KELOMPOK

Case Study

Forward Integration
-Management Strategy

PT. Kalbe Farma Tbk

(KLBF)

I.

Contents

Market Overview

II. Business Overview

III. Corporate Strategy
IV. Performance Highlights
V.

SWOT Analysis

VI. Business Decision Strategy

VII. Conclusion

Indonesias Health Spending Trends

Market
Overview

Total
expenditure
on
health
averaged 2.1% of GDP over the 11
year period 1999-2009.

BPJS
Health
program
has
commenced on January 2014 and
with a target to cover 40% - 50% of
the population in 2014 and the
entire Indonesian population by
2019.

2013 Pharmaceuticals Market Breakdown

Market
Overview

4/16/15

Kalbe continues to lead in the highly fragmented

pharmaceuticals industry with over 200 players

Slide 4

Consistent Top Line Growth

Business
Overview

No. 1 player in Indonesian Prescription PharmaMarket.

The largest medical representatives team in Indonesia
with more than 2,350 personnel.
Comprehensive product offerings for all income
groups.
Increasing competition following national insurance
implementation.

Gross Profit Margin (GPM) declined from 61.1% in YTD 09

2013 to 60.2% in YTD 09 2014, mostly due to Rupiah
depreciation and product mix.

4/16/15

Slide 5

Business
Overview

4/16/15

Shareholdin
g Structure
of the
Company
and
Subsidiaries

Slide 6

Business
Overview

4/16/15

Performance
Highlights

Slide 7

Kalbe has long track record of sustainable growth

Corporate
Strategy

4/16/15

Slide 8

Business Strength

SWOT
Analysis

Market leader for public health products and the market leader for
ethical products
As well as producing many new products based on high
technology
Kalbe revenues increased approximately 18% per year.
Kalbe do activities from procurement of raw materials, finished
product manufacturing, marketing, to sales and distribution.
Equipped with a solid team and good cooperation between
departments internally and close relationships with partners, PT.
Kalbe Farma Tbk increasingly established itself in the ranks of big
companies in Indonesia.
Sustained a fairly complete business structure, namely a
distribution company and a hospital network that carries the brand
Families and Partners International Partners, including school
nurses

Business Weakness

SWOT
Analysis

Expansion into noncore-business, such as the business property

(PT Kalbe Land) and education which may result in less focus on
business development pharmaceutical company.
Weakness, basically the pharmaceutical industry is indeed a
knowledge-intensive industries and highly-regulated, but
regulatory aspects of pharmaceutical industry in Indonesia is
considered sufficient weight
The number of pharmacy (drug store) currently numbers about
6,000 pieces which concentrated in the cities to serve the people
of Indonesia are more than 200 million inhabitants.
Distributors which is quite a lot but do not have a wide reach and
an efficient network that distribution costs are relatively expensive.

Business Opportunity

SWOT
Analysis

The size of the Indonesian population and the still low per capita
drug consumption cause a potential market that could be
developed.
Opportunity to enter into six key markets in Southeast Asia with a
population reaching 500 million or approximately 8% of the world
population. The total market is more than $ 890 billion in GDP and
is likely to grow 5% per year over the next 5 years.
And export opportunities as a result of the decline of the rupiah
and the implementation of Good Manufacturing Practice good
governance in Indonesia.
The first strategy, trading based, namely the Kalbe appoint local
distributors in export destination countries. This cooperation is
very simple because it merely buying and selling activities only.

Business Threats

SWOT
Analysis

The existence of internal competition is quite hard. Something

termed civil war is especially true in marketing channels. More
specifically, in pharmaceutical products in the same category. In
the cold medicine, for example, Kalbe have Procold while a
mainstay Laboratories powerful enough, Mixagrip. Because of
Kalbe and Dankos can see each individual data, they can bring
down each other.
The existence of the economic crisis has made the purchasing
power of Indonesian folk medicine to decrease and threatening
the survival of the national pharmaceutical industry mainly for the
local market.
The implementation of the Patent Act, 1997 and revised in 2001,
Kalbe Farma pharmaceutical industry, which used to rely on the
development of its products on a copy cat strategies of new
products still under patent, it becomes harder to develop its
products.

Business
Decision
Strategies

Corporate Actions

Business
Decision
Strategies

Kalbe has obtained the approval of the AGMS on

May 14, 2014 to pay dividend of Rp.797bn,or
equivalent to Rp.17 per share. This reflects a
payout ratio of 42% for financial year 2013.
Dividend has been paid on July 2,2014.
Acquisition of PT Millenia Dharma insani which previously starting as a pharmacy and
subsequently expanding to become a clinic under the name of Mitrasana. Mitrasana Clinic
provides affordable and integrated health facilities, consisting of clinics, pharmacies and
mini markets. Currently, Mitrasana also provides hemodialysis treatments.
To accelerate expansion in the ready-to-drink segment, on July 6,
2012, Kalbe completed the acquisition of PT Hale International, a
health beverage manufacturing company, also have their own
distribution market, worth Rp 98.6billion.
Kalbe signed an agreement with PT Milko Beverage Industry to form a joint venture
company, PT Kalbe Milko Indonesia, to manufacture liquid nutritionals products with an
estimated investment of Rp 100150Bn.

Corporate Actions
The Most Extensive Distribution Network

Business
Decision
Strategies

Kalbe signed an agreement with PT Enseval Putra Megatrading Tbk. (EPMT), a public
company listed in the Indonesian Stock Exchange, This business is run through a
91.75%-owned subsidiary.
Kalbes distribution network indirectly covers roughly 1 million outlets in Indonesia,
comprising pharmaceuticals outlets such as hospitals and pharmacies, as well
consumer health and nutritional products outlets

Based on the analysis above, we can conclude that :

Conclusion

1. Due to the low growth of pharmaceutical industry in Indonesia, even there a lot of
pharmaceutical companies, but the number of companies that has good performance is
small. This causes Kalbe Farma as one of pharmaceutical company in Indonesia beside
pharmaceutical industry belong to the Government (Kimia Farma) have a strong position
in health care sector. It can be proved by the number of Beta stock return of Kalbe Farma
is greater than 1 (1.33) in the market.
2. Pharmaceutical Industry in Indonesia is vulnerable to the fluctuation of exchange rate.
It caused by more than 90% of raw materials are imported from other countries.
Compared to its neighboring countries, Indonesias healthcare market is still relatively
small. Among ASEAN countries, Indonesia has one of the lowest total expenditures on
health, averaged at only 2.6%-2.7% of its GDP. This is partially due relatively low health
insurance penetration within the population, so health related expenditures are largely
financed by households, out-of-pocket payments.
3. PT. Kalbe Farma Tbk put : Increasing the effectiveness of marketing and sales
through global brand synergies, opening new market opportunities and distribution
network to ensure product availability. as Number 1 Strategies which already defined in
2014.