Indonesia: To sell here, produce here

Big Pharma may be waxing eloquent on the promise of emerging markets, but those markets aren't necessarily happy that they top the list of future revenue boosters. Some want pharma to dole out a piece of the pie locally. And one has joined a handful of countries that require it.

That one is Indonesia, which recently issued a decree requiring drug companies that hawk their wares in-country to establish production facilities in-country, too. The new rules are designed to encourage foreign investment to create jobs. Obviously. "If they want to get licenses (to sell their products) they have to invest here also, not just take advantage of the Indonesian market," Health Minister Siti Fadilah Supari told Dow Jones today. "They can't just operate like a retailer here, with an office that's three meters by three, and make billions of rupiah. That's not fair."

More than a dozen multinational drugmakers would have to set up new plants in Indonesia under the rules, including Merck, Novartis, Wyeth, Eli Lilly, Novo Nordisk, AstraZeneca and Astellas Pharma. Supari said Indonesia's $2 billion drugs market would make building those production facilities worthwhile. Other countries that sport similar requirements include China and India, both of which boast a multiplicity of foreign joint ventures and investment.

Indonesia's rules have drawn protest from the U.S. Chamber of Commerce, which is urging Indonesian President Susilo Bambang Yudhoyono to consider revising the decree. But so far, the country has taken a hard line. To companies that threaten to abandon the market rather than build factories there, Minister Supari said, "If they want to go away, go ahead."

- read the story in the Straits Times

Related Articles:
Pharma bets its chips in developing countries
Report examines global pharma growth
Emerging markets drive global growth
Big Pharma blunders in emerging world (Nov 2007)