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Phapros aims for 30 percent revenue growth amid challenges
Publicly listed pharmaceutical company PT Phapros aims to increase its revenue by 30 percent this year despite several challenges in the industry
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span>Publicly listed pharmaceutical company PT Phapros aims to increase its revenue by 30 percent this year despite several challenges in the industry.
Fierce competition among pharmaceutical companies, heavy dependency on imported raw materials and the increasing Health Care and Social Security Agency (BPJS Kesehatan) deficit are among challenges in the country’s pharmaceutical industry.
Despite those challenges, the subsidiary of state-owned diversified manufacturer PT Rajawali Nusantara Indonesia (RNI) is optimistic sales will increase this year.
Phapros president director Barokah Sri Utami said she was optimistic the company would see a revenue increase of 30 percent this year.
The company booked revenue of Rp 1.02 trillion (US$71.44 million) in 2018, an increase of 2.08 percent year-on-year (yoy).
Although this year’s target is far higher than the growth in 2018, Barokah and Phapros’ board of directors are confident about achieving the target as they were prepared to carry out several corporate actions to boost sales.
“We plan on adding up to 12 new products and to also expand our business to Myanmar this year,” she told reporters in Jakarta.
She said the company planned to expand its product line by providing other drugs to treat degenerative diseases such as diabetes and high blood pressure. The company was previously known for producing antimotion sickness drug Antimo and other generic drugs such as folic acid supplement Anemolat.
She said the company was also planning to produce an antiaging drug that had garnered interest from customers.
Barokah said another factor that made the company confident about reaching its growth target was the fact that it had completed its acquisition of another pharmaceutical company in Bandung, PT Lucas Djaja, and its subsidiary last year.
“The acquisition enables us to increase our production capacity and boost our sales in the long run,” she said.
According to Kontan, the acquisition was expected to increase Phapros’ production capacity to 4 to 5 billion tablets from 3 billion tablets in 2018.
Finance director Heru Marsono added that the acquisition would also increase the firm’s profit this year.
“We expect our profit to increase by around 15 to 20 percent in 2019,” he said.
Barokah said another effort to increase the company’s top line was to increase its export portion to 5 percent this year by setting up another factory in Myanmar.
However, she declined to reveal the exact date for the construction of the factory, saying it would be conducted as soon as it finished the feasibility studies and found the right partner for the joint venture in the Southeast Asian country.
“So while we’re waiting for the studies to finish, we’ll start our expansion by exporting our products to Myanmar,” she said, adding the exports would increase her firm’s export contribution to 5 percent.
In addition, Heru said the company would need Rp 100 billion to build the plant, which would be obtained through a rights issue to be held in the second half of the year.
Through the rights issue, he continued, the firm was seeking Rp 1 trillion. Besides funding the plant construction in Myanmar, the company would use the remaining funds to pay debts and use about Rp 255 billion to fund its capital expenditure in 2019.
For its long-term plan, Barokah said, the company may acquire hospitals and pharmacies to complete its supply chain in the next five years.
Currently, she said, the company had a 20-percent stake in Permata Cirebon Hospital in West Java and may increase or even acquire a new hospital in the future.
As for its expansion plan to pharmacies, she said, the company was open to the possibility of acquiring a pharmacy chain. However, she said, the expansion would await Phapros’ acquisition by state-owned pharmaceutical company PT Kimia Farma, which planned to buy a 56.77 percent stake in the company owned by RNI.
Earlier this year, Kimia Farma announced that it would take over RNI’s entire stake in its subsidiary. In February, Kimia Farma also signed a conditional sales and purchase agreement and aimed to finish the transaction in the first quarter of this year.
Given the fact that Kimia Farma already has its own pharmacy chain, Barokah said Phapros was also open to the possibility of supplying Kimia Farma pharmacies.
“We’ll see which strategy would strengthen our business, acquiring our own pharmacy or strengthening Kimia Farma’s chain in the future,” she said.
