Indonesia ranks as the 13th most attractive market for commercialising medical devices in the Asia’s Pacific region, and as the emerging market for medical devices, it is highly recommended for foreign investors to enter the market today by using a suitable agent/ distributor to help with their medical devices registration in Indonesia.
For foreign companies deciding to start marketing their medical devices in Indonesia this article will evaluate opportunities for foreign medical devices manufacturers in entering the Indonesian market that compromises regulatory requirements and recommends foreign market entry solutions.
Medical Devices Market in Indonesia
Demands for import and infrastructure in the medical device manufacturing in Indonesia are increasing rapidly and Business Monitor International (BMI) in their report “Indonesia Medical Devices Report” showed that medical device market in Indonesia, in US dollar terms, is projected to rise by a Compound Annual Growth Rate (CAGR) of 12.7%, which bring it from an estimated USD 672.8m in 2013 to USD 1, 221.9m by 2018.
The country’s projected 2013- 2018 CAGR ranks it amongst the top 15 fastest growing markets in the world. By individual product area, the CAGRs are expected to range from 20.3% for diagnostic imaging to 5.9% for other medical devices.
Despite the country’s potential and rapid growth within the market, its health sector remained severely underserved market until 2014 when the government finally launched its universal healthcare program known as The National Health Insurance/ Jaminan Kesehatan Nasional (JKN).
Alongside, the medical devices market in Indonesia is currently worth almost USD 1 billion, and almost 95% of the country’s device market is made up of imports, and that 90% of all 2013 device registrations were by foreign manufacturers. Through this, Indonesia’s medical device market has seen an annual growth rate of more than 12% with a stable growth at about 15% is expected for the next 5 years.
The chart below shows market analysis of medical products in Indonesia.
Regulations of Medical Devices in Indonesia
Any companies wish to enter medical devices market in Indonesia must follow regulations by the Ministry of Health of the Republic Indonesia, Directorate General of Pharmaceutical Services & Medical Devices, and Directorate of Medical Device Production and Distribution Development.
The primary government agency in charge of regulations for medical devices and pharmaceuticals is the National Agency of Drug and Food Control (NA-DFC). This agency is also in charge of pre-market evaluation, standardization, legislation and GMP certification.
Before we further discuss foreign companies’ entry into Indonesia’s medical devices market, let us firstly grasping the term and classification of medical devices in Indonesia.
Medical Devices Definition and Classification
As described in Article 1 and Article 3 in Regulation of the Minister of Health of the Republic of Indonesia No. 1190/MENKES/PER/VIII/2010 on Medical Devices and Household Products, medical devices are defined to be the instruments, apparatuses, machines and/or implants that do not contain drugs used to prevent, diagnose, cure and relieve diseases, treat sick people, recover health of human beings, and/or form the structure and correct the body function.
Each medical device may be used individually or in combination for human beings with one or several objectives as follows:
- Diagnosis, prevention, monitoring, treatment or reduction of diseases
- Diagnosis, monitoring, treatment, reduction or compensation of sick monitoring
- Investigation, replacement, modification, supporting the anatomy physiological process
- Support or maintain life
- Obstruct fertilization
- Disinfection of medical devices
- Provide information of medical purposes or diagnosis through the in vitro test on the specimen of human body
Medical devices are classified into (4) classes and described based on risk (in case of malfunction/ failure/ misuse) below. The examples for each class are shown as an addition.
|Classification System for Medical Device Based on AMDD (ASEAN Medical Device Directive)|
Foreign Medical Devices Registration
As the Indonesian government is welcoming foreign companies to take advantage of the huge market prospects that are at offer, you must understand the medical devices registration, approval process and regulatory compliance necessary for access to the expanding market.
At present, foreign companies are not allowed to do medical device registration without a local office or distributor in Indonesia. Therefore, the below steps show our service in helping you register your medical devices.
A presence with the purpose of creating revenues has to be set up with the status of a foreign direct investment company with limited liability.
By law, any company that is by any percentage foreign- owned is seen as a foreign direct investment company. The business fields open for foreign direct investments are regulated within the negative list of investment, which also regulates the maximum share of foreign ownership for some business fields.
In the field of medical devices, a limited liability company required to be classified under distributor, and must comply with the DNI’s foreign company requirements local ownership which allowing 67% foreign ownership with a local partner.
Emerhub provides nominee shareholder service using corporate shareholders. This has many advantages, greatest of them being that it allows you to own 67% foreign ownership and Emerhub to hold the remaining 33% of the share.
Izin Usaha (Permanent Business License)
When setting up a foreign owned company, you are basically free to choose where exactly it will set up operations. The approval for setting up a foreign owned company will be provided by the Indonesia Investment Coordinating Board (BKPM). After the approval by BKPM, Izin Usaha (Permanent Business License) can be proceed as soon as your company ready to operate.
As the application processes can be bureaucratic, Emerhub can provide you the assistance of consultants specialised in setting up foreign owned companies in Indonesia.
The requirement to obtain Izin Usaha with our service are as follows:
- Form – duly signed by Director
- Power of attorney – duly signed by Director
- Copy of Company’s NPWP (Tax ID)
- Copy of Izin Prinsip (Principal License) of BKPM
- Latest LKPM (Investment Activity Report) – duly signed by Director
- Office Rental Agreement – for at least 1 year from the date of IUT submission – if less than 1 year, Director to provide statement letter stating to extend the period of rent
- Environmental Friendly Statement – duly signed by Director
- UUG/HO (Location License) if the company address is at non commercial building
- AKTA Pendirian and all amendment
- SK Kemenkumham and all amendment
- Valid Domicile Address
- Proof of Investment – reflecting to investment plan (i.e., audited financial statement, proof of assets buying and etc as required by BKPM after reviewing application)
Izin Penyalur Alat Kesehatan/ IPAK (Medical Devices Distributor License)
There are three categories of IPAK (Medical Devices Distributor License), and medical devices that can be handled by the holder depend on these scope below.
- Medical Devices for Electromedical Radiation
- Medical Devices for Electromedical Non Radiation
- Medical Devices for Non Electromedical Sterile
- Medical Devices for Non Electromedical Non Sterile
- In vitro Diagnostic Products
Timeline and steps in processing IPAK are as follows:
|7 days||45 days, if no additional documents needed|
Audit on facilities
Early stage evaluation on required documents. If passed, government will issue invoice to pay PNBP
Evaluation and Verification of the facilities and distributions practice
The documents we need from you are also given to ensure that you are well prepared for the process.
- Application Form
- Survey report and Recommendation Letter (produced during Recommendation Stage)
- Company’s Deed of Establishment
- Ministry of Law and Human Right’s approval on the Deed of Establishment
- NPWP/Tax Card
- Izin Usaha/ Permanent Business License
- TDP/ Business Registry
- BKPM Principal License
- Disturbance License on the office building
- Map on the office’s building and location
- Building status (if renting, a minimum 2 years rental agreement is required)
- Copy KTP (National ID card) of Director
- Copy KTP of PJT (technical person in charge and should be locally domiciled)
- Copy of Diploma of the PJT (should be related to the type of the Medical Devices which will be distributed)
- Statement Letter from PJT on Full Time position in the Company
- Agreement Letter between PJT and the Company, to be legalised by the Public Notary
- Organisation structure/ chart
- Job Description on each title from the organisation chart
- List of medical devices to be distributed
- Brochure or catalogue on the medical devices (if any)
- List of equipment in the warehouse (should appropriate to store the medical devices)
- List of tools of the workshop (only for Company distributing Electromedical and or Diagnostic in Vitro product instruments)
- After sales service statement letter (only for Company distributing Electromedical and or diagnostic in Vitro product instruments)
- Technical expertise names list (only for Company distributing Electromedical and or diagnostic in Vitro product instruments)
- List of office administrative supplies
Izin Edar (Distribution of Medical Devices License)
To be able to obtain your Izin Edar (Distribution of Medical Devices License) we will first help you acquiring Izin Edar Alat Kesehatan dan Perbekalan Kesehatan Rumah Tangga/ PKRT (HHP Distributor License).
To make sure you are following the compliance, a company like Emerhub shall be in charge of technique on a full time basis. In obtaining the Izin Edar (Distribution of Medical Devices License) for example, Emerhub has the production certificate to carry out reassembling/ repackaging of imported products and has the power attorney to register your HHP.
However, before we register your HHP, we have to follow the requirement for labelling of HHP. Following the article 26 in Regulation of the Minister of Health of the Republic of Indonesia No. 1190/MENKES/PER/VIII/2010, below is the labelling information that needs to be stated on the labelling:
- Product name and/or trade name
- Name and address of manufacturer
- Name and address of distributor and/or importer
- Main components of medical devices
- Active ingredients and concentration for household product
- Intended use and instruction for use should be in Indonesian language
- Warning or adverse effect should be in Indonesian language
- Expiry date
- Batch number/production code/serial number, registration number and net quantity of product
After obtaining your HHP Distributor License, we will go to the next required procedure, which can be divided into 2 steps, as follows:
|Classification of household product||This step consists of class verification process and payment for non-tax state revenue (PNBP) which will take approximately 17 working days|
|Evaluation||The process consists of evaluation and verification of safety requirements, efficacy and quality based on our submission of your hard- copies on all required documents|
The license issued will be effective for 5 years.
The duration of the licensing process depend on the product class, as seen in the below table.
|Izin Edar (Distribution of Medical Devices License) Class Type||Classification Procedure||Evaluation Process|
|Class 1/ A||7 days||45 days|
|Class 2/ B|
|Class 3/ C|
|Class 4/ D|
|Amendment/ Extension on Class A|
|Amendment/ Extension on Class B|
|Amendment/ Extension on Class C|
|Amendment/ Extension on Class D|
*The above USD showed the exchange rate of IDR 14,000 to the US dollar
Once the Izin Edar (Distribution of Medical Devices License) is obtained it is valid for 5 years.
We have provided insights for you that can be used as a reference if you wish to enter the medical devices market in Indonesia, as well as how we can build bridges for you towards medical devices market in Indonesia.
With your investment in Indonesia’s medical devices market, Indonesia’s financing will continue to recover and the country’s healthcare for public will cover a broad range of benefits that go beyond what we think.
The medical devices industries in Indonesia are broad and complex in nature, and we have valuable know- how to offer in terms of negotiating with potential domestic clients. Talking to individual practitioners requires a different approach than business- to- business channels, as would be the case of a large private hospital.
We hope the information and our detailed services above can show you on how we can build bridges for you towards medical devices market in Indonesia.
Besides providing you full- service to your medical devices registration, here are other key benefits of using our consultation service:
- Gain insight on emerging trends that could support, strengthen or disrupt your activities in the medical devices market
- Get a full view of the competitive landscape to assess your market position
- Understand the expert analysis, independent forecasts and competitive intelligence on the medical devices industry
- Recognise the threats to your operations and investments and protect your company against future risks
Many foreigners’ initial registration dossier fails to effectively address certain regulatory concerns, and the process for registering their medical devices could be lengthened significantly.
Emerhub is a global market- entry consulting firm with over 5 years of knowledge and experience with Indonesia’s bureaucratic procedures. We serve a wide range of local, regional and multinational clients from the United States, European Union and Asia wishing to register their products in Indonesia.
By having a full understanding to clinical affairs, medical devices regulatory and regulatory intelligence in Indonesia, our mission is simply to provide you a continuous ‘bridge’ of trust and respect by providing the best legal support you need when registering or distributing your medical devices to Indonesia.
Emerhub handles medical devices registration in Indonesia, contact us via the form below or via email at [email protected] to get the process started.