In BMI’s Business Environment Rating matrix for Q410, we see Indonesia occupying 11th place, out of the 17 regional markets surveyed in the Asia Pacific region. The country’s pharmaceutical rating has risen to 48.9, marking a slight increase over the previous quarter. However, it is still lower than the average for the region, which stands at 52.3. The main drawbacks to investment in Indonesia include corruption, low per-capita spending on pharmaceuticals and a small proportion of the elderly in the country. On the other hand, factors such annual growth of its pharmaceutical market, coupled with rising population numbers and a relatively solid political and economic base are expected to encourage multinationals to invest in the country despite a risky operating environment. We therefore envisage that sales of pharmaceutical products will increase over the next 10 years, with sales of prescription drugs and over-the-counter (OTC) medicines expected to grow from US$2.92bn in 2009 to US$5.89bn in 2014 and US$11.00bn in 2019, thus representing compound annual growth rates (CAGRs) in local currency terms of 10.86% and 10.84% for 2009-14 and 2014-19 respectively.
The head of Indonesia’s investment-coordinating board recently announced that efforts will be made to open more sectors to overseas investment – including health and agriculture, but not dealing with areas such as telecommunication towers for mobile telephones. To this end, a draft proposal citing investment in strategic areas, known as the negative list on foreign investment, has already been finalised and is expected to be approved soon.
Elsewhere, recent findings suggest that most people suffering from bleeding disorders in the country are not properly diagnosed and therefore fail to receive proper treatment for the disease. It is thought that only 5% of cases in Indonesia have so far been successfully diagnosed. It is estimated that there are approximately 20,000 haemophiliacs across the country, with only 1,200 being registered as of March 2010.
Meanwhile, Singapore-based Invida Group, a leading specialty biopharmaceutical company announced that it has completed a joint venture agreement with domestic pharmaceutical manufacturer PT MUGI Laboratories. Under the terms of the agreement, Invida will seek to expand its operations in Indonesia to include: the importation of raw materials and auxiliaries; the possession of regulatory licenses for the manufacture of pharmaceutical products; the provision of toll manufacturing support; and providing marketing expertise throughout the archipelago.
In other developments, PT Bio Farma announced that it is to spend IDR500bn (US$55mn) on a facility to produce blood plasma products, including albumin and Factor IX. The plant will be the first of its kind in Indonesia and will be built using assistance from South Korean and Australian pharmaceutical companies, based on guidelines stipulated by the WHO. Indonesia is the world's fourth most populous country but currently has to import the majority of its blood plasma products, primarily from the Netherlands.
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