Indonesia’s major pharmaceutical companies mostly reported encouraging results in their third quarter financial reports as higher sales and thriving distribution services further increased their earnings.

 State-owned PT Kimia Farma booked a 14.2 percent increase in net sales to Rp 2.76 trillion (US$287 million) in the first nine months, which ended in September on the back of the surge in the sales of basic medical materials, and generic and over-the-counter (OTC) medicine.

Between January and September 2012, sales of basic materials, such as vegetable oil, iodine and quinine, soared more than threefold to Rp 123.8 billion from the same period last year. Generics grew 73.6 percent to Rp 660 billion, while OTC rose 4 percent to Rp 492 billion.

“We saw a jump in sales from basic materials because we increased our ownership in PT SIL [Sinkona Indonesia Lestari], a quinine manufacturer, late last year. We are now the majority shareholder in PT SIL with a 56 percent stake now, from the previous 15 percent,” Kimia Farma corporate secretary Djoko Rusdianto said on Friday.

Even though basic materials have grown significantly, prescribed or the ethical products segment remain the biggest contributor to the company’s net sales, according to Kimia Farma’s latest financial report.

Prescribed medicine made up for Rp 1.33 trillion or 48.2 percent of the figure, followed by generics with 23.8 percent, OTC with 17.8 percent, medical equipment with 5.7 percent and basic materials with 4.5 percent.

Kimia Farma booked Rp 148.13 billion in net profits during the first nine months, up 23 percent from last year. Kimia Farma president director Rusdi Rosman said growing costs had prevented the company from posting higher net profits.

“Currency fluctuations also affected our business because 90 percent of our raw materials are imported,” he said, adding that some of Kimia Farma’s imported raw materials came from China, Germany, India and Switzerland.

From January to September 2012, the company’s costs of goods sold increased by 14.1 percent to Rp 1.92 trillion, while operating expenses grew by 12.6 percent to Rp 639.47 billion.

Kimia Farma targeted to reach Rp 4.2 trillion in net sales and Rp 220 billion in net profits by year’s end, Djoko said. The company is currently preparing several projects to improve its future performance, which includes building a hospital specializing in liver-related health issues, extending one of its factories and opening more pharmacies.

The hospital will be built in Tebet, South Jakarta, and is expected to start operations in 2015. Its construction will cost up to Rp 300 billion.

Kimia Farma also plans to merge with Indofarma, another state-owned drugmaker in 2013. According to Djoko, the company will submit results of a feasibility study to the State-Owned Enterprises Ministry next week.

“The ministry will then submit the results to the House of Representatives. We hope to acquire the House’s approval [on the merger] this year,” Djoko said in a telephone interview.

Meanwhile, PT Indofarma managed to reap Rp 20.03 billion in net profits, 24.4 percent higher from 2011, even though it only booked a slight growth in its net sales. The company’s net sales rose 0.9 percent to Rp 701.54 billion.

 Indofarma president director Djakfarudin Junus attributed the net profits increase to cost efficiencies. During this year’s first nine months, its costs of goods sold were down 1.5 percent to Rp 440.62 billion and its other expenses declined 12.8 percent to Rp 20.25 billion.

The prescribed drugs segment accounted for a huge chunk of total net sales with 81.2 percent. The rest of the figure came from OTC with 1.5 percent, medical and diagnostic equipment with 11.1 and others with 6.2 percent. The company expected its net sales in 2013 to reach Rp 1.4 trillion, with prescribed drugs as its major contributor, Djakfarudin said.

Another publicly listed pharmaceutical firm, PT Tempo Scan Pacific (TSPC), recorded a 14.4 growth in net revenues to Rp 4.84 trillion between January and September 2012, driven by its distribution services unit, which provides services for other companies.

Tempo Scan, known for its Hemaviton energy drinks and Bodrex flu medicine, saw income from the distribution services climb by 17.9 percent to 2.35 trillion. Other business units showed improvements as well.

The company reported that its income from pharmaceutical products rose 8.1 percent to Rp 1.37 trillion, while income from consumer products and cosmetics surged 15.4 percent to Rp 1.12 trillion.

Tempo Scan’s net profits grew by 9.6 percent to Rp 549.31 billion amid surging costs of goods sold, which climbed 16.5 percent to Rp 2.97 trillion.

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