The Pharmaceutical Market: Indonesia

In November 2008, the Health Ministry introduced rules requiring drug companies to have production facilities in the country, in order to get licences to sell their products in Indonesia. The rules will affect 13 international companies that sell their products in Indonesia but do not have manufacturing facilities.

The economy is predicted to slow in 2009, expanding at just 3.5% compared to an estimated 6.1% in 2008 largely due to a lower demand for Indonesian exports. The stock market and the Indonesian rupiah took a beating in 2008. The government under president Bambang Susilo Yudhoyono faces the challenge of steadying its currency from further devaluation.

Public sector funding for healthcare is low, estimated at around US$4.4 billion in 2008 and the country continues to rely on international aid. Despite the present administration placing more emphasis on healthcare and funding, the insufficient number of health professionals and bureaucratic problems are hampering development.

Protection of intellectual property rights is generally regarded as inadequate in Indonesia and counterfeiting is also a major problem. Although the government has started to crackdown on distributors of counterfeit drugs, intellectual property protection for pharmaceuticals remains weak. The country remained on the US government's Watch List in 2008.

The domestic pharmaceutical manufacturing industry is strong and the country has become an attractive base for many multinational producers to operate. This is largely down to a cheap labour force and generally inexpensive production costs.

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