THE PHARMACEUTICAL INDUSTRY AND ITS POTENTIAL IN THE 2022 PANDEMIC ERA
In Indonesia, the pharmaceutical industry is a promising sector due to its high population density and annual growth. This sector is also supported by the increasing demand for pharmaceutical products every year. In addition, the government has included the medical equipment and pharmaceutical sectors as part of the priority sector in an effort to realize the Making Indonesia 4.0 program. The Indonesian government seeks to increase the competitiveness of the medical equipment and pharmaceutical sectors by encouraging the implementation of technology-based digital transformation.
Based on its growth in the last 3 years, the pharmaceutical industry sector has an average growth of around 8-9% (y-o-y). This is due to the Covid-19 pandemic which has changed the focus of public consumption from other secondary needs to medicinal products. However, along with the easing of cases of the Covid-19 pandemic and people no longer “panic buying” for medicinal products, this has led to a decrease in sales.
In 2022, the pharmaceutical industry sector is predicted to experience a decrease in growth to 7.36%. Even though its growth is decreasing, it is still categorized as good when compared to other sectors whose growth is still small.
The pandemic has opened our eyes to the importance of medicines, medical equipment and health workers. The race to develop a Covid-19 vaccine has prompted countries to invest more in health research programs and procure vitamins, supplements and immune-boosting drugs.
POTENTIAL OF THE PHARMACEUTICAL INDUSTRY
The Ministry of Industry (Kemenperin) states that there are as many as 220 pharmaceutical industry companies in Indonesia, 90% of which focus on the downstream sector in the production of medicines. Meanwhile, the government continues to seek to reduce imports by 35% until the end of 2022. The government hopes that these efforts can overcome dependence on imported raw materials and make pharmaceutical industry products more competitive in the international market.
Based on data from the Ministry of Health (Kemenkes), in 2021, there are 241 companies engaged in the pharmaceutical manufacturing industry, 17 companies in the pharmaceutical raw material industry, 132 companies in the traditional medicine industry, and 18 companies in the natural product extraction industry.
The growth of medical equipment production facilities also continues to increase. From 2015 to 2021, the number of companies producing medical equipment increased from 193 to 891 companies. Furthermore, in the last five years, the domestic medical equipment industry has grown by 361.66% or approximately 698 companies.
Indonesia exports pharmaceutical products and medical equipment to several countries, namely the Netherlands, England, Poland, Nigeria, Cambodia, Vietnam, the Philippines, Myanmar, Singapore, South Korea, and the United States of America.
LICENSING IN THE PHARMACEUTICAL INDUSTRY SECTOR
The government has prepared a roadmap to accelerate the development of the pharmaceutical industry, including procedures and product development targets and timeframes. The Indonesian Investment Coordinating Board (BKPM) and the Ministry of Health have agreed to accelerate the granting of permits for medical equipment providers to help the country cope with the Covid-19 pandemic. The granting of business licenses for medical equipment in Indonesia can be accelerated to 1×24 hours (one day) only by accessing the Online Single Submission (OSS) system and the BKPM Investment Command and Investment Command Center.
The provider will receive a Business Identification Number (NIB), an Industrial Business Permit, and a Commercial or Operational Permit. Later, the Ministry of Health system will process their requests for Production Certificates and Distribution Permits.
Some of the products included in the accelerated service are surgical masks, Personal Protective Equipment (PPE), and hand sanitizers. BKPM predicts that medical equipment providers will take advantage of this opportunity to help prevent the spread of Covid-19
The government will provide fiscal and non-fiscal incentives to investors who want to invest in Indonesia. Reduction of corporate income tax (tax holiday), reduction of income tax for investment (tax allowance), super tax deduction incentives, and import duties are some of the incentives available.
Strong economic growth and significant demographics make Indonesia a suitable country for investors. The Omnibus Law on Job Creation, as part of structural regulatory reform, also improves the investment climate and eases doing business in Indonesia. (Source: Ministry of Investment/BKPM).