Is the Healthcare Industry in Indonesia Going to Boom Like China?

It's no secret that the current condition of the internet economy in Indonesia is a reflection of the previous five years in China. Apart from being due to geopolitics, economic, cultural, and historical relations in China have also influenced Indonesia a lot.

The closest example, can be seen from the development of internet industry trends, starting from E-commerce and fintech Both have now become big industries, and other industries will follow suit. One of the industries that is getting bigger in the Bamboo Curtain country is healthcare, the big trigger since the pandemic three years ago.

This hot industry is one of the three big topics raised in technology exhibitions and conferences BEYOND Expo 2023, Macau, after sustainability and consumertech. Various discussions were held to see how massive this industry was in China and what the future trends would be. Here's the summary:

Supported by a large population

In a panel discussion entitled "International Market Opportunities for Chinese Healthcare Companies," EVP Fosun International Li Haifeng and CFO Livzon Zhang Wenze were present as panelists, on the second day of BEYOND Expo 2023.

Li explained that China, as the world's second largest economy with a population of 1,4 billion people, offers a huge market for the pharmaceutical industry. In addition, the central and regional governments continue to emphasize their residents on improving people's livelihoods and life expectancy, which has a huge impact on this industry.

According to him, Chinese companies are likely to gain a bigger market if they adopt a global approach by embedding leading technology combined with local work ethics. Also supported by R&D facilities, allowing the company to explore larger market growth and also expand market opportunities.

Fosun itself is a pharmaceutical company with four superior products: Artesun, a malaria drug discovered by Nobel laureate Tu Youyou; Comirnaty's mRNA vaccine for COVID-19 co-produced with German company BioNTech; Axicabtagene Ciloleucel Injection, a CAR-T cell therapy product developed for the treatment of late-stage lymphoma; and Azvudine, an antiviral drug used to treat COVID-19.

Zhang added, from his 20 years of experience working in this industry, he concluded that the pharmaceutical industry is like manufacturing, food and agriculture, because it has cycles. But the pharmaceutical industry can transcend market cycles.

“However, during the three years of the pandemic, we have observed several new changes. Biopharmaceutical laws that outpaced market cycles appear to have failed, and are now entering a strange cycle in which it takes a very long time and a lot of capital investment to commercialize new technologies, such as small molecule drugs, cell therapies, and immunotherapies.”

He continued, “Today, capital markets are more focused on niche channels, and trends change every year: from devices to mRNA to AI manufacturing, and each tends to attract waves of funding.”

This has led to the emergence of several projects that only cater to VC and PE investors, although many of them cannot explain their basic business model and rely solely on the concept to secure financing.

There is a trend towards impatience in the medical field as entrepreneurs and investors demand returns that exceed the projected natural growth of the industry. This results in the phenomenon of trying to get quick results and hindering long-term growth.

Zhang also pointed out that AI will likely be a significant force in disrupting systems healthcare and will be a major influencing factor in the development of biopharmaceuticals over the next 10 years.

"Many technologies are still in the unverified or fake stage, so investors and industry players need to be alert and focus on technologies that can really be implemented and help patients solve problems immediately, not just promising gimmicks," he said.

Consumer point of view

Then, in the previous panel discussion entitled "Emerging Trends and Opportunities in Biotechnology", GM AstraZeneca Hong Kong Wu Shan and GM Lianblo APAC Raphael Ho were invited as panelists. On this occasion, Shan explained that after the pandemic, pharmaceutical companies had become more active in carrying out R&D because the variety of diseases, starting from asthma and respiratory disorders, had become more diverse.

"The conditions now are completely different from 10 years ago. In fact, we have been successful in recent years, through independent research, collaboration and introducing all this good work in expanding our innovative medicine," he said.

It's just that the most important thing for pharmaceutical companies in making strategies and decisions, is always to start from the consumer's perspective. He considered this cognition to be very good, because it was very clear that pharmaceutical companies could not possibly help patients solve all the problems that existed in their bodies.

"So this is why we continue to work closely with partners across the ecosystem."

How about Indonesia?

According to the 2021 Global Health Security Index, released by the John Hopkins Center for Health Security, the Nuclear Threat Initiative, and the Economist Intelligence Unit, Indonesia is ranked 45th out of 195 total countries, far behind its closest countries, Singapore (24th) and Malaysia (27th). . The index measures the capacity of 195 countries to prepare for epidemics and pandemics.

This means that the COVID-19 pandemic is a warning for Indonesia to reform its health system. The government also revised the Negative Investment List (DNI) in 2021 by opening up opportunities for foreign investors in most vertical lines of the health sector, especially health support services.

Not only that, the Ministry of Health of the Republic of Indonesia initiated the 2020-2024 Digital Transformation Strategy for the Health Sector, which aims to transform the health service system into a more efficient, effective and patient-centered model. One of the main initiatives of this strategy is the SATUSEHAT (formerly PeduliLindungi) platform.

As is known, the shortage of medical personnel is one of the main obstacles in achieving equal access to health services. The availability of health facilities is also still concentrated on the island of Java until 2021, according to the Central Statistics Agency (BPS).

With inadequate health infrastructure, the country has higher per capita health expenditure in areas with fewer health facilities due to higher costs for patient mobilization.

“We have a strong belief that biotech innovation can help overcome health problems that have existed in Indonesia for years. Nalagenetics and Nusantics are biotech startups that have different methodologies in solving problems. "The two founders of this startup have a strong background in the fields of science and the biotech industry, which is an integral asset for the company," said East Ventures Venture Partner Avina Sugiarto in official site East Ventures. These two biotech startups are backed by East Ventures.

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Disclosure: DailySocial.id is a media partner of BEYOND Expo 2023