Industry to be foward-looking to compete

Industry to be foward-looking to compete

CHAIRMAN OF THE INDONESIAN PHARMACEUTICAL COMPANIES ASSOCIATION
ANTHONY CH. SOENARDJO

There is no denying the great effect of the crisis upon the
development of the national pharmaceutical sector. It has been
primarily due to the fact that components of most pharmaceutical
products -- between 50 percent and 95 percent, including
ingredients, additives and packaging -- are imported. The
resulting adjustment in prices has reached about 70 percent,
while consumer purchasing power has plummeted.

Indonesian Pharmaceutical Companies Association Chairman
Anthony Ch. Soenardjo said: "Ultimately, production has also
fallen."

The pharmaceutical sector's prospects remain good because of
the needs of the sick. "What's more, only 50 percent of illnesses
require medication," he said. Furthermore, per capita consumption
of medication in Indonesia remains small at US$3 to $5, compared
to the Philippines, with $12 per capita.

The situation is also indicative of the slow growth of the
sector's development in Indonesia, including the issue of
patents. The greatest contributor to the problem is the huge cost
of research, at between $150 million and $500 million, compared
to the entire market in Indonesia of about $1 billion. Also
obstructing development have been the quality of human resources,
funding and the structure of the chemical industry.

On the pharmaceutical sector in a future global market,
Anthony believed two issues need particular attention:

1. The emergence of competitors to the national pharmaceutical
industry, particularly from China and India, offering relatively
inexpensive products. Indonesian firms must be ready to compete
with them.

2. The Treaty on Related Aspects of Intellectual Property Rights,
regarding patents. Up to now, many local companies produce
branded drugs but the patent is retained by the foreign patent
holder. But beginning on Jan. 1, 2000, this will no longer be
permitted because patent rights will be treated accordingly.
"Thus, those wishing to produce patented drugs will have to wait
20 years," Anthony said. He believed the composition of the local
market -- currently 60 percent domestic and 40 percent foreign --
will change. "Inevitably, the foreign firms will dominate us."

Because of this, and in the drive to develop the national
pharmaceutical sector, the association is recommending that the
government foster its development in addition to increasing the
budget allocation, currently only 2 percent. "The ideal,
according to the World Health Organization, is 5 percent," he
said.

On public health issues, the government has acted wisely in
covering the economically disadvantaged by increasing the
availability and information on generic medicine.