Indonesia has a fairly small but fast-growing pharmaceutical market, with an estimated value of USD 7.31bn in 2012. The pharmaceutical market is projected to grow at a compound annual growth rate of 10.8%, reaching a value of USD 12.2bn by 2017. It is expected that the market will further grow as current drug consumption per capital is relatively lower than neighbouring countries at about USD 20 in 2011, hence there likely will be more increases in health spending in the future.

Due to a large population size and relatively strong production base, Indonesia has the potential to be a lucrative pharmaceutical and healthcare market. The country has a huge generic drugs sector, which is likely to see consolidation as larger companies seek to maximise profits through acquisition of smaller domestic companies. However, it is noteworthy that part of the generics market is made up of counterfeit drugs. Over-the-counter (OTC) segment has also shown steady growth in recent years, attributed to increased self-medication and accessibility to more affordable drugs.

Majority of the local pharmaceutical companies achieved better sales growth in 2011-2012, supported by improved macro-economic conditions and stable raw material import prices. The leading players include PT Kalbe Farma Tbk, PT Merck Tbk, and PT Kimia Farma Tbk.

Key Points:

• Indonesia’s pharmaceutical market is projected to grow at a CAGR of 10.8% over the next five years, reaching USD 12.2bn by 2017, and will rank as the sixth largest pharmaceutical market in the Asia-Pacific region.

• According to industry estimates, drug expenditure is projected to reach IDR 84.8tn (USD 9.5bn) by 2016, with a CAGR of 10% during the 2011–2016 period.

• Healthcare spending in Indonesia, which is equivalent to 2.6% of GDP, is projected to nearly double over the next five years, driven by strong economic, demographic and income growth, as well as the eventual introduction of the national health insurance system by 2014.