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Indonesia Pharmaceuticals & Healthcare Report Q3 2007
Business Monitor International, Feb 2008, Pages: 68
The Indonesia Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Indonesias pharmaceuticals and healthcare industry.
The Indonesian pharmaceutical market reached an estimated US$2.6bn in 2006, in terms of value. By the end of 2011, the market is forecast to reach nearly US$3.9bn at consumer prices, according to the Pharmaceutical & Healthcare Report Q3 2007. With its large population and growing economy, Indonesia should be an attractive market, but very low per-capita spending highlights the main obstacle to strong sales.
With no price controls or national insurance, around 85% of drugs are paid for out-of-pocket, this sector forms the main market for multinationals. However, a number of the products manufactured by large foreign drugmakers are included in the US$400mn state-run Askeskin scheme for 60mn people on low incomes. While Indonesia runs a national essential-drugs list, the foreign industry continues to be frustrated over opaque inclusion criteria. Counterfeits and dubious marketing practices are among the most obvious negatives, but efforts are underway to reform these deficiencies.
Reinforcing the countrys status as a regional manufacturing centre, German firm Bayer has made Indonesia its Asia Pacific base for consumer healthcare production. A portfolio of over a dozen over-thecounter (OTC) products will be made at its plant in Cimanggis, West Java. The medicines will then be distributed for domestic consumption and also exported to neighbouring countries. The author endorses this strategy and accordingly continues to view Indonesia as a promising market, both for manufacturing and for sales.
As part of his mission to improve public health, Indonesias President Susilo Bambang Yudhoyono (SBY) called upon local drugmakers in August 2007 to participate in his ultra-cheap medicine programme and improve the quality of their products. In addition, SBY wants domestic firms to increase output and ultimately raise export figures, to keep pace with the rapidly expanding capabilities of India and China.
We sympathise with the presidents sentiments, but, like the foreign multinationals, feels that government intervention in pricing will stifle outside investment, ultimately to the detriment of patients. The retail sector received a major boost in June 2007 when the government launched a programme to increase the availability of cheap, locally-made versions of patented pharmaceuticals. Under the Apotek Rakyat (Peoples Pharmacy) scheme, restrictions on dispensing drugs have been loosened and a network of small pharmacy outlets will be encouraged.
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