CHAPTER I: INTRODUCTION
In 2030, estimated total population in Indonesia will be 270 million. From the total population there will be estimate 25% suffer from several degenerative diseases and impacted to the productivity and economic sector of Indonesia. The expanding middle class of Indonesia also boosts demand in Indonesia’s pharmaceutical industry as the lack awareness of healthy lifestyles lead to catastrophic diseases such as cancer, cardiovascular and metabolic disease. Earlier, the World Health Organization (WHO) predicted that diseases that are caused by unhealthy lifestyles will account for 87 percent of all deaths in Indonesia by the year 2030. To resolve the issues, the government formed Badan Penyelenggara Jaminan Sosial Nasional (known as BPJS) start in 2001with the National Social Security Working Group and established the regulation for Sistem Jaminan Sosial Nasional (SJSN) since 2000 until Presiden Megawati legalized the regulation of the National Social Security System. The vision and mission of BPJS to establish sustain and good health insurance system in 2019 for all Indonesian population based on mutual cooperation.
BPJS started in 1 January 2014, and based on year to date 2017 estimated 70% of total Indonesian population or 181 million people registered as JKN-KIS (Jaminan Kesehatan Nasional-Kartu Indonesia Sehat) within less than four years.
Tabel 1. Population projection 2010-2035 (in thousand)
Table 2. Population coverage BPJS per December 2016
To provide the access to healthcare in BPJS era, the government and BPJS build and engage the health facilities nationwide. The infrastructure and resource are the main contributors for the implementation of the program. BPJS implement referral system to ensure the coverage of the population, there are 14 referral hospital under the ministry of health and more than 1,000 hospitals diagnose and treat BPJS patients. BPJS implement effective and efficient systems with web based registration and also partnership with primary healthcare to extend the capacity and simplify the infrastructure management nationwide.
Graphic 1. BPJS Healthcare facilities distribution
In JKN era, one of the concerns from the government related to significantly increase number of cancer cases treated and the mortality rate. In 2017, estimated 9 million worldwide patients with cancer died and will reach 13 million in 2030. Refer to Riskesdas 2013 data, Indonesian prevalence is 1.4 per 100 population or 347.000 people with cancer. This disease need innovative and targeted drugs to prolong the survival and improve the quality of life of the patients.
Graphic 2. Cancer estimated prevalence and mortality rate in the world
Graphic 3. WHO 2014 Cancer mortality rate in Indonesia (population 247.000)
Graphic 4. WHO 2014 Cancer Incidences in Indonesia
In 2014, there was significant growth in pharmaceutical industry after the socialization of JKN. Indonesia’s total pharmaceutical sales estimated 24% of Healthcare expenditure in 20143. Based on 2015, 25 USD per capita pharmaceutical sales in Indonesia.
Graphic 5. IPMG Ytd Sales 2014-2017
In 2015, there were significant growth 18% from multinational pharma company associated under IPMG (International Pharmaceutical Manufacturer Group). The double digit growth supported by the government program to reimburse chronic and non-chronic diseases with universal health coverage. The number of patients doubled and significantly increased after the ministry of health open the access focus on type A hospital in big cities. After two years of the implementation, the multinational pharma company start declining due to hurdles and challenges regarding infrastructures in hospital, diagnosis of the disease and limited resources while the government propose for lower scheme to the multinational pharma company to support the sustainability of the universal health coverage program in Indonesia. They are struggle with the revenues and also the uncertainty of public reimbursement in Indonesia since the Government not yet establish the open system for drugs listing and pricing negotiation.
1.2. Pharmaceutical industry profile
Healthcare business has growth significantly in the last five years. For multinational pharma company, with its unique role in developing new medicines to treat and improve the lives of patients worldwide. Recognized as research based manufactures, thus committed in researching, developing, manufacturing and marketing safe, also to provide high quality medicines.
Graphic 2. Pharmaceutical R&D spending
The role and contribution of this research based manufacturers also as catalyst for and advancement of an effective and integrated healthcare system in each respective country. Engage the government and multi-stakeholders to enhance the system and collaborate to support the resources in a continuous effort to bring the latest innovations that are safe and fulfil international standards of quality that have proven through extensive certified clinical trials also state of the art manufacturing facilities.
In providing full access to innovative medicines, the manufactures also respect and comply with the prevailing local laws and regulations in line with the highest ethical marketing codes.
1.2.1. Scope of Business field
To invest in Research and development of new medicines, it would analyze first the chemical and biological compound thus potentially for treating new or existing conditions. In 2015, there were 56 new medicines were launched and recently more than 7000 compounds develop globally
Graphic 3. Medicines in development (Selected categories)
In worldwide, there were significantly decreased death rates for HIV/AIDS, cancer, polios and measles. For example, HIV/AIDS death rates declined from 10.2 deaths in 1990 to 2.0 deaths in 2014 (per 100.000 people) in United States. Today, metabolic disease could be treated with oral therapy. The existing cancer treatments could cut half annual death rates nowadays.
In Indonesia, research based manufacturers have introduced more than 900 products to treat several diseases such as cancers, infectious diseases, cardiovascular diseases, etc.
Based on the Ministry of Health data in 2013, there were 206 pharmaceutical companies operating in Indonesia. The national average annual growth in prescription drugs sales is estimated at 12%-13%. Currently, Indonesia’s pharmaceutical market value is estimated at USD 6.24 billion, reflecting pharmaceutical spend of USD 26 per capita per annum, with national companies controlling 75% of the market share. Ethical drugs contributed 55%, or USD 3.2 billion, to the total market, while the over-the-counter drugs made up the remaining 41%, or USD 2.2 billion.
In 2015, the country’s pharmaceutical sales-to-GDP ratio is forecasted to shrink to 0.57% despite an expected increase in pharmaceutical sales to USD 6.89 billion from USD 6.18 billion in 2014. A pharmaceutical sale per capita is estimated to go up to USD 26.9 billion in 2015 from USD 24.5 billion in 2014. The pharmaceutical sales-to-health spending ratio is predicted to drop from USD 21.4 billion in 2014 to USD 20.5 billion next year.
1.3.Business Issue Faced
The innovative market in Indonesia especially on BPJS era has been declining due to budget limitation and several issues specifically in number of patients to be covered and the program implementation nationwide such as numbers of doctors, referral systems and drug distribution. In the future, there are opportunities and threats rely on some uncertain factors for innovative manufacturers. To ensure the growth and sustain the business, the manufacturers should to have contingency and risk management by developing a scenario planning which is able to answer the following key focal issue:
What is the future of the innovative oncology manufacturers market in BPJS era in the coming 5 years? How could the manufacturers able to growth and sustain the business?
1.4. Project Objectives
Based on the background and key focal issue above, this final project developed to answer the following questions related to BPJS era in the coming 5 years:
1. What are the Key Driving Forces that influence innovative manufacturers specifically in oncology market?
2. What are the Critical Uncertainties that affect innovative manufacturers market?
3. How does the Scenario Framework of the innovative manufacturers?
4. What are the Implications and Options available for each scenario?
1.5. Project Limitations
The scenario planning will analyze external and internal data and in narrative forms as well as qualitative base on the key driving forces and critical uncertainties of innovative manufacturers specifically oncology market in BPJS era. The development of scenario is to answer all the questions in these final project objectives.
As limitation of this final project, there are some points thus need to be convey as mentioned below”
1. The time range for the scenario planning development is limited to 5 years forward i.e. until 2022. The selection of 5 years’ time frame is based on the government program (President election) and product life cycle
2. Interview session involved external and internal stakeholders. External stakeholders involved Ministry of Health, BPJS, hospitals management. Internal stakeholders involve cross functions i.e. Market Access, Marketing, Sales, and Medical team.
1.6. Research Methodology
1.6.1. Project design
Design of scenario planning in this final project is based on business issues exploration that includes internal and external analysis, strategy framework. In this approach, therios those will be used as mentioned below:
1. External analysis:
a. General environment analysis (PESTEL)
b. Industry analysis (Porter’s 5 Forces)
2. Internal analysis:
a. Resources, capabilities and competencies analysis
b. Resource based analysis
c. Value chain analysis
3. Strategy framework:
a. SWOT analysis
1.6.2. Project methodology
This final project methodology is based on desk and field research. Desk research using third party data, publication and information from the Internet and media. For field research is based on interview sessions with external and internal stakeholders.