Across the region, many pharmaceutical companies have emerged over the past 50 years. Often springing from Chinese family
businesses, the spectacular socioeconomic growth witnessed by the region has fostered a buoyant industry with hundreds of
players. While some have barely taken off from the traditional medicine, remedies, and herbal tea activities, others have
developed into large integrated groups, with distribution and logistics operations, fully fledged manufacturing capabilities,
and in-house marketing activities. Despite the fundamental flaw of having only marginal API production in the region (unlike
the compelling examples of fully vertically integrated China and India), the Southeast Asian pharmaceutical industry is a
credible player that deserves to be kept in mind. Beyond market sizes, in themselves compelling enough, a wealth of entrepreneurial
value, great industrial tools, cumulated know-how and expertise, and of course local knowledge is on display. The region is
also at a genuine turning point of its development, and the industry is forward thinking and ready for action.
The region's industry: domination by the largest
In the meantime, local players have developed dominant positions that are hard to fight. In Indonesia, the largest market
of the region, three players are leading the pack, each with different strengths.
The leader in Indonesia, Kalbe Farma is Southeast Asia's largest local pharmaceutical company when excluding Chinese and Indian
players. With $267-million revenues in 2005, it is trailing the global leaders Pfizer and GlaxoSmithKline, which also hold
the top positions in this region with $367 and $289 million revenues, respectively, for 2005 (source: IMS Health). Kalbe Farma
is a versatile producer dominating the OTC market, the energy drinks, and the nutrition market and is number three in the
Indonesian prescription market with a 9% market share.
The next Indonesian players are Dexa Medica and Sanbe Farma, both with ;$152-million revenues that benefited from truly impressive
revenue growth rates of 35% and 28.6%, respectively. These companies are also strong prescription generics producers. Dexa
Medica is a producer of solid and liquid forms, particularly injections. The company has expended the range of its offer notably
by striking partnership agreements with some of the world's most renowned pharmaceutical players, producing and distributing
their products under license throughout Indonesia. Sanbe Farma, on the other hand, is moving beyond its original core activities
of human and veterinary pharmaceutical manufacturing and is financing a biotech and research center as well as managing a
brand new, state-of-the-art private hospital in Bandung.
Despite an impressive presence on their home turfs, all three companies have initiated international market expansion strategies
starting across the region, in Vietnam, Thailand, and Myanmar as well as Africa, Nigeria in particular. "This densely populated
African nation (132 million people) is attractive to Indonesian companies as the two countries share market characteristics,
from the fact that most of the population relies on a very low disposable income through to the fact that both markets are
volume rather than value based.
In terms of innovation, Kalbe Farma, Dexa Medica, and Sanbe Farma are at the edge of the sector. From Sanbe's state-of-the-art
new CGMP sterile injection plant and new dry forms tablet plant to Kalbe's Kalbiotech, a Singapore-based entity that will
work on research coordination and licensing in Singapore and Dexa's successful in-licensing and even out-licensing deals,
these leaders have adapted spectacularly well to the new conditions of production expected from any decent player today. Although
the country does not request CGMP for product registration, the Indonesian manufacturers have anticipated the call and have
started investing ahead of time. Sanbe pharma's two splendid new production units are ready to welcome inspections from any
national drug regulatory body and take orders for export sales and contract manufacturing. The quality of the construction,
equipment used, and procedures in place testify of the head start some players of the region have taken.