The Rise of the Indonesian Healthcare Industry
September 15
15min read
Indonesia’s healthcare industry has seen unprecedented growth in recent years. By 2020, the country’s pharmaceutical industry has seen an annual growth between 10 and 13%. Meanwhile, the national medical equipment industry grew by 25% in 2018.
The growth was boosted by government’s plan to develop the national medical equipment industry through Presidential Instruction 6/2016 on the acceleration of pharmaceutical and medical equipment industry development and Health Ministry Regulation 17/2017 that outlines the implementation plan thereof. This was a key move for a country that, as of 2020, still imports 94% of its medical equipment. Another driving factor was improved access to healthcare under the government’s health insurance through BPJS Health. As of March 2021, BPJS Health has covered 83.6% of the Indonesian population.
The COVID-19 pandemic further added to this push. The pandemic shone light on the massive gap in Indonesia’s healthcare facility, pushing the government to make medical equipment and pharmaceutical sectors a priority in the efforts towards Making Indonesia 4.0.
The surge in demand for medical equipment and devices during the pandemic was clearly seen in the market. As a specialty chemical distributor that supports the healthcare industry, Bahtera saw rising demands for chemicals and nonwoven for applications that directly contribute to the pandemic handling, including syringes for vaccination, alcohol swab, protective gown, and antiseptic disinfectant. Need for personal protective equipment in particular saw a significant growth during the pandemic.
Although several segments, such as wound care and hemodialysis consumable, experienced a slight decline as people put off going to the hospital for non-emergencies, they are expected to recover quickly. Supply chain disruption also played a role in the slowdown as the import of raw materials were halted, forcing pharmaceutical firms to operate at 50-60% capacity.
This has pushed the government to further minimize the country’s reliance on export in medical equipment and devices. This includes setting the target to reduce raw materials import by 35% by the end of 2022. Between 2016 and 2019, domestic raw material supply has shown growth. Drug raw material companies grew to 14 companies from 8, traditional medicine companies grew to 120 from 88, natural herb extract grew to 17 from 8, and medical equipment and devices companies grew to 313 from 215.
Digitalization is also a big part of this initiative. In early 2021, the trade ministry conducted an Indonesia Industry 4.0 Readiness Index assessment on several industries, including the pharmaceutical and medical device sectors.
The continued push for domestic medical equipment production in the last few years has resulted in significant growth in the number of medical equipment industry players. Medical equipment manufacturers in the country have grown by 361.66% from only 193 companies in 2015 to 891 companies in 2021. Still, there is a lot to be done. Rising prices and export halt early on in the pandemic created a medical equipment crisis in Indonesia, which only had two face mask manufacturers. This highlighted the urgent need for a more robust medical equipment industry in the country.
With this awareness, along with the government’s continued push, growingly health-conscious people, and increased access to health insurance, the upward trend of the healthcare industry will continue. There is so much potential to be explored, considering the massive unaddressed demand in the market representing a US$68-billion opportunity.
Indonesia’s healthcare industry has seen unprecedented growth in recent years. By 2020, the country’s pharmaceutical industry has seen an annual growth between 10 and 13%. Meanwhile, the national medical equipment industry grew by 25% in 2018.
The growth was boosted by government’s plan to develop the national medical equipment industry through Presidential Instruction 6/2016 on the acceleration of pharmaceutical and medical equipment industry development and Health Ministry Regulation 17/2017 that outlines the implementation plan thereof. This was a key move for a country that, as of 2020, still imports 94% of its medical equipment. Another driving factor was improved access to healthcare under the government’s health insurance through BPJS Health. As of March 2021, BPJS Health has covered 83.6% of the Indonesian population.
The COVID-19 pandemic further added to this push. The pandemic shone light on the massive gap in Indonesia’s healthcare facility, pushing the government to make medical equipment and pharmaceutical sectors a priority in the efforts towards Making Indonesia 4.0.
The surge in demand for medical equipment and devices during the pandemic was clearly seen in the market. As a specialty chemical distributor that supports the healthcare industry, Bahtera saw rising demands for chemicals and nonwoven for applications that directly contribute to the pandemic handling, including syringes for vaccination, alcohol swab, protective gown, and antiseptic disinfectant. Need for personal protective equipment in particular saw a significant growth during the pandemic.
Although several segments, such as wound care and hemodialysis consumable, experienced a slight decline as people put off going to the hospital for non-emergencies, they are expected to recover quickly. Supply chain disruption also played a role in the slowdown as the import of raw materials were halted, forcing pharmaceutical firms to operate at 50-60% capacity.
This has pushed the government to further minimize the country’s reliance on export in medical equipment and devices. This includes setting the target to reduce raw materials import by 35% by the end of 2022. Between 2016 and 2019, domestic raw material supply has shown growth. Drug raw material companies grew to 14 companies from 8, traditional medicine companies grew to 120 from 88, natural herb extract grew to 17 from 8, and medical equipment and devices companies grew to 313 from 215.
Digitalization is also a big part of this initiative. In early 2021, the trade ministry conducted an Indonesia Industry 4.0 Readiness Index assessment on several industries, including the pharmaceutical and medical device sectors.
The continued push for domestic medical equipment production in the last few years has resulted in significant growth in the number of medical equipment industry players. Medical equipment manufacturers in the country have grown by 361.66% from only 193 companies in 2015 to 891 companies in 2021. Still, there is a lot to be done. Rising prices and export halt early on in the pandemic created a medical equipment crisis in Indonesia, which only had two face mask manufacturers. This highlighted the urgent need for a more robust medical equipment industry in the country.
With this awareness, along with the government’s continued push, growingly health-conscious people, and increased access to health insurance, the upward trend of the healthcare industry will continue. There is so much potential to be explored, considering the massive unaddressed demand in the market representing a US$68-billion opportunity.