MARKET STRUCTURE, CONDUCT AND PERFORMANCE OF NATIONAL PHARMACEUTICAL INDUSTRY : FOCUS ON PUBLIC PHARMACEUTICAL COMPANY 2010-2015

• Main Author: Asal
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/78999
• Institution: Institut Teknologi Bandung

Pharmaceutical business in Indonesia often raises a number of issues ranging from collusion to drug administration errors. This study aims to determine the condition of the national pharmaceutical industry currently undergoing structural transformation towards market-based health insurance. Basic theory used is the theory of SCP (Structure, Conduct, Performance). The analysis was focused on the 10 pharmaceutical public companies in Indonesia in 2010-2015. Descriptive analysis showed that the structure of national pharmaceutical industry could be classified as a non concentration market, where no cpmpany could hold a dominant position with a significant market share. The mark't share of foreign public pharmaceutical companies increased while {he share of public local pharmaceutical companies as well as the national pharmaceutical companies decreased despite an increase in the usage of generic drugs during JKN (National Health Insurance). The business conduct of local pharmaceutical companies in terms of R & D intensity remained at levels below 2% of sales, indicating that low income companies simply carried out product formulation development rather than developing innovative research-based products. The performance variables of pharmaceutical public companies reflected as return on sales and return on assets showed a declining trend. The results of verification analysis with panel data regression using Eviews 9.5 showed that the structure of national pharmaceutical market (market concentration) was influenced by market concentration and capital intensity of 1-2 year earlier and a return on sales of 1 year earlier. While the market structure of public pharmaceutical companies (market share) was affected by capital intensity and selling intensity 1 year eglier. Business conduct (capital intensity) was influenced by market concentration, market share, return on sales and return on assets. While business conduct (selling intensity) was only influenced by market share. Companys performance (return on sales) was affected by market share and selling intensity. The influence of two-way Granger causality found between market structure with business conduct showed that capital intensity showed reciprocal influence on market share. This implied that the capital strength in the pharmaceutical business in Indonesia played a role in determining the market structure and that the national pharmaceutical industry needs to improve its efficiency and productivity in order to be sustainable.