Jakarta - March 6, 2012

2012 Indonesia Healthcare 2012 Indonesia Healthcare OutlookOutlook

By: Dr. Luthfi MardiansyahChairman IPMGPresident Director Novartis Indonesia

Healthcare spend is increasing While overall spend still low at 2.4% of GDP and USD 44 per capita

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

National Spending on Healthcare

% GDP spend on healthcare growing% GDP spend on healthcare

% GDP spend on healthcare growing% GDP spend on healthcare

% spend is low compared to peer countries% GDP spend on healthcare

% spend is low compared to peer countries% GDP spend on healthcare

0

2

4

6

8

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536 504

268 20972 45 44 2

0100200300400500600

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Equal HC spending per capita to the PhilippinesNational HC spend per capita in USD

Equal HC spending per capita to the PhilippinesNational HC spend per capita in USD

2 | IPM; Optimize Access to Innovative Drugs | Dec 2011

Source: Worldbank report, WHO Global Atlas, Datamonitor

0%

20%

40%

60%

80%

2008 2010 2012 2014

% G

row

th

ASEAN

Emerging/DevelopingEconomies

Source: 1Ministry of Planning (Bappenas) – Indonesia”, ADB outlook 2010, economy watch

…& per capita income is also expected to grow faster% Per Capita income growth 2007 - 2014

…& per capita income is also expected to grow faster% Per Capita income growth 2007 - 2014

Indonesian GDP growth will continue to outgrow its regional peers - $3,015 (2010) - $3,800 (2012)

Indonesia real GDP grow faster than ASEAN and emerging/developing economies …% GDP growth (real) 2007 - 2014

Indonesia real GDP grow faster than ASEAN and emerging/developing economies …% GDP growth (real) 2007 - 2014

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2007 2008 2009 2010 2011 2012 2013 2014

Indonesia Emerging/Developing Economies ASEAN

Indonesia Macro Economic Indicators

3

Government spending on healthcare is increasing, yet private out-of-pocket spend remains high

Private spending is mainly funded out-of-pocket% split of private healthcare expenditure

Private spending is mainly funded out-of-pocket% split of private healthcare expenditure

Source: 1National Health Account, WHO, in IMS Prognosis 2011-2015 report

National spending on healthcare (% based on value)

National health expenditureby source of financing

National health expenditureby source of financing

Privatespending

71%

71%

70%

2%

2%

2%

27%

27%

28%

2005

2006

2007

Out of pocket

NGO

Private Insurance

4 | IPM; Optimize Access to Innovative Drugs | Dec 2011

Less than 50% of the Indonesian population covered by health insurance

~45%insured

~55%fully out of pocket

Public Insurance (ASKES) •Civil servants and army pensioners•(about 19 million insured)•Essential Drug Lists focusing on both branded Gx and originator drugs•20-30% discount to MNC prices

JamkesmasBasic coverage scheme for the poor(about 80 million insured)•Essential Drug Lists focusing on low-cost medicines •Very low (close to zero) originator sales•80-90% discount to MNC prices

Private Insurance•e.g. Jamsostek, In-Health, etc.•(about 9 million insured)•Fully reimbursed•Presence of Essential Drug Lists

Indonesian population healthcare coverage100% = 236 million

Source: IMS Prognosis 2011-2015 report

5 | IPM; Optimize Access to Innovative Drugs | Dec 2011

~ 33%

Pharmaceutical market growth is being driven by expanding middle class

Upper class

Middle class

Emerging middle class

Low & very low income groups

>30k

>10k-30k

<10k-5k

<5k

9.7m (4.1%)

25.5m (10.8%)

69.6m (29.5%)

17.2m (6.9%)

42.6m (17.1%)

129.5m (52.0%)

59.8m (24.0%)

Upper class continues to offer growth opportunity for pharma

87m more people will enter the middle class; income levels mandate their opting mainly for branded Gx

SegmentIncomein USD

Population2010: 236m Trend

Population2016: 249m

130.7m

(55.4%)

Indonesia Population Pyramid

6

77Source: IMS ITMA MAT Q4 2011

Pharmaceutical Market SituationTotal Market of IDR 43,081 Billions with double digit growth – USD 20/Capita

High healthcare market growth

13.0%

Total Healthcare Market Ethical vs OTC

Market Share

CAGR

Ethical

58% 13.9%

OTC 42% 11.8%

7

88Source: IMS ITMA MAT Q4 2011

Prescription (Ethical) Market Trend10% growth in 2011, still attractive sales trend of Ethical business dominated by local players (branded and unbranded generics products)

Ethical Sales Trend – MNC

MS CAGR

34% 11.5%

66% 15.2%

13.9%

8

999

1010Source: IMS Ethical data Q4/2011

Total Ethical Market 2011 Sales (Bio IDR)

4.1% 7.8% -0.4%

7.8% 7.3% -0.2%

13.7% 5.0% 0.2%

9.0% 3.6% 0.0%

-9.3% 3.4% -0.7%

12.2% 3.3% 0.1%

7.4% 3.1% -0.1%

2.6% 2.9% -0.2%

23.9% 2.8% 0.3%

3.1% 2.5% -0.2%

Growth Market Share MS Diff

YTD vs PY YTD YTD vs PY

Total Ethical Market: IDR 25,046 Bio 10.0% 100.00%

1

2

3

4

5

6

7

8

9

10

RANK

Top 10 Ethical Pharma Companies - 20117 out of Top 10 companies are local players – MNC’s growth less than local

10

1111

Element of Growth Contribution

New Products

Interaction

Volume Increased

New Line Extension

Price Increased

Source: IMS ITMA MAT Q4 2011

What are the growth drivers?Volume increased drive ethical market growth

11

12122011 Market Growth

CA

GR

20

07

-20

11

Gro

wth

9.9%

13.9%

Various

Sensory

A.Infectives

Parasit

Hormones

Hospital

GU& Sex Hormones

Respiratory

Musculo

CNS

Derma

Bubble: Market Share

Therapeutic Class DevelopmentBlood, Alimentary, CVS and Respiratory products are the top drivers of prescription market in Indonesia

Source: IMS ITMA MAT Q4 201112

1313

Indonesia Healthcare Transformation

1313

1414

Indonesia Healthcare TransformationUniversal Healthcare Coverage in 2014

• Indonesia Minister of Health has already set a target to start covering all people’s health costs as early as 2014.

• Law No. 40/2004 on National Social Security System (SJSN)

• Law No. 36/2011 on Social Security Implementation – BPJS I (Health Insurance)

• ASKES +JAMKESMAS merge• 5 Committees are now working

to set the Insurance System

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Summary

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THANK YOU

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