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.