Commercialisation of healthcare in Indonesia: overview

A Q&A guide to the commercialisation of healthcare in Indonesia.

This Q&A provides an overview of the regulatory framework for the commercialisation of medical products in Indonesia. It covers the key requirements for manufacturing, advertising and selling drugs, medical devices, biological products and natural health products.

To compare answers across multiple jurisdictions, visit the commercialisation of healthcare Country Q&A tool.

This Q&A is part of the Commercialisation of Healthcare Global Guide. For a full list of jurisdictional Q&As visit www.practicallaw.com/healthcare-guide.

Eri Raffaera Budiarti and Muhammad Iqsan Sirie, Assegaf Hamzah & Partners
Contents

Regulatory overview

1. What is the regulatory framework for medical products?

Legislation

Law No. 36 of 2009 on Health (Health Law) is the main law in Indonesia covering healthcare and medical products.

Regulatory authorities

The Ministry of Health (MOH) is the main regulatory body overseeing activities related to healthcare and medical products. The MOH is also the main supervisory body, carrying out this function through the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM).

For more information on the MOH and BPOM see The regulatory authorities.

Private parties

The role of private parties in regulating medical products is limited. Private parties can participate to the development of laws and regulations by organising general hearings (rapat dengan pendapat umum), seminars and public discussions. Any draft laws or regulations must be easily available to the public so that private parties can submit their comments or input.

 
2. What types of medical products are regulated?

Under the Health Law, medical products are recognised as either pharmaceutical supplies (sediaan farmasi) or health equipment (alat kesehatan).

Pharmaceutical supplies include:

  • Medicines.

  • Medicinal substances.

  • Traditional medicines.

  • Cosmetics.

Health equipment includes:

  • Instruments.

  • Apparatus.

  • Machines.

  • Implants.

Health equipment must not contain any medicines and must be used to:

  • Prevent, diagnose, cure or ameliorate diseases.

  • Take care of sick persons.

  • Restore the health of human beings.

  • Establish structures and improve bodily functions.

 

Drugs

3. What are the general requirements for a drug to be manufactured, advertised and sold?

Manufacturing

Any medicines intended for distribution in Indonesia must be registered with the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM) which will then issue a distribution licence (izin edar) within one to one and a half year from the date of receipt of the application. The following are exempt from registration requirement:

  • Medicines used for special purposes as requested by physicians.

  • Donated medicines.

  • Medicines for clinical sampling.

  • Sample medicines.

To manufacture medicines and/or medicinal substances, a pharmaceuticals producer must secure an industrial licence (izin industri farmasi). The licence is supplied by the Director General of Pharmaceuticals and Medical Equipment (DGPM) at the Ministry of Health.

To obtain an industrial licence, a company must submit an application for BPOM approval of its development master plan (rencana induk pembangunan) (DMP). Once the DMP approval has been secured, which by regulations takes 14 business days from the date of receipt of the application, the applicant may then submit an application for an interim licence (izin prinsip) from the DGPM. If the application is approved by the DGPM, which must not take more than 14 business days from the date of receipt of the application, the interim licence will be valid for three years and extendable for a further year.

The interim licence allows the pharmaceuticals company to undertake preparatory work before commencing production. Once the preparations have been completed, the company can then submit the application for an industrial licence to the DGPM. If the application is approved, the industrial licence will be valid for as long as the holder continues to produce medicines or medicinal substances.

In the private sector, an industrial licence will only be granted to an entity that is incorporated as a limited liability company (perseroan terbatas).

Under the recent Negative Investments List (which is incorporated in Presidential Regulation 39/2014), it is only possible to have 85% foreign investment in any medicine production business.

Advertising

Advertising medicines (except prescription medicines) through audio, visual or electronic media is allowed, but the content must be approved by BPOM. Only a distribution licence holder can apply for approval.

To obtain the relevant approval, a distribution licence holder must file the appropriate application and supporting documents to BPOM, which will issue the approval within 60 business days from receipt of all the required documents.

Sale

The following can sell medicines:

  • Pharmaceutical producers.

  • Pharmaceutical wholesalers (also known as large pharmaceutical distributors (pedagang besar farmasi)).

  • Pharmacies.

  • Hospital pharmacies.

  • Clinics.

  • Drug stores.

  • Community health centres (puskesmas).

Pharmaceutical producers and pharmaceutical wholesalers cannot sell medicines directly to consumers.

Pharmaceutical wholesalers must have a licence from the DGPM in order to sell medicines. Licences are valid for five years and can be extended as long as the requirements are fulfilled. Only a limited liability company or co-operative can apply for a licence.

The Negative Investments List places restrictions on foreign investment in businesses that distribute medicines. Therefore, only a wholly locally-owned company can sell medicines in Indonesia. The exception to this is where the distribution is carried out by a pharmaceutical production company, which may be partially owned by foreign investors.

 
4. Are there different requirements for patented and generic drugs?

The rules on manufacturing, advertising and sale of medicines are the same for both generic and patented drugs.

 
5. What authority is responsible for regulating the manufacture, advertising and sale of drugs?

The main authorities responsible for regulating the manufacture, advertising and sale of drugs are the:

  • Ministry of Health.

  • Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM).

For more information on the Ministry of Health and BPOM see The regulatory authorities.

 
6. Are there fewer or different requirements for drugs that have already been licensed/approved in another jurisdiction?

The requirements for medicines that have already been licensed/approved in other jurisdictions are not different. Such medicines must still be registered with and have a distribution licence from the Food and Medicine Supervisory Board (BPOM).

 
7. Is it possible to sell drugs to or buy drugs from other jurisdictions?

Import and export of medicines is permitted under Indonesian law, provided that the importing or exporting entity has the following licences/documents:

  • An importer and/or exporter licence in accordance with the relevant laws and regulations, and a licence from the Ministry of Health (MOH) to import medicines.

  • A declaration from the authorised agency in the country of origin (the MOH in the case of Indonesia) stating that the medicines have passed a quality, safety and benefit inspection.

  • A distribution licence where the medicines are imported and intended for distribution.

 
8. Is it permitted to advertise drugs to consumers? Are there restrictions on advertising?

Advertising medicines is permitted provided that the content of the advertisements has been approved by the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM) (see Question 3). However, advertisements must provide objective, complete and correct information. Medicines that require a doctor's prescription can only be advertised in printed scientific media aimed at doctors or pharmacists. A Code of Advertising Ethics (Etika Pariwara Indonesia) applies to all advertisements. The Code is issued by the Indonesian Advertising Council (Dewan Periklanan Indonesia).

 

Medical devices

9. What are the general requirements for a medical device to be manufactured, advertised and sold?

Manufacturing

Similar to the distribution of medicines, any health equipment that is imported into and used/distributed in Indonesia must be registered in order to obtain a distribution licence. Unlike the distribution licence for medicines, the licence for health equipment is issued by the Director General of Pharmaceuticals and Medical Equipment (DGPM) at the Ministry of Health. Medical equipment that is urgently needed for particular reasons or which is produced by a traditional health equipment manufacturer is exempt from the registration requirement.

Health equipment is classified into four categories based on the risks posed by such equipment. The categories are as follows:

  • Class I: health equipment which, if it fails or is misused, will not have a significant effect.

  • Class II: health equipment which, if it fails or is misused, may give rise to significant consequences for the patient but will not cause a serious accident.

  • Class II: health equipment which, if it fails or is misused, may give rise to serious consequences for the patient but will not cause a serious accident.

  • Class III: health equipment which, if it fails or is misused, may give rise to serious consequences for the patient or the healthcare professional/health equipment operator.

Any company that manufactures health equipment must first obtain a health equipment production certificate (production certificate) from the DGPM.

There are three classes of production certificates:

  • Class A certificates are provided to manufacturers that apply good health equipment manufacturing practices (cara pembuatan alat kesehatan yang baik) (CPAB) and are therefore permitted to produce Class I, Class II a, Class II b and Class III health equipment.

  • Class B certificates are provided to manufacturers that are eligible to produce Class I, Class II a and Class II b health equipment in accordance with the CPAB.

  • Class C certificates are provided to manufacturers that are eligible to produce Class I and certain Class II a health equipment in accordance with the CPAB.

To obtain a production certificate, a company must submit a written application to the Ministry of Health (MOH) through the local provincial health agency. Within 12 working days from receiving the application, the provincial health agency is required to co-ordinate with the regency or municipal health agency to establish a joint inspection team to carry out an on-site inspection. The inspection must be conducted within 12 working days from the date of receipt of the application and a joint inspection report must be provided. If the inspection is not carried out in time, the company may prepare a written statement that it is ready to commence operations. This must be sent to the DGPM with copies provided to the provincial health agency and regency/municipal health agency.

If the requirements are fulfilled, the provincial health agency will prepare a letter of recommendation to the DGPM within six working days of receiving the joint inspection team report. The DGPM will then issue the health equipment production certificate within 30 working days. The certificate is valid for five years and can be extended if the applicable provisions are complied with.

Advertising

Advertisements for health equipment must provide objective, complete and correct information. A Code of Advertising Ethics (etika pariwara Indonesia) applies to all advertisements. The Code is issued by the Indonesian Advertising Council (dewan periklanan Indonesia).

Sale

Health equipment can be sold by:

  • Health equipment producers.

  • Pharmaceutical wholesalers.

  • Health equipment distributors (penyalur alat kesehatan).

  • Health equipment stores.

Health equipment producers, pharmaceutical wholesalers and health equipment distributors must obtain a licence from the DGPM in order to sell such equipment.

Unlike the distribution of medicines, it is possible to have foreign investment in a health equipment distribution company up to a maximum of 33%.

 
10. What authority is responsible for regulating the manufacture, advertising and sale of medical devices?

The main authorities responsible for regulating the manufacture, advertising and sale of drugs are the Ministry of Health, specifically the Director General of Pharmaceuticals and Medical Equipment (DGPM).

For more information on the Ministry of Health see The regulatory authorities.

 
11. Are there fewer or different requirements for medical devices that have already been licensed/approved in another jurisdiction?

The requirements for health equipment that have already been licensed/approved in other jurisdictions are not different. Such equipment must still be registered with and have a distribution licence from the Director General of Pharmaceuticals and Medical Equipment (DGPM) at the Ministry of Health.

 
12. Is it possible to sell devices to or buy devices from other jurisdictions?

The legal requirements for importing and exporting health equipment are as for medicines (see Question 7).

 
13. Is it permitted to advertise medical devices to consumers? Are there restrictions on advertising?

The position is the same as for medicines (see Question 8).

 

Biological products

14. What are the general requirements for a biological product to be manufactured, advertised and sold?

Under Indonesian law, the definition of medicines includes biological products. Therefore, the legal requirements for the manufacturing, advertising and sale of biological products are the same as those for medicines.

Manufacturing

See Question 3.

Advertising

See Question 3.

Sale

See Question 3.

 
15. What authority is responsible for regulating the manufacture, advertising and sale of biological products?
 
16. Are there fewer or different requirements for biological products that have already been licensed/approved in another jurisdiction?
 
17. Is it possible to sell biological products to or buy biological devices from other jurisdictions?
 
18. Is it permitted to advertise biological products to consumers? Are there restrictions on advertising?
 

Natural health products

19. Is there a category for natural health products (including, for example, traditional medicines, homeopathic medicines, supplements, vitamins and minerals)?

The Health Law recognises traditional medicines.

 
20. What are the general requirements for natural health products to be manufactured, advertised and sold?

Manufacturing

Traditional medicines to be distributed in Indonesia must be registered with the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM) and be issued a distribution licence.

A manufacturer of traditional medicines must obtain a traditional medicine producer licence (izin obat tradisional) from the BPOM. Applicants (either a limited liability company or co-operative) for traditional medicine producer licences must first apply for an interim licence.

The interim licence for traditional medicines is valid for three years. Before an applicant can apply for the traditional medicine producer licence, any preparatory work for starting production of the traditional medicines must be completed.

Foreign companies are not allowed to invest in businesses that produce traditional medicines.

Advertising

See Question 3.

Sale

The right to sell traditional medicines is attached to the traditional medicine producer licence. If a traditional medicine producer holds the licence, it is also authorised to sell traditional medicines to third parties, including end customers.

 
21. What authority is responsible for regulating the manufacture, advertising and sale of natural health products?

The Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM) is responsible for regulating the manufacture, advertising and sale of natural health products.

For more information on the BPOM see The regulatory authorities.

 
22. Are there fewer or different requirements for natural health products that have already been licensed/approved in another jurisdiction?

Traditional medicines that have already been licensed and approved in other jurisdictions must still be registered with and have a distribution licence from the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM).

 
23. Is it possible to sell natural health products to or buy natural health products from other jurisdictions and/or electronically?

The legal requirements for the import and export of traditional medicines are the same as for medicines (see Question 7).

 
24. Is it permitted to advertise natural health products to consumers? Are there restrictions on advertising?

The position is the same as for medicines (see Question 8).

 

Reform

25. Are there any plans to reform the rules on the development, manufacture, advertising and sale of medical products?

The legislative body of Indonesia (Dewan Perwakilan Rakyat) has proposed two new laws relating to:

  • Pharmaceutical practice.

  • The supervision of food and medicines.

Both new laws may contain provisions on healthcare and medical products. It is hoped that the legislation will be passed before 2019 but these two proposed laws are not part of the priority list of 37 that will definitely be enacted before that date.

 

The regulatory authorities

Ministry of Health (Kementerian Kesehatan Republic Indonesia) (MOH)

W www.depkes.go.id/index.php

Principal responsibilities. The MOH formulates national policy and implements technical policy in the field of health. It is also in charge of issuing licences to the healthcare industry.

Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM)

W www.pom.go.id/new

Principal responsibilities. BPOM implements specific policies and supervises the food and drug industry.



Online resources

Legal information for businesses and lawyers

W www.hukumonline.com

Description. This website is maintained by PT Justika Siar Publika, a private company not affiliated to the government. It is the only website in Indonesia providing an organised and systematic collection of laws, regulations and court cases. The website provides English translations for some laws and regulations, and is generally up-to-date.



Contributor profiles

Eri Raffaera Budiarti, Partner

Assegaf Hamzah & Partners

T +62 21 2555 7811
F +62 21 2555 7899
E eri.budiarti@ahp.co.id
W www.ahp.co.id

Professional qualifications. Indonesia, Advocate

Areas of practice. General corporate and M&A.

Muhammad Iqsan Sirie, Associate

Assegaf Hamzah & Partners

T +62 21 2555 7805
F +62 21 2555 7899
E iqsan.sirie@ahp.co.id
W www.ahp.co.id

Professional qualifications. Indonesia, Advocate

Areas of practice. General corporate and M&A.


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