Indonesia gains momentum as drug firms eye second year of phased national insurance

Indonesia could be the new darling of healthcare industry investors, many of whom are already taking advantage of opportunities afforded by a new national health plan initiated at the beginning of last year.

A Frost & Sullivan outlook report said the health plan already has become a driver of investments lured by outcomes such as triple patient volumes in some clinics in its first two months. That and similar reports elsewhere suggest a good market not only for makers of medical equipment, but also for affordable and low-cost drugs.

The research company said international pharmaceutical companies would do best to form partnerships or acquire Indonesian drugmakers to enter the market. The domestic pharma industry, it said, still struggles in the areas of offering quality, efficiency and innovation.

The health plan, called Jaminan Kesehatan Nasional (JKN), favors locally produced content to stimulate domestic business when buying drugs and medical equipment, Frost & Sullivan said in a news release.

Siddharth Dutta

The report's author, Siddharth Dutta, said JKN was likely to generate a need for drugs "in the lower end of the market rather than the large-scale substitution of premium products." Outside the government plan, however, private healthcare companies could be sales targets for the more expensive or nontraditional products, he said.

As for devices, the report said foreign makers of in vitro diagnostics already have 80% of the Indonesian market, led by Abbott Laboratories ($ABT), bioMérieux, Sysmex and Roche ($RHHBY).

Dutta's report advised foreign companies to leverage their stronger finances and branding and have domestic firms manage the Indonesia end of their business.

- here's the release and report