Only 40% of pharmacies ready for free trade

The Jakarta Post, Jakarta

Only 40 percent of local pharmaceutical firms comply with the "current good manufacturing practices" (CGMP), which promote standardized product quality, required under the ASEAN Free Trade Agreement (AFTA) that takes effect in 2008, an association says.

At present, the industry boasts 206 manufacturers, including 35 multinational firms.

"All of our members are trying to comply with these requirements in the run-up to AFTA, which will come into effect in January 2008," Anthony C.H. Sunarjo, the chairman of the Pharmaceutical Producers Association, told The Jakarta Post on Wednesday.

AFTA -- which groups the members of ASEAN, excluding its three newest members, Laos, Cambodia and Myanmar -- requires all pharmaceutical products traded in the region to comply with current good manufacturing practices.

Certain medicines have also to satisfy "bio-availability and bio-equivalence" (BABE) studies.

At least Rp 30 billion (around US$3.3 million) in additional investment will be needed for Indonesian companies to be able to meet the criteria, which for local producers, especially the small to medium-scale ones, will be quite an onerous burden, Anthony said.

This is exacerbated by the fact that the industry has been growing at a lower-than-expected pace, he added.

In 2004, sales of pharmaceutical products grew by 13.5 percent to Rp 20.22 trillion, while growth reached 13.7 percent in 2005, with overall sales amounting to Rp 23 trillion.

For 2006, Anthony predicted mediocre growth of 5 to 6 percent due to weaker purchasing power.

"I assume that 2007 will not be much different from 2006, with sales growth for pharmaceutical products reaching only between 5 and 6 percent," Anthony said.

He added that the industry was having difficulties in achieving faster growth, especially since the government decided in February last year to apply the highest retail prices for generic pharmaceutical products, which reduced the margins of producers.

Unlike Anthony, Parulian Simanjuntak, the executive director of the International Pharmaceutical Manufacturers Group, said that all 35 of his organization's members had already satisfied the CGMP as required.

"If the other producers are unable to invest in order to fulfill the requirements, mergers may be the answer, or else they will be faced with closing down," Parulian said.

If the current problems are addressed in time, Parulian said that the country would have no problem with AFTA as pharmaceutical products were basically the same everywhere. (05)
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