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Jakarta Post

Kalbe eyes entry into new foreign markets

  • Tassia Sipahutar

    The Jakarta Post

Jakarta   /   Tue, May 19, 2015   /  09:34 am

The country'€™s largest pharmaceutical firm PT Kalbe Farma (KLBF) is looking at breaking into new foreign markets this year.

Kalbe finance director and corporate secretary Vidjongtius said that it was in the process of registering its products in Nigeria, Singapore and Thailand.

'€œThe process is ongoing and we hope to begin marketing nutritional products and over-the-counter drugs in Singapore and Thailand, while we will focus on marketing energy drinks in Nigeria in 2015,'€ he said on Monday.

Besides Nigeria, Kalbe will look for opportunities to market similar products in other West African countries as well.

The company has so far exported its products to Myanmar, the Philippines and Vietnam, but
foreign markets currently account for only around 5 percent of its overall sales.

'€œOur overseas sales growth target is higher than that of our domestic sales this year, with double-digit percentage growth, but it will still take us several more years to boost the export contribution in our business,'€ he said.

The company, he added, usually allocated between US$5 million and $10 million per year for overseas marketing investment.

Publicly listed Kalbe is eyeing between 7 percent and 9 percent growth in its domestic sales in 2015, bringing the year-end figure to at least Rp 17.73 trillion ($1.35 billion).

It initially targeted 11 percent in terms of domestic growth, but revised the target downward due to a slowing economy that hampered its first quarter results.

In the January to March period, Kalbe'€™s total sales climbed 4.4 percent only on an annual basis, whereas during the same period in 2014, its sales increased 16.5 percent year-on-year.

'€œMacroeconomic challenges will still persist this year. People'€™s purchasing power has not improved and the rupiah is still weak,'€ Vidjongtius said, blaming the depreciating currency for rising production costs.

As with other drug makers, Kalbe continues to import most of its raw materials due to the absence of locally sourced ones. As the rupiah has weakened against the US dollar, these firms have reported surging costs that have compressed their margins.

Vidjongtius said the firm would stick to its natural hedging mechanism to cope with foreign exchange (forex) volatility, adding that it usually managed between $40 million to $50 million of forex reserves within the company'€™s coffers to finance various import needs.

Meanwhile, the company is looking to introduce about 10 new products in 2015, including five to six new cancer drugs in the second half.

Kalbe began producing cancer drugs in late 2014 at its facility in Pulogadung, East Jakarta, which it claims are the first locally produced cancer drugs.

The firm also expects the fasting month to help boost sales this year, as they are normally 5 percent to 10 percent higher compared to average sales in regular months.

It is embarking on a new project as well in 2015 that will see the firm begin construction of its first biosimilar drug plant in Bekasi, West Java province.

'€œConstruction of the plant will commence in this second quarter and be completed after three years. Total costs will be $25 million to $30 million. Once it'€™s complete, we will be able to produce biosimilar drugs, which are based on biological organisms,'€ he said.

'€œThe process is ongoing and we hope to begin marketing nutritional products and over-the-counter drugs in Singapore and Thailand, while we will focus on marketing energy drinks in Nigeria in 2015.'€

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