharmaceuticals and diagnostics are looking at the country as a major investment destination.
The study finds that Greater Jakarta remains the most promising market due to strong infrastructure support, accessibility, and the presence of major hospitals. Kalimantan and Papua (outer Jakarta) too offer attractive potential.
The study notes that the implementation of the Jaminan Kesehatan Nasional (JKN) insurance scheme has spiked patient volumes significantly, heightening the demand for hospital beds, medical devices, affordable medicines and diagnostic services.
A few clinics in Bandung reported up to a 200 per cent rise in patient volumes in the first two months after the scheme’s implementation.
JKN's goal is to cover all citizens by 2019. In the short term, it is expected to boost the prescription drug demand in Indonesia as it will cover medical consultation and drug costs for participants. It is estimated that the drug spend as a percentage of total health expenditure will be close to 19 per cent after JKN implementation.
Through JKN, government-run hospitals are looking to improve access to and affordability of healthcare in rural areas, thus spurring the demand for drugs. JKN is likely to fuel the need for drugs in the lower end of the market rather than the large-scale substitution of premium products, the study adds.
Local drug manufacturers like the Darya-Varia Group, Konimex and Tempo Scan Pacific control about 75 per cent of over the counter medicines and are expected to continue their dominance over the market. While in 2014, over the counter medicine had covered 40 per cent of total pharmaceutical market in Indonesia. This will grow to approximately 50 per cent by the end of 2015.
More global multinational pharma companies are likely to make more deals with local, home grown companies in this region. This will continue to be expedited in response to local governments protectionist policies and to help in private-public partnerships.
With positive, influential changes continually shaping the pharma industry, Indonesia is set to emerge as one of the world’s most dynamic markets for pharmaceuticals.
Indonesia currently operates as a secondary manufacturing market – i.e. for finished dosage rather than Active Pharmaceutical Ingredients (APIs) and excipients – 90 per cent of raw materials in Indonesia are imported, primarily from India and China. In the future, Indonesia may look to Europe (Italy, Germany and the UK) – and even the US – to import APIs as more advanced formulations are sought by the gentrified population. As Indonesian pharma market continues to evolve, there is even potential for the manufacture of their own APIs in the future.
Overall though, there will be a huge growth and demand for APIs and excipients in Indonesia due to the increased demand for drugs.
With Indonesia’s pharma industry growing at such a tremendous rate – 12.5 per cent per annum, which will be maintained through to 2018 – the machinery and packaging sectors have huge opportunity for growth within the industry.
In the short to medium term, there will continue to be an increase in low-cost packaging demands throughout Indonesia to supply the large OTC consumption and as the prescription generic market grows – with the Government’s passage of universal healthcare – packaging demands will be increased once more.
In the future, there may be standardization of regulations across the ASEAN region, which would present a huge opportunity for the machinery and packaging sectors to expand their business to neighbouring countries.
CPhI South East Asia organised by UBM EMEA and taking place at the Jakarta International Expo, Indonesia, from April 8 to10, 2015 , will provide an unparalleled regional platform for domestic/international buyers and suppliers to meet, network and boost the pharmaceutical sector in the South East Asian region. Exhibiting at CPhI opens gateway to this advancing market.
The event, now in its fourth edition, co-located with P-MEC and InnoPack will bring the entire pharma supply chain under one roof from ingredients to technology and packaging, making it a one stop shop for ASEAN pharma solutions.
2015 CPhI South East Asia marks the launch of new additions: a new report made by Global Business Reports in collaboration with CPhI called ‘Indonesian 2015 Pharmaceuticals Perspectives’; an integrated conference platform and a ‘Supplier Finder Programme’.
New to the event this year, the Supplier Finder Programme enables exhibitors to connect with potential business partners in just a few seconds – a time-efficient aid that helps to find the right partner. Highlights of the conference platform include ‘Healthcare Plans across South East Asia’ and ‘Roadmap of Indonesian Pharmaceutical Industry 2015 – 2025’.
The remarkable growth of the Indonesian pharma market has provided an increasing international outlook, which has caught the attention of many overseas companies looking to capitalise on this evolving industry. This change is reflected in the increasing number of international visitors – a total of 38 countries will be represented on the show floor, against 23 in the previous year – including USA, India, Japan and China.
About14 companies from India are exhibiting at this year’s event and in the future organizers expect this to grow more due to increased imports of raw ingredients.
" With many foreign companies looking to gain a foothold in this market, we will undoubtedly see an increase in partnerships between multinationals and local manufacturers in the near future. Government regulations mean that overseas companies can only hold a maximum share of 75 per cent of the business, which means finding the right domestic partner is crucial. CPhI South East Asia provides the perfect platform for companies to do exactly this, with all the regional industry", say organizers.
2014 marked the most successful CPhI South East Asia event to date – over 6000 visitors and 240 exhibitors from 23 different countries attended the event. One of the highlights of the 2014 event was the innovation tours, where industry experts and top exhibitors were given the opportunity to showcase their latest innovations to the pharmaceutical community. This provided a unique platform for thought leadership and opened up Indonesian innovations to the world’s pharma industry.
For those who were looking to gain a foothold in the continually evolving South East Asian pharmaceutical market, the Connect Seminars proved very popular. The seminars provided invaluable insight into a series of modules such as ‘Biosimilar development and opportunities’.
“CPhI South East Asia provides direct access to the thriving ASEAN pharmaceutical market that continues to grow year-on-year. Indonesia is projected to be the fastest-growing ASEAN economy and is attracting more and more global pharma players, making this the perfect location for international buyers and suppliers to meet and break into this dynamic market”, says Chris Kilbee, Group Director Pharma.