T

he nation'€™s pharmaceutical companies recorded mixed results last year, as the rupiah continued to weaken and healthcare spending remained low despite the government'€™s ambitious healthcare program, which began early last year.

A number of publicly listed pharmaceutical companies, both domestic and global, recorded slower revenue growth of between 3 and 8 percent last year compared with 15 to 20 percent the previous year.

They also posted varying results in their net profits, with some booking declining profit growth and others seeing a boost.

The largest drug manufacturer, PT Kalbe Farma (KLBF), ended last year with 6.9 percent growth in its net profit to Rp 2.05 trillion (US$155.5 million) from Rp 1.92 trillion in 2013, lower than the 12.9 percent growth from Rp 1.7 trillion to the 2013 level.

Another publicly listed local drugmaker, PT Kimia Farma (KAEF), meanwhile, saw its net profit growth surge to 9.4 percent from 2013 to 2014, from 4.5 percent between 2012 and 2013. KAEF exports part of its production overseas.

The firm'€™s net sales growth, however, declined to 3.9 percent during the 2013-2014 period from 15.3 percent in the previous period.

The firm'€™s net sales increased to Rp 4.5 trillion last year from Rp 4.35 trillion in 2013, a slower growth than the 15.3 percent surge to the 2013 level from Rp 3.73 trillion in 2012.

A steep decline in net profit growth was experienced by global chemical and drug manufacturer PT Merck, the local unit of Germany-based Merck KGaA.

The firm, which discontinued certain chemical products last year following an agreement with its parent company, posted a 3.5 percent net profit growth for the period of 2013 to 2014, far lower than the 62.7 percent growth between 2012 and 2013.

The weakened rupiah has put heavy pressure on pharmaceutical companies, which import most of their raw materials from China, India, Europe and the US.

'€œThe country'€™s pharmaceutical industry sources around 95 percent of its raw materials through imports,'€ Investment Coordinating Board (BKPM) head Franky Sibarani said.

In KAEF'€™s financial report, for example, the exchange rate was set at Rp 12,440 per US dollar in 2014 from Rp 12,189 in 2013.

KLBF finance director and corporate secretary Vidjongtius also admitted recently that the rupiah'€™s depreciation had significantly cut his firm'€™s profit margins. The International Pharmaceutical Manufacturers Group (IPMG), meanwhile, hinted that the slowdown in profit growth in the industry was also due to firms'€™ revenue growth not meeting expectations, as the adoption of the government'€™s healthcare program remained low.

'€œAnnual drug consumption in the country is low, with drug spending hitting Rp 200,000 per person and medical treatment standing at Rp 1 million per person,'€ said IPMG chairman Luthfi Mardiansyah.

The government started introducing its national healthcare program, locally known as JKN, early last year. It aims to make the program fully operational by 2019.