State Own Enterprises (SOEs) ministry plans to complete the formation of a pharmaceutical holding with PT Bio Farma as a lead before October 2019 - Photo by Kimia Farma

JAKARTA (TheInsiderStories) – Indonesia’ State Own Enterprises (SOEs) ministry plans to complete the formation of a pharmaceutical holding with PT Bio Farma as a lead before October 2019, said the deputy on Wednesday (09/18). As known, the ministry

Deputy at the ministry Wahyu Kuncoro said, to complete the holding formation, the government will transfer PT Kimia Farma Tbk (IDX:KAEF) and PT Indofarma Tbk (IDX: INAF) shares to Bio Farma. Currently, the ministry waiting for the presidential decree to set up the holding.

Bio Farma is likely to absorb the rights issue shares to maintain the government ownership which not diluted at 22 percent. The acquisition values to execute the rights issue worth of Rp3 trillion (US$214.29 million). Basyir revealed, his party could use a long-term loan scheme to buy the rights issue shares.

According to him, with the formation of this holding, Kimia Farma’ businesses focusing to produce medicines, Indofarma produce herbal medicines and medical equipment, and Bio Farma to produce vaccines.

Followed the planned, today, SOEs ministry appointed Honesti Basyir as the CEO of Bio Farma. His position at KAEF fill by the former production & supply chain director at the company Verdi Budidarmo.

At the holding, Basyir will accompany by IGN Suharta Wijaya, M. Rahman Roestan, and Sri Harsi Teteki. His first job as the new leader of the company to complete the holding process.

Previously, Kimia Farma signed a sale and purchase agreement to buy 56.77 percent or 476.90 million shares of PT Phapros Tbk (IDX: PEHA) from PT Rajawali Nusantara Indonesia. The medicine producer said, the purpose of purchasing all of these shares is to rise the company‘ market shares to six percent and enrich the drug production portfolio in Phapros.

This transaction also aims to increase the growth of assets, profitability, the efficiency of marketing costs, research and marketing development by utilizing Phapros’ distribution channel.

Since last year, Kimia Farma has planned to acquire a pharmaceutical company and three hospitals. The company has allocated Rp2.2 trillion for the acquisition.

In February 2018, the company was bought 60 percent shares of Daiwa Medical Ltd. Co. which has a pharmaceutical network in Saudi Arabia with worth Rp139 billion. This action was part of Kimia Farma’ planned to expand the market to the Middle East and Africa.

Kimia Farma planned to build 90 retail outlets and open a drug factory in Saudi Arabia in two years period. In Indonesia, the producer aimed to adds production facilities in Banjaran, West Java. The company developed ethical drug factories and herbal medicine factories at Banjaran, which will be completed before the second quarter of 2019.

The total investment for the construction of the plant reaches Rp 1.1 trillion. In Cikarang, Bekasi, KAEF also build the new factory to produce raw materials for medicine, cosmetics and food supplements with total investment Rp132.5 billion.

The factory is operated by PT Kimia Farma Sungwun Pharmacopia, a joint venture between Kimia Farma and Sungwun Pharmacopia Co. Ltd., from South Korea. About 20 percent of the production from the factory will be allocated to domestic needs while 80 percent will be exported.

The construction of a drug raw material factory is also carried out to reduce the company’ dependence on imported raw materials. As is known, about 90 percent of domestic drug raw material needs are still imported. Over the past year, there have been several medicinal raw materials whose prices have risen by more than 40 percent, especially those imported from India.

Meanwhile, this year, Kimia Farma targets a double-digit revenue growth in line with the company’s strategic which is focused on transforming integrated health service retailers from pharmacies, clinics, to diagnostic laboratories.

In addition, the manufacturer focuses on optimizing supply chains or distribution. Major business expansion also continues, including by acquiring a company in the pharmaceutical sector, medical devices, including hospitals.

US$1: Rp14,000

Written by Staff Editor, Email: theinsiderstories@gmail.com