With a GDP of more than USD 1 trillion in 2017, Indonesia is the 16th largest economy in the world. Indonesia is also the largest economy in the ASEAN community and the second fastest growing economy in G-20 after China. The IMF forecasts Indonesia’s economy to expand to USD 1.4 trillion by the end of 2018. Therefore not surprising, the ASEAN countries including Indonesia, are expected to be the next most interesting emerging medical devices market in the world. Indonesia alone, with its more than 260 million citizens, represents already one third of this ASEAN market and notably about half of them are younger than 30 years.
Rising average per capita and lifestyle-changes
Average per capita in Indonesia crossed in 2010 the important threshold of US$ 3000,- for the first time and stands at almost USD 4000,- at the end of 2017. Reaching such levels comes along with food consumption and life-style changes, namely enjoying more sugar-based products and enjoy leisure time for instance at malls. Consequently, on one side such lifestyle causes more diseases like strokes, diabetes, high blood pressure and obesity and on the other side there are more private and public funds available for getting medical tests and treatments done, broadening the demand side for medical technology.
Large dependence on imported products
Local medical device manufactures for the time being produce primarily basic and disposal products. The domestic manufacturers currently only meet 10% of the local demands. This sector is still largely depending of imported products.
Universal Insurance Coverage: Free basic health care
The implementation of the National Health Insurance System launched in 2014 lead to a strong increase in the need for advanced medical devices. In January 2014, the government of Indonesia launched a Universal Health Insurance Coverage program that will ensure all people in Indonesia to have access to a free basic health care service by 2019/2020. This also means that a huge number of hospitals will need to be built to meet the increasing demand. To meet the demand, for example, hundreds of new private hospitals were built in the past two years and the Government is planning to build 5,000 additional community health care services up to 2025.
Private hospital sector growing rapidly
Indonesia counts 2,820 hospitals (957 public hospitals and 1863 private hospitals) and around 10.000 community health centers in 2017. The private hospital sector is developing rapidly. While there are well-off patients that often go abroad to neighboring countries such as Singapore and Malaysia for complex medical treatment, the bigger Indonesian hospital conglomerates seem to take on the challenge and strive to improve their service quality, so more patients stay in Indonesia for treatments, including long-term treatments.
Switzerland as an advantage
Looking at the supply side, Switzerland is also in Indonesia known for high quality, reliable and precision technology as well as the innovation culture of the sector. Besides a very wide range of instruments and appliances for laboratories, surgery and life support (ICU), particularly sub-sectors such as Cardiology, Oncology and Diabetes Care are of interest. Two supporting sectors, namely IT Solutions for Hospital Management and Medical Waste Technology, have been identified as immediately attractive as well.
Facilitated processes through the e-catalogue
Since 2013, the Ministry of Health implemented e-purchasing for its medical device procurements, whereby all medical devices were included in e-catalogue to streamline the process. In short, the aim of this system is to increase transparency, ease the transaction and procurement process in form of tenders with participation of most public hospitals via a shared platform and a unified e-catalogue. Another important point worth to mention is the registration process. Once all documents are on hand its straight forward, relatively non-bureaucratic and inexpensive.
How to enter the Indonesian market?
The assessment of further trends and possible fields of interest has led to additional recommendations and refinement of market entry strategies:
- Be locally present
- Work with reliable and efficient agent/distributor
- Focused branding
- Offer convincing sales and after-sales services
- Win over the doctors
- Start in urban areas
- Bundle your strengths and clearly shelve out your USP’s
S-GE and the Swiss Business Hub Indonesia have already identified reliable partners who are very familiar with all regulatory matters and import procedures. This allows new brands a “hassle free” markets entry. Get in contact with our Senior Consultant South East Asia, Angela di Rosa, for further information.