BMI View: The Indonesian rupiah will continue to pose a challenge for domestic drugmakers in Indonesia. The currency is forecasted to depreciate further over the coming quarters, and this will further weigh on the pharmaceutical industry’s bottomline as the majority of domestic drugmakers are heavily reliant on overseas exports to meet their manufacturing operations. – 23 June 2015
In March 2015, we stated that the depreciating Indonesian rupiah would impact local pharmaceutical company profit margins, driving up production costs and incentivising drugmakers to develop local pharmaceutical ingredient production strategies.
In November 2015, Indonesian state-owned drugmaker Kimia Farma announced plans to build a IDR110bn (USD8mn) active pharmaceutical ingredient (API) plant to reduce the country's reliance on imports. In February 2016, Indonesia's government announced a revision of the Daftar Negatif Investasi (DNI), which imposes foreign ownership caps. Foreign ownership caps for API manufacturers were lifted, increasing opportunities for local drug manufacturing.