The Indonesian association of pharmaceutical companies, GP Farmasi, is continuing its pessimistic outlook concerning the country's drug market, forecasting that growth will stand at only 5% this year and that total sales will fail to reach its target of IDR23trn (US$2.23bn).
Industry observers blame the current slump in the market on a 125% hike in fuel prices in October, which has hit consumer spending power. In 2004, Indonesia's drug market expanded by 25%. The current figure of 5% is the lowest since the Asian economic crisis of 1997.
Earlier this year, the weakening of the Indonesian Rupiah against the US dollar led to local drugmakers issuing threats of a 10-15% price hike. The currency's value has a strong influence on the drug market, as roughly 90% of drug raw materials used in manufacturing are imported. Raw materials account for around 30% of drug production costs.
According to industry observers, the continuing rise in fuel prices will only
make the situation worse and could lead to a number of foreign drugmakers pulling
out of the country.