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2012 Indonesia Healthcare Outlook

By: Dr. Luthfi Mardiansyah Chairman IPMG President Director Novartis Indonesia. 2012 Indonesia Healthcare Outlook. Jakarta - March 6, 2012. Healthcare spend is increasing While overall spend still low at 2.4% of GDP and USD 44 per capita. National Spending on Healthcare.

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2012 Indonesia Healthcare Outlook

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  1. By: Dr. Luthfi Mardiansyah Chairman IPMG President Director Novartis Indonesia 2012 Indonesia Healthcare Outlook Jakarta - March 6, 2012

  2. Healthcare spend is increasing While overall spend still low at 2.4% of GDP and USD 44 per capita National Spending on Healthcare % GDP spend on healthcare growing % GDP spend on healthcare % spend is low compared to peer countries % GDP spend on healthcare Equal HC spending per capita to the Philippines National HC spend per capita in USD Source: Worldbank report, WHO Global Atlas, Datamonitor | IPM; Optimize Access to Innovative Drugs | Dec 2011

  3. Indonesian GDP growth will continue to outgrow its regional peers - $3,015 (2010) - $3,800 (2012) Indonesia Macro Economic Indicators Indonesia real GDP grow faster than ASEAN and emerging/developing economies … % GDP growth (real) 2007 - 2014 …& per capita income is also expected to grow faster % Per Capita income growth 2007 - 2014 Source: 1Ministry of Planning (Bappenas) – Indonesia”, ADB outlook 2010, economy watch

  4. Government spending on healthcare is increasing, yet private out-of-pocket spend remains high National spending on healthcare (% based on value) National health expenditure by source of financing Private spending is mainly funded out-of-pocket % split of private healthcare expenditure Private spending Source: 1National Health Account, WHO, in IMS Prognosis 2011-2015 report | IPM; Optimize Access to Innovative Drugs | Dec 2011

  5. Less than 50% of the Indonesian population covered by health insurance Indonesian population healthcare coverage 100% = 236 million • Private Insurance • e.g. Jamsostek, In-Health, etc. • (about 9 million insured) • Fully reimbursed • Presence of Essential Drug Lists • Jamkesmas • Basic coverage scheme for the poor • (about 80 million insured) • Essential Drug Lists focusing on low-cost medicines • Very low (close to zero) originator sales • 80-90% discount to MNC prices ~ 33% ~45% insured ~55% fully out of pocket • Public Insurance (ASKES) • Civil servants and army pensioners • (about 19 million insured) • Essential Drug Lists focusing on both branded Gx and originator drugs • 20-30% discount to MNC prices Source: IMS Prognosis 2011-2015 report | IPM; Optimize Access to Innovative Drugs | Dec 2011

  6. Pharmaceutical market growth is being driven by expanding middle class Indonesia Population Pyramid Incomein USD Population2010: 236m Population2016: 249m Trend Segment Upper class >30k 9.7m (4.1%) 17.2m (6.9%) • Upper class continues to offer growth opportunity for pharma • 87m more people will enter the middle class; income levels mandate their opting mainly for branded Gx Middle class >10k-30k 25.5m (10.8%) 42.6m (17.1%) Emerging middle class <10k-5k 69.6m (29.5%) 129.5m (52.0%) Low & very low income groups <5k 130.7m (55.4%) 59.8m (24.0%)

  7. Pharmaceutical Market SituationTotal Market of IDR 43,081 Billions with double digit growth – USD 20/Capita High healthcare market growth Ethical vs OTC Total Healthcare Market 13.0% 7 Source: IMS ITMA MAT Q4 2011

  8. Prescription (Ethical) Market Trend10% growth in 2011, still attractive sales trend of Ethical business dominated by local players (branded and unbranded generics products) Ethical Sales Trend – MNC 13.9% MS CAGR 34% 11.5% 66% 15.2% 8 Source: IMS ITMA MAT Q4 2011

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  10. Top 10 Ethical Pharma Companies - 20117 out of Top 10 companies are local players – MNC’s growth less than local Total Ethical Market 2011 Sales (Bio IDR) RANK Total Ethical Market: IDR 25,046 Bio 10.0% 100.00% 10 Source: IMS Ethical data Q4/2011

  11. What are the growth drivers?Volume increased drive ethical market growth 11 Source: IMS ITMA MAT Q4 2011

  12. Therapeutic Class DevelopmentBlood, Alimentary, CVS and Respiratory products are the top drivers of prescription market in Indonesia Bubble: Market Share Respiratory Musculo Hospital Various CAGR 2007-2011 Growth 13.9% Hormones Sensory GU& Sex Hormones A.Infectives CNS Derma Parasit 9.9% 2011 Market Growth 12 Source: IMS ITMA MAT Q4 2011

  13. Indonesia Healthcare Transformation 13

  14. Indonesia Healthcare TransformationUniversal Healthcare Coverage in 2014 • Indonesia Minister of Health has already set a target to start covering all people’s health costs as early as 2014. • Law No. 40/2004 on National Social Security System (SJSN) • Law No. 36/2011 on Social Security Implementation – BPJS I (Health Insurance) • ASKES +JAMKESMAS merge • 5 Committees are now working to set the Insurance System 14

  15. Summary 15

  16. Thank You 16

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