Go Southbound! Indonesia, a Nation of 270 Million, Has Only 18 API Manufacturers?

With a population of 270 million, Indonesia is experiencing an expanding gap in the demand for clinical medications. Tracing back through its complex historical context, Indonesia’s pharmaceutical sector has relied almost entirely on imports over the past four decades, particularly for active pharmaceutical ingredients (APIs), pharmaceutical excipients, pharmaceutical packaging, and pharmaceutical manufacturing equipment. As of 2022, Indonesia had 252 pharmaceutical manufacturers, 18 API producers, 132 traditional medicine enterprises, 18 natural product extraction companies, 5 pharmaceutical excipient manufacturers, 19 pharmaceutical packaging companies, and 26 pharmaceutical equipment manufacturers.

Benefiting from the Indonesian government’s Universal Health Care Program (JKN-KIS), which has covered over 90% of the population since its launch in January 2014. JKN-KIS is a government initiative designed to ensure that every Indonesian citizen receives financial support when accessing medical services, providing a solid foundation for the booming pharmaceutical market), as well as the vast unmet clinical needs, Indonesia has boasted the largest and fastest-growing pharmaceutical market in Southeast Asia since 2015.

The chart shows the top 10 active pharmaceutical ingredients (APIs) by import volume in Indonesia. In recent years, Indonesia’s demand for APIs such as sacubitril, deferasirox, and empagliflozin has been growing rapidly. (Source: First Data)

Indonesia’s six most commonly used APIs are primarily imported from China, India, and the EU. (Image source: First Data)

From 2015 to 2020, the Indonesian pharmaceutical market expanded at an annual growth rate of 7.0%. Sales reached IDR 110.6 trillion (approximately USD 7.6 billion) in 2020 and are projected to rise to IDR 176.3 trillion (approximately USD 12.1 billion) by 2025, accounting for 27% of the entire ASEAN pharmaceutical industry.

Despite its substantial market size, Indonesia’s pharmaceutical sector remains heavily reliant on imports for active pharmaceutical ingredients (APIs), excipients, packaging materials, and equipment. To address this situation, the Indonesian government has been actively courting overseas investors in recent years to participate in the local production of APIs and pharmaceutical supply chain products.

Notably, China National Pharmaceutical Group Corporation (Sinopharm) signed a strategic cooperation memorandum with the Indonesian state-owned pharmaceutical enterprise Kimia Farma, planning to produce 5,000 tons per year of PAP (p-aminophenol) in Indonesia. Furthermore, Sinopharm International has entered into a strategic partnership with Bio Farma, Indonesia’s largest state-owned pharmaceutical company. Meanwhile, ETANA, an Indonesian biopharmaceutical company; ANVITA, a chemical pharmaceutical company; and UBC, a diagnostic reagent company—all of which have received investments from Legend Capital—are also demonstrating strong growth momentum.

ETANA entered into a partnership with Innovent Biologics in 2021, securing an exclusive license for the localized production and distribution of Innovent’s Byvasda (bevacizumab injection) in Indonesia. ANVITA has also established strategic collaborations with multiple Chinese active pharmaceutical ingredient (API) manufacturers to localize production.

During the recently concluded CPHI Shanghai exhibition, Mr. Wu Xuetao, Partner at VCBeat, accompanied Indonesian guests from ETANA and ANVITA to visit multiple Chinese pharmaceutical raw material enterprises, bringing the most direct implementation resources and orders for Chinese API manufacturers expanding into the Indonesian market. According to Mr. Wu Xuetao,Starting in August 2024, VCBeat will work closely with Indonesian resource partners such as Legend Capital, ETANA, ANVITA, and UBC to lead Chinese medical innovation enterprises, pharmaceutical companies, and IVD companies to Indonesia, facilitating on-the-ground collaborations with local counterpart demand-side entities.

During this period,VCBeat will also organize visits for Chinese enterprises to the Indonesian Ministry of Health, the National Agency of Drug and Food Control (BPOM), the China Chamber of Commerce in Indonesia, the Indonesian Medical Device Manufacturers Association, the Indonesian Association of Health Tools and Laboratories, and the Indonesian Hospital Association, as well as to the country’s three largest hospital groups: Herminal Group, Siloam Group, and IBNUSINA GROUP. This initiative aims to provide comprehensive, in-depth resource matchmaking to support Chinese companies in expanding their business operations in Indonesia.

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For further insights into opportunities in Indonesia’s pharmaceutical and healthcare market, please feel free to contact:
Wu Xuetao 13701064964 WeChat: 15101021397