Industry landscape
Indonesia has the largest and one of the fastest-growing pharmaceutical markets in Southeast Asia. Leveraging its rapid population growth and youthful demographic, Indonesia will remain a lucrative investment opportunity for both global and local companies looking to invest in the industry. The market is expected to expand to over 4.5 billion U.S. dollars in annual revenue by 2028 from 3.6 billion U.S. dollars in 2022. Another significant driver of the pharmaceutical industry growth in Indonesia is the government's universal healthcare program (JKN-KIS), which has covered more than 90 percent of its population since its first rollout in early January 2014. JKN-KIS is a government initiative aimed to ensure that every Indonesian citizen gets financial assurance whenever they need health care services.The Indonesian pharmaceutical industry is dominated by local companies such as Kalbe Farma and Kimia Farma. These companies mainly engage in the distribution of pharmaceutical products to end consumers. This is not surprising as the pharmaceutical industry in Indonesia is still heavily dependent on imported raw materials, adding challenges and extra costs to the production of local pharmaceutical products. Indonesia’s dependence on imports of pharmaceutical products has also made the selling price of patented medicines unaffordable for most Indonesian consumers. Therefore, many consumers opt for low-cost generic medicines. All these things combined causes the trade balance in the Indonesian pharmaceutical industry to remain in deficit, with import values considerably exceeding export values.
