Indonesia's pharmaceutical market could nearly double to US $ 9.9 billion by 2020 (from US $ 5 billion). Yet, there are some risks to overcome: ‘Non-efficient and non-transparent IP protection for pharmaceutical products and medical devices leaves major loopholes in Indonesia’s healthcare system,’ a Globaldata analyst says.
Driven by increased government healthcare spending and growing life expectancy, the Indonesian pharmaceutical market value will climb from approximately US $ 5 billion in 2013 to US $ 9.9 billion by 2020, at a Compound Annual Growth Rate (CAGR) of 10.2%, forecasts the research and consulting firm GlobalData. According to the company’s latest report, this growth is due to the introduction of government healthcare reimbursement programs, such as Jamkesmas and the Family Hope Program. Their aim is to provide health insurance to all Indonesians by 2019.
Joshua Owide, GlobalData’s Director of Healthcare Industry Dynamics, says: “Patented drugs account for the majority of the Indonesian pharmaceutical market. Therapeutic segments, such as infectious and respiratory diseases, are expected to grow significantly in the future, thanks to the increasing incidence of certain communicable diseases.”
Generics Expand Rapidly in Indonesia
“The generic market is also undergoing rapid expansion, boosted by government incentives and the loss of patent protection for several high-selling products. The over-the-counter drug sector reached a 48% share of the pharma market in 2013”, Owide adds. However, the increasing use of generics, coupled with counterfeit medicines, could slow down the Indonesian pharmaceutical industry expansion.
According to Owide, the country’s regulatory system for Intellectual Property (IP) enforcement is problematic on a number of levels, due to inadequate observation and enforcement, and the lack of an effective customs recordal system to discourage infringement of IP rights.
Transparency Still Lacking: Obstacles for the Industry
“Non-efficient and non-transparent IP protection for pharmaceutical products and medical devices leaves major loopholes in Indonesia’s healthcare system. Infringement is common, and penalties include imprisonment for up to seven years and/or a significant fine, but only minor charges are imposed in practice,” Owide says.