Interview with Alfian Banjaransari: Can Post Covid-19 Indonesia Become a Global Pharmaceutical Powerhouse?
Dec 5, 2023
Interview with Alfian Banjaransari: Can Post Covid-19 Indonesia Become a Global Pharmaceutical Powerhouse?
By Dr. Susanna Lukacs
The Property Rights Alliance had the pleasure of interviewing Alfian Banjaransari, partner and co-founder of Practice Ready, and author of the case study “Moving Up the Ladder: Can Post Covid-19 Indonesia Become a Global Pharmaceutical Powerhouse?”
What is the mission of your organization and what is the significance of your mission?
I represent the Center for Market Education (CME), a regional think tank based in Kuala Lumpur, Malaysia, also present in several Southeast Asian countries. As Country Director for Indonesia, our mission at CME is to promote a pluralistic and multidisciplinary approach to economics. We aim to advance a comprehensive understanding of market forces, emphasizing the practical implications of economic theories. We believe that economics matters, and therefore needs to be presented in a way that resonates with the public. Our focus extends beyond theoretical economics to encompass policy analysis, with awareness of the unintended consequences that may arise from political actions. Ultimately, we believe that a sound understanding of economics is crucial for informed decision-making and effective policy implementation.
Given the diverse economic and political history of the region, focusing on Southeast Asia, and Indonesia in particular, it contributes significantly to global economic discourse. Indonesia, often regarded as the big brother of the region, plays a central role. Its policies are closely observed by neighboring nations, we hope our insights contribute to informed policy implementation.
What is your case study about?
The case study examines Indonesia’s pharmaceutical industry’s current situation while aiming to provide a critical examination of the challenges faced in developing and highlighting Indonesia’s global presence in the industry. The study leverages renowned external indices, including the International Property Rights Index (IPRI) and the Trade Barrier Index (TBI).
Unfortunately, Covid-19 brought awareness to the vulnerability of Indonesia’s healthcare infrastructure, prompting the government to address systemic weaknesses, in this case its pharmaceutical industry. The case study attempts to go beyond rhetoric and examine Indonesia’s current standing in the industry, revealing a detrimental cycle affecting its pharmaceutical sector.
With an overwhelming reliance (around 90%) on imported active pharmaceutical ingredients (APIs), ironically compounded by self-imposed tariffs, Indonesia faces limited supply chain control over its pharmaceutical market. This is against the backdrop of a sheer population of close to 300 million. Furthermore, it renders Indonesian pharma producers vulnerable and non-competitive globally – the only reigning champs in the domestic OTC and generic drug market. The situation drives up costs and demand for more affordable medicines. Indonesia’s low purchasing power and weak consumer protection further fuel the proliferation of illicit, counterfeit, and substandard products. This goes on like a reinforcing cycle, which is why a regulatory framework based on innovation and market understanding is critically needed.
What are the implications of the trade barrier topic discussed in your case study?
I’d like to think that the case study serves as a reminder that what often starts as a seemingly “benign” attempt to incentivize domestic industries can easily – as it often does – take a turn for the worst. It is the Indonesians consumers who pay the price. Rather than an analysis or critique of Indonesia’s post-Covid-19 pharma approach, it underscores the importance of sound and pragmatic policies deliberately steering clear from hostility towards trade and innovation. The Trade Barrier Index aptly captures Indonesia’s situation, as it places Indonesia at the bottom regionally and second to bottom globally (https://tradebarrierindex.org/country/indonesia).
Particularly for the pharmaceutical industry (although the implications can certainly go beyond), the bottom line is clear: Indonesia must step up its game in safeguarding intellectual property rights (IPR) and reconsider its stance on trade barriers if Indonesian pharma are to move up the ladder. Indonesians deserve it. The industry longs for it. Our trading partners are counting on it.