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Indonesia teams with China's Sinovac for COVID vaccine

Pandemic underscores need for national self-reliance in drug R&D and production

The world's fourth-most populous country is seeking to be self-reliant in pharmaceuticals.   © Reuters

JAKARTA -- The coronavirus pandemic has energized Indonesia's drive for self-reliance in pharmaceuticals, with state-owned Bio Farma collaborating on a vaccine with China's Sinovac Biotech and a company from the United Arab Emirates.

The state-owned Indonesian company considers the tie-ups as important for future development and production of vaccines -- and even new medicines -- in the world's fourth-most populous country.

Bio Farma announced on Friday that it had signed an agreement with Sinovac. The Indonesian company will import 50 million doses of vaccine from Sinovac from November through March 2021, according to a news release. "[We must] complete our big task to distribute it quickly for Indonesian society," said Bio Farma CEO Honesti Basyir.

Sinovac -- a joint venture between Peking University and companies in Hong Kong -- will also give priority to Bandung-based Bio Farma for further supply until the end of 2021. The Chinese company is one of several in the country now conducting Phase 3 clinical trials for vaccines.

In July, Bio Farma kicked off Indonesian trials, seeking 1,600 participants as part of Sinovac's Phase 3 trials in several countries that reportedly include Bangladesh and Brazil. If successful, the Indonesian biotech is planning to start manufacturing the vaccine locally under a license that Sinovac is expected to provide.

Bio Farma is building a new facility that will more than double production capacity by the end of this year, to potentially provide 250 million doses annually, all of which will be reserved for domestic use.

Kimia Farma, one of Bio Farma's listed subsidiaries, announced on Saturday that it will collaborate with the UAE's G42 Healthcare Holdings, a subsidiary of Abu Dhabi-based tech company Group 42 for research and development, marketing and distribution of a coronavirus vaccine. G42 has an ongoing collaboration with another Chinese company, Sinopharm, which is also in Phase 3 clinical trials.

To CEO Basyir, the goal is clear: "Bio Farma will acquire transfer technology while [vaccine production during] Phase 3 clinical trials is underway."

"Through these collaborations, Indonesia will be in a strategic position to support global demand not only for COVID-19 vaccine, but other pandemic vaccines should the need arise," he added during a press conference on July 16. As a generic vaccine maker, Bio Farma has been exporting to more than 140 countries and is looking to become a leading Asian biotechnology company.

At the same time, Bio Farma intends to develop Indonesia's own vaccine. The company set up a local consortium with Jakarta-based Eijkman Institute for Molecular Biology and other research agencies and universities in May. It hopes to develop a COVID-19 vaccine prototype by the middle of next year and start manufacturing it in mid-2022.

Rival Kalbe Farma, with its 6% domestic market share, is partnering with South Korea's Genexine for vaccine development, with Phase 2 clinical trials in Indonesia slated to take place in the fourth quarter.

Meanwhile, a little-known biotechnology company, BCHT Bioteknologi Indonesia, is partnering with Sinopharm.

Muslims attend prayers in Jakarta on June 5 after the government eased restrictions on public gatherings.

The move is important for the Indonesian pharmaceutical industry, which otherwise would have to continue to rely on other countries for coronavirus vaccines. As analyst Ahmad Maghfur Usman from securities company Nomura noted in regard to the Bio Farma-Sinovac partnership: "The bulk antigen products of the vaccine will need to come from Sinovac, as it is a new vaccine. Hence, this largely depends on Sinovac's production capacity."

About 90% of raw materials used by Indonesian drug makers, including active ingredients, are imported -- 60% of which are from China and 30% from India. This reliance on imports has become more apparent since the pandemic occurred. As of Sunday, Indonesia reported a total of 153,535 coronavirus cases, including 6,680 deaths.

In May, supply chain disruptions due to the pandemic caused Indonesia's pharmaceuticals to operate at 55% to 66% of capacity, according to the country's chamber of commerce and industry, while prices increased.

"The pandemic has been a learning process for all of us, including Indonesia," said State Enterprise Minister Erick Thohir, who is responsible for Bio Farma, in May. "Starting next year, Indonesia wants to make sure that as regards the health security issue, [we'll be] less dependent on the supply chain from other countries."

Kimia Farma signed an agreement in July with the state oil and gas giant Pertamina for Indonesia's first local production of paracetamol -- one of the active ingredients that the country has been importing. Pertamina began seriously expanding its petrochemical capacity last year.

Director for business development Imam Faturohman added that the company is working on developing generics for antiviral drugs favipiravir and remdesivir, which have been used for treating coronavirus patients. Kimia wants to reduce raw material imports by 24% by 2024, from a projected 3% this year.

Indonesia's pharmaceutical market grew to 88.4 trillion rupiah ($6 billion) in 2019, up from 65.9 trillion rupiah in 2016. The increase was largely driven by the government's universal health coverage program launched in 2014, which aims to cover the entire population of 268 million. As of June, coverage reached 80%.

Of course, the pandemic has damaged the Indonesian market overall. Fitch Solutions says its chemical, pharmaceutical and traditional medicine industry recorded annual growth of just 5.6% in the first three months ending March, down from 11.5% over the same period last year. The data analysis company, however, remains upbeat about Indonesia's health care market.

"Growth of its middle class and the introduction of universal health care has driven demand in almost all aspects of the industry, from hospitals to pharmaceuticals to medical devices," Fitch said in an Aug. 11 note.

The trend is similar in other major Southeast Asian economies, according to international pharmaceutical event group CPhI, where there is a reputable generics production capacity that accounts for a large percentage of the region's pharma revenues. Most of the region's countries are similarly heavily reliant on China and India for raw materials.

The pandemic is expected to make regional governments focus more on developing self-reliance in active pharmaceutical ingredients and other key raw materials, the report says.

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