The rupiah’s weakening against the United States dollar has affected the domestic pharmaceutical industry, which imports around 90 percent of its raw ingredients. The imports of raw ingredients had always burdened pharmaceutical company.
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JAKARTA, KOMPAS – The rupiah’s weakening against the United States dollar has affected the domestic pharmaceutical industry, which imports around 90 percent of its raw ingredients.
Pharmaceutical company PT Dexa Medica director Gunawan Lukman said in Jakarta on Friday (7/9/2018) that imports of raw ingredients had always burdened his company. Nevertheless, he continued that Dexa would not take any strategic steps against the rupiah’s weakening. “We will observe how the [rupiah] exchange rate develops in the coming days. Currently, we are trying to increase our efficiency and not to immediately increase our prices,” he said.
PT Kalbe Farma president director Vidjongtius said that a weaker rupiah might lead to product price hikes. He said that Kalbe set its product prices at a rupiah exchange rate of Rp 13,500 per US dollar (Kompas, 23/5/2018). “As the rupiah has weakened by 8-9 percent, this will lead to a product price hike of 2-3 percent, assuming that the price of raw ingredients in their original currencies remains stable,” he said.
Vidjongtius continued that increasing the selling price would not be an easy decision for pharmaceutical companies given the uncertain market conditions. Kalbe will be required to choose which products will see price hikes as not all of them will have their prices increased. Only several over-the-counter drugs and nutritional products will have their prices increased by 3 percent on average in the third quarter of this year. The prices of prescription drugs in the National Health Insurance-Indonesia Health Card (JKN-KIS) program will not increase as they are government-regulated. The prices of over-the-counter drugs are not government-regulated and, therefore, may increase.
Talks on drug prices
Separately, Indonesian Pharmaceutical Association (GP Farmasi) executive director Darodjatun Sanusi said that he could not make any comment regarding the impact of the rupiah’s weakening against the US dollar on the domestic pharmaceutical industry. He said that he had yet to obtain any information regarding any pharmaceutical company increasing their product prices because of the rupiah’s slump.
Darodjatun said that GP Farmasi would meet with the Health Ministry to talk about drug prices. “We will observe drug prices for [government] programs. The prices of regular drugs not included in the JKN program will be determined by their respective producers,” he said.
Vidjongtius said that supply of raw ingredients for medicines remained smooth despite the weakening rupiah.
To reduce dependence on imported ingredients amid the fluctuating rupiah exchange rate, Gunawan said that Dexa was committed to using locally produced ingredients. Indonesia has one of the largest biodiversities in the world. Processing homegrown natural ingredients with sophisticated technology will lead to products with high added value.
Besides, Gunawan added, his company strived to support the government by contributing to the push for an increase in pharmaceutical product exports. Currently, Dexa products have penetrated markets in ASEAN, Africa and the European Union.