Indonesia: 'Asian tiger' roars in Pharma
PhI report forecasts double-digit growth, huge influx of foreign investment and the development of Indonesian CDMOs
Innovative foreign-domestic partnerships to transform market into regional drug exporter
Report Predictions:
1. Over the Counter drugs demand to grow steadily over the next 1-2 years
2. Explosion of growth in prescription generics over the next 3-5 years as government takes on the financial burden of drug sourcing from the private sector
3. Overseas multinationals to increasingly buy domestic cGMP facilities in Indonesia as a gateway into market
4. Foreign multinationals partnering with domestic companies for product distribution
5. Indonesian manufacturers look to move up the drugs value chain in the long term
Amsterdam, 08 April 2015: CPhI South East Asia, organised by UBM EMEA, announces the findings of its Pharma Insights report on the Indonesian pharma market. The full, in-depth study – produced in collaboration with Global Business Reports – will be released free of charge at the event which takes place at the Jakarta International Expo, Indonesia, 8th-10th April.
The overall picture reveals a strong and strengthening position for domestic manufacturers within Indonesia, with overseas companies anticipated to move into this thriving market, sparking an influx of foreign investment that will lead to innovative partnerships in the long term.
The CPhI report shows a remarkable figure of projected growth for the Indonesian pharma market. Already valued at over US$6.5 billion, further investment from the Government, and domestic and foreign manufacturers is set to skyrocket development. Over the next 2 years, domestic companies will continue to thrive, benefiting from the steep increase in consumption of over-the-counter drugs (OTCs). In the medium term, the report predicts this OTC demand will become progressively more linear and the demand for prescription generics will see a sharp increase (over 3-5 years).
This change in the industry dynamic towards prescription generics is being driven by new Government initiatives as they take on the financial burden of drug sourcing. Last year, Jaminan Kesehatan Nasional (JKN) – a universal healthcare programme – was implemented and it has been designed to enable access to drugs for an increased population of 257.5 million by 2019. Currently, only half of the Indonesian population is covered, meaning there will be a huge rise in drugs spending over the next few years.
However, the report has identified a potential risk factor, many Indonesian manufacturers are already operating at capacity, and this is hindering the industry's ability to cater for rapidly rising drug demands. Greater foreign investments will play a major role in ensuring demand does not exceed supply and the report postulates this will ultimately lead to more acquisitions and even innovative partnering models.
Indonesia has an extremely high proportion (83%) of cGMP facilities, which overseas companies will look to acquire in order to gain a foothold in the market. Strong economic growth, and a burgeoning middle class have created a hugely attractive platform for foreign companies, with high-value (more profitable) formulations on the rise as well. Collectively, this means the pharma economy will continue to experience double-digit growth rates for the foreseeable future.
Overseas investors cannot acquire 100% of an Indonesian firm – their maximum ownership stake is limited to 75%. This paves the way for more innovative forms of collaboration between local and foreign companies with partial/equal ownership and risk sharing. Domestic-foreign partnerships will enable local companies to move their businesses towards operating as regional CDMOs and give overseas manufacturers the ability to navigate Indonesia's difficult distribution pathways.
Currently, a strong, domestic base drives Indonesian pharma sales. As this industry continues to evolve, the natural progression for Indonesian manufacturers is to begin exporting to other countries within the ASEAN region. Roy Sparringa, Chairman of the BPOM, (Badan Pengawas Obat dan Makanan - Indonesia's National Agency for Drug and Food Control) believes this could occur in as little as 5 years if increased harmonisation across the region prevails and standardised regulations are established.
The report concludes that the Indonesian market is on the brink of a regional manufacturing boom and with market capitalisations and company values rising, Indonesia's pharma potential will not remain an undiscovered secret much longer.
"This comprehensive market report on the Indonesian pharma economy highlights the exciting prospects within this region and sees strong, continual growth predicted for both local and overseas companies. Partnerships are set to play a major role in advancing this market into a major international drugs exporter for ASEAN countries. Foreign-domestic partnering will allow local manufacturers access to new technologies and provide the opportunity for companies to develop into regional CDMOs." Chris Kilbee, Group Director Pharma.
An abridged version of the CPhI Pharma Insights report on Indonesia is available online and attendees at CPhI South East Asia 2015 will receive a free printed version of the full-length report – entitled 'CPhI/GBR Indonesian Pharmaceuticals 2015: Industry Explorations'– including complete interview transcripts.
Kilbee added; "Finding the right partner has never been more crucial for Indonesian pharma as multinationals look to capitalise on this vibrant, dynamic market. CPhI South East Asia is the perfect location to meet with potential partners and investors to form successful collaborations that will drive the industry forward."
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Notes to editors
About CPhI
CPhI drives growth and innovation at every step of the global pharmaceutical supply chain from drug discovery to finished dosage. Through exhibitions, conferences and online communities, CPhI brings together more than 100,000 pharmaceutical professionals each year to network, identify business opportunities and expand the global market. CPhI hosts events in Europe, Korea, China, India, Japan, Southeast Asia, Istanbul, Russia and South America and co-locates with ICSE for contract services, P-MEC for machinery, equipment & technology, InnoPack for pharmaceutical packaging and BioPh for biopharma. CPhI provides an online buyer & supplier directory at CPhI-Online.com.
For more information visit: www.cphi.com
The UBM EMEA annual schedule of Pharmaceutical events includes; CPhI, P-MEC and Innopack South East Asia (08-10 April, 2015 at the Jakarta International Expo- Jakarta, Indonesia); CPhI, ICSE, P-MEC, BioPh and Pharmatec Japan (22-24 April, 2015 at the Big Sight Exhibition Centre- Tokyo). CPhI Russia and IPhEB (27-29 April, 2015 at the VVC, Pavilion Nr 75, Moscow Russia); CPhI Istanbul (3-5 June, 2015, at the Lutfi Kirdar Convention and Exhibition Centre- Turkey); CPhI, Hi and Fi, ICSE, P-MEC, BioPh and LabWorld China (24-26 June, 2015 at SNIEC- Shanghai, China);CPhI, ICSE, P-MEC, BioPh Korea (7-9 September, 2015 at the COEX- Seoul, South Korea); CPhI, ICSE, P-MEC and InnoPack Worldwide (13-15 October 2015, IFEMA- Feria de Madrid, Spain)
About UBM EMEA
UBM EMEA connects people and creates opportunities for companies across five continents to develop new business, meet customers, launch new products, promote their brands, and expand their market. Through premier brands such as TFM&A, Internet World, IFSEC, MD&M, CPhI, Cruise Shipping Miami, the Concrete Show, and many others, UBM Live exhibitions, conferences, awards programs, publications, Websites, and training and certification programs are an integral part of the marketing plans of companies across more than 20 industry sectors.
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