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Soaring Indonesian Healthcare Market Woos Medical Device Exporters

With Indonesia's healthcare market tipped to be worth US$78 billion by 2027, suppliers from Europe, China and the wider Asia-Pacific region are eager to establish long-term local partnerships before the sector enters a fully mature phase.

Photo: Indonesian healthcare: Set to benefit from a 10% annual increase in state spending until 2027. (Shutterstock.com)
Indonesian healthcare: Set to benefit from a 10% annual increase in state spending until 2027.
Photo: Indonesian healthcare: Set to benefit from a 10% annual increase in state spending until 2027. (Shutterstock.com)
Indonesian healthcare: Set to benefit from a 10% annual increase in state spending until 2027.

Overall, exhibitors at the recent Indonesia International Hospital Expo were broadly positive about the potential for the country's hospital-equipment and medical-devices market – and they may well have good cause to be. Indonesia's healthcare spending is projected to rise to US$78 billion in 2027, up from $30.2 billion in 2017 and representing a compound annual growth rate of nearly 12%, according to London-headquartered BMI Research. Accordingly, the government has made the development of the medical-devices sector a priority, aiming to boost the manufacture of premium products, which currently need to be mainly imported, with local companies contributing just 10% of the total.

In order to attract more foreign investment, the Indonesian government has already opened up the medical-device industry to foreign direct investment, allowing 100% ownership. At the same time, the local market is growing on the back of strong domestic demand driven, in part, by the government's National Health Insurance (Jaminan Kesehatan Nasional) programme. By next year, the government hopes 95% of the population will fall within the remit of this nationwide initiative.

Given the country's healthcare aspirations, it was understandable that the expo attracted a considerable contingent of overseas businesses. One such company was OR Technology, a German manufacturer of x-ray equipment with a pedigree of some 26 years.

Introducing the company's product portfolio, Senior Sales Manager Jan Oekler said: "We supply a range of sectors – veterinary, medical and security – and our focus is primarily on Europe and North America through our network of 72 global distributors. Asia, though, is developing fast for us and Indonesia is potentially one of the biggest potential markets in the region, so we are supporting our local distributor by attending this show.

"In more advanced economies, digital x-rays have pretty much taken over, but that still has some way to go here. Europe was the same 15 years ago. Customers here, though, buy a product and they expect it to work for a long time – particularly if it's German. Good after-sales service is difficult outside the major cities and if a product breaks down they will try to save money and repair it themselves. Local buyers believe that anything made in Germany is likely to last longer than anything, say, made in China."

Unlikely to agree with that particular proposition was Guangxi-based Manchebisi Automation Equipment. Launched in 2013 and a specialist in high-tech intelligent logistics transportation, this was its first foray into the Indonesian market.

Introducing the company and outlining its relevance to the hospital sector, Trading Supervisor Cindy Li said: "We sell automated track and vehicle units and pneumatic tube systems for transporting waste products and the like. This is our first time here and we are looking to get a feel for the market and to identify a potential local partner.

"We currently sell into Mexico, Thailand and the Philippines. Indonesia is a new market for us, but we believe we can compete effectively on a price basis here. In terms of our offer, we have our own R&D team and all our software is produced on a proprietary basis."

One Chinese company that had already established something of a track record in Indonesia was Hunan-based Sinocare. A manufacturer of medical metering equipment for blood glucose monitoring, the company currently sells into 135 countries and territories.

Introducing one of the company's latest innovations, Sales Manager Paul Jiang said: "While much of our product range is quite well-established, we're here to promote our latest meter, which tests across three indices as opposed to the standard two.

"Our primary competitive advantage in this particular market is that we produce the highest-quality products while still offering the lowest price. We can also manufacture on OEM basis, something that we do in Europe and are now looking to extend throughout Asia."

Photo: OR Technology: German x-ray specialist.
OR Technology: German x-ray specialist.
Photo: OR Technology: German x-ray specialist.
OR Technology: German x-ray specialist.
Photo: Hospital logistics facilities from Manchebisi.
Hospital logistics facilities from Manchebisi.
Photo: Hospital logistics facilities from Manchebisi.
Hospital logistics facilities from Manchebisi.

In terms of Asian businesses targeting the Indonesian market, it wasn't just Chinese companies who had recognised its potential. Indeed, there were exhibitors from several countries in the region, including notable healthcare players from Malaysia and Pakistan.

Foremost among the former was Enviro Meditech Pratama, a Jakarta-based subsidiary of a well-established Malaysian business. Detailing just why the company had such high hopes of making inroads into this neighbouring market, Account Manager Ginu Rama Purwadinata said: "Our business is all about waste management and we make two key products – one for infectious waste, typically medical waste, and another for organic solid waste, such as human and animal manure.

"What makes us special in the case of organic waste is that with most systems the composting process can take up to three months, but our system cuts this down to just one day. We do this by adding a heating stage that, coupled with the application of an enzyme, accelerates the whole process.

"In the case of infectious waste, 80-90% of it is plastic-based and its fumes can be dangerously toxic if burnt. With our system, though, the waste is sterilised and shredded, which reduces the volume and produces an end-product that's completely recyclable. In Indonesia, plastic waste is a huge problem, so, for this product, our target markets are hospitals, clinics and health centres. In the case of our organic-waste system, the potential market is huge – basically, wherever there are humans or livestock there will always be organic waste."

Prominent among the Pakistan delegation was PT Falcon Medical Instruments, a surgical instrument manufacturer with a 45-year trading history and a heritage that stretches back to the late 19th century. At present, the company offers a range of more than 5,000 surgical instruments and services the surgical, dental, podiatry and veterinary sectors.

According to Director Muhammad Tayyab Sidiqui, Falcon has been exporting to Europe for about 35 years, with Germany now its largest overseas market. Focusing on its Indonesian aspirations, he said: "We have been here for about three years and it's an important market for us. Our only Asian regional office is here, although we also have plans to open in the Philippines.

"In the case of other Asian markets, such as South Korea and Singapore, we handle them directly from Pakistan and have found that we have no local competitors. Indeed, the only really big national players in this sector are Germany and Pakistan. China is trying, but is still lagging well behind, and won't really be competing with us for at least another 10 years."

One of the peculiarities of the Indonesian market is that overseas companies are restricted to using just one local distributor for each of their products, making choosing the right partner essential for long-term success. In the healthcare sector, one of the most popular choices is PT Urogen Advanced Solutions, a nationwide distributor that imports a wide range of international branded medical devices.

Upbeat about the current state of the local market, Sales Executive Jumadi said: "We are an Indonesian company and we distribute many of the major global brands, including Siemens and Agfa, with the latter being our principal client. We have been in business for more than 10 years now and we are very optimistic as to the future opportunities we see emerging in the local market."

Another leading Indonesia-based distributor exhibiting at the event was PT Sinar Roda Utama, a company that has been working for many well-known healthcare brands – including Toray, PDC, Aguettant Laboretoire and Nipro Medical Corporation – for more than 25 years now. In the case of Nipro – a US-based world leader in renal, medical-surgical and interventional-radiology products – it has also opened local manufacturing facilities and is working with Utama to develop its regional export base.

Photo: Sinocare’s blood glucose monitors.
Sinocare's blood glucose monitors.
Photo: Sinocare’s blood glucose monitors.
Sinocare's blood glucose monitors.
Photo: Urogen: The medical device distributor of choice.
Urogen: The medical device distributor of choice.
Photo: Urogen: The medical device distributor of choice.
Urogen: The medical device distributor of choice.

Expanding on the new possibilities emerging from this long-established partnership, Yusuf Ramdhani Kurniawan, Utama's Non-Hemodialysis Head Market Promoter, said: "While we see many new opportunities for Nipro products in Indonesia, we are also now actively exporting to a number of other Asian markets, including the Philippines, South Korea, Thailand and even China."

The 2018 Indonesia International Hospital, Medical, Pharmaceutical, Clinical Laboratories Equipment & Medicine Exhibition took place from 17-20 October at the Jakarta Convention Center.

Marilyn Balcita, Special Correspondent, Jakarta

Content provided by Picture: HKTDC Research
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