Market Monitor chemicals Indonesia 2018

Market Monitor

  • Indonesia
  • Chemicals/Pharma

19th July 2018

Indonesian pharmaceuticals sector growth is driven by a rising population and the roll-out of the government's universal healthcare insurance system.

 

 

 

 

 

 

Indonesia chemicals 2018 pic1

  • The Indonesian pharmaceuticals sector value added grew 7.1% in 2017, and in 2018 an increase of about 7.5% is expected, driven by a rising population and roll-out of the government's universal healthcare insurance system, which will expand access to medicine and healthcare.
  • Foreign pharmaceutical businesses dominate the market for patented drugs, and have invested more than USD 1 billion to build factories and in clinical research. However, foreign players continue to face significant competition from domestic companies like Kalbe Farma, Tempo Scan Pacific and Kimia Farma. Those local firms are well established with significant activity across various subsectors, including logistics, consumer healthcare and prescription drugs.
  • Due to the recent currency depreciation we expect the profit margins of manufacturers to deteriorate in the coming months, as a large percentage of raw materials for pharmaceutical production has to be imported. However, the impact should be partly mitigated by higher sales prices.
  • In general, banks are willing to lend to the sector due to the positive performance trend and growth prospects. Gearing tends to be generally lower in manufacturing, but higher in the distribution segment, due to working capital purposes.

  • On average, payments in the Indonesian pharmaceuticals sector take 30-60 days. The number of non-payment notifications and insolvencies was low in 2017, and no substantial increase is expected in 2018. Due to this and the favourable growth prospects our underwriting approach to the pharmaceuticals sector is generally positive.

  • Our underwriting stance for the basic chemicals and petrochemical subsectors is neutral. Petrochemicals has developed only slowly in recent years, with most players lacking value chain integration (i.e. operating in either the upstream segment or the downstream segment only). While basic chemicals show stable growth rates (mainly driven by construction, automotive, increased urbanization and a growing middle class), inefficiencies and red tape remain stumbling blocks.

 

 

Related documents

Disclaimer

Each publication available on or from our websites, such as, but not limited to webpages, reports, articles, publications, tips and helpful content, trading briefs, infographics, videos (each a “Publication”) is provided for information purposes only and is not intended as a recommen¬dation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in any Publication has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in any Publication is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in any Publication, or for any loss of opportunity, loss of profit, loss of production, loss of business or indirect losses, special or similar damages of any kind, even if advised of the possibility of such losses or damages.