The Jakarta Post
Publicly listed pharmaceutical firm PT Kimia Farma is aiming to make up for last year’s losses despite the COVID-19 pandemic, after recording a promising financial performance in this year’s first half.
The company’s finance director Pardiman said on Wednesday that the company had prepared several strategies to book a profit this year, including conducting retail transformation, optimizing its supply chain and diversifying its products and portfolios, among other measures.
“The strategy was proven in the first quarter of this year when we managed to book Rp 160 billion [US$10.8 million] and we believe this will continue through to the end of the year,” he said during an online public expose, referring to the company’s operating income in the year’s first quarter.
Pardiman, however, did not elaborate on the company’s profit projection for this year.
The company recorded Rp 12.72 billion in losses in 2019, compared to Rp 491.5 billion in profit a year earlier, due a 119.16 percent increase in finance costs.
It booked Rp 48.57 billion in profit in the first half of this year, a 1.7 percent increase from Rp 47.7 billion last year, its financial report shows.
Its net sales also increased slightly by 3.5 percent year-on-year (yoy) in the year’s first half to Rp 4.68 trillion, from the January to June period of 2019, despite the blow dealt to the economy by the pandemic.
The company’s optimism also seems to be supported by the fact it has seen an increase in sales of COVID-19 related products, like medicines and health supplements, during the pandemic.
“However, [sales of] products not related to the coronavirus, such as cosmetics, declined by around 30 percent compared to a year prior and that will continue to pose a challenge for us,” president director Verdi Budidarmo said.
The company’s generic medicine sales saw the highest jump of 10 percent yoy to Rp 739 billion in the first half of the year, while over-the-counter medicine and cosmetics sales nosedived 17.8 percent yoy, its report shows.
Given that the pandemic has yet to show signs of slowing down, business development director Imam Fathorrahman said the company would continue to develop products that could help prevent COVID-19. The company plans to distribute a vaccine candidate that is currently being developed by state pharmaceutical firm Bio Farma, in cooperation with Sinovac Biotech of China.
At the same time, Kimia Farma will also develop products for degenerative illnesses that have been included in the company’s product development roadmap this year, as ailments like cancer, diabetes and cardiovascular disease continue to increase both domestically and globally.
It will also continue its organic expansion plans this year by allocating Rp 547 billion in capital expenditure (capex) sourced from its own internal funding, said Pardiman.
“We have used about 54 percent of the capex to develop our pharmacy, clinic and laboratory chain, our medicine production and our raw material plant in Cikarang [in West Java],” he said.
The raw material plant, which has been in operation since 2019, was established under a joint venture with South Korea’s Sungwun Pharmacopia Co Ltd in 2016, and is also aimed at reducing Kimia Farma’s dependency on imported raw materials.
Verdi said the country’s pharmaceutical industry was still heavily dependent on imported raw materials from China, India and many other countries.
He expects the plant to reduce the firm’s raw material imports by 2.72 percent this year.
“We hope this will continue, as we aim to further reduce our raw material imports by 23.82 percent by 2024,” said Verdi.
Kimia Farma also plans to diversify its products and portfolio this year through inorganic growth. Verdi said the diversification would be achieved through strategic partnerships with other companies rather than through acquisitions.
“These partnerships include developing products that relate to our core pharmaceutical business, both for COVID-19 products and non-COVID-19 products,” he said.
Meanwhile, Pardiman said the company was committed to reducing its accounts receivable, including Rp 1.13 trillion from the government, to help reduce its short-term loans.
Kimia Farma’s shares, traded on the Indonesia Stock Exchange (IDX) under the code KAEF, were up by 7.21 percent to Rp 2,380 apiece as of 1:42 p.m. on Thursday .