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Indonesia Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, June 2011, Pages: 99
Indonesia Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's pharmaceuticals and healthcare industry.
While Indonesia's pharmaceutical market is small compared with its Asia Pacific neighbours, BMI believes factors such as the annual growth the market, combined with rising population numbers and a relatively solid political and economic base, will continue to provide substantial income to companies operating in the country, encouraging multinationals to invest in the Asian country.
Headline Expenditure Projections
- Pharmaceuticals: IDR37,530bn (US$4.13bn) in 2010 to IDR41,991bn (US$4.77bn) in 2011; +11.9% growth in local currency terms and +15.5% in US dollar terms. Our forecast has been revised up moderately from Q211 due to macroeconomic factors.
- Healthcare: IDR133,373bn (US$14.68bn) in 2010 to IDR152,953bn (US$17.38bn) in 2011; 14.7% growth in local currency terms and 18.4% in US dollar terms. Our forecast has been revised up moderately from Q211 due to macroeconomic factors.
- Medical devices: IDR2,758bn (US$304mn) in 2010 to IDR3,081bn (US$350mn) in 2011; 11.7% growth in local currency terms and 15.3% in US dollar terms. Our forecast has been revised up moderately from Q211 due to macroeconomic factors.
Business Environment Rating: BMI's Pharmaceuticals & Healthcare BERs assess countries according to their risk/reward profile. In BMI’s BER matrix for Q311, Indonesia occupies 12th place of the 17 regional markets surveyed in the Asia Pacific region. The country’s pharmaceutical rating stands at 47.4, lower than the average for the region. 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.
Key Trends And Developments
Merck KGaA's subsidiary in Indonesia, PT Merck Tbk reported revenues of IDR796bn (US$87.6mn) in 2010, a 5.9% growth (in local currency) from 2009 revenues of IDR751bn (US$72.7mn).The increase in sales was attributed mainly to the company's Merck Serono division which deals with prescription drugs, accounting for 41% of sales, followed by its customer health care division and chemical division accounting for 25% and 34% of the 2010 revenue.
Economic View: Indonesia's real GDP expanded by 6.9% year-on-year (y-o-y) in Q410, the fastest pace since 2004, led by robust growth in both private consumption and gross fixed capital formation (GFCF). Notably, this strong print was markedly above consensus (6.3% median estimate) and caps a stellar 2010 with overall growth of 6.1%. We remain bullish on the Indonesian economy in 2011 and 2012, forecasting real GDP to reach 5.9% and 6.0% respectively. However, we note that the outlook in the next few months will be clouded by rising consumer price pressures and the prospect of more rate hikes.
Political View: We believe a cabinet reshuffle is in order in the coming months as Indonesian President Susilo Bambang Yudhoyono seeks to account for his administration's failure to curb religious extremism and rein in corruption. We also highlight the possibility of a broader shakeup within the ruling coalition that may lead to the departure of Golkar party.
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