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The pharmaceutical industry in Indonesia appears hesitant to make the transition from inventor to innovator and instead continues with the process of formulation and packaging. Evidence-based policy has been advocated for Indonesia and, in general, this is more likely to hold. This study aims to establish a model for a policy-making process that is strategically able to predict strategies that would encourage drug development in Indonesia.

A quantitative approach with the survey method was designed to obtain appropriate data from a population of pharmaceutical industries in Indonesia and relevant government institutions to assess the relationship of various factors capable of triggering domestic drug development, including pharma capability, political feasibility and innovation incentives. The construct was validated using a set of techniques pertaining to the calculation of structural equation modeling.

The model demonstrates how it matters when applied to the policy-making process. It proves that pharma capability, political feasibility, and innovation incentives correlated to pharma capability are major catalysts in the promotion of drug development. These are largely explained by market opportunity, pull factors, government power, and position. Although all of the elements were moderately to strongly related to the promotion of drug development, this study has revealed the predictive impact on drug development in Indonesia to be only 46%.

This study adds values to policy-makers as it attempts to predict strategies that would encourage a successful policy when being implemented. Encompassing both pharma industries and government institutions, this study captures a real situation and provides an empirical contribution to the concept of the integrated research of drug development in developing countries.