The domestic medical device market in Indonesia was forecasted to be worth US$3.0 billion by 2020, with a compound annual growth rate (CAGR) of 5.8% between 2017 and 2020 according to the Indonesian Medical Device Producers Association (ASPAKI)
In spite of protectionist measures to boost local manufacture of medical devices, Indonesia continues to rely on imported products which account for just over 53% in value terms at US$1.5 billion in 2019. The main importing country is China with 20% market share, followed by Germany with 15% according to Fitch Solutions
Domestic manufacture focuses on unsophisticated lower value devices such as surgical gloves, bandages, orthopaedic aids, and hospital furniture
There were over 21000 medical device and IVDs registered in Indonesia at the end of 2020 with over 6000 more household health supply devices also registered. Between 1200 and 2200 additional medical devices are being registered each month in Indonesia in addition to 200 to 800 household health products which has seen a boost due to the COVID-19 pandemic.
Regulatory authority and laws governing medical devices in Indonesia
Medical devices and IVDs are regulated by the Minister of Health.
The Assessment Directorate and Surveillance Directorate of Ministry of Health implements and enforces ministerial regulations:
No. 62 of 2017 on Product License of Medical Devices, In Vitro Diagnostic Medical Devices and Household Health Supplies.
No. 63 of 2017 on Supervision of Import Trade System for Medical Devices, In Vitro Diagnostic Medical Devices and Household Health Supplies.
No. 26 of 2018 on Electronic Integrated Business Licensing Services of Health Sector.
Indonesia’s healthcare system
Indonesia has the world’s largest universal healthcare program covering 83% of the population in 2019 and is expected to cover 100% of the population for basic needs in the coming years
Private health insurance schemes are also used by the middle and upper classes, of whom over 1.2 million people go overseas for more sophisticated healthcare, mainly to Singapore and Malaysia, spending over US$2 billion abroad according to Dezan Shira & Associates
According to Fitch Solutions, Indonesia’s healthcare expenditure was expected to reach US$51 billion by 2020, approximately 4.18% of GDP
The main problem faced by the Indonesian healthcare sector is the severe lack of hospital beds at just 1.17 beds per 1000 people which is the lowest in ASEAN as well as qualified staff with doctors at 0.4/1000 population
To overcome the shortage in hospitals the government has relaxed restrictions so that foreign companies can have larger stakes in the healthcare industry (normally limited to 49% foreign ownership)
Gabungan Perusahaan Alat-alat Kesehatan dan Laboratorium (GAKESLAB) which is the association of Medical Device and Laboratory Equipment Company Organizations
Asosiasi Produsen Alat Kesehatan Indonesia (ASPAKI) which is the association for domestic Indonesian Medical Device Producers only
Population of 273.5 million in 2020 and is the 4th largest country in terms of population worldwide
People aged 65 and over in 2020 constituted around 6.3% of the population according to Knoema, however the over 65s population is projected to grow 40% by 2025 making Indonesia one of Asia’s fastest ageing populations according to Statistics Indonesia, the state-owned institute responsible for social and economic surveys
Communicable diseases impact on morbidity has reduced significantly in the 10 years from 2009 to 2019; with cardiovascular diseases now the leading cause of death and disability (stroke and ischaemic heart disease), followed by diabetes according to the Institute for Health Metrics and Evaluation in 2020
Gross Domestic Product (GDP) growth is calculated to be 6.1% in 2021 and forecasted to fall slightly by 2025 to 5.1% according to the International Monetary Fund
Unemployment rate of 4.84% in 2020 according to Statista.
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