KGBio president director Sie Djohan said on Wednesday that between 50 and 60 percent of the funds would be used to acquire new drugs, mainly for cancer immunotherapy. Another 30 percent would be used to expand a manufacturing facility in Cikarang, West Java, and the remainder would finance ongoing clinical trials.

The subsidiary focuses on producing cancer immunotherapy drugs, a rising alternative to the hair loss-inducing cancer chemotherapy method. Such drugs are classified as biological drugs as they are made from living organisms.

“The [cancer immunotherapy] market is also growing fast. The technology is there, the understanding of the immune system is there. We believe this is a very interesting area in the future,” said Sie Djohan, who is also a Kalbe Farma director, at a virtual press briefing.

Kalbe Farma, Indonesia’s largest pharmaceutical company, has identified the high-margin, high-barrier biological drugs as a key growth engine for the coming years. KGBio, a joint venture between Kalbe Farma and South Korean biotechnology firm Genexine, was established in 2016 to maximize the opportunity.

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“Biologicals are a key growth lever for the Kalbe Group,” said Kalbe Farma president director Irawaty Setiady. “We are committed to bringing global innovation to medicine and improving the accessibility and affordability of critical drugs for patients across the Southeast Asia region.”

KGBio is currently conducting clinical trials on three biological drugs coded PD-1, TJD5 and GX-E4. The former two treat tumors while the latter treats anemia related to chronic kidney disease. The trials are expected to be done within two to three years.

Sie Djohan noted that the company planned to sell its biological products to Taiwan, Australia and the Middle East and North Africa (MENA), among other countries, as part of its long-term growth strategy. The GX-E4 drug is undergoing clinical trials in the two former countries.

“We are looking at areas that have not been served by big international pharmas,” he said. “With GA’s participation, we expect to speed up this process.”

GA Indonesia managing director Ashish Saboo said the investment firm saw big potential in the biological drugs market. Developed countries spend roughly 30 percent of their healthcare spending on such drugs compared with only 5-6 percent in developing countries.

“The real revenue will be two to three years from now when these big molecules are commercialized,” he said. “It could be triple digit growth. That’s what we are expecting.”

He also signaled GA’s preparedness to inject more money into KGBio within the next two to three years as its usual ticket size was between $100 and $150 million.

GA will take a minority share in KGBio, which is currently 60 percent controlled by Kalbe Farma, publicly listed on the Indonesian Stock Exchange (IDX) as KLBF.

Stocks of Kalbe Farma gained 0.33 percent on Thursday as the main gauge, the Jakarta Composite Index (JCI), dropped 2.12 percent. The stock market has lost more than 6 percent of its value so far this year.

Kalbe Farma’s net profit rose 6 percent year-on-year to Rp 2.03 trillion ($143.86 million) in the first nine months of 2020 as its sales grew 1.6 percent to Rp 17.09 trillion, according to the company's latest financial report.

GA, which claims to be one of the world’s biggest investors in life sciences, has 14 offices in Europe, Asia and the Americas, according to its website. The firm is also an investor in Jakarta-based edtech startup Ruangguru and food and beverage retailer PT Map Boga Adiperkasa, whose portfolio includes Starbucks Indonesia.