Kimia Farma Raises Sales Of IDR 9.96 Trillion In 2023 Amid The Pressured Indonesian Pharmaceutical Industry

JAKARTA - PT Kimia Farma Tbk (KAEF) posted sales that grew 7.93 percent year on year (yoy) to IDR 9.96 trillion during 2023 in the midst of depressed national pharmaceutical market conditions.

KAEF President Director David Utama in an official statement in Jakarta, Saturday, June 1, said that the company focuses on making internal improvements in a sustainable manner through operational excellence and business reorientation during 2023.

Kimia Farma managed to maintain sales growth in 2023, which shows we have strong business fundamentals and have the potential to continue to grow sustainably in the future, "said David, quoted by Antara.

As part of the Bio Farma Group Holding, his party is committed to supporting and implementing the 'clean-up' improvement program initiated by the Ministry of State-Owned Enterprises (BUMN).

Throughout 2023, efforts to clean up and improve operations were carried out, including in the presentation of the 2023 Annual Financial Report (LKT 2023), which was presented by the consolidated financial statements of all subsidiaries from the audit from the Public Accountant Office (KAP). "Kimia Farma and all its subsidiaries were audited by KAP independently. We apologize to all shareholders and stakeholders for the delay in submitting audited financial reports in 2023," said David.

During 2023, there were several conditions that contributed to the decline in the company's profit, including operational inefficiency and high value of the Cost of Sales (HPP). "One of the causes of operational inefficiency is because the capacity of the 10 factories owned is not in line with meeting the company's business needs," said David.

As a step to increase efficiency, he explained that the company will optimize production facilities through the arrangement of 10 factories to 5 factories. "HPP in 2023 is IDR 6.86 trillion, or an increase of 25.83 percent (yoy), or higher than the increase in sales which is only 7.93 percent (yoy)," said David. David explained, the increase in HPP from the lack of optimal product portfolio in accordance with initial planning, raw material price dynamics, and the trend in drugs for therapeutic needs that were different from before so that sales were less achieved. In terms of operating expenses, recorded an increase of 35.53 percent (yoy) to Rp4.66 trillion in 2023 compared to Rp3.44 trillion in 2022. "The increase in operating expenses occurred predominantly in subsidiaries, namely PT Kimia Farma Apotek (KFA), which did not occur in previous years," said David.

Meanwhile, the financial burden in 2023 increased by 18.49 percent (yoy) to IDR 622.82 billion, along with the company's working capital needs and an increase in interest rates.

"In the future, the company will carry out financial restructuring to ease financial burdens," said David. Furthermore, KAEF management found allegations of violation of the integrity of the provision of financial report data that occurred in its subsidiary, namely KFA in the period 2021-2022. Currently KAEF management is tracing further on these allegations through investigative audits conducted by independent parties. "The existence of the above factors resulted in KAEF losses on a consolidated basis in 2023 reaching Rp1.82 trillion," said David.

David explained that the company's business reorientation includes the arrangement of production facilities, arrangement of product portfolios (Ethcal segments, OGB & OTC), optimization of sales channels, cost leadership (cost leadership strategy), and transformation of Human Resources (HR).

"The transformation of human resources is carried out through the development of competencies in line with the arrangement of performance-based organizations and talent management," said David. In addition, the company is also making efforts to organize assets and restructuring finances to improve profitability, as well as improvements are also carried out in order to improve the performance of PT Kimia Farma Apotek (KFA). "In the future, steps will be taken to improve the quality of inventory and cash flow management at KFA," said David.