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Kalbe Farma looks to digital platforms to cushion COVID-19 impact
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Two Kalbe Farma researchers work at the company's Stem-cell and Cancer Institute (SCI). The company has allocated Rp 200 billion (US$14.8 million) to develop products through its research and development facilities. (Courtesy of http://www.kalbe.co.id//-)
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T Kalbe Farma is bracing for the impact of COVID-19 on its business in the second quarter and hoping to cushion the blow through cashflow management and by making better use of digital channels.
Kalbe Farma president director Vidjongtius said that, while the COVID-19 impact was not apparent in the first quarter, it would be more significant in the second quarter with an expected decline in the number of patient visits and limited consumer mobility.
“We will take greater advantage of digital platforms as an alternative for our stay-at-home consumers,” the president director said on Monday.
The publicly listed company has several digital channels, including klikdokter.com, a website that currently also provides services related to COVID-19, such as rapid test arrangement for consumers at risk in hospitals cooperating with Kalbe Farma.
The service is currently available in Greater Jakarta and Surabaya, East Java.
Meanwhile, through its subsidiary PT Enseval Putera Megatrading, Kalbe also runs digital health distribution services through the EMOS and MOSHEALTH platform, for both businesses and customers to ease the process of ordering pharmaceutical and other health products.
“We see the utilization of the existing platforms as a very good option,” Vidjongtius added.
Meanwhile, Kalbe Farma has decided to slash dividends on last year’s profit to build up the retained capital to wither the COVID-19 impact.
Kalbe Farma will only pay out Rp 937.5 billion (US$62.97 million) in dividends to its shareholders, lower than the initial projection of Rp 1.13 trillion to Rp 1.26 trillion.
The dividends are around 37 percent of the company’s 2019 profit of Rp 2.5 trillion, lower than Kalbe Farma’s average dividend ratio of 45 to 50 percent over the years.
“We are taking the initiative to increase the company’s cash flow reserve for the year 2020, so that we can weather the impacts of COVID-19 well,” Vidjongtius said.
Furthermore, to boost its business, the company also plans to increase the production of a number of highly sought items during the pandemic, including vitamin supplements, jamu (traditional herbal medicine) and health equipment such as masks and protective coveralls.
The company booked around 8 percent year-on-year (yoy) growth in net sales at Rp 5.8 trillion in the first quarter, while its net profit grew by 12.47 percent yoy to Rp 669.27 billion in the first three months.
In the wake of the pandemic-related disruption of pharmaceutical supply chains, the company also plans to get more involved in the provision of raw materials for the industry as the country seeks to reduce its dependency on imported products.
The company is said to collaborate with its longtime partner from South Korea, Genexine Inc., to develop raw materials for biotechnology-based medicines with a future potential of those products turning into export goods, according to Vidjongtius.
While refraining from stating company targets for 2020, Vidjongtius expressed optimism about the growth of the pharmaceutical industry as “public awareness of health has increased significantly, at every level, in every region” due to the pandemic.
“We have lowered our forecast on KLBF’s [Kalbe Farma] operating costs as we believe KLBF will keep increasing its efficiency at the operating level to support its net profit,” Mirae Asset Sekuritas Indonesia analyst Mimi Halimin wrote in a research note.
The note also highlighted that the company’s net profit was forecast at Rp 2.7 trillion this year, a 5.7 percent increase yoy, in line with the management’s target of 5 to 6 percent growth.
