HEALTHCARE | Staff Reporter, Indonesia

Indonesia's drug exports gets boost from international pharmas

The formation of the ASEAN Economic Community will allow local drugmakers in Indonesia to expand.

Indonesia's pharmaceutical exports are expected to rise to IDR9.2trn (USD660.2mn) by 2024 with a CAGR of 4.1% in local currency terms, as firms seek to capture opportunities within the broader Southeast Asian market, according to a report from Fitch Solutions.

Leading this increase are exports to Singapore, Thailand, and the Philippines. The report noted that multinational pharmaceutical companies are expected to begin using Indonesia as a manufacturing base for exports.

This includes Germany-based Bayer, which in 2015 spent $3.4m in 2015 to expand its Cimanggis, West Java production capacity, aiming to enable the firm to export global healthcare products to at least 50 countries within the following three years.

Bayer Indonesia also announced in April 2019 that it expects to be able to boost exports from this manufacturing facility by 30%, to 65 containers on average a month, up from 50.

In addition, the formation of the ASEAN Economic Community (AEC) is expected be a catalyst for Indonesia's pharmaceutical exports. Beyond facilitating access to the Southeast Asian market, this will also allow Indonesia-based drugmakers to achieve larger economies of scale and enable them to compete in markets such as China.

"Though integration will remain a gradual process due to the disparities in regulatory standards between ASEAN members, the end objective will be highly positive as it seeks to harmonise pharmaceutical regulations and eliminate technical barriers to medicine trade," the report stated.

Indonesian drugmakers have been anticipating the opportunities that will arise from greater integration, Fitch noted. Kalbe Farma, for example, plans to manufacture cancer medicines to meet the needs of the local market and prepare to export them.

Similarly, Darya-Varia Laboratoria is looking to roll out the AEC, which it believes will be highly beneficial to the firm due to its established partnerships.

"Due to the limited spending on research and development, the vast majority of local Indonesian drugmaker exports will remain low-cost generic and over-the-counter (OTC) medicines. Kalbe Farma's push into Singapore and Thailand for example, is focused on nutritionals and OTC drugs," the report noted.

The sales of medicines for the 10 member states of the Association of Southeast Asian Nations (ASEAN) are expected to grow, underpinned by the roll-out of universal healthcare in some markets as well as the expansion of existing coverage.

However, Fitch Solutions expect much of the increased output to be used in the local market, given the widening insurance coverage in Indonesia.

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.