MULTINATIONALS CONCERNED OVER INDONESIAN COPY EPIDEMIC

Foreign drug companies are increasingly concerned by recent poor drugs sales in Indonesia, coupled with a reduction in market share. According to international reports, Pfizer has reported a sales growth of just 2% y-o-y for January through May, compared to 10% for the same period in 2004. As local prices for some of Pfizer's products have recently increased, the latest results are a useful barometer of the local market.

Meanwhile, local observers claim foreign firms are losing out to cheap generics. This has been fuelled by government policy, which encourages the use of generic drugs in state hospitals. A reduction in consumer purchasing power, caused by a steep fuel price increase in March and the depreciation of the Rupiah against the US dollar, are also significant factors.

Further, foreign drugmakers have been losing out to an epidemic of counterfeit drugs in the country. The International Pharmaceutical Manufacturers group in Indonesia reports that up to 25% of the US$2bn drug market is comprised of pirated medicines. The most commonly targeted drug is Pfizer's anti-impotence drug Viagra.

It is hoped anti-counterfeiting measures undertaken by the government, which includes a print campaign in the media, will help remedy the situation. It is also possible that the gradual implementation of ASEAN trade rules will also improve the outlook.