Indonesia's universal health care program aims to provide health insurance to all Indonesians (which means covering more than 255 million people) by January 2019. This is an ambitious target and thus is accompanied by pressures on the government's state budget.

Currently, 167.7 million Indonesians participate in the JKN program, or slightly over 65 percent of the Indonesian population. Although the program is plagued by budget pressures as well as infrastructure obstacles (access to hospitals and medical centers is limited, especially in the more remote areas of the country), it should boost demand for medicines and therefore the whole pharmaceutical industry of Indonesia should get a boost.

However, Simanjuntak reminded that, after showing double-digit growth in recent years, the country's pharmaceutical industry has currently lost some of its shine. The JKN program cannot push sales much higher because the program particularly boosts demand for the much cheaper generic drugs. Contrary to ethical drugs (prescription medication), generic drugs have a much lower profit margin (the profit margin of ethical drugs is around 60 percent, while the profit margin of generic drugs is only about 20 percent).

This also causes a problem for the pharmaceutical industry, specifically foreign investors in Indonesia's pharmaceutical industry. These foreigners have always been focused on the manufacturing of ethical drugs for the private market. However, the public JKN program particularly boosts demand for generic medicines that are mostly produced by locally-owned pharmaceutical companies. Simanjuntak therefore hopes that foreign pharmaceutical manufacturers will also be included in the government's JKN program.

Recently, research conducted by the American Chamber of Commerce in Indonesia (AmCham Indonesia) concluded that Indonesia's pharmaceutical market will grow 9.3 percent (y/y) to IDR 85.6 trillion (approx. USD $6.3 billion) in 2016, from IDR 77.6 trillion in 2015. The industry can not post double-digit growth like it was in recent years due to several challenges that occurred in 2015, including the weak rupiah and economic slowdown. However, after 2016, double-digit growth may reappear. Therefore, AmCham still sees lucrative opportunities for investors in this industry for the years to come.

Meanwhile, Indonesia's Healthcare and Social Security Agency (Badan Penyelenggara Jaminan Sosial, or BPJS Kesehatan), which runs the JKN program, detected a mismatch between claims paid and premiums received through the program. This has led to concern about the financial sustainability of the program. It will therefore require innovative solutions or more government support to make the program a success.

The expanding middle class of Indonesia also boosts demand in Indonesia's pharmaceutical industry as the unhealthy lifestyles causes diseases. 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.