Indofarma sees sales up 40%
Rendi A. Witular, The Jakarta Post, Jakarta
Ailing state-owned pharmaceutical company PT Indofarma said on Monday that it would be back in the black this year on an expected 40 percent increase in sales, as it strives to restructure its business and sales strategy.
Indofarma president Dani Pratomo said sales were projected to increase to about Rp 700 billion (US$82.3 million) this year from Rp 498 billion last year, and a profit of around Rp 35 billion from a loss of Rp 129 billion in 2003.
"We are optimistic that we will make a profit this year despite tougher competition in the country's already competitive pharmaceutical industry," said Dani during a press conference.
He explained that the company would increase its sales by offering discounts on generic medicine of between 5 percent to 50 percent, as it had no other choice than to offer such discounts due to the competition.
"I expect demand for generic medicine to increase," he said.
About 85 percent of Indofarma's sales still rely on generic medicine.
Indofarma was under scrutiny by the Jakarta Stock Exchange (JSX) earlier this month due to the company's poor performance. The JSX has continued, to this day, the suspension of Indofarma's shares, pending clarification from the company.
Indofarma recorded a loss of Rp 129 billion last year from Rp 59.8 billion in 2002, after it previously said it would obtain a profit.
Indofarma financial director Soedibyo said that the loss was mainly caused by the company's decision to write off Rp 55.8 billion in expired medicine and unsold medical tools belonging to its subsidiary PT Indofarma Global Medika (IGM).
IGM contributed around 60 percent to Indofarma's total loss.
Soedibyo also said that huge borrowing interests, which amount in total of Rp 40.9 billion, also worsened the company's financial burden. Indofarma had around Rp 235 billion in debts last year owed to Bank Mandiri, Bank Central Asia and Bank Bukopin.
Due to the bad performance of IGM, Indofarma plans to sell the company, which engages in the distribution of pharmaceutical products, food and beverages, in an effort to allow the company to concentrate on its core business of manufacturing generic medicine.
"We are continuing to look for strategic investors," Dani said.
At the moment, publicly listed pharmaceutical firm PT Tempo Scan Pacific and distribution company PT Tiga Raksa Satria are the investors which have openly expressed interest in IGM.
The government is also planning to merge Indofarma with a relatively healthier state-owned pharmaceutical company, PT Kimia Farma, before being proposed to private investors for sale.