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Indonesia and South Korea form biomedical alliances

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Workers sort tablets at PT Kalbe Farma's factory in Cikarang, West Java, Aug. 5, 2013.   © Reuters

JAKARTA -- Kalbe Farma, Indonesia's largest pharmaceutical company, is building alliances with foreign companies to make a headstart in the country's biomedical industry.

     Kalbe recently agreed to establish a 60:40 joint venture with South Korean biotechnology company Genexine and initially invest 130 billion rupiah ($9.1 million) to develop biopharmaceutical products. Vidjongtius, a director at Kalbe, on Thursday said the joint venture will set up a research and development facility in Indonesia to conduct basic research on erythropoietin, a hormone that enhances the production of red blood cells.

     "Genexine has the technology, and we will prepare the market such as clinical trials," Vidjongtius said, adding that the research will take four to five years. Kalbe aims to produce biomedical products locally in the future. The company has announced that it will construct a factory that produces biosimilars, or copy versions of biologic drugs, on the outskirts of Jakarta.

     Vidjongtius said Kalbe will also collaborate with China's Shandong Kexing Bioproducts and is in discussions with Japan's Daiichi Sankyo.

     With a population of 250 million and rising income levels, Indonesia is an attractive market for foreign medical companies looking to expand outside their home market. The government launched a national health insurance program in 2014 and private hospital operators are expanding aggressively across the archipelago.

     Kalbe, which has a nationwide distribution network and production facilities, has a strong market share in generics but is aiming to develop more advanced technology to differentiate itself from competitors. Indonesia's pharmaceutical industry is fragmented, with more than 200 players.

     Kalbe has grown through acquisitions, partnerships with foreign companies and diversifying into nutritional food and drinks. The company's prescription pharmaceuticals division accounted for 24% of its consolidated revenue for the nine months ended September, which grew 3% year on year to 13.13 trillion rupiah ($920 million).

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