INDONESIAN PATENT PROTECTION SEEN FAILING MULTINATIONALS

The international drug industry has continued to criticise patent protection in Indonesia. Recent developments have been mixed, with the authorities implementing some of the terms of TRIPS by the end of 2004, despite pledges to introduce the treaty by 2000. A copyright law, which was introduced in 2003, has been widely reported to be ineffective.

Nevertheless, this year US trade association PhRMA has opted not to lobby for Indonesia's inclusion on the Office of the US Trade Representative (USTR)'s list of countries where intellectual property rights are threatened. Although this should be seen as a positive sign, Indonesia remains on the USTR's list of "Priority Watch" countries, mainly due to widespread infringements in other industries.

In the recent past, the USTR has estimated that copy drugs account for up to 40% of the market, indicating the massive task the government faces in attempting to resolve the problem. A key problem is that despite the adoption of TRIPS provisions, the country's generally low-income population is reliant on low cost, copied drugs.

Meanwhile, some foreign drug companies have reported weak sales in Indonesia, coupled with a reduction in market share. According to international reports, Pfizer's Indonesian subsidiary reported sales growth of just 2% for January through May, compared to 10% for the same period in 2004. Recent currency appreciation has also had a negative impact on local prices, potentially offsetting the positive impact of high-profile, official anti-copying campaigns in recent months.