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Asia300

Indonesia's Kalbe Farma moves into clinical testing

Pharmaceutical giant taps Japanese partners for technology

Kalbe Farma's KALGen Innolab clinical laboratory in Jakarta

JAKARTA -- Indonesian pharmaceutical company Kalbe Farma is entering the clinical testing business with two Japanese companies to tap the country's growing demand for prevention of lifestyle-related diseases.

The foray marks a further diversification of Kalbe's business, which includes drugs, powdered milk and energy drinks. The company's pharmaceutical division, which accounts for about a quarter of total revenue, is facing pressure on margins as the government's universal healthcare program brings in more competition among drug makers.

Kalbe owns a 60% stake in the joint venture, Innolab Sains Internasional, while trading company Toyota Tsusho and Yokohama-based clinical testing specialist Health Sciences Research Institute (HSRI) each own 20%. Kalbe recently opened a laboratory in Jakarta, equipped with modern Japanese medical equipment and technology. The lab will conduct blood, bacteriological and other tests for hospitals and clinics.

Kalbe director Sie Djohan told a press conference on Thursday that the initial investment for the joint venture is around 50 billion rupiah to 100 billion rupiah ($3.5 million to $7 million). It has already partnered with 300 medical institutions and plans to increase this to 1,200 over the next five years.

"We want to establish a complete, fast and accurate laboratory," Djohan said. Indonesia lacks modern testing facilities, and complex tests need to be sent to Singapore or other countries. The Indonesian government has been trying to revamp its medical infrastructure since rolling out a universal healthcare program in 2014. While the program has attracted drugmakers and pushed down prices of generic drugs, Kalbe believes the market for clinical testing is underpenetrated.

With 19.37 trillion rupiah ($1.36 billion) in revenue in 2016, Kalbe is Southeast Asia's largest pharmaceutical company. Djohan said setting up its own clinical testing lab will enable the company to offer medicine that better matches patients' conditions, as well as boost its research and development capabilities.

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