Pharmaceutical companies have until 2034 to be fully halal certified. With more than 90% of raw materials currently imported, the sector will need that time to be compliant.

Jakarta - Indonesia’s drive to require pharmaceutical products to be halal-certified is gathering pace, but the country’s reliance on imported raw materials for medicines is impeding progress, officials and industry players say.

In October, Indonesia issued a government regulation requiring pharmaceutical products to be certified halal by 2029 for over-the-counter drugs and by 2034 for prescription medicines.

The regulation is based on the Halal Product Assurance Law (Undang-Undang Jaminan Produk Halal) passed in 2014, which stipulates that starting in October 2019, products such as food, cosmetics and drugs must undergo a halal certification process. It includes requirements that product packaging or labels must show whether these goods are halal, so permissible under Islamic law, or not.

This has increased the number of halal-certified pharmaceuticals made in Indonesia: “It’s growing. Over the past several years, the number has increased significantly. Even though initially it was tough, the market is there,” said Pre Agusta Siswantoro, an advisor and former director of manufacturing at Kalbe Farma, southeast Asia’s largest pharmaceutical company, headquartered in Jakarta.  

Kalbe’s halal-certified product range includes popular heartburn drug Promag, painkiller Bintang Toedjoe and energy drink Extra Joss, he said. Only about 10% of the company’s halal products are currently exported, he added.

Given a choice, many Muslims will choose halal-certified drugs over those that do not carry halal labels, he said, although non-halal medication can be used when halal products are not readily available.

Kalbe exports its halal drugs to other southeast Asian countries, the Middle East and Africa.

The firm has plenty of sales to make at home, given Indonesia, the world’s largest Muslim majority country with nearly 300 million people, is southeast Asia’s largest pharmaceutical market, accounting for 27% of the regional market.

The overall Indonesian pharmaceutical market size rose from Indonesian Rupiah 65.9 trillion ($4.5 billion) in 2016 to IDR88.36 trillion ($6.1 billion) in 2019, according to the Indonesian industry ministry.

Indonesian Vice President Ma’ruf Amin said last year that domestic Indonesian spending on halal products reached $214 billion in 2018, accounting for 10% of global halal spending. No figures are available for spending on pharmaceutical products within Indonesia or sales of halal pharmaceuticals made by Indonesia manufacturers, including exports.

However, the country’s exports only account for 3.4% of the global market, said Amin.

Tirto Koesnadi, chairman of the Indonesian Pharmaceutical Manufacturer Association (GP Farmasi), said a recent lowering of certification fees by certification bodies has encouraged companies to comply with the halal requirements.

“Initially there was reluctance because of the cost, but now that the government has put the cost under control, everyone is on board,” he said.

Siswantoro said the emergence of halal certification centres, including at universities, has also helped with wider adoption.

Moreover, Indonesia’s religious affairs ministry has recognized at least 45 halal certification bodies in 26 countries, including Australia, Britain, Germany, Japan and the United States.

“Even though it takes time to get halal certificates, pharma companies have begun applying for certification for their products, because not only is it legally required, but consumers demand it,” he said. “If your products are halal certified, many Muslims will opt for them,” he said.

Moreover, halal labelled pharmaceuticals are not usually more expensive than non-halal competing products, said Siswantoro.

“If you produce the products at high quantities, it doesn’t affect the cost. There’s just additional procedure to comply with halal requirements,” he added.

That said, a dearth of halal-assured input materials is nonetheless posing a major challenge to Indonesia’s pharmaceutical industry, officials and experts said.

More than 90% of raw materials, including active ingredients, for medicines in Indonesia are imported, making it difficult to ascertain whether they are suitable for consumption by Muslims, they said.

“The pharmaceutical industry has been slow in getting halal certification because more or less 95% of raw materials are imported, 60% of which are from China,” said Agusdini Banun, director for pharmaceutical production and distribution at Indonesia’s health ministry.

“We are encouraging industry players to produce raw materials domestically so that the government can guarantee their halal status,” she said.

“Finding halal raw materials is not always possible. It often takes time to find the suitable materials,” added Siswantoro. Demanding that overseas material suppliers certify their products halal is not always possible, he added.

This can be an economy-of-scale issue: “They are not too happy if we only buy in small quantities from them. What is the benefit for them?” he said.

This may change in future as more medicines become halal certified in Indonesia – the proportion is low at present. Sukoso, a former head of the Halal Product Assurance Agency (BPJPH), a body established under the Indonesian halal assurance law, and professor in biotechnology at Brawijaya University in Malang, said halal-certified drugs account for only 4% of the total number of pharmaceutical products made in Indonesia, at present.

Only 5,886 products from the drug and vaccine category and 8,494 from the traditional medicine category are halal certified, according to the Indonesian Council of Muslim Scholars (MUI), which is tasked with approving halal certification of medicines, food and cosmetics.

“The halal issue is a sensitive one in Indonesia because it has many ramifications,” said Sukoso. “Its impact on the health sector must be considered. Are there alternatives to those drugs? Drugs are about saving lives and during an emergency, the question of halal or haram (forbidden) takes a backseat,” he added.

This was reflected during the deliberation of the halal law, with some suggesting that drugs and vaccines be exempted from halal certification requirements.

Some experts said certification could undermine health outcomes, inspire reluctance among patients to use necessary vaccines, extend the time it would take for new medicines to enter the market and hurt the industry.

But Muslim leaders and consumer protection groups say Muslims have the right to be informed about the origins of products they consume and their processes of making them, and that labelling should be transparent.

Muti Arintawati, director of the Drug and Food Monitoring Agency at MUI, said while there has been growth in the number of pharmaceutical products that are halal certified, there is still a long road ahead.

“For companies that are prepared, they have started to apply for certification. But there are other companies that are still conducting research on the use of materials,” she said.

“There’s a lot of leeway because the deadline is 2034,” she added.

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