Kimia Farma to build US$100 million plant

Novia D.Rulistia, The Jakarta Post, Jakarta | Thu, 04/03/2008 1:37 AM

Publicly listed state pharmaceutical company PT Kimia Farma plans to build a US$100 million plant this year to help reduce its dependency on imported raw materials.

President director Sjamsul Arifin said Wednesday that 98 percent of the company's raw materials were still imported.

"We only have several small-sized plants to produce raw materials for our medicine. We want to add capacity by setting up a new plant outside Java because of the abundant resource availability," he said.

The firm is still undecided on the location of the new plant.

To help finance the construction, Sjamsul said, Kimia Farma was negotiating with investors from China and India.

"Our capability to finance this plant is between Rp 300 billion (US$32.6 million) and Rp 400 billion, so the remaining financial needs will be either from a rights issue, bonds, asset sales or from investors," he said.

However, the plan is subject to the government's approval.

Kimia Farma is targeting a net profit of Rp 65.9 billion this year, up 26.9 percent from Rp 52 billion in 2007.

"We're optimistic we can reach the target as we have forecast the local pharmaceutical market to grow by 9.1 percent this year. Our sales are expected to increase by 16.74 percent," Sjamsul said.

In 2007, Kimia Farma recorded sales of Rp 2.3 trillion, with some 60 percent coming from nongeneric medicine and the remainder from generics.

Due to the soaring prices of raw materials, Sjamsul said, the company was likely to increase the prices of generic medicine by up to 10 percent.

"The price for Amoxicillin, for example, in some countries has already reached $50 dollars per kilogram. It worries us," he said, adding the company still bought Amoxicillin for $40 dollars per kilogram despite an unadjusted selling price of Rp 370 per tablet.

Kimia Farma, also the country's largest drugstore chain, has allocated some Rp 50 billion for capital expenditure this year, mostly for expanding operations and maintenance.

The company has 350 pharmacies equipped with clinics and laboratories, as well as 40 distribution offices throughout the country.

Aside from producing branded and essential generic medicine, the company is also authorized to produce narcotics.