Indonesia Healthcare

Outlook 2019

28 November 2018

Copyright © 2017 IQVIA. All rights reserved.

Indonesia healthcare industry
opportunities and challenges

1
The scheme is being rolled out in two phases, aiming for universal coverage by 2019

Planned BPJS coverage (2014 population base) 49 251

51

18
20 6
108
Jamkesda 31
Expansion phase (2016 – 2019)

Jamkesmas 76

Poor / Askes Jamsostek Private Privately Self-employed Total population

Near poor TNI/POLRI insurance employed

The “middle class”

population

About 70% of the population has been covered by the National Health Insurance program in mid of 2017.

While enrolment will continue progressively, achieving universal coverage by the original target date of 2019 is now considered unlikely.
Coverage rates are expected to reach 85-90% in 2019, with full coverage now expected by 2022.

The Middle Class Population Potential Impact on Pharma market

• Decrease in private market prices due to cross over impact
• Upper middle class - possibly utilize COB if implemented
of tendering
• Emerging middle class increase participation in NHI
• Higher volume but lower prices under BPJS tender system
Source: BPJS, IQVIA Market Prognosis 3Q17, IQVIA Internal Analysis
 This has led to policy changes that are likely to impact the way companies
function in the Indonesian pharma market
Disease clinical
pathway
• Referral pathway:
primary care gate-keeping
Policy change
function and tiered referral
system
• GP focus: Increased role
of the GP in diagnosing
and treating 144 diseases
• Focus on GPs: Along
with the specialists and
KOLs as they become first
point of contact
• Sales Teams: Need to be
more flexible to operate in
a cyclical portfolio
independent sales model
Source: IQVIA Internal Analysis
IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018
Drug procurement
Funding protocol National drug formulary
process
• Capitation funding for • Drug list: Listed 519 drug • E-catalogue system for
primary care molecules pharmaceutical
companies to participate
• INA-CBG funding for • Standardization of drug
in government drug
secondary and tertiary benefits: Across multiple
procurement process
care settings insurance schemes
• Fee for service: Separate offered previously • Local GMP: To be listed
on e-catalogue
funding scheme for
manufacturers have to
management of chronic
meet local GMP standard
diseases, such as
oncology
• Capitation funding for • Portfolio alignment: • KAM model: With one bid
primary care offerings with the winner, KAM model could
government needs and/or be critical in tender
• INA-CBG funding for
offer
secondary and tertiary
care settings • Increased transparency:
• Fee for service: Separate • Strong value of drug procurement
funding scheme for proposition: to gain process
management of chronic national formulary listing
diseases such as
oncology
 Positive impact and challenges

Positive Impact Challenges

✓ More people are covered by ✓ Inability to estimate demand

insurance, approximately 170
millions ✓ Irregularity in the tender process

✓ Coverage for catastrophic and ✓ End-consumer usage not guaranteed

chronic diseases improve vs for tender winner
previous insurances ✓ Budget deficit

✓ Infrastructure overload

✓ Channels are not segregated

Source: IQVIA Internal Analysis

IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018
 This has also jump-started the healthcare spending where it has been flat prior to
BPJS
% Healthcare Spending in GDP

Forecast Data
Historical Data

3.0% 3.0% 3.1% 3.2%

2.7% 2.9% 2.9%
2.6% 2.6% 2.6%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Indonesia vs. Other Countries (2014)

10.0%

8.0% 7.4% 7.1%

6.5%
6.0% 5.5%
4.7%
4.2%
4.0% 2.7%
2.0%

0.0%
Korea Vietnam Thailand China Philippines Malaysia Indonesia

• Historically, Indonesian healthcare expenditure as a percentage of GDP is considered low compared with comparable
countries (e.g.: Malaysia, Thailand, & Philippines)
• The implementation of NHI will create the needs to have larger healthcare budget to cater aggressive reimbursement
growth
Source: IQVIA Estimated, Baseline Forecasting ; World Bank

IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018
Growth in healthcare infrastructure has primarily been driven by hospitals and
private sector
NUMBER OF HOSPITAL NUMBER OF BED

1,517 Public: 159,173 Public:

1,594 1,612 128,528 137,194 144,620
1,601 0.4% CAGR 120,455 4% CAGR
1,540
1,562 92,991
5.9% 7.3%
Private: 174,939 179,330 Private:
989
1,256 145,382 157,995 166,445 172,089
666 807 896 15.3% CAGR 10% CAGR
543

2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017

NUMBER OF PRIMARY CARE NUMBER OF PHARMACY*

26,658 NUMBER OF DOCTOR
25,127
9,731 9,754 9,767 9,825 23,931
9,510 9,655 22,791 139,158
21,103 129,004
119,268
17,613 110,521

8.6%
0.7% 8.0%

2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015

*Including independent and chain pharmacy

Source : www.depkes.go.id ; http://binfar.kemkes.go.id; Hospital Association Indonesia, IQVIA Internal Data
The total pharmaceutical market is expected to grow at a CAGR of
4.8% (±2.5%) during the period 2017-2022
TOTAL PHARMACEUTICAL MARKET (BIO IDR) – MAT HNA PRICE

80,000

70,000
CAGR 2017-2022 (%)

60,000
Non-Panel Sector 4.8 %
50,000

40,000 Hospital Sector 8.5 %

30,000

Drugstore Sector 0.2 %

20,000

10,000
Retail Pharmacy (Apotik) 0.7 %
0 Sector
2017 2018 2019 2020 2021 2022

Source: IQVIA Market Prognosis 1Q18, IQVIA Internal Analysis 7

IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018
 Chronic diseases have grown rapidly post implementation of BPJS

Source: IQVIA Market Prognosis 3Q17, IQVIA Internal Analysis, IQVIA Combined Audit 2Q17
IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018
Indonesia consumer behavior in
healthcare trend

9
 Demographic trends in APAC is also happening in Indonesia

1
Focus on Wellness
• More focus should be on preventive care versus reactive care
• Consumers want products that make them feel good and
healthy
• Educated older adults have higher expectations

Consumer Involvement and Higher 2

Purchasing Power
• Rising disposable income of middle class is
fueling increasing demand
• Progressive consumers are the future of
consumer health

3 Rise in Availability and Access of Consumer Health

Products
• Accelerated use of internet to search about available options
• Better access to products via multiple channels

10
Source: World Bank, Statista, Market Research, IQVIA analysis
IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018
How do Indonesian consumers get influenced?
Similar to any other industries: brand-in mind is very strong, but HCPs recommendation and
social media (start) plays important roles

Doctors

Midwives,
Family, friends, Nurses
Healthcare
colleagues, relatives
Professionals
(HCPs) Pharmacist

Television, Social Media

newspaper, radio, (Facebook, Twitter,
websites Instagram, etc.)
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Source : IQVIA Analysis
IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018
With increasing health literacy and access to technology, consumers are
becoming more “health-smart” and proactive towards self care…

12
IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018 IQVIA CH Conclave, Sep 2018 #not to be circulated without IQVIA consent
Indonesia is one of the fastest growing smartphone and social media users

Mobile Usage
4h17m per day using
Mobile Internet
67%
Unique 130 Million Users
Mobile 177.9Mn unique mobile users Ranked 4th Worldwide*
User penetration as of Jan 2018

Social Media
#3 3h23m 53 Million Users
per day
130Mn Social
on Social
Ranked 3rd Worldwide*
Active users media
growth ranking Media in 2017
in 2017

6.6 Million Users

23% Annual
Ranked 12th Worldwide**
growth of
active social
Indonesia
average
(49%) > World
average
(42%)
media users Note: All values represented are of 2017 unless mentioned otherwise.
Social media penetration Source: We Are Social, Katadata, www.thenextweb.com
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 Therefore in …….

14
IQVIA Confidential – Not for circulation without IQVIA Consent - Nov 2018 IQVIA CH Conclave, Sep 2018 #not to be circulated without IQVIA consent
 Indonesia healthcare market holds good potential despite of instability

With focused market segment, private

healthcare market still has positive outlook

Innovation across all stages of

product/services development and sales

Self-care product and services expanding

their share in the market

Source: QuintilesIMS, Adforum

15
IQVIA Confidential – Not for circulation without IQVIA Consent - Oct 2018 IQVIA CH Conclave, Sep 2018 #not to be circulated without IQVIA consent
Thank You!