In one of the next economic stimulus packages of the Indonesian government the focus will be on increasing domestic production of raw materials for medicines and medical devices. Currently, these industries are still highly dependent on imports of raw materials. It is estimated that around 90 percent of raw/basic materials for medicines and medical devices need to be imported from abroad and therefore cause additional pressure on Indonesia's balance of payments.

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Indonesian state-controlled pharmaceutical company Kimia Farma will construct Indonesia's first pharmaceutical salt factory in Jombang (East Java) in an attempt to supply the domestic market and curb imports of this type of salt. Minister of State-Owned Enterprises Dahlan Iskan said that the plant can commence operations near the end of 2014 and will have an annual production capacity of 2,000 tons of pharmaceutical salt (approximately two thirds of domestic demand).

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State-controlled pharmaceutical company Kimia Farma is expected to show steadily improving corporate earnings in the years ahead supported by Indonesia's universal healthcare scheme (in Indonesian: Jaminan Kesehatan Nasional or JKN) that was implemented by the social security agency Badan Penyelenggara Jaminan Sosial Kesehatan (BPJS) in early 2014. The scheme aims to provide all Indonesian citizens with access to a wide range of health services. Obviously, local pharmaceutical companies are in a great position to benefit from this program.

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Companies active in the pharmaceutical industry of Indonesia need to find strategies to overcome sharp rupiah depreciation. Indonesia’s pharmaceutical industry is still - to a large extent - dependent on the import of raw materials, hence a weakening rupiah raises the costs of imports thus eroding profit margins. Since May 2013, when the US Federal Reserve started to hint at monetary tightening, the US dollar has experienced bullish momentum. Between the May 2013 and July 2015, the rupiah depreciated around 37 percent against the US dollar.

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