Indonesian state-owned pharmaceutical company Kimia Farma has announced today that it has acquired 60% stake in Saudi Arabia’s Dawaa Medical Limited Company for $10.1 million in a share subscription investment scheme.
According to an official statement, the deal is part of Kimia Farma’s effort to extend its presence to the Middle East and North Africa.
The investment will see Dawaa, which was previously a subsidiary of medical firm Marei Bin Mahfouz (MBM) Group, turned into a joint venture company under new holding company Kimia Farma Group. The joint venture firm will be named Kimia Farma Dawaa and will start operations this month.
Kimia Farma executive director Honesti Basyir said, the investment in Dawaa marks the company’s first move in its planned expansion to the Middle East and North Africa, a region specifically targeted by the government to support Indonesian Hajj pilgrims in Saudi Arabia.
“This business expansion also supports the program of the Indonesian government in serving the medical needs of the Indonesian Hajj and Umrah pilgrims, which is increasing in number every year, and also to serve migrant workers in Saudi Arabia,” said Basyir.
Through its investment in Dawaa, Kimia Farma will have access to the Saudi company’s network of 31 outlets, consisting of 10 outlets in Mecca and 21 outlets in Jeddah. Dawaa also has two distribution centers in Mecca and Jeddah.
Kimia Farma says it has specifically chosen Saudi Arabia as its point of entry into the Middle East market because of the country’s promising medicine industry with a projected market value of around $20 billion by 2020.
Honesti Basyir has previously told local media that his company has allocated Rp 3.5 trillion this year for the construction of factories.
Early last month, Kimia Farma’s biggest competitor Kalbe Farma also said that it was eyeing the Middle East as a new market for its nutritional products. Kalbe recently announced that it has invested $35 million to construct a new biological drug factory in East Jakarta to gain higher margins from its products