KALBE FARMA DOING BUSINESS PENETRATION TO VIETNAM AND MYANMAR

PT Kalbe Farma, Tbk (KLBF) in the second half of 2013 seems more aggressively expand export market penetration to several countries in Asia, particularly Southeast Asia. Last year, KLBF has established business in India and Taiwan, now the market being targeted by KLBF is Vietnam, Korea, and Myanmar.

The business penetration is in line with the strategy of the company which will encourages the growth of sales by strengthening its business portfolio through products innovation, or through exploration of mergers and acquisitions.

Finance Director and Corporate Secretary of KLBF, Vidjongtius, said that business expansion overseas is part of the strategy of increasing the effectiveness of marketing and sales, opening new market opportunities, and strengthening distribution. Currently, the contribution of export revenues only amounted to 4%. The company is reviewing the steps that will be taken to develop its market in Southeast Asia.

The Vietnam and Myanmar market s widely open in line with the increasing consumption of pharmaceutical products. This effort also accelerates the company’s business expansion in Southeast Asia. KLBF is still exploring opportunities and ripening its business move to seize pharmaceutical market opportunities overseas. Whether by boosting its marketing, business consolidating (merger), or by acquiring local firms of the destination country, the strategy makes the company optimistic that in the next 4-5 years, the contribution of export revenues will rise to 8%.

KLBF is now targeting the market in Myanmar, and the company continues to do a probing for a strategic cooperation. “Currently, the company is also looking for local companies in the destination country to be made a strategic partner”, said Vidjongtius, at Kalbe Farma iftar event at Haropa Restaurant, Jakarta on Thursday (July 25).

He cannot tell which local companies are being targeted to become partners. Form the cooperation between the two countries, it is expected that the company will distribute and develop their superior products. In addition to Myanmar, KLBF is also eyeing Vietnam.

The company will also establish a joint venture for Myanmar. The company had not calculated how much the revenue contribution from the market expansion. However, from Vietnam, he targeted that within three years, revenues form this country will exceed USD 5 million per year. “The revenues have made a significant contribution because it is still new”, he said.

For this action, the company set up a fund of Rp5 billion to Rp10 billion for Vietnam expansion. One hundred percent of the funds are derived from internal cash. KLBF did not set a specific target of the number of companies to be acquired. “The important thing is to keep carrying out our expansion strategy”, he said.

He added that it would not be difficult to open markets in Myanmar and Vietnam. The reason is that some of the company’s products are well known in Myanmar through Over-the-Counter (OTC) drugs marketing. Expansion of markets in Myanmar and Vietnam is by adding nutritional products, namely Diabetasol and Zee, this year. From the result of business expansion, KLBF will set a growth target of 15%-18%, both total sales and net profit, this year compared to the previous year.

In the year 2012, KLBF has recorded total net sales of Rp13.63 trillion, growing by 25% compared to the same period a year earlier, and net profit increase 17% to Rp1.73 trillion.

To smooth the target, KLBF has prepared a capital expenditure of Rp1 – Rp1.5 trillion this year. Funds coming from internal cash will be used to support the company’s business expansion. The funds will be used for the construction of factories in three locations to increase production capacity of the company’s entire business segments.

           

Build Factories 

KLBF plants to build dairy factories with a total investment of Rp350 billion – Rp450 billion. The two factories will be built in Sukabumi and Cikampek, Karawang, West Java.

According to Vidjongtius, the factory in Sukabumi will reduce liquid milk products with a total investment of Rp150 billion. The factory which stands on 8 hectares of land is planned to be constructed in the fourth quarter this year.

Meanwhile, the factory in Cikampek will produce milk powder with an investment of Rp200 billion – Rp300 billion on a 5-hectares area. However, the two plants will be built early next year. Vidjongtius said that the two plants are expected to be completed by 2015. The construction of the plants is expected to increase production capacity from 12,000 tons to 24,000 tons per year. 

    

According o him, the company will continue the acquisition of a number of companies this year as one of the business development of the company, after last year it completed the acquisition of two companies. KLBF has completed the acquisition of 100% shares of beverages manufacturer, PT Hale International, with a value of Rp93.9 billion.

The acquisition is a strategic move of the company to have production facility of instant health beverage. “We are optimistic that this acquisition will accelerate the pace of the company in the marketing of instant health beverage which market potential is very promising” he said.


Business New - July 31, 2013