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Analysis: Challenge of halal certification in pharmaceutical industry
All food, beverage, medicine and cosmetics manufacturers must obtain halal certification for their products as of this year as stipulated in Government Regulation No
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span>All food, beverage, medicine and cosmetics manufacturers must obtain halal certification for their products as of this year as stipulated in Government Regulation No.31/2019, which was issued on May 3.
The regulation is the implementing regulation of Law No.33/2014 on halal certification. Even though the requirement to obtain halal certification will become effective on Oct.17, its implementation in medicine products will be introduced in stages.
The mandatory halal certification of drug products will be implemented in stages for a number of reasons, including the lack of readiness of business players and infrastructure to ensure the production of halal products.
Drug products, the raw materials of which may not be sourced from halal materials and/or the manufacturing practices may not be halal, may still be distributed in Indonesia with the stipulation that information about the materials be included until halal materials and/or halal manufacturing practices are available.
Furthermore, provisions regarding the phasing in of the halal certification requirement on drug products will be stipulated in a ministerial regulation. Meanwhile, further stipulations regarding drug products in which the raw materials have not been sourced from halal materials and/or halal manufacturing practices are regulated by a presidential decree.
Even though the government has announced that the implementation of the halal certification obligation in drug products will be carried out in phases, polemics still occur among industry players. Many pharmaceutical companies are of the view that the implication of the halal certification obligation will be more complicated in drug products than in food and beverage products, which are also regulated in the regulation.
This is because consumers have many alternative food and beverages to choose from while not all drugs have a halal alternative that can a chosen. In addition, the complexity of the raw materials for drugs makes implementing the rules a challenge. Moreover, some players are worried that the obligation for halal certification will affect the business and investment climate in the pharmaceutical industry.
On the other side, many other players try to be positive by looking at the business opportunities ahead. Over the last two years, many people have rejected the measles rubella (MR) vaccine because it contains trypsin and gelatin derived from pig enzymes. Many people, especially Muslims, feel reassured and more confident in using drug products with a halal label.
In general, we understand the concerns of the pharmaceutical industry players regarding the obligation for halal certification. The pharmaceutical industry is one of the strategic industries that supports healthcare services.
The country’s pharmaceutical market was estimated to be worth Rp 78 trillion (US$5.50 billion) in 2018. The majority of the country’s drug raw materials is imported (about 90 percent), most of it from China (60 percent), followed by India (30 percent) and the remainder from the United States and Europe.
It would be a complicated process to trace the origin of the materials to ensure that they are halal. Let’s say if the material used is not halal, the pharmaceutical company would have to make some changes or adjustments to source imported halal raw materials and adopt a halal production process.
Of course, it would take time and lead to additional costs for industry players. In the meantime, producers also need to consider a product price that will be accepted by consumers. The point is that the halal certification obligation is not being implemented to cause a high-cost economy.
Some important things are needed to support the halal certification obligation in drug products.
First, all relevant parties, especially industry players, should be involve in the discussion, formulation and implementation of additional regulations that will be issued in relation to the halal certification obligation of drug products.
Second, the government should prioritize the drugs ready for mandatory halal certification. This can be used in determining the phases of the halal certification requirement in drug products that are currently being designed. Drugs, and drug ingredients, produced in the country could be prioritized, especially as it would be easier to ensure that they were halal.
Third, government support would be necessary, such in encouraging and facilitating research on the development of halal drug products and the raw materials, as well as the methods of manufacturing halal drugs. In this case, the government should strengthen coordination and cooperation between industry players and academics/technologists. The government could also establish cooperation with halal certification agencies abroad. The government should also make other prevailing pharmaceutical industry regulations congruent. It could also perhaps provide fiscal incentives, such as tax reductions for the halal pharmaceutical raw material industry. Last but not least, we support the government’s efforts to immediately issue further regulations to minimize business concerns and uncertainty.
We realize that implementation of the halal certification obligation in drug products is a big challenge for the pharmaceutical industry. However, we all hope that the requirement to obtain halal certification runs well according to its phasing in and that further technical regulations can bridge all relevant parties and open up greater business opportunities in the future.
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The writer is an industry analyst at PT Bank Mandiri (Persero)
