Reform to make pharmaceutical firms efficient<\/p>\n
JAKARTA (JP): The deregulation of the pharmaceutical industry
\nwill not bring down drug prices but will surely make local
\npharmaceutical industries more efficient, industry executives
\nclaim.<\/p>\n
Chairman of the Association of Indonesian Pharmaceutical
\nCompanies, Anthony Ch. Sunaryo, said on Tuesday that if the
\nderegulation does not force down the prices, it would at least
\nkeep drug prices stable.<\/p>\n
\"If the prices of drugs do not increase for a certain period
\nof time, it means that we have already lessened prices because we
\nimport more than 90 percent of the raw ingredients,\" Anthony said
\nafter opening a seminar on the pharmaceutical industry at Hotel
\nHorison.<\/p>\n
He added that the government's reduction of import tariffs on
\na number of drug ingredients will not significantly affect the
\nprices of drugs.<\/p>\n
\"Before the government took the last deregulatory measures,
\nimport tariffs on most drug raw materials, especially those which
\nare not produced locally, are already very low, in the range of
\nzero to five percent,\" Anthony said, referring to the
\nderegulation package announced on May 23.<\/p>\n
Import tariffs<\/p>\n
The deregulation package cut the import tariffs on drug
\ningredients by an average of five percentage points to 20
\npercent, especially for ampicillin and amoxycillin, and 15
\npercent for paracetannol.<\/p>\n
The package also cut import tariffs on pharmaceutical products
\nto a maximum 30 percent from the previous maximum of 40 percent.
\nThe highest tariffs of 30 percent will be cut further to 20
\npercent by 1998 and to 10 percent by 2003.<\/p>\n
Minister of Health Sujudi noted in his keynote speech that
\nIndonesia's pharmaceutical industry will have to be ready to face
\nglobal competition by 2003.<\/p>\n
\"That's why we have to condition them to sell their products
\nbelow international prices, so that by the time the real
\ncompetition is unleashed they will be able to compete with
\nforeign markets,\" Sujudi said.<\/p>\n
The minister noted that some local companies have actually
\nbeen able to compete globally. He cited as an example the state-
\nowned pharmaceutical company Perum Bio Farma which won an
\ninternational tender worth US$2.3 million for the supply of polio
\nvaccine to Unicef.<\/p>\n
The Bandung-based Bio Farma, which produces intravenous
\nsolutions and diagnostics in addition to vaccines, is the only
\ncompany appointed by the government to supply polio vaccine worth
\nsome Rp 30 billion (US$13.5 million) for the national vaccination
\nweeks in September and October.<\/p>\n
Anthony said the new deregulation package which practically
\nliberalized the domestic drug market in Indonesia will create
\nfiercer competition in the Indonesian drug market.<\/p>\n
\"Foreign-owned pharmaceutical companies will bring more of
\ntheir products into domestic markets, and therefore competition
\nwill become fiercer and it will force locally-owned entities to
\nimprove their efficiency,\" Anthony said.<\/p>\n
Barriers<\/p>\n
According to Presidential Decree No. 31\/1995, which is part of
\nthe deregulation package, the drug formulation industry is
\nexcluded from the negative investment list, meaning that foreign
\ninvestors may enter the sector without any barriers.<\/p>\n
Andayaningsih, director of drug administration at the Ministry
\nof Health, said that foreign pharmaceutical companies were
\nformerly required to export 65 percent of their products. The
\nderegulation package, however, removed the export requirement and
\nnew drug makers can now sell all their products locally.<\/p>\n
Foreign pharmaceutical companies are trying hard to seize a
\nbigger portion of the local drug market, worth about US$700
\nmillion.<\/p>\n
\"The use of drugs in Indonesia is the lowest among the
\nAssociation of Southeast Asian Nations, amounting to only US$5
\nper capita for last year,\" said J.R. Kosasih of the association.
\n(rid)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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