Indonesia is the home of 260 million people and one of the fastest-growing pharmaceutical markets in Asia. In a survey conducted by Global Data, Indonesia’s pharmaceutical market is the largest in the ASEAN region, with a value of IDR 141.6 billion (USD 10.11 billion) in 2021.


The growth of the pharmaceutical industry is expected to reach 12-13 percent per year.
The pharmaceutical market is worth IDR 84 trillion (USD 6 billion) and is claimed to have earned $ 10.11 billion by 2021.
Over-the-counter (OTC) pharmaceuticals were valued at IDR 48.8 trillion (USD 3,483 million) in 2018. They are expected to grow by 1.3 percent per year (CAGR 2018-2021).
For OTC pharmaceuticals, the income per person is IDR 183,250 (USD 13.08) generated, in relation to total population figures.
The Indonesian Pharmaceutical Association reports that about 95 percent of the raw materials for medicines are imported.
Foreign ownership for pharmaceutical companies has increased from 75 to 100 percent.
Indonesia is the home of more than 30,000 medicinal plants out of 40,000 types of medicinal plants in the world.
Pharmaceutical Growth Getting Stronger

The “National Health Insurance” (JKN) program in Indonesia is one of the reasons the Indonesian pharmaceutical market program has increased since 2016. This program aims to meet the needs of more than 260 million Indonesians to ensure that all Indonesians have health insurance by January 2019.

The unbranded generic market is estimated at IDR 8.7 trillion (USD 619 million), contributing 10.8 percent to the pharmaceutical market share. This number is expected to increase as is the introduction of JKN and Indonesia becomes increasingly dependent on this program.

There are currently more than 210 drug manufacturers, 70 percent of which are domestic manufacturers, according to the Indonesian Ministry of Health. Ownership limitations have been simplified and have been stated in the Negative Investment List. With the new government regulation, foreign companies can now acquire 100 percent ownership, which previously was only 75 percent. As a result, it would be very positive to expect that direct investment in the pharmaceutical sector will reach IDR 277.4 trillion (USD 19.8 billion) during 2015-2025.

Consumption of Indonesian Pharmaceutical Drugs

Per capita expenditure on pharmaceuticals in Indonesia is increasing rapidly. Historically, Indonesia had one of the lowest levels of drug consumption in Asia. Now, however, for OTC pharmaceuticals only, the per person income has increased significantly to IDR 183,250 (USD 13.08), in relation to the total population figures. As per capita income is expected to increase in the next decade, Indonesians will spend more on health care.

The number of chronic diseases and increasing middle-class income are also the main factors contributing to the increasing demand for drugs. By 2022, total health care spending in Indonesia is expected to surge to IDR 277.4 trillion (USD 47.1 billion). For you to know, halal pharmaceutical products must also be registered because if not, then the product will become non-halal products.

Indonesian Pharmaceutical Market Size

Expansion of product types and increasing demand for generic drugs are the main keys driving the growth of the pharmaceutical market in Indonesia. Nearly 75 percent of Indonesia’s drug needs are met by domestic companies. Foreign companies cover the remaining 25%. Kalbe Pharma, Indonesia’s largest domestic pharmaceutical manufacturer, holds a 15% market share. Together, Bayer, Pfizer, and GlaxoSmithKline hold 8 percent of the market size. However, with respect to raw materials, around 95% of medicinal ingredients in Indonesia are still imported, according to the Indonesian Pharmaceutical Association.

As previously stated, in order to support more foreign investment in the pharmaceutical sector, the government changed the law from previously foreign ownership to 100% foreign ownership. As a result, in early 2017, several multinational pharmaceutical manufacturers enthusiastically started building factories in this sector, especially for raw materials. These companies are leveraging substantial resources in Indonesia, seeing great prospects in Indonesia, which is home to about 30,000 medicinal plants and herbs out of a total of 40,000 in the world.


One thing for sure is that all these opportunities will provide another tremendous growth to the already developing pharmaceutical sector. There is no room left for foreign investment in the pharmaceutical industry, especially the upstream industry after the government made changes to relax restrictions on foreign investment.

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