In 2024, the foreign direct investment in the chemical and pharmaceutical industry in Indonesia amounted to approximately 4.1 billion U.S. dollars, marking a decrease of nearly 700 million U.S. dollars compared to the previous year.Â
How big is the Indonesian pharmaceutical industry?
The pharmaceutical industry in Indonesia has grown at a steady pace in recent years. The industry is expected to expand to more than 4.5 billion U.S. dollars in annual revenue by 2028 from 3.6 billion U.S. dollars in 2022. The continued growth in the industry has been mainly driven by the government health insurance scheme (JKN-KIS) that covers a large portion of Indonesia’s population. In addition, the coronavirus (COVID-19) further spurred industry growth due to a significant increase in demand for pharmaceutical products. In 2021, the industry recorded its highest annual revenue growth of about 50 percent.
Challenges in the Indonesian pharmaceutical industry
Despite witnessing stable growth, the Indonesian pharmaceutical industry still relies heavily on imports for both raw materials and patented pharmaceutical products. This, in turn, causes the trade balance in the industry to remain in deficit, with import values far exceeding export values. These conditions make local pharmaceutical production more challenging and expensive. As a result, Indonesia depends highly on imported pharmaceutical products to meet domestic demands, which are naturally more expensive than locally produced ones.