As a follow up to the 11th economy policy package stipulated under the Presidential Instruction regarding the Acceleration of the Development of Pharmaceutical and Medical Devices Industries (6/2016), the minister of health recently issued the Regulation regarding Pharmaceutical and Medical Devices Industries Development Action Plans (17/2017). Signed by the minister on February 27 2017, Regulation 17/2017 establishes plans for the development of the pharmaceutical and medical devices industries.

Action plans

With the action plans, the government aims to:

  • promote both industries so that they can independently produce medicines, raw materials and medical equipment to fulfil national needs and for export purposes;
  • establish, preserve and apply pharmaceutical product and medical device standards;
  • increase the use of local pharmaceutical products and locally produced medical devices;
  • revitalise the industries' technological capabilities and optimise the promotion of new capacities; and
  • encourage new investments.

The regulation emphasises that the action plans are directed at mainstream industries, innovative products and human resources promotion. It also stipulates that the industries' products must meet security, quality and efficacy standards, in addition to being affordable for the public.

Article 6 of the regulation explicitly requires:

  • the pharmaceutical and medical devices industries to prioritise the use of locally produced raw materials; and
  • government and private suppliers in the industries to prioritise pharmaceutical preparations which use local raw materials and local medical devices.

Notably, the regulation imposes no binding obligations on the pharmaceutical and medical devices industries; rather, it presents the government's outlook. However, based on its tone, further regulations governing the industries are expected to be issued within the regulation's framework, particularly with regard to:

  • import restrictions for pharmaceutical and medical device products that can be manufactured domestically;
  • research and development (R&D) and the transfer of foreign investment companies' technology obligations; and
  • encouraging the export of pharmaceutical products and medical devices.

Pharmaceutical industry action plan Regionally, the Indonesian pharmaceutical market occupies 27% of the Association of Southeast Asian Nations market. Ranking 23rd globally in 2014, the government is now optimistically aiming to be ranked 20th in 2017 and 19th in 2020.

At present, the Indonesian pharmaceutical industry comprises four state-owned companies, 178 private companies and 24 multinational companies. Despite its positive growth, the Indonesian pharmaceutical market still relies on imported raw materials, estimated to comprise 96% of total raw materials.

With Regulation 17/2017, the government has encouraged the pharmaceutical industry to transform into a research-based industry covering, among other things:

  • R&D;
  • clinical trials;
  • formulations;
  • manufacturing;
  • distribution; and
  • export.

The action plan is developed in line with the 11th economy policy package by strengthening the so-called 'four pillars' (ie, bio-pharma, vaccines and natural and chemical active pharmaceutical ingredients) to achieve the government's 2025 vision for the industry.

Medical devices industry action plan The success of the medical devices market is reflected by its import and export activity. Based on trade data, medical device export demand reached $676 million (Rp9 trillion) in 2015, while the import demand reached $1.28 billion (Rp17.2 trillion). From 2011 to 2015, the export annual average growth was 11.5%, whereas the import annual average growth was 20%. These numbers are expected to continue increasing until 2019, due to the steady increase of National Health Security membership. The export of medical devices is dominated by disposable medical devices, such as gloves, mittens, mitts, contact lenses, sanitary towels and pads, whereas the import of medical devices is dominated by high-tech medical devices.

According to available data, although 216 medical device manufacturers exist in Indonesia, 94% of existing medical devices are imported. Some of the identified barriers in achieving national autonomy in this industry are:

  • a lack of supportive regulations;
  • limited technological support;
  • the imposition of a 5% to 20% tax on raw materials;
  • a lack of R&D plans;
  • limited product capacity;
  • a lack of ability to meet the standards;
  • limited availability of local raw materials which meet the relevant standards;
  • a lack of interest in investing in raw materials;
  • a limited number of laboratories for testing purposes;
  • a lack of medical device expertise; and
  • limited capital (there are many small to medium-sized medical manufacturers with limited capital).

Regulation 14/2015

Notably, the Regulation regarding the National Industry Development Master Plan for 2015 to 2035 (14/2015) stipulated the following stages.

For further information on this topic please contact Agus Ahadi Deradjat or Adri Yudistira Dharma at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125) or email ( or The Ali Budiardjo, Nugroho, Reksodiputro website can be accessed at

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