Factors in Indonesia such as urbanization and a large, slowly aging population are driving the demand for quality healthcare. In 2014, the introduction of a universal health plan aiming to cover the entire population of 250 million people presents a tremendous opportunity for Western medical device and pharmaceutical companies to export their products to Indonesia.
Historically, the medical sector in Indonesia has been very closed to 100% direct investment by foreign medtech companies. A 2016 change to foreign investment regulations, called the Negative Investment List, encourages foreign investment by allowing investors to hold up to 100% ownership in five healthcare industries, including pharmaceutical raw materials, business/hospital management and consulting services, healthcare support services in medical equipment rental, healthcare support services in laboratory clinic, and healthcare support services in medical check-up clinics. Previously, old regulations only allowed 85% ownership in pharmaceutical raw materials, 49% ownership in medical equipment rentals, and 67% ownership in business/hospital management and consulting, and laboratory clinic and medical check-up clinic services.
According to a Frost & Sullivan report, the Indonesian medical device market is expected to grow at 12.5% a year between 2013-2018, and should reach $1 billion USD by. Almost all of Indonesia’s medical equipment is imported, and the value of these imports will continue to grow each year. Markets experiencing the most growth include surgical equipment and medical imaging equipment and diagnostics. In the Indonesia, over-the-counter medications sales account for over 35% of total pharmaceutical sales, the highest rate in the APAC region. There is also a strong preference for branded generics. The pharmaceutical giants Bayer, Pfizer, and GlaxoSmithKline collectively hold less than 10% of the Indonesian pharmaceutical market, providing tremendous opportunity for other Western pharmaceutical companies to expand business into Indonesia.