Winning Potentials in Indonesian Pharma and Medical Industries


The pandemic has opened our eyes to the vital roles of medicine, medical devices and medical personnel in ways we probably hadn’t quite noticed before. The race to develop a cure against COVID-19 has led many governments to invest more in medical research programs and stock up on immune-boosting vitamins, supplements and medicines.

In Indonesia, the pharmaceutical industry is a lucrative sector. Due to rising demands, the government has added the medical device and pharmaceutical sectors as part of the priority sectors in Making Indonesia 4.0. The government strives to improve the medical device and pharmaceutical industry sectors’ competitiveness by encouraging digital-bad technology transformation.

All state-owned pharmaceutical holding companies, for example, have implemented the use of digital technology, starting from the production stage to the distribution stage. They use an interconnected system to grow their network; implement digital administrative processes; and ultimately drive more effective and efficient performance.

Resilient opportunities

Industry Minister, Agus Gumiwang Kartasasmita, claimed 220 companies support the pharmaceutical industry in Indonesia; and 90 percent of these focus on the downstream sector in producing medicines. Meanwhile, the government continues to strive to reduce imports by 35 percent by the end of 2022. Hoping the country can overcome dependence on raw material imports.

According to data from the Ministry of Health, up to 2021, there are 241 pharmaceutical formulation industries, 17 pharmaceutical raw material industries, 132 traditional medicine industries, and 18 natural product extraction industries.

The growth of medical equipment production facilities continues to increase. From 2015 to 2021, medical device production companies increased from 193 to 891 companies. And in the last five years, the domestic medical device industry has grown by 361.66 percent or approximately 698 companies.

Indonesia exported pharmaceutical products and medical devices to several countries, ie. the Netherlands, England, Poland, Nigeria, Cambodia, Vietnam, the Philippines, Myanmar, Singapore, South Korea and the United States.

Quick licensing

The government has prepared a road map to accelerate the pharmaceutical and medical device industry’s development, including steps to be followed, product development targets, and time frames.
The target of the roadmap is to produce high-tech raw material products. And the long-term focus is to help pharmaceutical and medical device industries become independent and meet the population’s needs while reducing dependence on imported products.

The Chairman of the Indonesian Investment Coordinating Board (BKPM), Bahlil Lahadalia, and the Minister of Health, Budi Gunadi Sadikin, have agreed to provide accelerated licensing for medical equipment providers to help the country cope with the COVID-19 pandemic. Medical equipment business licensing in Indonesia can be accelerated within 1 x 24 hours (one day) simply using BKPM’s Online Single Submission (OSS) system and optimizing monitoring through BKPM Investment Control and Command Center.

The providers will receive a Business Identification Number (NIB), an Industrial Business License, and a Commercial or Operational License. Later, the Ministry of Health’s system will process their requests for Production Certification and Distribution License.

Some of the products included in the acceleration services include surgical masks, Personal Protective Equipment (PPE) and Hand Sanitizer (HS). BKPM expects that medical equipment providers will seize this opportunity to help stop the spread of COVID-19.

The government will provide fiscal and non-fiscal incentives to investors who will invest in Indonesia. The tax holiday, tax allowance, super tax deduction and import duty exemption are some of the incentives available.

Indonesia’s strong economic growth and favorable demographics make it an excellent country for investors. The Omnibus Law on Job Creation, as a part of structural regulatory reform, improving the investment climate and the ease-of-doing-business in Indonesia. Let’s be a part of Indonesia’s growth.