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November 25, 2008

Indonesia tells foreign drug firms to set up local units or quit
Foreign drug companies can quit Indonesia if they do not like new rules requiring them to have local production facilities, Reuters quoted Health Minister Siti Fadilah Supari as saying Monday.

Rules introduced earlier this month are designed to encourage foreign companies to transfer technologies to Indonesia and boost investment to create jobs, she said.

"If they want to get licences (to sell their products) they have to invest here also, not just take advantage of the Indonesian market," Supari told Dow Jones Newswires.

"They can't just operate like a retailer here, with an office size that's three metres (yards) by three and make billions of rupiah. That is not fair."

The decree, which has drawn protests from the US Chamber of Commerce, will affect 13 international pharmaceutical companies that currently sell their drugs in Indonesia but do not have production facilities here.

The affected companies include Wyeth, Eli Lilly and Merck Sharp & Dohme Corp. of the United States, Switzerland's Roche, France's Servier, Denmark's Novo Nordisk, AstraZeneca of Britain and Astellas Pharma of Japan.

Under the new rules, foreign companies have a two-year grace period in which to set up production facilities.

Supari said she believes Indonesia's big drugs market -- worth around two billion dollars a year -- would persuade the companies that building production facilities is worthwhile.

Those who fail to do so would be banned from selling their products or distributing them through companies that do have plants in Indonesia.

"If they want to go away, go ahead," she said. She added that India and China had already enacted such requirements.

The president and chief executive of the US Chamber of Commerce, Thomas J. Donohue, last week sent a letter to President Susilo Bambang Yudhoyono, urging the president to "consider revising the decree."

There are 29 international pharmaceutical companies marketing their products in Indonesia, with total market share of 25 percent.

The minister said the new rules will give "fair treatment" to pharmaceutical companies that have already invested in drug production facilities in Indonesia.

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