Korean pharmas flock to Indonesia with high growth potential

Chong Kun Dang (CKD) headquarters [Courtesy of CKD]

South Korean pharmaceutical and biotech companies are flocking to Indonesia, the world’s fourth-most populous country, that accounts for nearly 30 percent of the ASEAN pharmaceutical market. Its aging population makes it a promising destination for pharmaceutical industry growth.

Indonesia’s pharmaceutical industry is projected to reach $3.7 billion in total revenue by 2025, up from $3 billion in 2021.

Major Korean pharmaceutical companies such as Daewoong Pharmaceutical and Chong Kun Dang (CKD) have been quick to recognize the potential of the Indonesian pharmaceutical market and have already made inroads.

Daewoong Pharmaceutical established a subsidiary related to botulinum toxin production in Indonesia earlier this year, marking its fourth local subsidiary in the country.

Notably, Indonesia is also the location of Daewoong’s first bio-pharmaceutical factory, cementing its position as a Korean healthcare pioneer in localizing its business in the country.

CKD embarked on its Indonesian market penetration in 2015 by establishing a joint venture corporation with a local pharmaceutical company. In 2019, CKD inaugurated Indonesia’s first halal-certified oncology drug factory.

Dong-A ST, another Korean pharmaceutical company, invested jointly with a local partner in establishing a biopharmaceutical production facility in 2018.

Recently, there has been an increasing trend of Korean companies entering the Indonesian market, particularly in the field of blood products.

GC Pharma headquarters [Courtesy of GC Pharma]

According to sources on Wednesday, GC Pharma recently obtained final approval from the Indonesian government for the construction and technology transfer of a blood product plant.

After being selected as the priority negotiator for the project in January of this year, GC Pharma has been engaging in detailed discussions with the government. Last month, the company signed an MOU with the Indonesian Red Cross and a local pharmaceutical company to outline the specific plans for the project.

SK plasma has already initiated the construction of a blood product plant in Jakarta. In March, the Indonesian government approved the establishment of the blood product plant, and just three months later, SK plasma swiftly commenced construction.

The plant, with an annual capacity to process one million liters of plasma raw materials, aims to be operational by 2025. SK plasma plans to form a joint venture with local companies, investing about 300 billion won in the construction of the plant.

Indonesia is a significant market in Asia, with a high demand and consumption of pharmaceuticals. It controls 27 percent of the ASEAN pharmaceutical market, making it a substantial market.

However, when it comes to blood products, Indonesia is entirely reliant on imports. Blood products are crucial in the treatment of various conditions, such as shock and hemophilia, making them essential therapies. The Indonesian government envisions achieving self-sufficiency in blood products through the establishment of the blood product plant and technology transfer.

The Indonesian market holds great appeal for Korean pharmaceutical companies. The Korea Innovative Medicines Consortium (KIMCo) projects that the pharmaceutical industry’s total revenue will grow at an average annual rate of 5.5 percent from 2021 to 2025, reaching $3.7 billion by 2025.