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Indonesia pharmaceuticals market boosted by government changes towards foreign ownership

Press Release   •   Feb 13, 2013 11:45 GMT

Indonesia's pharmaceuticals market is forecast to report strong growth following the recent government changes to foreign ownership of drug companies. Foreign drug companies are now able to establish new operations in Indonesia which are 100% owned by themselves, opening up the market up for increased competition and investment which will ultimately raise the quality and output of local drug production.

The Asian pharmaceuticals markets are seeing mixed fortunes with the Philippines pharmaceuticals market witnessing slow growth compared to its neighbouring markets at the current time. Recent government policies in the Philippines have had a counter measure to growth with the new pricing drug law being implemented recently. Both Indonesia and the Philippines pharmaceutical markets are relatively attractive to foreign companies with both ranking in the top 20 most populated countries which ultimately results in a larger potential patient pool. It is clear that in the emerging markets, changes in government policy is having a big effect on the future growth prospects of the pharmaceutical markets and inward investment. For instance, the recent approval of the Universally Accessible Cheaper and Quality Medicines Act that includes the Maximum Drug Retail Price (MDRP) scheme in Indonesia has altered the dynamics of Indonesia's pharmaceutical industry. MDRP called for a 50% price reduction for more than 100 specified drugs in the market place.

The demands for patient care and medical assistance are often not met in the emerging countries such as Indonesia and the Philippines and it is the relaxation of laws relating to foreign investment which is likely to accelerate inward investment and ultimately allow increased investment and drug production meet the supply required. In Indonesia, the CRO market is not as favourable for drugs registration procedures as it currently takes 300 days after submission to the Indonesia Food and Drug Monitoring Agency (BPOM). The Philippines CRO market, on the other hand, is more favourable with its more relaxed regulatory environment and large patient base. However, both these countries are seeing increased interest from foreign companies to capitalise on the relaxation of government laws and large patient pool which require improved and more widespread medical care.

The Indonesian pharmaceutical market is projected to represent the sixth largest market in the Asia Pacific region by 2016 as research forecasts the market to grow at a high single-digit CAGR in US dollar terms during the forecast period. In 2010, over 250 pharmaceutical manufacturers were operating in Indonesia with the majority located in Java. However, this number is expected to rise with the relaxed foreign investment laws being passed. The lack of R&D investment by local companies in Indonesia has affected the market and so expected increased investment from foreign companies is forecast to address this issue.

For more information on the Indonesia pharmaceuticals market, see the latest research: Indonesia pharmaceuticals market

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