The National Socio-Economic Survey records that Indonesia's public health expenditure in 2022 reached Rp. IDR 1,327,782.00 per capita per month. The allocation of health expenditure in Indonesia for medicine is 12.57%, including prescription drugs, modern drugs purchased without a prescription, traditional medicines/herbs, and the cost of buying glasses, prosthetic limbs/arms, and wheelchairs. Among these products, the public majorly spent their income on modern medicines purchased without a prescription from health workers. 

The growth of the pharmaceutical market in Indonesia is about 7% to 8% year on year. It is affected by the government's priority to increase the number and quality of health facilities. Pharmaceutical companies contribute to medicine accessibility and affordability, especially for high-prevalence diseases such as hypertension and diabetes. 

Public access to medicine is affected by the coverage area of pharmaceutical wholesalers or distributors and the distribution of health facilities. The even distribution of health facilities provides wider opportunities for people to purchase medicines while distributors help to allocate drugs to health facilities. The number of health facilities in each province is listed here: 1. Sumatra (3435); 2. Jakarta (511); 3.Java (4666); 4. Kalimantan (1139); 5. Sulawesi (1646); 6. Papua (1085), and; 7. Bali Nusra (890). Even though the sum of health facilities is nearly 15,000, Indonesia is still on the verge of a crisis since Indonesia ranks 4th most populated country with a limited number of health facilities. Furthermore, this issue was illustrated by the lack of hospital beds when COVID-19 emerged. Thus the government accelerated the construction of emergency hospitals for COVID-19 patients' isolation. The government's response is to strengthen the pharmaceutical supply chain system resilience. The government set the local production target of 14 vaccine programs and 10 highest-consumption medicines in 2024. Not only that, but the government also focuses on essential medicines such as blood products, biological products, and herbs (Obat Herbal Terstandar and fitofarmaka) production reinforcement, and their use is based on evidence-based medicine. 

The pharmaceutical market for finished products is dominated by local companies (88%), which are Dexa Medica (6.1%), Kalbe Farma (5.3%), Kimia Farma (3.9%), and Sanbe Farma (5.4%) ). However, local manufacturing companies that produce Active Pharmaceutical ingredients (APIs) are still relatively rare. This condition can be the main focus for new players in the Indonesian pharmaceutical market. Indonesia's limited capabilities in API production might be the opportunity to expand the business scope. Now, 5 out of 10 Active Pharmaceutical Ingredients (APIs) with the highest consumption in Indonesia have fully developed. Among them are Paracetamol, Clopidogrel, Amlodipine, Omeprazole, and Atorvastatin. Then, in 2023, API development will focus on bisoprolol and Candesartan. 

Since 2021, there have been five medicinal raw material manufacturing industries: PT Ferron Par Pharmaceutical, PT Riasima Abadi Farma, PT Kalbio Global Medika, PT Daewoong Infion, and PT Kimia Farma Sungwun Pharmacopia (KFSP). KFSP can produce Clopidogrel, Simvastatin, Atorvastatin, Rosuvastatin, Entecavir, Lamivudine, Zidovudine, Efavirenz, Tenofovir, Remdesivir, and Povidone Iodine, PT Ferron Par Pharmaceutical has produced omeprazole (Injection grade), PT Riasima Abadi Farma produce Paracetamol, and PT Daewoong Infion produces Erythropoietin. 

The increase in local API production capacity is none other than part of the pharmaceutical sector's support for the Increased Use of Domestic Production policy. The TKDN (Local Component) value of pharmaceutical products that exceed 50% will be a priority in the e-Katalog shopping system. Regulation of the Minister of Industry Number 16 of 2020 concerning Provisions and Procedures for Calculating the Domestic Content Level (TKDN) for Pharmaceutical Products implements the new TKDN calculation system, which is processed-based. This method is done by weighting the raw material content of Active Pharmaceutical Ingredients by 50%, research and development by 30%, production process by 15%, and packaging by 5%. For further information click here.

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Salam Inspirasi,
apt. Syifa Amirta Sani, S. Farm