Pharmaceutical firms cut revenue targets
<p>Pharmaceutical firms cut revenue targets</p><p>The Jakarta Post, Jakarta</p><p>The weakening rupiah against the U.S. dollar in the past weeks
has forced pharmaceutical companies to revise down their revenue
targets for this year.</p><p>The Indonesian Pharmaceutical Association (GP Farmasi)
chairman Anthony Ch. Sunardjo said the market size would likely
remain stagnant as a result of increasing production costs due to
the weakening local currency.</p><p>"Earlier this year, we projected our revenue to grow to Rp 23
trillion (US$2.25 billion) from Rp 20 trillion last year. But the
new situation may hamper our target, which will stay at Rp 20
trillion," he told The Jakarta Post on Saturday.</p><p>Anthony said if the market did not expand, companies would be
forced to increase their retail prices due to the increasing
prices of imported materials, which account for 90 percent of
production substances.</p><p>"We are facing a dilemma. On the one hand, we have to raise
prices but on the other hand the people's purchasing power is
also weakening.</p><p>"If the dollar keeps strengthening against the rupiah, it will
directly affect our production costs," he said, adding that
imports accounted for between 30 and 50 percent of retail prices.</p><p>He said raising drug prices should be the last option for
pharmaceutical firms. "First, they must be more efficient by
reducing their budget for promotion, which is the biggest cost in
our business."</p><p>PT Kimia Farma revised down its revenue target this year from
Rp 100 billion to Rp 60 billion due to rising imported materials,
detik.com reported.</p><p>Publicly listed PT Kalbe Farma, however, was still optimistic
of seeing an 18 to 20 percent growth this year as soon as it
revised its sales strategy.</p><p>"We still expect this year's revenue to reach Rp 4 trillion.
But we must formulate a strategy by, among others methods,
adjusting prices, being efficient and focusing promotion efforts
on our niche products," said the company's finance director and
corporate secretary Vidjongtius.</p><p>He said the firm was not worried about the weakening rupiah as
it had prepared $55 million in reserves and faced no obligation
to pay foreign loans in the near future.</p><p>"Our biggest concern is higher inflation, which would weaken
the people's purchasing power and would eventually lead to
declining sales and demands," he said.</p><p>Anthony also pointed to the increase of Bank Indonesia's key
interest rate, which would also affect the industry.</p><p>He said the situation would cause Indonesians to buy less
medicine from pharmaceutical companies than they did at present.</p><p>On average, he said, Indonesians spent only $6 to $7 per year
on medicine, while Singaporeans and Malaysians spent $70 and $20
respectively.</p><p>"If the situation continues, their (Indonesians) annual
spending would drop to between $4 and $5," he said.</p><p>Anthony urged the government to immediately disburse a low-
income assistance fund, chiefly allocated for health services to
support pharmaceutical industry growth.</p><p>"At least, the government can promote generic medicine sales,"
he said. (006)</p>
has forced pharmaceutical companies to revise down their revenue
targets for this year.</p><p>The Indonesian Pharmaceutical Association (GP Farmasi)
chairman Anthony Ch. Sunardjo said the market size would likely
remain stagnant as a result of increasing production costs due to
the weakening local currency.</p><p>"Earlier this year, we projected our revenue to grow to Rp 23
trillion (US$2.25 billion) from Rp 20 trillion last year. But the
new situation may hamper our target, which will stay at Rp 20
trillion," he told The Jakarta Post on Saturday.</p><p>Anthony said if the market did not expand, companies would be
forced to increase their retail prices due to the increasing
prices of imported materials, which account for 90 percent of
production substances.</p><p>"We are facing a dilemma. On the one hand, we have to raise
prices but on the other hand the people's purchasing power is
also weakening.</p><p>"If the dollar keeps strengthening against the rupiah, it will
directly affect our production costs," he said, adding that
imports accounted for between 30 and 50 percent of retail prices.</p><p>He said raising drug prices should be the last option for
pharmaceutical firms. "First, they must be more efficient by
reducing their budget for promotion, which is the biggest cost in
our business."</p><p>PT Kimia Farma revised down its revenue target this year from
Rp 100 billion to Rp 60 billion due to rising imported materials,
detik.com reported.</p><p>Publicly listed PT Kalbe Farma, however, was still optimistic
of seeing an 18 to 20 percent growth this year as soon as it
revised its sales strategy.</p><p>"We still expect this year's revenue to reach Rp 4 trillion.
But we must formulate a strategy by, among others methods,
adjusting prices, being efficient and focusing promotion efforts
on our niche products," said the company's finance director and
corporate secretary Vidjongtius.</p><p>He said the firm was not worried about the weakening rupiah as
it had prepared $55 million in reserves and faced no obligation
to pay foreign loans in the near future.</p><p>"Our biggest concern is higher inflation, which would weaken
the people's purchasing power and would eventually lead to
declining sales and demands," he said.</p><p>Anthony also pointed to the increase of Bank Indonesia's key
interest rate, which would also affect the industry.</p><p>He said the situation would cause Indonesians to buy less
medicine from pharmaceutical companies than they did at present.</p><p>On average, he said, Indonesians spent only $6 to $7 per year
on medicine, while Singaporeans and Malaysians spent $70 and $20
respectively.</p><p>"If the situation continues, their (Indonesians) annual
spending would drop to between $4 and $5," he said.</p><p>Anthony urged the government to immediately disburse a low-
income assistance fund, chiefly allocated for health services to
support pharmaceutical industry growth.</p><p>"At least, the government can promote generic medicine sales,"
he said. (006)</p>