Indonesian state-owned pharmaceutical company PT Kimia Farma Tbk (KAEF) is planning to invest Rp978 billion ($70.87 million) in a new pharmaceutical manufacturing facility at Banjaran Industrial Estate, Bandung, West Java. The new plant will cater to the growing domestic demand for herbal medicines.
The construction for the new plant is expected to begin in the current year and it is scheduled to be completed within two years.
Kimia Farma’s president director Rusdi Rosman said in a statement on Tuesday that the new plant was designed to have a production capacity of around 3.6 billion tablets per year, which is more than triple the existing capacity of 1.1 billion tablets.
The company currently operates five plants in Jakarta, Bandung, Semarang in Central Java, Watudakon in Jombang, East Java and Medan in North Sumatra.
According to Rosman, the plant could possibly become one of Indonesia’s largest herbal medicines factory that conducts the synthesis, extraction and production of the raw herbal ingredients. The company is also eyeing overseas markets for its herbal medicine products, he added.
The company expects the revenues from exports to contribute around 5 per cent to its revenues targeted for this year.
Kimia Farma has a revenue target of of Rp5.2 trillion this year, or 15 per cent higher than a year ago ( Rp4.52 trillion). It is expecting net profit to increase of 8 per cent to Rp255 billion from Rp236 billion in 2014.
In the six months to June this year, the company logged Rp2.10 trillion in revenues and a net profit Rp of Rp77.44 billion, which is up 9.725 per cent from the same period last year
Rosman revealed that the company will cooperate with a South Korean partner to build a factory in Lippo Cikarang Industrial Estate in Bekasi, West Java to produce raw materials for medicines. He said the company is trying to reduce imported raw materials by developing the plant. The project is expected to kick off by the end of this year.
State-Owned Enterprises Minister Rini Soemarno has urged all state-run pharmaceutical companies to find a way to reduce imports of pharmaceutical products, which have long contributed to rising import rates in the country.
The total value of the country’s pharmaceutical imports surged by 17.03 per cent to $296.77 million in the January – May period of this year, from $253.59 million in the same period last year, according to data from the Trade Ministry.
The relatively high import levels of raw materials have also affected the operating expenses of both Indofarma and Kimia Farma.
Kimia Farma has planned to build Indonesia’s first pharmaceutical salt plant later this year in partnership with salt producer PT Garam to meet growing domestic market demand. Under a partnership agreement signed by the two companies, Kimia will build the plant to produce the salts, while Garam will provide the raw materials.
The plant will be located in Watudakon, Jombang in East Java, and will have an initial production capacity of 3,000 tons per year. The capacity may be upgraded to 6,000 tons per year in the next two years.
Rosman said that the plant’s construction would take around six months to complete and that the whole process would require Rp28 billion funding. The company will use its own funds to finance the construction. At the moment, it has around Rp198 billion in cash on hand, according to him.
He said that several companies had expressed their interest in purchasing the pharmaceutical salt for their own manufacturing processes, which include intravenous fluid, sports drink and other beauty products.
Garam finance and commercial director Yulian Lintang said that Indonesia needed about 320,000 tons of salt for consumption every year. Garam produced 400,000 tons of raw salt annually and was ready to supply the necessary materials for Kimia Farma for its next production of salt for consumption, Yulian said.
“Right now, we have 6,000 hectares of salt fields on Madura Island [East Java] and hope to expand the size to more than 13,000 hectares with new fields in Kupang, East Nusa Tenggara province in 2014,” he stated.
Kimia Farma has also diversified their business and has entered into profit-sharing agreements with PT Aura Nusantara Abadi and PT Tata Mulia Nusantara Indah to establish and manage hotel on the company’s land in Bandung. The company will provide a 2,200-square-meter plot and will allow two companies to run the hotel for 25 years.