Indonesia Pharmaceutical Update 2012


The Indonesian pharmaceutical market was estimated to be around US$4 billion in 2011.  The country’s pharmaceutical market has been steadily growing.  Along with increased domestic demand, sales of prescription drugs are expected to grow approximately 12% in 2012, according to IMS Health data.  Growth in prescription drugs will be higher than over-the Counter (OTC) drugs, which are only forecasted to grow 5.7%.

Because of the country’s weak currency and cheap labor costs, Indonesia is an attractive location for manufacturing. Though in order to be successful, it is important to stay abreast on Indonesia pharmaceutical regulations. Currently, there are about 240 domestic pharmaceutical manufacturers in Indonesia with the majority located in Java.  However, domestic pharmaceutical companies still significantly lag behind western drug companies in terms of research and development.

In 2011, the Indonesian Pharmaceutical Manufacturers Association announced that 20 of its members had raised the prices of a number of drugs by an average of about 7%.   The group’s chairman cited rising inflation as the main cause for the drug price increases.  However, the Indonesian Pharmaceutical Entrepreneurs Association predicts that the drug price increases will not actually take effect until the end of 2012.  In addition, producers have requested the government to lift import duties for raw materials for drugs in an effort to further decrease prices.  With reduced import taxes, pharmaceutical sale prices can be lowered by 5%.

Of the 200 drug companies operating in the Indonesian market, about 40 are foreign-owned and 160 domestic.  Foreign drugmakers constitute about 30% of the overall pharmaceutical market in Indonesia.

Drug Regulatory System

The overarching authority on Indonesia pharmaceutical regulations is the National Agency of Drug and Food Control (NADFC).  Registering drugs can be an extremely lengthy and taxing process.  Registration can take from one to three years.  Thus, the NADFC plans to accelerate the drug approval process and improve overall transparency, at least in theory.

Pharmaceuticals are classified as indicated below:

  • narcotics (category O),
  • prescription medicines (category G),
  • OTC medicine with warning labels (category W), and
  • general OTC products (category F).

The NADFC also regulates drug advertising.  All advertising materials must be approved by the NADFC.  Category G prescription drugs are not permitted to be advertised to the public.  Category W drugs can be advertised to consumers, provided they have warning labels on packages.  There is no restriction on the advertising of category F products.

In July 2009, the drug regulatory agencies of the Association of Southeast Asia Nations (ASEAN) agreed to standardize regulations of pharmaceutical products and took crucial steps towards expediting Indonesia pharmaceutical regulations. This aimed to increase transparency and remove the need for duplicate studies to meet various Asian countries regulation requirements.

According to the agreement, manufacturers are required to follow the ASEAN Common Technical Documents (ACTD) in order to be certified as compliant.  In addition, the harmonization applies to all components of the pharmaceutical manufacturing process, from testing, to raw materials, to production.

In January 2010, the MOH announced that it will require doctors at state-run medical facilities to prescribe generic drugs whenever possible in an effort to stifle rising healthcare costs.  The MOH regulation makes it mandatory for state health facilities to use generic drugs unless none are available.

Labeling Requirements

In order to be in line with Indonesia pharmaceutical regulations, all pharmaceutical products must state their generic or chemical name, along with their brand name on the packaging.  However, many of the labeling requirements have not been stringently enforced or followed.

In late 2009, the NADFC issued Regulation Number HK. (also known as Halal labeling Regulations) which stated that pharmaceutical, cosmetic, and food products that do not conform to the “Halal” regulation requirements must attach a new label and will be prevented from receiving a distribution license otherwise, unless the Muslim clerical body declares otherwise.

Drug Reimbursement

Various public health insurance schemes each have a different formulary and reimbursement policy.  However, there is no private insurance available in Indonesia.  Hence, most patients must pay for 100% of their drug expenses out-of-pocket since they are not reimbursed.  Even though the Indonesian government operates a National Essential Drug List (NEDL), only about 50% of the drugs on the list are readily available throughout the country.  The list is made up of mainly generics.  The government continues to encourage generic substitution for branded pharmaceuticals.

Opportunities in the Pharmaceutical Sector:

With the continuing expansion of the healthcare sector, demand for low-cost drugs is likely to increase.  Though the Indonesian pharmaceutical market is largely import-driven, exports are likely to increase as more domestic producers adhere to Good Manufacturing Practice (GMP) standards.  In addition, in light of efforts to improve Indonesia pharmaceutical regulations and Good Clinical Practice (GCP) standards, the country is becoming an increasingly attractive location for clinical trials.

In the News:

Eye Health:

In lieu of merging its parent company with Alcon Inc., PT Novartis Indonesia is planning to expand its eye health market share in Indonesia.  The Swiss pharmaceutical producer aims to strengthen its market share in eye care products and the health services market.  The newly acquired Alcon division in Indonesia will focus on developing drugs related to eye health.

Prostate Cancer:

Clinical trials for the prostate cancer vaccine, Provenge, are to commence in Indonesia in late 2011 or early 2012.   The new vaccine may slow cancer cell growth, limit decreases in hemoglobin, and reduce pain.  Unlike other preventative cancer vaccines, this new prostate cancer vaccine is developed as a form of medical therapy to help prostate cancer patients live longer.  By taking the vaccine, a patient with advanced cancer may live 18 to 24 months longer, according to scientists.  The clinical trials in Indonesia will be part of a trial involving cancer patients in five other countries: China, India, Japan, Korea, and Singapore.  The vaccine was produced by Dendreon and was subsequently approved by the FDA in 2010.