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Drug prices soar on raw materials
Soaring prices of raw materials imported from China used in pharmaceutical products have driven up the prices of branded drugs in Indonesia due to the local industry's reliance on imports, an association says
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Soaring prices of raw materials imported from China used in pharmaceutical products have driven up the prices of branded drugs in Indonesia due to the local industry's reliance on imports, an association says.
Chairman of the Indonesian Pharmaceutical Association Anthony Ch. Sunarjo told The Jakarta Post recently the country's pharmaceutical manufacturers, which import 95 percent of their raw materials, were suffering from higher production costs.
Prices of raw materials have risen by between 50 and 100 percent since early in the year, said Anthony, president of pharmaceutical firm PT Doxa Manggalya Utama.
"In general, branded drug prices have increased by between 5 percent and 10 percent."
"We can not buy raw materials if we still sell our products based on old prices," Anthony said.
He said producers would ideally raise drug prices by between 20 and 30 percent if they "disregard people's purchasing power, which has been undermined by the recent fuel price increases."
To cope with a growing drug demand of between 5 and 10 percent annually, local producers now import around 250 types of raw materials, including amoxicillin, an antibiotic, and paracetemol, a pain killer, according to the association's raw material committee chairman Vincent Harijanto.
He said raw material imports stood at Rp 6 trillion (US$652.81 million) per annum.
Some 80 percent of the imported materials come from China and India, while the remaining 20 percent come from Europe.
Vincent said raw material prices had risen due to Chinese government policy changes.
"The Chinese government last June lowered its export incentives for drug raw materials from between 13 percent and 17 percent to 5 percent. This has since caused prices to go higher," Vincent told the Post.
"The Chinese government has also strictly enforced its environmental regulations since early this year, shutting some pharmaceutical factories, temporarily or permanently, for failing to meet waste management qualification standards." he said.
Other causes for the price increases include an increase of the minimum wage in China and the appreciation of the Chinese yuan against the U.S. dollar.
Indonesian companies producing generic drugs were the hardest hit as the government restricts generic drug prices to ensure their affordability to poor people.
"The government should give us incentives for importing raw materials or raise the prices of generic drugs, otherwise we could collapse," he said.
Although Indonesia has three big state pharmaceutical companies -- PT Kimia Farma, PT Indofarma and PT Bio Farma -- the country has not been able to cut its dependency from importing raw materials for drugs.
Analysts believe international drug companies have been lobbying the government to discourage local companies from producing relevant raw materials to ensure the country remains addicted to imports.
