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Two-state owned pharmaceutical firms, PT Kimia Farma Tbk and
PT Indofarma Tbk, may merge as part of an effort to improve efficiency
as competition in the industry heats up.
Newly-elected Kimia Farma president director M. Sjamsul Arifin said
Friday that a merger was one of a few options, which also included the
establishment of a partnership or holding company.
"We have two objectives regarding the consolidation plan. First, we
wish to upgrade the value of the companies. Second, we want to increase
our competitiveness in both the domestic and international markets," he
said, adding that the competition in the domestic drug market had
become tighter with the entry of new foreign firms.
Regarding which option would be selected, he said it depended on which
would provide maximum benefits to the two companies' stakeholders, and
would therefore require further discussion and study.
According to Sjamsul, who had previously served as Indofarma's
president director for a year, his move to Kimia Farma is aimed at
speeding up the consolidation process.
"The state enterprises minister has told me to ensure the studies are
finished soon so that we (state-owned pharmaceutical firms) can catch
up with other state enterprises," he said.
Sjamsul said that prior to taking up his post as president director of
Indofarma, he had been with Kimia Farma for 35 years, adding that this
background enabled him to recognize each firm's strengths and
weaknesses.
According to Sjamsul, Indofarma is good at manufacturing. He gave as an
example how the firm could produce up to 35 tons of amoxicillin per
month, seven times Kimia Farma's amoxicillin production capacity of 5
tons per month. Indofarma, however, had limited distribution and
marketing networks.
By comparison, Kimia Farma was strong in distribution and marketing
with its large number of retail outlets throughout the country.
"We can double our production, distribution and marketing through
consolidation," he said, adding that finance, research and technology
were other areas where the two companies could build synergies.
Kimia Farma booked total revenue of Rp 2.2 trillion (around US$234.3
million) and a net profit of Rp 42 billion last year, while Indofarma
recorded total revenue of Rp 1.1 trillion and a net profit of Rp 15
billion.
Sjamsul said that his move to Kimia Farma would not affect the firm's
target of making a net profit of Rp 72 billion in 2007.
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