2013-02-22 13:52:42 - Recently published research from Business Monitor International, "Indonesia Pharmaceuticals & Healthcare Report Q1 2013", is now available at Fast Market Research
BMI View: Indonesia's new goal to establish universal healthcare coverage by 2019 rather than 2014 is more feasible given that the programme will be rolled out in phases. We continue to see universal healthcare coverage as a key theme in Asia, although poor governance in several countries across the region will delay its implementation. Despite this, pharmaceutical firms will continue to enjoy strong growth in the region due to the expanding, increasingly ageing and affluent population, which will boost volume demand for pharmaceuticals as well as medical services across the board.
Headline Expenditure Projections
* Pharmaceuticals: IDR53,041bn (US$6.04bn) in 2011 to IDR58,657bn (US$6.25bn) in 2012; +10.6% growth in local currency terms and +3.5% in US dollar terms. Local currency forecast broadly
unchanged from previous quarter.
* Healthcare: IDR195,355bn (US$22.26bn) in 2011 to IDR223,454bn (US$23.82bn) in 2012; +14.4% growth in local currency terms and +7.0% in US dollar terms. Local currency forecast unchanged from previous quarter.
* Medical devices: IDR5,721bn (US$652mn) in 2011 to IDR6,282bn (US$670mn) in 2012; +9.8% growth in local currency terms and +2.7% in US dollar terms. Local currency forecast broadly unchanged from previous quarter.
Full Report Details at
- www.fastmr.com/prod/536466_indonesia_pharmaceuticals_healthcare_ ..
Risk/Reward Rating: In our Q113 Pharmaceutical and Healthcare Risk/Reward Ratings (RRRs), Indonesia slipped from 11th to 12th position out of the 18 Asia Pacific markets. Nevertheless, its composite score remains an unchanged 48.4 out of 100. Indonesia's rewards are viewed as being slightly better than the regional average, but its risks profile is considerably more unfavourable, both in terms of industry- and country-specific risks, which will continue to detract foreign players from participating in the country's pharmaceutical market. Globally, Indonesia ranks 53rd out of the 95 markets surveyed.
Key Trends And Developments
* In September 2012, Iran was planning to set up a pharmaceutical plant in Indonesia in the near future, IRNA reported. The Indonesian chairman of the Iran-Indonesia Parliamentary Friendship Group, Ahmad Shahab, said the Ministry of Health had requested the plant. He was speaking at a meeting with several officials from the Iranian health ministry. Shahad also highlighted the need to work on the memorandum of understanding (MoU) signed between the countries five years ago.
* US consumer group Public Citizen reported that Indonesian President Susilo Bambang Yudhoyono issued a decree in September 2012, authorising the use of seven generic versions of patent-protected HIV/AIDS and hepatitis B drugs. The drugs are: GlaxoSmithKline (GSK)'s Ziagen (abacavir), Merck & Co's Stocrin (efavirenz), Bristol-Myers Squibb's Videx (didanosine), Gilead Sciences' Viread (tenofovir), Truvada (tenofovir + emtricitabine) and Atripla (efavirenz + tenofovir + emtricitabine), Abbott Laboratories' Kaletra (lopinavior + ritonavir). According to Public Citizen, Indonesia did not override or revoke any patents. Instead, the introduction of generic drug imports aimed to facilitate competition. The country has also established a 0.5% royalty for patent holders.
* In October 2012, Indonesia-based BioFarma announced at the 13th Developing Country Vaccine Manufacturers Networks that it intends to partner vaccine manufacturers in developing and Islamic countries, particularly in the research and development (R&D) of new vaccines. Some of the members of the network include state-owned China National Biotec Group, which is currently developing a human papillomavirus vaccine; Xiamen Innovax Biotech, whose hepatitis E vaccine is the first vaccine for the disease to be allowed onto the global market after first being approved in China; Sinovac Biotech, which was chosen to supply hepatitis A vaccines in Beijing and Shanghai; and Pasteur Institute of Iran, which has produced a vaccine for tuberculosis (TB) and has been marketed in Iran since June 2012.
* In December 2012 PT Merck Tbk, German company Merck KGaA's principal Indonesian operation, reported plans to strengthen its warehousing infrastructure, reinforce and expand partnerships with local distributors, and improve operational efficiency over the medium term. The company does not anticipate any large investments in manufacturing capabilities, President Director Markus Bamberger told The Jakarta Post. He added that the introduction of universal health coverage 'will have a huge impact on all pharmaceutical companies.'
BMI Economic View: Indonesia's large domestic demand base and exposure to commodities are two key factors driving our bullish growth outlook for the next decade. Indeed, we are forecasting real GDP growth to average 6.4% over the coming ten years. That said, government policy reform - particularly in the areas of bureaucratic efficiency, corruption and investment promotion - will be crucial in determining whether the country can reach its real growth potential.
BMI Political View: Although Indonesia has returned to relative orderliness since the chaos of the late 1990s and early 2000s, the country faces multiple challenges and threats to its stability that could flare up again if President Susilo Bambang Yudhoyono or his successor proves incompetent, or if improved governance fails to take hold. As such, investors will continue to view Indonesia as one of Asia's riskier destinations. In the meantime, issues such as widespread poverty and an increasingly uneven income distribution and high degree of ethnic diversity remain threats to stability.
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