Newsmaker Interview: Benoît Martineau

Sanofi Indonesia head on pharma and life sciences and building the industry in Indonesia

By Mary R. Silaban and Gilang Ardana
Tuesday, February 14, 2017

Sanofi Indonesia, part of the global life sciences group, is a leading pharmaceutical company with a strong presence in the vaccine, consumer healthcare and prescription markets. Sanofi is deepening its business through joining the Indonesian government’s social security program (JKN)and exporting pharma products to other Association of Southeast Asian Nations (ASEAN) markets from its manufacturing site located in Jakarta.

In Indonesia, with business dynamics changing due to new laws and regulations, such as the patent and halal laws, pharma companies are facing continuing challenges to the way they operate.

AmCham Indonesia recently sat down with Sanofi Indonesia Country Chair Benoît Martineau to discuss further the company’s views on the Indonesia pharma industry, the regulatory hurdles and how Indonesia can further develop the sector.

AmCham Indonesia: What is Sanofi’s core business and competency?

Benoît Martineau: Sanofi is basically a human healthcare company, one of the largest in the world. Our headquarters are in France but we are listed in the European and New York stock exchanges. We are one of the companies that offers the widest range of health solutions and treatment, moving from prevention up to treatment and personalized healthcare. We’ve been present in Indonesia for more than 60 years, being one of the leading international companies in healthcare in this market. 

Our core competency covers basically three main segments. The first is prescription medicine, mostly focusing on diabetes, cardiovascular and Thrombosis. We are also trying to approach rare diseases such as Mucopolysaccharidoses (MPS), which is a metabolic disorder, caused by the absence or malfunctioning of enzymes. Our second competence is vaccines - we are the leading company in vaccines with a wide range of vaccines, from pediatric to flu. We also just recently launched a dengue vaccine. The last one is consumer health care, and for this we were quite small last year, but now we are becoming a more predominant player thanks to the swap of assets we did with German company Boehringer Ingelheim. We swapped their consumer healthcare business with our animal health business.

In Indonesia we have more than 800 direct employees. We also work with the government in its Social Security Program [JKN] scheme and we have our production site here, which produces for the local market, but also for exports to Australia, and to ASEAN countries. In Indonesia our production site produces solid and semi-solid pharma products, from prescription medicine to consumer healthcare.

How has the Indonesian market been evolving? How do you see the current market given the fact there are several regulations that might pose challenges to the pharma industry?

Being the largest pharma market in ASEAN, Indonesia has been reshaping itself in the past couple of years due to the implementation of JKN. Previously we only had a scheme for public servants with ASKES. JKN obviously increased the size of the public market, which is very positive for the population as the intent of giving wider access to healthcare makes sense and it is something that we have to support.

However, there are some questions that still need to be addressed, ranging from the funding scheme of the program to more critical challenges such as availability of infrastructure and healthcare professionals. The number of hospitals as well as the number of doctors in Indonesia is one of the lowest in Asia. This bottleneck is not going to be resolved as fast as the bottleneck in funding. Training doctors takes time - roughly 10 years. If you want to benchmark with other countries, Indonesia, with 250 million people has roughly 100,000 doctors. But if you take a country like China, which has four to five times the population, the number of doctors in China is around 1.2 million – 10 times more than Indonesia. So it is not only an issue about improving access, but also to ensure the proper handling of patients.

As a company that participates in JKN, what are the main challenges for multinational pharma companies in getting their products into the e-catalog?

The main concern is the process of renewal of the catalog, which should be done on a yearly basis, but always gets delayed. For this year, for example, the new contract should have been put in place by January 1, but we have been asked by the Ministry of Health to extend it until April 2017 to ensure the availability of treatments in hospitals, and also because they are not yet ready for new bidding and negotiations. 

I think this is something to be solved, as of today the process is quite transparent but the rules of the game and the implementation have to be improved. The scheme is also quite challenging, as this is basically not really a tender. There is no commitment from the government in terms of volume, so it is difficult for us as a pharma company to define a strong procurement strategy, especially when you have uncertainty in the time of the tender as well. For instance, the current tender is 12 months but the next tender will be most probably eight months. We have also a tender for 12 months but for some products it is extended to 17 months. So it is challenging for us to properly operate, to put in place a strategy that makes sense for the country.

Do you think yearly contract renewal is sufficient for pharma companies?

The government chose yearly renewal because it wants to be able to update and renegotiate the price of medicine on a yearly basis. Most MNCs [multinational companies] or even local companies would rather advocate for two years’ listing to give us more visibility and sound production planning.  However, as of today, most of the time the timeline is not being respected. We are sometimes being asked to extend our contract from last year’s bidding. It is not the best position for us to propose the best that we can provide to the scheme.

What are your thoughts on the Halal and Patent laws?

Indonesia is a country which is majority Muslim, so obviously the issue of Halal products is valid to be raised by the population. On top of that, there is already a law about it so, as an MNC operating in the country, we need to respect it. However, the implementation of the Halal Law for pharma products is not an easy game. Currently there is no single country in the world with a compulsory Halal law for pharma products, so Indonesia is potentially the first one to do so. Pharma products take a long time to develop and a long time to produce. If there is to be a change in the process of manufacturing, it will take years because we need to test and verify the process and the product for around two to three years to make sure the end product is stable. It means that we need to physically leave the product for two to three years and check after that time if it is valid. That is why we need to be very careful in implementing Halal in our sector so that it does not create a risk of unavailability of products and treatment in the country.

On the Patent Law, this is also raising a lot of questions. There are various aspects of the law that need to be further discussed with the government. Sanofi is in the position of supporting the implementing regulations so there won’t be any negative side effects. For instance, on the compulsory licensing provision, it has been tried in many markets and turns out to have negative impacts. As an MNC, we have no intent to block access to innovative treatment for Indonesians. In fact, we are often trying to discuss with the government on how we can accelerate access to innovative treatment and accelerate the registration process of new chemical entities. So in general, we don’t have a negative position to the law, but I think we still need to have more discussions with the government.

For example, the parallel importation provision in the law was something I experienced when I was working in Cambodia. In Cambodia, when the product is registered by a company, any other company can also import it provided it is exactly the same product. The intent behind it is to ensure access to the treatment so there will be no company that can block access. However, in Cambodia, it became a concern as we had less control of the supply chain of products. Having strong control of the supply chain of the product is key to limiting the risk of counterfeit products. We understand the intent of the Indonesian government, but we think there is a need for further dialogue to ensure that what is going to be implemented is going to serve the intent and not backfire. 

How do you think the government can work to improve the life sciences and pharma industry in Indonesia?

The first one is stability. The life science industry requires stability in order to be able to build and implement strategy. Having longer-term visibility and stability in the rules and regulations will build confidence for MNCs to bring long-term investment to Indonesia. As of today, in the view of MNCs, instability in rules and regulations is still a negative point when benchmarking Indonesia to neighboring markets. The stability is not only for the law, but also stability for the system for a certain period of time in order to accelerate the development of healthcare in this country. 

The second is linked to market access. Indonesia is the only market in ASEAN that is dominated by local players; in other ASEAN markets the size of local players is smaller. It does make sense for the government to have a strong local healthcare industry because that's part of the primary need of the population, however fair market access needs to also be part of the country’s commitment as it also gives fair access to all innovative treatments for patients.

The third is about maintaining dialogue in the preparation of the implementation of new laws. This has improved in the last few years. We have a better dialogue with the government and different ministers in the preparation of the implementation of a new law. Having the dialogue is important to avoid making mistakes that could have the opposite impact from the main objective of the government. 

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