Establishing Bridgehead
GC Biopharma’s and SK plasma’s entries into Indonesia will accelerate this year. GC Biopharma is expected to finalize all procedures within this year after receiving approval for business rights related to the construction of a blood product factory and a technology transfer from the Indonesian government. And SK plasma has already begun the construction of a local blood product factory. Prior to this, Daewoong Pharmaceutical, Chong Kun Dang and Dong-A ST are also establishing a bridgehead to Indonesia.
On July 11, according to sources in the pharmaceutical and biotech industries, SK plasma recently started the construction of a blood product factory near Jakarta, Indonesia. In March, the company had received final approval from the Indonesian Ministry of Health to build a blood product plant that can process 1 million liters of plasma raw materials per year. The size of its investment in the plant is about 300 billion won, with the goal of completing it in 2025.
GC Biopharma is also expected to finalize all procedures for the construction of a local blood product plant by the end of this year. In the meantime, the Indonesian government has been selecting companies for the construction and technology transfer business, and selected GC Biopharma as the preferred bidder in January. After detailed discussions and coordination, the Indian government finally approved the business license for GC Biopharma in June.
The first Korean pharmaceutical company to have entered Indonesia was Daewoong Pharmaceutical. In 2014, it established a biopharmaceutical production plant and a local subsidiary, Daewoong Infion, in a joint venture with local biotech company Infion. The company has obtained a local sales license for the growth hormone treatment Caretropin liquid pen syringe, and has also received a halal certification on the diabetic foot ulcer treatment Easyef Topical Solution.
In 2015, Chong Kun Dang established a joint venture CKD-OTTO with Indonesian pharmaceutical company OTTO. In 2019, it completed a local plant for anti-cancer drugs and received good manufacturing practice (GMP) approval from the Indonesian government. Dong-A ST also co-invested with local pharmaceutical company Combiphar to complete a biopharmaceutical production plant, PT Combiphar East Indonesia. The plant produces Dong-A ST products such as Eporon, a treatment for anemia in patients with chronic kidney failure and Leukostim, a treatment for neutropenia.
In fact, Indonesia has been considered a difficult market to enter by Korean drug makers. Among other things, Indonesia has demanding conditions such as halal certification for products that can be eaten and used by Muslims, mandatory cooperation with local companies for distribution and sales, and technology transfers.
“Despite tough constraints in the Indonesian pharmaceutical market, Korean drug makers continue to enter the Indonesian market because there is no other country with as big market growth potential as Indonesia,” said one industry insider. According to market research firm Statista, Indonesia’s pharmaceutical industry’s sales are expected to grow from US$2.861 billion in 2020 to US$3.722 billion in 2025. Despite this rapid growth, Indonesia imports 90 percent of all pharmaceutical raw materials that it needs from abroad.
The Korean government has also rolled up its sleeves. To support Korea’s biopharmaceutical exports and strengthen bilateral cooperation on blood products, the Korean Ministry of Food and Drug Safety traveled to Indonesia from June 25 to 29 to hold a director general-level bilateral cooperation meeting with Indonesia’s biopharmaceutical regulators. Through the meeting, the two countries agreed to establish a director-level working group and revise a memorandum of understanding on cooperation in the field of biopharmaceuticals.