Indonesia Pharmaceuticals and Healthcare Report Q3 2009

Publication Date	July 2009
Publisher	Business Monitor
Product Type	Report
Pages	89
ISBN Number	1748-1945
Product Code	BMI00521

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Summary

Despite the impact of the global financial crisis, Indonesia's drug market is still expected to grow substantially in 2009. According to the Indonesian Pharmaceutical Association (GP Farmasi), drug expenditure should expand by 9% this year. BMI's own forecasts are slightly lower and we expect the market to grow by around 8% in nominal terms in 2009 to reach a value of US$2.7bn. By 2013, the market should reach a value of US$4.7bn, representing a compound annual growth rate (CAGR) of 11%.

However, in real terms BMI believes that the drug market will contract in 2009 due to the impact of high inflation. Other negative factors weighing on the market include the soaring cost of drugs, which are reducing volume sales.

Times are tough for Indonesian drugmakers. They have limited capability to make active pharmaceutical ingredients (APIs) and are therefore dependent on imports, mainly from China, a situation exacerbated by currency fluctuations which in turn impact profit margins. As reported by the Jakarta Post, Syamsul Arifin, deputy chairman of the GP Farmasi claimed that 'As long as it [rupiah/dollar exchange rate] is below INR12,000 to the dollar, we can still survive.' Because of intense competitive pressure, two Indonesian pharmaceutical companies agreed to merge in March 2009. Following the completion of feasibility studies and legal processes, the integration of PT Kimia Farma and PT Indofarma is expected by Q409. BMI notes that the deal underlines our core view that M&A activity will increase due to the efficiencies realised from consolidation.

In 2008, Indofarma and Kimia Farma recorded foreign exchange losses of US$1.46mn and US$428,000, respectively, due to the necessary import of raw materials. To prevent this from happening again, the new entity aims to be a full spectrum player. A chemical division will provide APIs to the pharmaceuticals business. To maintain the integrity of the supply chain, a distribution arm will link up with proprietary retail outlets. The company will also have an interest in healthcare equipment.

The tie-up was also stimulated by planned reforms to trade within the Association of Southeast Asian Nations (ASEAN) region. 'In 2011, the pharmaceutical market in the ASEAN countries will be integrated

[in one market]. The merger is a strategy to prepare us for the upcoming competition,' said M. Sjamsul Arifin, president director of Kimia Farma. By 2011, the 10% tariff on pharmaceuticals entering Indonesia will be reduced to zero.

In the BMI Business Environment Rating matrix for Q309, Indonesia occupies 12th position out of the 15 regional markets surveyed in the Asia Pacific region. Main drawbacks to investment in the country include corruption, low per capita spending on pharmaceuticals and a small proportion of the elderly in the country.

Content

Executive Summary
SWOT Analysis
Indonesia Pharmaceutical and Healthcare Industry SWOT
Indonesia Political SWOT
Indonesia Economic SWOT
Indonesia Business Environment SWOT
Pharmaceutical Business Environment Ranking
Asia Pacific Pharmaceutical Business Environment Ratings
Limits of Potential Returns
Risks to Realisation of Returns
Indonesia - Market Overview
Regulatory Regime
Intellectual Property Issues
Generic Drug Legislation
Labelling Requirements
Counterfeit and Substandard Drugs
Free Trade Agreements
Pricing Regime
Reimbursement Regime
Price Cuts
Industry Trends and Developments
Epidemiology
Avian Flu
International Avian Flu Partnerships
Healthcare System
Healthcare System Reform
International Healthcare Collaborations
Pharmaceutical Sector
Recent Pharmaceutical Industry Developments
Pharmaceutical Retail Sector
Research and Development
Herbal Medicines
Medical Devices
Industry Forecast Scenario
Overall Market Forecast
Key Growth Factors - Industry
Key Growth Factors - Macroeconomic
Prescription Market Forecasts
Patented Market Forecast
Generics Market Forecast
OTC Market Forecast
Export/Import Forecast
Medical Devices Market Forecast
Other Healthcare Data and Forecasts
Key Risks to BMI's Forecast Scenario
Competitive Landscape
Company Profiles
Leading Foreign Manufacturers
Sanofi-Aventis
Bayer
Indigenous Manufacturers
PT Kalbe Farma
PT Bio Farma
Kimia Pharma
PT SidoMuncul
Combiphar PT
Country Snapshot: Indonesia Demographic Data
Section 1: Population
Section 2: Education and Healthcare
Section 3: Labour Market and Spending Power
BMI Forecast Modelling
How We Generate Our Pharmaceutical Industry Forecasts
Pharmaceutical Business Environment Ratings Methodology
Ratings Overview
Weighting
Sources
List of Tables
- Table: Un Millennium Development Goals
- Table: Indonesia - Medical Device Market Forecast
- Table: Indonesia - Drug Expenditure Indicators, 2003-2013
- Table: Indonesia - Health Expenditure Indicators, 2003-2013
- Table: Indonesia - Economic Activity, 2006-2013
- Table: Indonesia - Prescription Market Indicators, 2003-2013 (US$Mn Unless Otherwise Stated)
- Table: Indonesia - Patented Drug Market Indicators, 2003-2013
- Table: Indonesia - Generic Drug Market, 2003-2013 (Idrmn Unless Otherwise Stated)
- Table: Indonesia - Otc Drug Market, 2003-2013
- Table: Indonesia - Pharmaceutical Trade Indicators, 2003-2013 (US$Mn)
- Table: Indonesia - Medical Device Market Indicators, 2004-2013 (US$Mn Unless Otherwise Stated)
- Table: Indonesia - Other Health Indicators, 2003-2013
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Table: Education, 2000-2005
- Table: Vital Statistics, 2005-2030
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2010 (US$)
- Table: Average Annual Manufacturing Wages, 2000-2012 (Idr)
- Table: Pharmaceutical Business Environment Indicators
- Table: Weighting of Components