Govt to merge Indofarma with Kimia Farma

The Jakarta Post, Jakarta

The government said it would push ahead with plans to merge ailing state pharmaceutical company PT Indofarma with the healthier PT Kimia Farma and follow up with selling the shares in the combined entity.

State Minister of State Enterprises Laksamana Sukardi said on Thursday that the divestment was expected to take place this year.

"The merger plan is still on. It will boost efficiency -- there's no need to have so many pharmaceutical companies that compete with each other," Laksamana was quoted by Bloomberg as saying.

The government controls 81 percent of Indofarma, the largest generic drug producer, and 90 percent of Kimia Farma.

The shares sale is part of this year's privatization program, which aims to raise about Rp 24.4 trillion to help finance the budget deficit.

Indofarma expects to enjoy a profit of around Rp 35 billion this year after suffering a hefty loss of Rp 129 billion in 2003, while it expects sales to grow by 40 percent to about Rp 700 billion, despite the tough competition.

An Indofarma executive said it would increase sales by offering 5 to 50 percent discounts on generic medicines.

Reports have said that a number of private firms like drugmaker PT Tempo Scan Pacific and distribution company PT Tiga Raksa Satria are also eying Indofarma.