Country Report: Indonesia - Pharmaceutical Executive

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Country Report: Indonesia

Pharmaceutical Executive


PIC/S & PENNIES


Filling the voids
When it comes to serving the generics-focused BPJS niche, Indonesia's local pharmaceutical companies are in a prime position. "These pharma companies will need to look at ways to increase their current capacity and ensure the readiness of their products," said Darodjatun Sanusi, executive director of GP Farmasi Indonesia, the association of generic drugs manufacturers. "At the same time, they have to find and sustain the competitive advantage of their products, particularly as the markets will open up more and barriers to trade will decrease,"


Erik Darius, President, Meprofarm
If Indonesia's local manufacturers supply BPJS, they will also be the ones feeling the much expected price-volume effect. "It will change the whole landscape and turn Indonesia from a self-payers market into a government and private insurance-driven market," said Johannes Setijono, chairman of Kalbe Farma, the largest listed pharmaceutical company in the ASEAN region. "The private insurance companies, which are still small today, are therefore expected to see their bargaining power increase significantly. The plan is expected to not only drive up market volume but also create severe price pressures."


Santiago Garcia, President Director - APL Care
Two decades ago, one could already see several manufacturers moving out of the big cities and into industry-friendlier outskirts, moves that coincided with a government push to force GMP standards upon the industry. "Meprofarm was founded by my father in 1973. Two decades later, in 1995, we moved premises," said Eric Darius Mardiwidyo, president director of Meprofarm,a local generics manufacturer. Now, the company is based on the outskirts of Bandung, the second largest metropolitan area in Indonesia 87 miles southeast of the capital, Jakarta. "The move was the direct result of the company's rapid growth, as well as new government regulations to comply with GMP standards," Mardiwidyo said. "GMP compliance was achieved by December 1995, boosting the growth of the company further. In 2006 we acquired additional land next to our existing facilities in order to build our new facility 'Meprofarm 2'. This second facility was completed in 2010 and added a number of new lines to the company: injectables, liquid syrup and creams. It also includes storage space that now makes up our central warehouse. Most of the growth will sit in generic tablets and capsules. Specialty products like hormones, oncology and vaccines, for instance, are going to be attractive areas to invest in."

A FOR ACCESS IN THE ARCHIPELAGO


HR War
Partnering with a top notch distributor may be desirable in any pharma market; it is a must in Indonesia. With over 6,000 inhabited islands scattered across both sides of the equator, the ­Indonesian archipelago is the world's 16th largest country in terms of area. "As a distributor, you easily have to deal with forty-plus companies for transportation alone," said Santiago Garcia, CEO of APL Care, the country's leading distribution company for the pharmaceutical and health care sector. "Moving goods and people is very difficult because the links between some of Indonesia's key cities are missing. We also notice that truck loads are often incomplete while the discipline among logistics companies is often lacking. Electricity cuts are another big issue, especially when we start talking about cold supply chains. However, the situation is improving and changes are happening in this respect, and these challenges are an integral part of doing business in Indonesia. Every time companies are under pressure, goods are being sold to wholesalers at severe discounts. We, however, target the proper channels consisting of hospitals, doctors, clinics and pharmacies. We want them to work with us and work on demand generation, rather than flooding our channels at discount prices." While Indonesia's leading independent distributors APL Care, Dos Ni Roha and Pentavalent have a significant presence in the market, they compete head-on with in-house distribution companies that belong to local pharmaceutical manufacturers such as Kalbe Farma and Dexa Medica.


Family grip on local pharma
2013 is an exciting year for the industry, a year of preparation for implementation of universal health care coverage in 2014. The industry will see itself forced to reshape business strategies to supply the system with quality medicines, be it branded originals or their generic counterparts. MNCs with the ability to play in the generics space will stand a good chance in excelling in the Indonesian market, while those without generic capabilities are likely to continue along a growth path nurtured by optimistic macro figures. Local companies must professionalize their operations and invest in more capacity and better quality standards. The expectation is for Indonesia to continue its double digit growth path, which makes it an exciting pharmaceutical market with many opportunities. But growth will require more than finding the right portfolio. It will come down to becoming a true partner to Indonesia's healthcare system and its many stakeholders.


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