The Outlook for Pharmaceuticals - Indonesia
A Report by Espicom Business Intelligence
The report is an insight into the current situation of the pharmaceutical industry in Indonesia. It provides an overview of the market size with projections for future growth and a SWOT analysis. The report includes a detailed analysis of exports and imports. The developments in the markets are outlined with respect to government initiatives, economic and environment factors. The report presents a look at the Provincial Health project in Indonesia.
Methodology
Figures for the national pharmaceutical markets are Espicom estimates, in current US dollars. Pharmaceuticals include retail prescription and over the counter medications and hospital only pharmaceutical products. The markets have been estimated using a variety of data, including public and private pharmaceutical expenditure, domestic production and international trade. Domestic production data is sourced from national estimates from governments and industry associations and has been adjusted to take account of re-exporting, stockpiling and differences in the definition of medical production.
The growth rate given for the market in this report is a real annual average rate for the year 2006 - 2011 . The rate does take inflation into account, but makes no attempt to predict exchange rate movements. It does not attempt to track year-by-year fluctuations in growth, but rather provides a projection of the likely size of the market in five years’ time. The rate is calculated by looking at a number of factors. These include economic performance, health expenditure levels, provision of medical staff and hospital beds, trends in medicament and raw material import levels, size and performance of domestic manufacturing sector, national healthcare development plans, and international aid projects.
Summary
- Indonesia remains one of the poorest countries in South East Asia. The country lags behind in many areas of healthcare provision and the major recession experienced in 1998 as a part of the Asian crisis still affects economic prospects. The impact of the tsunami in 2004 is likely to have a damaging effect on the economy as the country attempts to rebuild the devastated areas.
- Government funding for healthcare is low standing at US$8.6 billion in 2005 and the country continues to rely on international aid. An unstable political environment, tarnished by corruption has made healthcare reform somewhat of an afterthought in recent years.
Following the success of Susilo Bambang Yudhoyono at the most peaceful elections in the nations' history in 2004, it is hoped that this will signal a more stable period in Indonesian politics. - There is a marked disparity in the standard of healthcare between rural and urban areas. The capital city Jakarta enjoys relatively good levels of primary care as well as a range of modern private specialist facilities, while healthcare coverage in remote regions tends to be insufficient. Many healthcare facilities, particularly in the Banda Aceh region were destroyed during the tsunami in late 2004 and an already low number of medical personnel will have decreased further such was the scale of casualties involved.
- The domestic pharmaceutical manufacturing industry is strong and the country has become an attractive base for many multinational producers to operate. This is largely due to a cheap labor force and generally inexpensive production cost.
KEY FINDINGS
Market Size
The Indonesian market for pharmaceuticals equipment is valued at US$1.6 billion in 2006, equal to US$7 per capita. Indonesia spends just under one quarter of its total health expenditure on medical equipment and supplies, and around 0.7% of total GDP. The market accounts for just over a 0.2% share of the total world market.
Market Projection
As the economy seeks to recover from the recession of 1998, Indonesia has become an inexpensive place to produce goods destined for export. It is hoped that investment from abroad may increase thus strengthening the industry, and prospects for the market appear good in the short-term, although the volatile nature of the Indonesian socio-political climate should be borne in mind.
