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Kimia Farma to push for acquisitions in 2018
State-owned pharmaceutical company PT Kimia Farma is seeking to expand aggressively this year, as it plans to acquire at least three factories to accelerate earnings growth
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tate-owned pharmaceutical company PT Kimia Farma is seeking to expand aggressively this year, as it plans to acquire at least three factories to accelerate earnings growth.
The company had earmarked Rp 3.5 trillion (US$245 million) in capital expenditure (capex) this year to support both organic and inorganic business expansions, Kimia Farma president director Honesti Basyir said on Monday.
“Of the figure, Rp 2.3 trillion will be used to support our inorganic growth through the acquisition of plants [in Indonesia],” he told reporters.
Honesti added that Kimia Farma would acquire a pharmaceutical factory, a cosmetics factory and a factory that makes products that it had yet to produce. However, he declined to elaborate the details.
The publicly listed pharmaceutical giant is of the view that such inorganic growth is the fastest way to speed up its business growth in a highly regulated environment like the pharmaceutical industry.
It normally takes a long time to build a factory, obtain all necessary certificates, manufacture items and sell them.
Kimia Farma hopes to secure 70 percent of its capex from external funds, while the remainder comes from internal cash.
On Monday, the company issued the second trance of medium term notes (MTN) worth Rp 600 billion. The debt paper has a coupon rate of 7.75 percent and a three-year tenure.
The proceeds from the note issuance will be used to support corporate expansions.
PT BNI Sekuritas, PT Mandiri Sekuritas and PT Indo Premier Securities, will act as arrangers, while PT BNI will be serving as a monitoring agent.
Last September, Kimia Farma finance director IGN Suharta Wijaya said the company had launched the first trance of the notes worth Rp 400 billion for refinancing and business expansion.
With its expansion strategies this year, primarily through its inorganic growth plan, it hopes to book a 10 percent growth in annual revenue to Rp 6.74 trillion.
Kimia Farma’s revenue rose by 5.4 percent year-on-year to Rp 6.13 trillion last year. Its total assets surged significantly by 32.15 to Rp 6.09 trillion last year from a year earlier.
Early this month, the drug maker spread its wings to Saudi Arabia, where it acquired a 60 percent stake in pharmaceutical company Dawaa Medical Limited Company, equal to 38 million riyals ($10.13 million).
The move was part of an effort to set up a presence in the African market in the future, Honesti said.
Kimia Farma, one of Indonesia’s biggest state-owned pharmaceutical companies, operates upstream and downstream sides of drug making with wide-ranging activities, including drug manufacturing, medicine material production, research and development, marketing, trading and distribution.
As of last month, the company controls 1,005 pharmacy networks, comprising 500 health clinics, 47 laboratory clinics, 10 opticians and 47 branches for trading and distribution.
Trading under the ticker symbol KAEF, Kimia Farma saw its shares gain slightly by 0.42 percent to Rp 2,380 per share from the previous trading day.
