The Indonesian pharmaceutical and healthcare sector has recorded double digit growth over the last few years. However, in value terms, domestic pharmaceutical industry was minuscule in size compared to the markets of the U.S. and Japan.
Low per capita income, subsidies, lower penetration and accessibility of healthcare were the main reasons for this low figure. Hence, immense potential exists for the growth of domestic pharmaceutical sector. However, the sector is often marred by regulatory flip flops, drug approval delays, currency fluctuations, unethical practices and pricing controls.
In 2015, the sector saw a challenging period due to lower economic growth and higher inflation. Depreciation of IDR, higher electricity tariffs and higher minimum wages also led to an erosion in the profitability margins of pharmaceutical manufacturers during the year. However, the implementation of the National Health Insurance (JKN) program by the Social Security Agency (BPJS) in 2014 helped to revive the sector.
The growth was backed majorly by the generics segment. The JKN program has made Indonesia one of the fastest growing pharmaceuticals markets in the region. Both domestic and foreign companies are expanding their production capacities to meet the expected demand growth over the next few years thanks to the program.
Going forward, the sector is expected to be back on double-digit growth path, backed by government support and various macro growth drivers, including rise in per capita income, rise in health insurance penetration, proliferation of healthcare services across the remote areas, increase in foreign investments and increase in government as well as private expenditure on health. However, frequent policy changes and rising prices of raw materials may act as deterrents for the growth of this sector.
- Government accounted for around 40% of the total healthcare spending while the private sector accounted for the remainder. The healthcare market saw a CAGR of around 20% during 2006-2011 and is expected to surpass USD 30bn by 2015.
- The government aims to have every Indonesian covered by health insurance before 2019 under the new program Jaminan Kesehatan Nasional (JKN), with nearly IDR 20tn (US$1.6 billion) allocated to cover premiums for the poor in 2014. The scheme was launched on Dec 31, 2013 by President Susilo Bambang Yudhoyono.
- Indonesian companies accounted for 70% of the pharmaceutical market while foreign companies accounted for the remainder. The pharmaceutical market grew at a CAGR of 12% during 2007-12. In 2013, it remained stagnant in USD terms. However, the sector recovered in 2014, recording a growth of 21% y/y. It further grew by 13% in 2015.
- Indonesia had an average GDP growth rate of 5.9% during 2006-2012. However, FY15 proved to be tough for the economy with GDP slowing to a five-year low of 4.8%. However, the healthcare sector was resilient even amidst the dip in the overall economy.
1.1 Sector overview
1.2 Sector size
1.3 Competitive landscape
1.4 Environmental scanning
2. Market Trends and Outlook
2.1 Key economic indicators-Indonesia
2.2 Health status indicators
2.3 Healthcare infrastructure
2.5 Market outlook
3. Leading Players and Comparative Matrix
3.1 Leading players
3.1.1 PT Kalbe Farma Tbk (Kalbe)
3.1.2 PT Tempo Scan Pacific Tbk (TSP)
3.1.3 PT Kimia Farma (Persero) Tbk (Kimia)
3.2 Comparative matrix
3.3 SWOT analysis
4. Tables and Charts
Table 1: World health financing statistics
Table 2: Functions of the BPOM
Table 3: Key financial ratios of the leading players
Chart 1: Breakup of global pharmaceutical market by country
Chart 2: Size of Indonesian healthcare industry
Chart 3: Size of Indonesian pharmaceutical industry
Chart 4: Market share of different players in the pharmaceutical sector of Indonesia
Chart 5: Position of People's Representative Council after 2014 elections
Chart 6: Per capita expenditure on health
Chart 7: Pharmaceutical market breakdown
Chart 8: Annual budget for government healthcare spending
Chart 9: Quarterly GDP growth rate-Indonesia
Chart 10: Trade balance of Indonesia
Chart 11: Average monthly USD to IDR exchange rate
Chart 12: Government budget deficit
Chart 13: CPI Inflation-Indonesia
Chart 14: BI rate-Indonesia
Chart 15: Child mortality rate (under 5 Years) per 1000 live births
Chart 16: Maternal mortality rate per 100,000 live births
Chart 17: Infant mortality rate (under 1 year) per 1000 live births
Chart 18: Countries with highest number of people living with HIV infections
Chart 19: Deaths due to tuberculosis among HIV-negative people
Chart 20: Causes of mortality in Indonesia
Chart 21: Number of doctors in Indonesia
Chart 22: Number of hospital beds per 1000 persons
Chart 23: Forecast for the size of Indonesian pharmaceutical sector
Chart 24: Sales breakdown by segment-Kalbe
Chart 25: Net sales of Kalbe
Chart 26: Profit margin of Kalbe
Chart 27: Sales breakdown by segment-TSP
Chart 28: Net sales of TSP
Chart 29: Profit margins of TSP
Chart 30: Sales breakdown by segment-Kimia
Chart 31: Net sales of Kimia
Chart 32: Profit margins of Kimia