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T Merck (MERK), the local unit of German pharmaceutical giant Merck KGaA, is expecting to record stronger growth this year, buoyed by improving economic conditions and the government'€™s quest to provide better healthcare services.

Last year, the publicly listed chemical and drugs manufacturer reaped Rp 175.4 billion (US$15.2 million) in net profits, a 62.7 percent increase from Rp 107.8 billion the previous year.

The company'€™s net sales, meanwhile, surged by 28 percent to Rp 1.2 trillion last year from Rp 930 billion in 2012.

'€œWe are optimistic that we will outperform the market this year, as long as Indonesia'€™s economic growth stays on track at between 5 and 6 percent with the global economy starting to recover,'€ Merck president director Martin Feulner said Thursday in a press conference.

He added that stable economic growth would boost people'€™s purchasing power, which would eventually result in them spending more on health care.

It is predicted that Indonesians will spend almost $150 per person on health care in 2015, up from only $35 in 2005, according to consulting firm Pacific Bridge Medical.

The consulting firm has also estimated that the country'€™s pharmaceutical market is worth $6.5 billion with an annual growth rate of 12.5 percent.

Merck'€™s finance director, Bambang Nurcahyo, said his company would see a significant amount of ethical drug sales this year, without detailing how much it could contribute to the company'€™s overall sales.

Bambang said that Merck would likely gain a large amount of sales due to the government'€™s national health insurance (JKN) program, which will gradually provide health insurance for all Indonesians starting this year.

'€œWe are one of the suppliers of ethical drugs for state-owned health insurance company PT Asuransi Kesehatan [Askes],'€ he said, referring to the company that has now become one of the JKN'€™s providers.

Among the supplied drugs are cancer medication Erbitux, hypertension drug Concor and thyroid cancer drug Euthyrox.

Merck'€™s 2013 financial report shows that its business unit, Merck Serono, which produces and markets prescription drugs, contributed 45.8 percent to Merck'€™s total sales of Rp 1.2 trillion.

Its consumer health unit, which produces and markets over-the-counter (OTC) drugs, recorded a larger contribution to the firm'€™s total sales with 15.5 percent, up from only 7.3 percent in 2012.

Merck'€™s OTC medicines posted 32 percent growth last year, more than double their international competitors'€™ average growth of 15 percent, according to data from the International Pharmaceutical Manufacturers Group (IPMG).

'€œThe significant growth of our OTC products is mainly due to our full restructuring, such as expanding our market,'€ Feulner said, adding that his firm had no fewer than 3,000 distribution channels.

He said that Merck previously cooperated only with wholesale agents to market its OTC drugs, but that now it also collaborated with retail outlets.

Bambang said his firm would be investing more than Rp 17 billion this year for (machine) maintenance and improvements in production quality.

Feulner added that with its operational restructuring, his firm would certainly perform even better this year. The elections and volatile rupiah exchange rate would have no significant effect, he said.

'€œAlthough we are still importing raw materials, we have a fixed exchange rate agreement that
allows us to pay an agreed amount of money to our suppliers, regardless of the rupiah exchange rate,'€ he said. (koi)