Indonesia’s Kalbe Farma on the Hunt for a Healthy Acquisition

By webadmin on 03:30 pm Jun 03, 2012
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Francezka Nangoy

Kalbe Farma, one of the country’s largest pharmaceutical companies, has set aside at least Rp 500 billion ($53.5 million) to finance acquisitions this year as part of its attempts to boost revenue.

The company is currently running the ruler over “two or three” health food and beverage companies as acquisition targets, with the additions likely to join its consumer health products division, corporate secretary Vidjongtius told the Jakarta Globe on Friday.

“There is continuous exploration for acquisitions,” he said, adding that the company had budgeted at least Rp 500 billion to finance the purchases.

These potential acquisitions are in addition to the company’s existing proposal to acquire Hale International, a beverages company that produces Original Love fruit juice. Hale has a 30 million liter annual production capacity.

Vidjongtius said the company had signed a conditional sale and purchase agreement on Wednesday to buy 100 percent of Hale for Rp 100 billion. He said Kalbe was conducting a due diligence assessment on Hale and expected to conclude the deal soon.

“It will take another one or two months, but I think the due diligence and acquisition can be completed in July,” he said.

Vidjongtius said he expected the Hale acquisition to boost the contribution of consumer health products to revenue to 25 percent within five years, from 20 percent now. He added that if Kalbe proceeded with the other three acquisitions, the goal would be reached much sooner.

He said growing awareness of healthy living among Indonesians meant there was a large potential market for Kalbe.

“In term of market size, there is big potential in this country. Of course, it also has something to do with improving purchasing power in this market” he said.

The company is aiming for revenue growth of 18 percent to 20 percent this year, from Rp 10.91 trillion last year.

In the first quarter, the company posted 28 percent increase in net income to Rp 403 billion from Rp 316 billion in the same period last year. Revenue grew to Rp 3 trillion in the first three months this year from Rp 2.35 trillion a year earlier.

Beyond the consumer health products division, Kalbe also has units of its business focused on prescription pharmaceuticals, nutrition and distribution and packaging. Energy drink Extra Joss is among its flagship products. According to the company’s website, it employs more than 15,000 people across Indonesia.

Shares in Kalbe rose 1.3 percent to Rp 3,925 on the Indonesia Stock Exchange on Friday. They have advanced 15 percent so far this year.