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tate-run drug makers put in a sickly financial performance in 2013, brought low by a combination of a weaker rupiah and surging costs.

State-run publicly listed pharmaceutical company Indofarma recorded a net loss of Rp 54 billion (US$4.7 million) in 2013, plunging from profits of Rp 42.38 billion in the previous year, despite recording a 15 percent jump in revenues.

The company achieved total sales of Rp 1.34 trillion last year, compared to the Rp 1.16 trillion it booked in 2012. Rising costs played a big part in suppressing Indofarma'€™s profitability as its operating expenses surged by 26 percent year-on-year to hit Rp 201.39 billion last year.

Its cost of goods sold rose by 26.87 percent to Rp 999.93 billion in 2013, compared to Rp 788.15 billion in the previous year.

'€œLast year was a challenging year for manufacturers, especially for those who import raw materials. Not only did we have to deal with currency depreciation, we also had to face increases in labor costs, as well as electricity and fuel prices,'€ Indofarma corporate secretary
Jefrie Moza said on Friday.

Jefrie said that Indofarma, like other drug makers, imported 90 percent of its raw materials, which resulted in the company recording skyrocketing foreign exchange (forex) losses in its 2013 financial report.

Indofarma'€™s forex losses hit Rp 14.97 billion last year, over 500 percent higher than the Rp 27 million it recorded in the previous year.

Jefrie said it was hard for the company to cover costs by increasing the prices of goods due to its public-service obligation to provide generic drugs as its business focus.

Kimia Farma, another state-run publicly listed company, faced similar challenges. Its operating costs nearly doubled to Rp 43.68 billion last year, compared to Rp 24.13 billion in the previous year. Its cost of goods sold rose by 19.1 percent year-on-year to Rp 3.05 trillion in 2013.

The company ended up booking a drop in net profits to Rp 239.76 billion last year, from Rp 285.16 billion in 2012. Kimia Farma'€™s sales rose 16 percent year-on-year to Rp 4.35 trillion last year.

Privately run and publicly listed drug makers booked better performances last year, including Germany-based company PT Merck, whose net profits increased by 62.7 percent year-on-year to Rp 175.44 billion last year.

'€œWe successfully met our targets and were able to deliver remarkable results, as shown by the growth in our financial indicators. We are very grateful to report that our 2013 financial performance was
defined by a sales performance amounting to Rp 1.19 trillion,'€ Merck president director Markus Bamberger said.

Of these sales, 46 percent was contributed by its prescription division, Merck Serono, followed by the chemicals division (38 percent) and the consumer-health division (16 percent).

'€œAlthough the cost of sales increased to Rp 648 billion, we recorded a gross profit of Rp 545 billion in 2013, a significant 29 percent increase from the previous year. Comprehensive income of Rp 175 billion rose due to a rise in operating income, which stood at Rp 230 billion,'€ said Bamberger.

Despite drug manufacturers'€™ lackluster performance last year, the trade association has predicted a brighter outlook as the universal health-insurance program '€” which came into effect on Jan. 1 providing cover for 120 million people '€” will help boost pharmaceutical companies'€™ growth this year.

The Indonesian Pharmaceutical Association (GPFI) had forecast that the pharmaceutical industry would achieve up to 20 percent sales growth annually once the program was in place.