BPJS, liberalization to provide boost to local pharma industry

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The country’s pharmaceutical industry is slated to grow by almost 50 percent, by 2022, thanks to the government’s universal healthcare program and the opening up of the sector to foreign investment, research firm Frost and Sullivan forecasts.

The value of the generic medicine industry will expand to US$5.73 billion by 2022, up 48 percent from $3.86 billion recorded last year, Frost and Sullivan Indonesia healthcare consulting analyst Jyoti Nagrani said.

Brand-name pharmaceuticals is seen as expanding by 33 percent to $1.63 billion, from $1.22 billion in 2015.

“The growth is backed by the JKN [national health insurance] program,” she said on the sidelines of the firm’s Investor Growth Opportunity Briefing 2016 in Jakarta on Tuesday.

Through the healthcare program, the government mandates the use of generic medicine, a policy that has caused a spike in drug demand and production.

Local pharmaceutical companies have the capacity to cater to the high demand, with Nagrani saying that state-run drugmakers Kimia Farma and Indofarma had the potential to upgrade their production capacity by 123 percent and 200 percent, respectively, last year.

“But maybe in the future, if demand continues to increase, you’ll see more foreign players addressing the increasing demand for generics in the country,” she added.

The number of pharmaceutical companies operating in the country stood at 239 firms in 2014, up from 206 in the previous year, according to Health Ministry data.

Ninety percent of drug ingredients are imported, although 70 percent of drugs consumed in the country are made by local firms, data from the Food and Drug Monitoring Agency (BPOM) showed.

In a bid to encourage the raw material industry, the government announced earlier this month that it would revise the nation’s negative investment list (DNI) — which includes sectors restricted for foreign investment — to allow 100 percent foreign ownership in pharmaceutical companies, from 85 percent previously.

Frost and Sullivan Asia Pacific transformational health director Milind Sabnis said during the same event that the new regulation would channel more foreign investment into raw material development for medicine manufacturing in the country.

“Developing products locally will be very much easier,” he added.

Publicly listed pharmaceutical company PT Kalbe Farma has commenced construction on its first biotech-based drug factory in Cikarang, West Java, in a bid to reduce its dependency on imported raw materials for drug production.

Meanwhile, Kimia Farma has established a joint venture with a South Korean-affiliated company to ensure the supply of raw materials for drug production.

Sabnis went on to say that in addition to investment in the raw material industry, foreign investors would also look to investing in healthcare services, which are currently open for a limited percentage of foreign investment, as patients had started to look for not only products but also services. - See more at: http://www.thejakartapost.com

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