How Indonesia is democratizing healthcare

A bold plan for a new global health agency to respond to crises and fund medical progress, along with an ambitious goal of becoming a regional vaccine manufacturing hub, speak to the confident transformation Indonesian healthcare is undergoing.

Meanwhile, a growing and increasingly health-conscious population combined with improving industry infrastructure and landscape are creating a rich range of investment opportunities inside the country.

A new global agency in town
The Covid-19 pandemic revealed critical gaps and weaknesses in global response capability, points out Health Minister Budi Gunadi Sadikin, inspiring Indonesia to propose a new funding agency, something akin to a health IMF.

“A G20-driven global financial resource mobilization, in the form of a Financial Intermediary Fund, or FIF, developed under the coordination of the finance and health ministries of member states with the support of the WHO and the World Bank,” explains Budi.

Nearly $1.4 billion has already been committed by 20 donors, including Indonesia, and Budi emphasizes that the aim is to raise new funds to strengthen the resilience of global health frameworks, not to divert money from existing structures. As part of its mission to improve preparedness, the agency also aims to help standardize global protocols and boost manufacturing capacity for relevant pharmaceuticals and medical devices.

The G20 Joint Finance and Health Task Force meetings are the platform through which consensus on how to deliver on the FIF is being built, notes Budi, who adds that funding for its initiatives, “should be recognized as global goods and human capital investment necessary for economic growth.”

A regional vaccine hub
Back in 2017, Indonesia began to establish itself as a base for vaccine manufacturing, at that time leveraging the fact that it has the world’s largest Muslim population to become a hub for halal vaccine production.

Fast forward to the Covid-19 pandemic and Indonesia this year became one of five countries selected by the WHO to be a recipient of mRNA vaccine technology transfer, another step on the road to making it a regional hub and helping to close the access gap between emerging and developed countries.

Manufacturing will be carried out by state-run Bio Farma, already the biggest vaccine manufacturer is Southeast Asia and a major exporter. And with mRNA having numerous applications in ground-breaking therapies far beyond treating Covid-19, this brings with it the potential for a boost to the wider domestic pharma sector.

In another sign of progress, Indonesia’s first domestically produced Covid-19 – a collaboration between Bio Farma and Baylor College of Medicine in Texas – was approved in late September. In addition, multiple Chinese companies are working with their Indonesian counterparts on a range of vaccine production projects.

A population growing in numbers and healthiness
Great strides have been made in recent decades, with most of the Indonesian population now enjoying healthcare coverage. Introduction of National Health Insurance (NHI) in 2014 was an undoubted game changer which has steadily expanded access to a range of treatments from public and private healthcare providers.

The World Bank gave a vote of confidence to Indonesia’s progress by approving a $400 million loan in December 2021 for strengthening of the NHI system, with an additional contribution coming from the Gates Foundation.

In parallel with expanding coverage, the government is implementing a Blueprint for Digital Health Transformation Strategy 2024, a comprehensive set of measures to utilize digital tech to enhance accessibility, data integration, administrative procedures, planning, delivery and much more across the healthcare sector.

Along with rapid growth in government healthcare spending, the private pharmaceutical sector is also set to continue expanding robustly in the years ahead. Overall healthcare spending stands at 3.2% of GDP, a lower proportion than many comparable nations, points out Evie Yulin, president of Merck Indonesia, who expects that figure to rise significantly. Rural areas are particularly ripe for growth due to underdeveloped infrastructure, fewer medical professionals and lower awareness of health issues compared to urban populations, notes Yulin.

Growth will also be driven by the expanding population, which is set to reach almost 300 million by 2030.

A unique opportunity
Despite having a presence in Indonesia for more than half a century, Merck continues to invest and ramp up its operations in the country, a testament to its stability and supportive environment.

“We are in the process of increasing our capacity to 2 billion tablets per year, related to the plan to make the Pasar Rebo Plant in Jakarta a pharma manufacturing hub for Southeast Asia,” reports Yulin.

As well as global players establishing and expanding operations in Indonesia, domestic healthcare start-ups are catching the eye of international investors. A flagship in this space is telehealth platform Halodoc, which has attracted funding from heavyweight investors in the US, Germany, Denmark, Singapore and Thailand.

There are more than 20 million active monthly users connected through the platform to over 20,000 doctors, around 2,000 hospitals and clinics, 4,000 pharmacies and more than 20 insurance partners.

Halodoc is determined to play its part in reducing disparities in access to services and medicines, according to co-founder and CEO Jonathan Sudharta, who hails, “the government’s bold movement towards digital healthcare.”

Sudharta adds that the platform is, “…also focusing on preventive and predictive actions, unlocking the untapped potential through prevention services that are aligned with the government initiative to make Indonesians healthier and implement an advanced healthcare system.”

A bright future
The combination of a burgeoning medical industry, expanding healthcare coverage, ambitious plans for digital reform, a growing population and the drive to make the nation a pharma manufacturing hub creates a unique set of investment opportunities. Underpinning this is a commitment to ensuring that on both a domestic and global level, quality healthcare is accessible to all.

To find out more, visit investindonesia.go.id