With over 6,000 inhabited islands forming the country of Indonesia, making sure that drugs are where they are needed, when they are needed, is a major challenge. How is this challenge managed today, and what will happen once the government introduces universal healthcare in January 2014?
A manager that won the talent war and was able to cope with Indonesia’s regulatory instability will face at least one more hurdle: getting the product to the patient. Partnering with a top-notch distributor may be desirable in any pharma market; it is a must in Indonesia. With over 6,000 inhabited islands scattered across both sides of the equator, the Indonesian archipelago is the world’s 16th largest country in terms of area. “As a distributor, you easily have to deal with forty-plus companies for transportation alone,” says Santiago Garcia, CEO of APL Care, the country’s leading distribution company for the pharmaceutical and healthcare sector. “When talking about frequencies, there are many challenges, too. Moving goods and people is very difficult because the links between some of Indonesia’s key cities are missing. We also notice that truckloads are often incomplete while the discipline among logistics companies is often lacking. Electricity cuts are another big issue, especially when we start talking about cold supply chains. However, the situation is improving and changes are happening in this respect, and these challenges are an integral part of doing business in Indonesia. We do not only help our clients on the quality and sustainability of the logistics chain itself, but also do much more than that. Every time companies are under pressure, goods are being sold to wholesalers at severe discounts. We, however, target the proper channels consisting of hospitals, doctors, clinics and pharmacies. We want them to work with us and work on demand generation, rather than flooding our channels at discount prices.” While Indonesia’s leading independent distributors APL Care, Dos Ni Roha and Pentavalent have a significant presence in the market, they compete head-on with in-house distribution companies belonging to local pharmaceutical manufacturers.
In-house distribution assets have become a strategic and often core asset to pharmaceutical companies in Indonesia and has become an inherent part of both large and medium-sized local manufacturers. Ferry Soetikno, president director of top five manufacturer Dexa Medica sees its as a competitive advantage, not only to get the product to its end user but also because of the invaluable data that can be derived from such activity. “Especially now that the Indonesian government will introduce universal health coverage in January 2014, we have to find better ways to understand the government jurisdiction, the plans for the distribution requirements, where we should deliver our products to, what roles the provincial and regional governments, and clinics will play, and so forth,” he says. “Any decision they will take will also require a different set of distribution guidelines. We are now waiting for the introduction of this BPJS to see what the plans and requirements will be.”
2013 is an exciting year for the industry, a year of preparation for implementation of universal healthcare coverage in 2014. While the government will continue to push for better healthcare facilities, the industry will see itself forced to reshape business strategies to supply the system with quality medicines, be it branded originals or their generic counterparts. MNCs with the ability to play in the generics space stand a good chance in excelling in the Indonesian market, while those without generic capabilities are likely to continue along a growth path nurtured by optimistic macro figures. Local companies must professionalize their operations and invest in more capacity and better quality standards. The expectation is for Indonesia to continue its double-digit growth path, which makes it an exciting pharmaceutical market with multiple opportunities. Growth will require more than finding the right portfolio. Growth, even survival, and will come down to becoming a true partner to Indonesia’s healthcare system and its many stakeholders.
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