The Business Competition Supervisory Commission says an upcoming Ministry of Health regulation on drug registration procedures and the establishment of production facilities will not have a negative impact on competition in the industry, a senior official from the state antitrust watchdog said.
The rule, which would come into effect in November 2010, requires pharmaceutical firms - including foreign companies - to partner with local firm to establish factories or team up with other companies that already have production facilities before registering drugs with the Food and Drug Monitoring Agency (BPOM).
â€śWe conducted a survey from April to August that showed that the decree will help encourage foreign pharmaceutical firms to set up factories here and use Indonesia as an industrial base,â€ť said Didik Achmadi, the deputy chairman of the antitrust agency, which is also known as the KPPU.
The survey was used to assess the likely impact of the decree on competition in the pharmaceutical industry, he said.
The decree has drawn strong criticism from foreign pharmaceutical producers that donâ€™t have factories in Indonesia.
Parulian Simanjuntak, executive director of the International Pharmaceutical Manufacturers Group, said the decree would cause problems for foreign companies, given the high costs involved in the construction of pharmaceutical plants.
The IPMG has 29 members, including Bayer, GlaxoSmithKline and Schering-Plough. Parulian said that 12 of the groupâ€™s 29 members were strongly opposed to the Health Ministry decree, saying that it might push them to withdraw from the domestic market.
Hanum Yahya, the IPMGâ€™s communications director, said that the 12 companies would be forced to at least temporarily stop registering new products with BPOM.
â€śThey canâ€™t register any new drugs because they would first have to comply with the ministerial decreeâ€ť and establish factories she said.
Hanum declined to identify the companies, but she said that all of them were importers and distributors with local offices.
Marius Widjajarta, a health analyst and chairman of the Indonesian Consumers Foundation for Health (YPKKI), on Friday said that the ministerial decree was justified.
He said that while it could lead to higher prices for some drugs, overall it would actually bring prices down between 30 percent and 50 percent.
Marius also said foreign drug companies had long had an easy time in Indonesia.
â€śItâ€™s only fair for the government to now ask foreign pharmaceutical firms to establish factories here, because the companies have done well in the local market,â€ť Marius said.
â€śThey should view Indonesia not just as a potential market, but also as an industrial base.â€ť
It has been extremely easy for foreign pharmaceutical firms to operate in the country because they only needed a pharmaceutical distributorâ€™s permit (PBF) to operate, he said.
â€śBefore the regulation, all they had to do to get a PBF was open a representative office with nothing more than a skeleton staff,â€ť he said.
He argued that the ministerial decree should not be seen as a problem, but rather as part of ongoing efforts to ensure the quality of drug products and protect consumers.
Anthony Sunarjo, chairman of the Indonesian Pharmaceutical Manufacturers Association (GP Farmasi), said that the association supported the ministerial decree because it would encourage foreign investment.
â€śThe ministerial decree should also encourage more collaboration between local and foreign pharmaceutical firms, because they may enter into agreements with local companies that have factories, in order to keep operating in Indonesia,â€ť he said.