Indonesia Active Pharmaceutical Ingredient Market

Indonesia Active Pharmaceutical Ingredient Market is expected to grow at a robust CAGR of 7.1% between 2025 and 2032, supported by a growing outsourcing API production and government efforts to promote local manufacturing.

Major Drivers and Emerging Trends

The active ingredients in medicinal products are responsible for delivering the desired health benefits to users where high quality ingredients are essential for ensuring that a medication is safe. Poorly produced active ingredients have been linked to harmful health effects like fatalities in several incidents. To address these concerns many countries including Indonesia have introduced regulations aimed at ensuring the safety associated with active ingredients.

Indonesia active pharmaceutical ingredient market size growth is mainly fueled by the rising reliance on external suppliers. Around 90% of the APIs in domestic drug manufacturing are imported from foreign markets mainly from India. This reliance makes it prone to some challenges like supply chain disruptions along with price fluctuations.

The government is focused on supporting the national industry which has been burdened by the reliance on imported materials which negatively affect the trade balance and Indonesian currency exchange rate. The pharmaceutical sector in Indonesia represents 27% of the entire ASEAN market with most companies focusing on medicine formulation or manufacturing. However, the country remains largely dependent on importing raw materials from abroad. Therefore, the investment in raw materials for medicine in Indonesia offers numerous promising opportunities.

Furthermore, the rising healthcare expenditure in the country could also drive its dependence on imported sources if local production is unable to meet the demand. As a result, the government has turned to foreign investment as a strategy to ramp up local production. The government took action in 2021 to strengthen the local manufacturing capabilities and encourage foreign investment in the market. In accordance with this, a policy passed in the same year permitted foreign investors to hold up to 100% of pharmaceutical enterprises which is a rise from the earlier restriction of 85%.

The growing elderly population is also driving market growth. BPS data from 2023 shows data seniors comprise nearly 12% among total population in Indonesia. With life expectancy reaching 74 years, this trend underscores advancements in healthcare access in Indonesia. Despite this progress, when hit 68 the elderly typically suffer from illness for several years before passing which further drives the demand for APIs in their medication.

Based on synthesis type, the synthetic segment dominates the market share. This surge is a result of the affordable nature of synthetic APIs that are key for cost conscious markets and foster their widespread implementation. Additionally, ongoing R&D efforts advanced synthetic methods using green chemistry which ensures alignment with international environmental regulations and drives growth in the sector. The biotech sector is seeing the most rapid growth due to the rising incidence of chronic diseases along with an aging demographic and the increasing preference for outsourcing API manufacturing. The segment growth is also supported by the use of biologics in disease treatment coupled with evolving regulatory measures and the end of patents for important drugs.

Based on manufacturer type, the captive API sector is experiencing notable growth due to advancements in technology and improved manufacturing capabilities. There is also the growing requirement to satisfy the rising need for bulk API production. The segment is also growing rapidly supported by significant investments from key industry players thereby accelerating producers’ growth.

Based on type, the innovative API segment is seeing rapid growth supported by higher investments and regulatory incentives for R&D which leads to a pipeline filled with numerous groundbreaking products. Consequently, various innovative APIs are anticipated to be introduced in the coming years.

Based on drug type the market can be segmented into OTC and prescription. OTC medications are readily available in pharmacies or supermarkets and can be purchased without a prescription from a doctor. OTC medications are used by different people to manage various health or medical concerns. Prescription drugs are authorized by a doctor tailored for a specific person to treat a particular condition. These drugs are usually potent and not meant for casual use by just anyone which is why they need to be prescribed by a doctor.

Based on application outlook, the cardiovascular diseases category is growing quickly driven by the rising occurrence of the illness among younger demographic coupled with the increasing aging population. Additionally, factors like hypertension and smoking habits are key contributors in driving the segment growth.

Top Market Players

Several leading players in the market include PT Dexa Medica, PT Kimia Farma Tbk , PT Phapros Tbk, PT Bio Farma, PT Meiji Indonesian Pharmaceutical Industries, PT Mahakam Beta Farma, PT Soho Global Health, PT Bernofarm, PT Mersifarma TM, PT Indofarma Tbk, PT Kalbe Farma Tbk, among others. The API market in Indonesia is fragmented which features various companies from different sectors. Numerous companies are shifting their focus toward API development attracted by the market’s potential. Increased investment in research is further anticipated to drive future growth in the API market. Strategic approaches including collaborations and acquisitions are commonly employed to increase market share and broaden their product range.

Key Developments

• • In 2024, Citi Pharma formed a strategic collaboration with Mersi Farma to develop advanced API manufacturing capabilities and improve access to nutraceutical products across Indonesia. The MoU formalizing the partnership focuses on increasing API production independence and reinforcing the healthcare infrastructure in the country.
  • In 2024, Novo Nordisk finalized an agreement with Bio Farma to carry out insulin packaging in Indonesia. The partnership will see Novo Nordisk applying its insulin production expertise while Bio Farma will deliver the necessary local infrastructure for manufacturing.

Segments covered in the Report:

The Indonesia Active Pharmaceutical Ingredient Market has been segmented on the basis of Type of Synthesis, Type of Manufacturer, Type, and Type of Drug. Based on Type of Synthesis, the market is segmented into Biotech and Synthetic. Based on Type of Manufacturer, the market is segmented into Captive APIs and Merchant APIs. Based on Type, the market is segmented into Generic APIs and Innovative APIs. Based on Type of Drug, the market is segmented into Prescription and OTC.

Market Segmentation

Indonesia Active Pharmaceutical Ingredient Market by Type of Synthesis

• • Biotech
  • Synthetic

Indonesia Active Pharmaceutical Ingredient Market by Type of Manufacturer

• • Captive APIs
  • Merchant APIs

Indonesia Active Pharmaceutical Ingredient Market by Type

• • Generic APIs
  • Innovative APIs

Indonesia Active Pharmaceutical Ingredient Market by Type of Drug

• • Prescription
  • OTC

Indonesia Active Pharmaceutical Ingredient Market Leading players

• • PT Dexa Medica
  • PT Kimia Farma Tbk
  • PT Phapros Tbk
  • PT Bio Farma
  • PT Meiji Indonesian Pharmaceutical Industries
  • PT Mahakam Beta Farma
  • PT Soho Global Health
  • PT Bernofarm
  • PT Mersifarma TM
  • PT Indofarma Tbk
  • PT Kalbe Farma Tbk