In-Depth Analysis Of The Covid-19 Impact On Indonesia Pharmacy Retail Market
The global outbreak of the Covid-19 virus has led to massive disruptions in all industries, majorly due to supply chain disruptions. The looming public health crisis has claimed over 17,479 thousand lives in Indonesia as of 4th December 2020 and apart from that, it continues to pose a threat to the lives, livelihoods, and businesses across the world.
Indonesia has been severely affected by the COVID-19 crisis. The lack of a centralized and adequate government response has led to uncoordinated responses, including a lockdown on Jakarta and business-as-usual in various sectors. August 2020 report from the Central Statistics Agency (BPS) stated that Indonesia’s economic growth in the second quarter of 2020 was -5.32%. Previously, in the first quarter of 2020, BPS reported that Indonesia’s economic growth only grew by 2.97%, down considerably from the growth of 5.02% in the same period in 2019. The healthcare capacity constraints have been an issue in Indonesia, even before the start of COVID. According to the Ministry of Health, Indonesia currently has only about 321,544 hospital beds to serve a population of about 270 million people as of January 2020. This accounts to about 1.2 hospital beds per 1,000 populations.
Effect on Drug Demand in the First Half of 2020: The imposed lockdown in the country and the social distancing norms have severely impacted the pharmaceutical demands in the country. Companies that had the widest product portfolios, and were not dependent on a few medication items (particularly prescribed medications) were stronger in withstanding the market shock brought about by the pandemic. The companies that were built on a single product line were impacted as during the pandemic the number of patients visiting hospitals for treatment for acute or chronic conditions slowly decreased. Pharmaceutical companies saw declines in demand for drugs during the Covid-19 pandemic as people avoided visiting medical facilities. ‘Kalbe Farma” a premier drug maker in Indonesia saw a 4.2% decrease in the sale of prescription medicines for the year ended June 30 2020. The production capacity of various pharmaceutical companies was as low as 50% due to a drop in demand during Q2-20. Due to COVID-19 restrictions in the country, the annual growth rate of the chemical, pharmaceutical and traditional medicine industry was just 5.59% in the first 3 months of 2020, down from the 11.53% annual growth recorded in the same period in 2019.
Effect on Online Retail Demand in the First Half of 2020: Stay-at-home orders amidst the pandemic increased the sales of telemedicine and Online Drug Retail companies. ‘Halodoc’, a telemedicine startup in Indonesia saw a 35% increase in basket size for pharma orders between weeks 8-13 of a pandemic. Another telemedicine platform provider in Indonesia Alodokter reported a skyrocketing uptake in the demand for the apps and related services. The growth of online retailing has helped in bridging the gap between the pharmacies and customers, especially during the pandemic. Growing internet penetration coupled with an improving logistic landscape has complemented the growth in sales of the pharmacy retail market via their e-stores.
Temporary & Long Term Shifts in the Business Practices: The demand for prescribed drugs including both generic and patented is expected to remain low throughout 2020 due to the reduced number of trips to hospitals and pharmacies. The demand for OTC drugs is however expected to recover in the second half of the year with increased activity in e-commerce and logistics sectors and to support commercial supply chains with relaxations in mobility restrictions coupled with increasing self-medication behavior in the country. The increasing health awareness among the citizens in the country along with government efforts to reduce the prices of medicines is expected to drive the demand for OTC drugs, especially the non branded generics. The ease in the lockdown is expected to increase the footfall for the pharmacy stores and increase average revenue per pharmacy in the coming future.
The industry is expected to witness a steady recovery from 2021 onwards and the sales volume reaching pre-COVID levels in the next few years. In the longer run, pharmacy chains are expected to shift towards online sales channels including e-commerce platforms, online marketplaces, and investing in an official online store, particularly for OTC drugs, which might account for the majority of the retail sales volume in the future. As a result of the Covid-19 pandemic, online buying is expected to dominate the buying preferences of consumers in the future. Strategic partnerships with independent & franchisee pharmacy store owners, and as well other stakeholders in the industry are expected to lead the industry to recover and boost drug sales volume in the future. This would be coupled with a focus on generic medicines, the introduction of new and innovative OTC products, and continued investment in marketing and promotion to drive the sales revenue. Basis all these factors, the Indonesia Pharmacy Retail Market is expected to grow at a CAGR of 1.5% on the basis of sales revenue during the forecast period 2019-2025.
Key Segments Covered: –
By Market Structure (Organized & Unorganized),
By Type of Product (Prescribed Drugs, Over-The-Counter, Non-Pharmaceutical Products & Medical Equipments)
Further Segmentation of Product Type based on Hospital-based and Street/Mall Based Pharmacies
By Region (West Java, East Java, Central Java, Jakarta, North Sumatra & Others)
By Type of Drugs (Patented & Generics)
By Therapeutic Areas (Anti-Infective, Cardiovascular, Pain/Analgesics, Vitamins/Minerals /Nutrients, Antibiotic, Respiratory, Gastro-Intestinal, Gynecology, Neuro & Others)
Companies Covered: –
Kimia Farma Apotek
Key Target Audience
Health Supplements and OTC Products Manufacturers
3PL Logistic Players
Government Organization catering to the Pharmaceutical Industry
Offline Pharmacy Players
Time Period Captured in the Report:-
Historical Period – 2014-2019
Forecast Period – 2020-2025
Key Topics Covered in the Report: –
Healthcare Overview of Indonesia
Trends and Growth Drivers in the Industry and Challenges Faced
Contraceptive Usage and Trends in Indonesia
Indonesia Pharmacy Retail Size and Segmentations, 2014 – 2019
Ecosystem and Value Chain of Pharmacy Retail Industry in Indonesia
Industry SWOT Analysis and BCG Matrix
Customer Decision Making Parameters
Cross Comparison between Major Players and Company Profiles & Product Portfolios
Future Market Size and Segmentations, 2019-2025F