Indonesia API Pharmaceutical Market Outlook to 2028

Indonesia API Pharmaceutical Market Overview 

• The Indonesia Active Pharmaceutical Ingredient (API) pharmaceutical market growth is primarily driven by the rising prevalence of chronic diseases, increasing healthcare expenditure. The Global Active Pharmaceutical Ingredient (API) pharmaceutical market was valued at USD 139 billion in 2018 and reached around USD 205 billion by 2023, registering a compound annual growth rate (CAGR) of 8% during this period.
• Key players in the Indonesian API pharmaceutical market include PT Kalbe Farma Tbk, PT Kimia Farma Tbk, PT Dexa Medica, PT Phapros Tbk, and PT Soho Global Health. These companies have established themselves as leaders through extensive research and development, strategic partnerships, and a strong distribution network.
• In 2023, PT Kalbe Farma Tbk announced a significant investment of USD 150 million to expand its API manufacturing capabilities. This development aims to reduce Indonesia's dependency on imported APIs and enhance the company's production capacity. This investment aligns with the government's objective to boost local production and achieve pharmaceutical self-sufficiency.
• Java is the most dominant region in the Indonesian API pharmaceutical market, primarily due to its well-developed infrastructure and concentration of major pharmaceutical companies. The region's dominance is attributed to its strategic location, access to skilled labor, and proximity to key research institutions and regulatory bodies.

Indonesia API Pharmaceutical Market Segmentation 

The Indonesia API PharmaceuticalMarket can be segmented based Product type, Application & region.

By Product Type: The Indonesian API pharmaceutical market is segmented by product type into synthetic APIs, biotech APIs, and natural APIs. In 2023, synthetic APIs held the dominant market share due to their wide application in various therapeutic areas and lower production costs compared to biotech APIs.

By Application: The market is further segmented by application into cardiovascular, oncology, and diabetes. In 2023, the high prevalence of cardiovascular diseases, coupled with the increasing aging population, drove the demand for APIs and dominated the segment. Moreover, the government's focus on reducing cardiovascular disease-related mortality rates has further bolstered this segment.

By Region: The market is also segmented by region into North, South, East, and West Indonesia. In 2023, West Indonesia, dominated due to the region's advanced infrastructure, concentration of pharmaceutical companies, and access to research and development facilities. The government's investment in healthcare infrastructure in Java has also contributed to its leading position in the market.

Indonesia API Pharmaceutical Market Competitive Landscape 

• In 2024, PT Kalbe Farma Tbk expanded its API production facility in Jakarta with an investment of IDR 1 Trillion. This expansion is expected to increase the company's production capacity by 30%, enabling it to meet the growing domestic and international demand for APIs.
• PT Kimia Farma Tbk announced a collaboration with a leading global biotech firm to develop and produce biosimilars in Indonesia. This partnership, initiated in 2024, involves an investment of IDR 500 billion and aims to produce biosimilars worth IDR 1.2 trillion annually by 2026.

Indonesia API Pharmaceutical Market Analysis 

Indonesia API Pharmaceutical Market Market Growth Drivers: 

• Increasing Prevalence of Chronic Diseases: The incidence of chronic diseases such as diabetes, hypertension, and cardiovascular diseases is on the rise in Indonesia. According to the Ministry of Health, the number of people diagnosed with diabetes reached 10.8 million in 2024, up from 9.1 million in 2023.
• Rising Healthcare Expenditure: Healthcare expenditure in Indonesia has seen a significant uptick, with the government allocating IDR 405 trillion in 2024 for healthcare services, up from IDR 380 trillion in 2023. This increase in spending is directed towards improving healthcare infrastructure, and enhancing access to medical services.
• Growing Demand for Generic Drugs: The demand for generic drugs in Indonesia is increasing due to their affordability and the government's push towards reducing healthcare costs. In 2024, the sale of generic drugs in Indonesia reached IDR 35 trillion, a notable rise from IDR 30 trillion in 2023.

Indonesia API Pharmaceutical Market Challenges: 

• Quality Control Issues: Indonesian API manufacturers face significant challenges in maintaining quality control standards. In 2024, approximately 20 out of 100 API batches failed to meet the required quality standards, as reported by the National Agency of Drug and Food Control (BPOM). This issue hampers the credibility and competitiveness of local manufacturers in the global market.
• Regulatory Hurdles: The regulatory environment in Indonesia presents challenges for API manufacturers. In 2024, around 40 new API product approvals were delayed due to lengthy regulatory procedures and stringent compliance requirements. These delays hinder the timely introduction of new APIs to the market, affecting the industry's overall growth.

Indonesia API Pharmaceutical Market Government Initiatives: 

• Healthcare Infrastructure Enhancement: The government allocated IDR 200 trillion in 2024 towards the improvement of healthcare infrastructure, including the establishment of new hospitals and upgrading existing facilities. This initiative aims to enhance healthcare delivery and ensure a steady demand for pharmaceuticals, including APIs.
• Partnerships with Global Organizations: In 2024, the Indonesian government formed partnerships with global health organizations, securing funding of IDR 100 billion to support local API manufacturing. These partnerships aim to improve manufacturing standards, provide training to local manufacturers, and enhance the overall quality of API production in the country.

Indonesia API Pharmaceutical Market Outlook

The Indonesian API pharmaceutical Market is expected to grow significantly by 2028 along with a respectable CAGR during the period of 2023-2028, driven by increasing technological advancements & expansion of online retail. 

Future Trends

• • Advancements in Sustainable Manufacturing: The focus on green chemistry and sustainable manufacturing practices will continue to grow. By 2028, it is projected that 50% of API manufacturers in Indonesia will adopt eco-friendly production methods, reducing waste and production costs, and aligning with global environmental standards.
  • Increased Investment in R&D: Research and development investments in the Indonesian API market are expected to surge, reaching IDR 10 trillion by 2028. This increase will drive innovation, leading to the development of new and more effective APIs, enhancing the country's pharmaceutical capabilities and market position.