Pharmaceutical BUMN Holding Seeks To Lower Drug Prices And Imports Of Raw Materials

JAKARTA - The official holding of State-Owned Enterprises (BUMN) Pharmacy is realized. PT Bio Farma (Persero) is the holding holding which is joined by two Pharmaceutical SOEs, namely PT Kimia Farma Tbk and PT Indofarma Tbk.

This has been decided through Government Regulation Number 76 of 2019 concerning the addition of state capital participation in the shares of PT Bio Farma (Persero). In addition to the issuance of the PP, the Decree of the Minister of Finance Number 862 / KMK.06 / 2019 concerning the determination of the value of additional state capital participation in PT Bio Farma's shares and the signing of the deed of share transfer agreement statement Number 37 dated January 31, 2020 has also been issued.

Thus, all of the state-owned series B shares in Indofarma were transferred to Bio Farma as an additional state equity participation.

With the transfer of all series B shares, Indofarma's series B shares are owned 80.664 percent by Bio Farma and 19.336 percent by public investors, series A dwiwarna shares remain owned by the state. The status of the company from being a limited liability company to a non-state company, and the state still controls Indofarma.

President Director of Bio Farma, Honesti Bashir said, there were several positive goals from the establishment of this BUMN Pharmacy. The first is related to the price of drugs which are still expensive in the market. He emphasized that there is an opportunity to reduce drug prices through the holding of BUMN Pharmaceuticals.

"It [cheaper drug prices] is very possible. With this collaboration, people will get more affordable drug prices," said Honesti in Jakarta, Wednesday, February 5.

Honesti said this is in line with the goal of establishing a pharmaceutical BUMN holding, namely efforts to suppress imports of medicinal raw materials, which in turn will help reduce drug prices. Holding BUMN Pharmaceuticals will push to reduce Indonesia's dependence on imports.

"Currently for the manufacture of pharmaceutical products 90 percent comes from imports. The target is clear, 90 percent of raw materials are imported, so this holding is asked to reduce it," said Honesti.

With the establishment of this pharmaceutical holding, said Honesti, there will be a synergy with the subsidiaries of each company to increase production capacity. This is because before the existence of holding, each pharmaceutical business actor competed with each other to fight over the market and did not focus on increasing the production of raw materials.

Furthermore, said Honesti, this holding is also intended to reduce the overlap of Kimia Farma and Indofarma's businesses, whose businesses often co-exist. According to Honesti, this happened to the generic drugs Kimia Farma and Indofarma, which intersect around 80 percent of each other.

He explained, starting in 2020, Kimia Farma and Indofarma will have their own business directions. Indofarma will focus on medical devices and natural extracts. The company will also develop a pharmaceutical business according to growing disease trends, such as diabetes, heart disease, cancer and stroke.

Indofarma products will adjust to diseases that develop in society, one of which is degenerative diseases that arise due to unhealthy lifestyles or behavior.

Meanwhile Kimia Farma focuses on activities in the chemical and pharmaceutical industry, such as trade and distribution networks, as well as pharmaceutical retail, health services, and asset optimization. Meanwhile, Biofarma remains focused on the production of vaccines and antisera.