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tate-run pharmaceutical company Kimia Farma will be establishing a new plant with a bigger production capacity to supply a climbing demand for chemical and herbal medicines.

Kimia Farma president director Rusdi Rosman said the construction of the new plant, which is to be located in the Banjaran industrial area in Bandung, West Java, would cost Rp 978 billion (US$70.48 million).

'€œWe designed the Banjaran plant to have a production capacity of around 3.6 billion tablets per year, or more than triple the entire Kimia Farma plants'€™ capacity to date, which reaches 1.1 billion tablets annually,'€ Rusdi said in a press statement.

Rusdi added that the project would be funded partly from medium term notes (MTN) worth Rp 200 billion that were previously issued by the publicly listed company. Further issuances of MTNs could be done depending on the progress of the plant'€™s construction.

'€œWe are now eyeing alternative cheap sources of funds, from an MTN issuance to a rights issue. All possibilities will be reviewed before deciding on the options that benefit the company the most,'€ Rusdi said.

The construction will take two years.

Upon its completion, Kimia Farma will be able to produce around 4.6 billion tablets per annum of chemical medicines alone.

Rusdi added that the plant could possibly became Indonesia'€™s biggest herbal medicines factory that conducts the synthesis, extraction and production of the raw herbal ingredients.

Kimia Farma currently operates five plants in Jakarta, Bandung, Semarang in Central Java, Watudakon in Jombang, East Java and Medan in North Sumatra, which produce chemical and herbal medicines, iodine, vegetable oils, quinine and its derivatives.

The company is eyeing overseas markets for its herbal medicine products, the export of which could contribute around 5 percent to the Rp 5 trillion in revenues targeted for this year.

This year, Kimia Farma aims to reap revenues of Rp 5.2 trillion, or 15 percent higher than last year'€™s Rp 4.52 trillion, and profits of Rp 255 billion, a growth of 8 percent from the Rp 236 billion booked last year. Up until the first half of this year, the company pocketed Rp 2.10 trillion in revenues.

The company is also trying to reduce production costs for chemical medicines, whose imported raw materials are affected by the weakening of the rupiah against the US dollar, by constructing another plant at the Lippo Cikarang industrial area in Bekasi, West Java, with South Korean investors.

'€œWe already have a plot of land in the area and the construction probably can kick off by the end of this year,'€ he said, adding that his firm was in discussions with investors.

He said that the 7.5 hectare piece of land in Bandung was currently under review by consultants.

Previously, Kimia Farma entered into profit-sharing agreements with Aura Nusantara Abadi and Tata Mulia Nusantara Indah to establish and manage a hotel on the company'€™s land on Jl. Juanda in Bandung. Kimia Farma will provide a 2,200-square-meter plot and will allow the companies to run the hotel for 25 years before the hotel would be turned back over to Kimia Farma, which would then totally own and manage it. (prm)