MACRO-ECONOMICS REGULATORY INFRASTRUCTURE PHARMA INDUSTRY

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3 MACRO-ECONOMICS Economic growth are potentially good GDP per capita above $ Government health budget increases to 5% Middle class category is projected into 150 Mn in 2014, average life expectancy to 72.0 in 2014 and rise in population age 55+ Growth of Consumer 3000 increase public awareness of health importance REGULATORY Increase in health expenditure & number of people who have insurance as SJSN Implementation (2014) The enactment of SJSN lead to huge drugs demand in line with volume and price INFRASTRUCTURE Shortage of healthcare infrastructure (doctor, hospital, clinic, public health center) & professionals Indonesia has entered into a PIC/S membership, make it easier to comply with European standard PHARMA INDUSTRY Local keep dominating the market and MNC s are increasingly viewing the market as an attractive investment Local players are expanding the production and R&D capacity

4 Indonesia Pharmaceutical Market Forecast CAGR: 12.7% % 0.56% 0.56% 0.54% 0.53% F 2013F 2014F 2015F Pharmaceutical sales (US$bn) Pharmaceutical sales, % of GDP Market Drivers Indonesian market is predicted to grow 12.7% CAGR, driven by: GDP growth Government health spending % Number of people who have insurance Public awareness of health importance Demography growth of productive population, middle class, adult >50th Market Constraints Per capita healthcare expenditure is far below the average (Indonesia: 63.61) Shortage of healthcare infrastructure, facilities & professionals Efflux of medical tourists seeking treatment in other countries: 400,000 Indonesians patients travel annually

5 2011 Health Expenditure (% of GDP) Indonesia Health Expenditure 8.37% 7.17% 6.76% (2,4% (World Bank) % 4.44% 4.09% 3.85% 3.40% 1.89% 1.89% 1.82% 1.72% 1.64% Japan Vietnam South Korea Malaysia Hongkong China India Singapore Indonesia Health Expenditure (US$bn) Health Expenditure (% to GDP) Source: WHO, Business Monitor International: Pharmaceutical & Healthcare Report, Q4 2011

6 Indonesia Generic Drug Sales (US $bn) Indonesia Patented Drug Sales (US $bn) % 40.0% 41.2% 42.5% 43.7% 44.9% 20.5% 19.6% 18.8% 18.0% 17.2% 16.5% f 2012f 2013f 2014f 2015f Generic drug sales (US$bn) Generic drug sales, % of total sales f 2012f 2013f 2014f 2015f Patented drug sales (US$bn) Patented drug sales, % of total sales Indonesia OTC Drug Sales (US $bn) % 40.5% 40.0% 39.6% 39.1% 38.3% f 2012f 2013f 2014f 2015f OTC drug sales (US$bn) OTC drug sales, % of total sales Source: Business Monitor International: Indonesia Pharmaceutical & Healthcare Report, Q1 2012

7 100% DOMESTIC MNC % % MAT 4Q07 MAT 4Q08 MAT 4Q09 MAT 4Q10 MAT 4Q11 MAT 4Q 07 MAT 4Q 08 MAT 4Q 09 MAT 4Q 10 MAT 4Q 11 TOTAL GROWTH LOCAL GROWTH MNC GROWTH

8 Number of physicians (Year ) Number of hospital beds (Year ) (per 10,000 population) Number of hospitals (2011) Number of drug stores /dispensaries Indonesia 3 7* (2011) 1722* ± 16,603* Thailand China (2010) 20918** (2010) ± 120,000 retail pharmacies Vietnam (2010) (2008) 39,016 Source: WHO: World Health Statistic 2011; *KemKes, Pusadtin, Data & Informasi, 2011; ** 2011 China Health Statistics Summary

9 Indonesia Health Expenditure Estimated lost nearly US$1 billion every year 1.89% 1.82% 1.72% 1.64% Health Expenditure (US$bn) Health Expenditure (% to GDP) Composition of Malaysia Foreign Patients By Nationality, 2010 $ million (65% of its total international patients) $44.32 million (70% of its total international patients) OTHERS ± $362 million Source : Frost and Sullivan cited on Jakarta Post 2009

10 2011 Government Health Expenditure Indonesia Government Health Expenditure % % % % % % 2.06% % 2.84% Private Govt % 39.92% 38.68% 37.41% 58.85% 60.08% 61.32% 62.59% 1.11% 1.09% 0.99% 0.97% Japan China South Korea India Indonesia Hongkong Malaysia Singapore Vietnam Government Health Expenditure, % of total Government Health Expenditure (% GDP) Source: WHO, Business Monitor International: Pharmaceutical & Healthcare Report, Q4 2011

11 1. Drugs Registration Minister of Health Regulation No. 1010/2008 on Drugs Registration ( MOH Regulation No ) Stipulates the technology transfer requirements, which require local manufacturing facility for off-patent products. BPOM Regulation No. HK of 2011 on the Criteria and Procedures for Drug Registration ( Brown Book ) It provide for public protection against drugs that do not meet drug safety, quality and the use requirements. 2. Draft Law on Monitoring of Pharmaceutical Supply, Medical Devices and Household Health Products ( Draft Law on Pharmaceutical Supply ) The Draft Law does not provide transition period for companies to adjust to the requirements in the Draft Law, and until the implementing regulations is issued Stipulates direct obligation of companies to compensate consumers for product complaints with no requirement for the consumers to provide evidence for the complaint and also allow Government inspectors to take pictures at company facilities 3. Draft Law on Halal Product Guarantee ( Halal Law ) Halal assessment will be applied to both product ingredients and equipment used in the production process for food and beverages, medicines, cosmetics, chemical products, biological products and genetically-engineered products.

12 US$bn CAGR: 27.3% China India CAGR: 17.3%

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