OBG talks to Jorge Wagner, President-Director, Boehringer Ingelheim Indonesia; and Bernadette Ruth Irawati Setiady, President-Director, Kalbe Farma

Interview: Jorge Wagner, Bernadette Ruth Irawati Setiady

Indonesia’s pharmaceutical market is expected to reach $9.9bn by 2020. What growth is expected for high-end drugs vis-à-vis generics?

JORGE WAGNER: While generics are experiencing strong growth following expanded access to medicines with the implementation of the universal health care scheme, there is also a place for innovative products within this scheme and in the private sector.

Developing innovative drugs and therapies that can provide better and safer treatment than the current ones for patients is a main reason for the existence of the R&D-driven pharmaceutical industry. Our objectives include giving proper access to these therapies, and working on business models that can provide it. Future medical needs can be met, with clear added value, by the innovative medicines that will grow alongside the development of new therapies.

Due to diversity factors, a big difference is not expected in the growth patterns of innovative and generic drugs. These factors include the economic growth of the country or proper implementation of the universal health scheme. Currently different analysts predict moderate-to-high market growth, without strong differentiation between these categories, although growth of generics is expected to be stronger.

BERNADETTE RUTH IRAWATI SETIADY: Both generics and high-end drugs will receive greater demand in the coming years. The timing of both segments is the main factor to be considered. The growth of the health care sector will be mainly driven by the full implementation of universal health care coverage, and so generic medicines will reap the benefits first. These products provide for the basic needs of the population, which is the government’s objective in the initial stages of the Health Care and Social Security Agency (BPJS) plan.

On another note, as the middle class expands and income per capita increases, the result will be a greater need for high-end pharmaceutical products to treat more advanced illnesses. This will leave more room for the growth of the branded medicines market.

How do you assess the effectiveness of the universal health care programme so far, and how has it impacted Indonesia’s pharmaceutical industry?

SETIADY: Moving forward, the government must make clear and distinct priorities for both short- and longterm strategies to ensure the proper implementation of the universal health care programme. The most pressing need for the country is additional physical infrastructure. There are not enough hospitals to treat people directly: this should be a priority. After this, investing in education is the next step.

With an expansion of coverage, Indonesia will need more doctors. Measures such as easing the restrictions on foreign doctors practising in Indonesia would better serve patients; however this is a short-term solution. If the government truly wants to improve the country’s health sector it must also invest at home.

A good way for Indonesia to achieve its development goals is through greater international collaboration. Whether this means linking with staff from foreign countries or developing more joint research, Indonesia should be open to any possibilities that move the country forward. As an example, our company has been working with foreign firms to develop our research into the use of stem cells. The ASEAN is a market of 600m people and is working towards greater integration. Indonesia can be a good base of operations for multinational companies, which can find best practices here and be well placed to collaborate with other countries in the region.

WAGNER: The proper roll-out of the universal health care programme is probably the most significant event of the coming years for the pharmaceutical industry, and the health sector as a whole. This type of change is not achieved overnight, and therefore a sustainable approach in the coming years will be key to success.

The expansion and overall improvement of its infrastructure, including ensuring adequate private involvement, will also be key to the effectiveness of the programme. The first year was a transition year, when most of the barriers and hurdles to implementation had to be worked out. The pharmaceutical industry was affected by an overall slowdown of market growth, as well as a considerable change of product portfolio prioritisation within companies.

Pharmaceutical companies have different approaches to balancing participation in the universal health care scheme – where generics have a stronger presence – while continuing private sector growth.

How is the government encouraging investment in Indonesia’s pharmaceutical industry?

WAGNER: Access to health care for a growing number of patients in the next few years is encouraging for investors in the pharmaceutical industry.

The expansion of the market via the implementation of the universal health care programme provides a big incentive for local and international industries to decide to invest, both in facilities and human resources development. The development of public and private hospitals is also encouraging, as clinical development is a key aspect in the furthering of research and development (R&D).

On the other hand, there will always be elements that both industry and government can work on, in order to maximise these investments.

SETIADY: President Joko Widodo has consistently stated that there will be an effort to increase the budget and coverage of the BPJS. Pharma companies see that there will be more money invested by the government, so we look forward to 2015. The former regime’s plan was to cover the entire population as soon as 2019. However, the new administration has indicated that the programme will be accelerated, increasing the initial investment planned for the BPJS. An increase in funding means more coverage for patients and higher volumes. All manufacturers, both international and domestic, will benefit.

Also, the government has included the private sector in the development of a roadmap for the BPJS. To increase the efficiency of development, it is important to have viewpoints from businesses that are focused on efficiency. Through this roadmap, there will be opportunities to help expand Indonesian care.

What more can be done to boost Indonesia as a centre for research and development in the region?

SETIADY: Indonesia cannot avoid the need for R&D in all sectors. For the country to expand in the longterm, it is important to create value-added products. However, this is a very costly process. If the government were to provide incentives and funding in R&D, the private sector would surely follow.

However, there are ways for the business community to combine efforts with ongoing research in Indonesia’s universities. Scientists have been developing research for years in Indonesia that has gone unnoticed by the business community. The research scientist’s sole focus is finding out more about the uses and composition of chemicals and substances; he is not concerned with how to make them into a marketable treatment. This is where pharmaceutical companies can use their expertise.

By creating stronger university research programs, both parties can work towards a common objective of creating improvements in the development and advancement of medical technology for Indonesia.

WAGNER: Across all industries, R&D is a key driver for economic development. Boosting Indonesia as a centre for R&D is a complex process that will require close collaboration between the private and public sectors, academia and government.

Probably the most effective means of achieving a significant improvement is to focus the necessary resources in human talent development. Human talent development is the most important factor for the growth of research and development, along with the allocation of an improved budget to infrastructure and institutional development. In this sense Indonesia has made very good progress towards this objective.

Share

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Indonesia 2015

Health chapter from The Report: Indonesia 2015

Cover of The Report: Indonesia 2015

The Report

This article is from the Health chapter of The Report: Indonesia 2015. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart