Malaysian generics maker in talks to buy manufacturing facility in Indonesia

With the Indonesian government threatening to close the door on drug imports, one Malaysian drugmaker is looking to get in while the getting is good.

Yusoff Rahman, CEO of generic drug manufacturer Pharmaniaga, confirmed the company has set aside $10 million to acquire an API plant in Indonesia in an effort to break into the pharma sector there. He tells in-PharmaTechnologist that the growing market is appealing and that producing locally will give the company a cost structure that makes it easier to compete in a market dominated by local manufacturers.

"Due to the sheer size of the population, we see that Indonesia as a promising market," Rahman says. "With the manufacturing facility, Pharmaniaga will be able to penetrate its own product manufactured in Indonesia."

Rahman's thinking reflects that of others sizing up the market. Indonesia is among what IMS Health refers to as the 17 "pharmerging markets," where annual double-digit growth is expected through 2015. Pharmaniaga is not the only company acting on that insight.

An executive with Indonesia's own Kalbe Farma, the biggest drugmaker in Southeast Asia, recently acknowledged to Reuters it was in discussions with 5 to 8 pharma companies in Indonesia. It has some $200 million in its pocket with which to do deals.

But for those looking to export into the market, the process is trickier. For several years now, Indonesia has made it difficult for foreign firms to sell there unless they also have local manufacturing operations. A U.S. Trade Representative document says that since 2008, the country's food and drug agency, BPOM, "has been rejecting or delaying the approval of new applications for drug registrations by some companies, including wholesalers and distributors that do not have manufacturing operations in Indonesia."

Pharmaniaga's Rahman acknowledged that policy was a motivating factor to buy in Indonesia.

"Domestically produced drugs dominate Indonesia's pharmaceutical market, accounting for nearly 90 percent of total pharmaceutical sales, so there is a stiff competition in Indonesian market," he said.

- read the in-PharmaTechnologist story
- get more from Reuters
- here's the USTR document (PDF)

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