National pharmaceutical manufacturers have added their raw material supplies since early second half of 2011 to ensure that they will be able to meet demands until the end of the year. (BLOOMBERG/JB REED)
– The Indonesian Pharmaceutical Manufacturers Association estimated that the weakening of rupiah towards US dollar that is currently occurring will not affect the national pharmaceutical industry’s raw material prices. Kendrariadi Suhanda, Vice Secretary General of the Indonesian Pharmaceutical Manufacturers Association, said that the weakening of rupiah is still in tolerable levels and has not affected yet the national pharmaceutical industry’s production costs.
This is triggered by the stable raw material prices in the raw material import countries. "The effect of the weakening of rupiah towards US dollar will be seen in the next one to two months,” Kendriadi said to IFT.
According to him, national pharmaceutical manufacturers usually conduct raw material purchase contracts for shipments in the next one or two months. “Manufacturers usually anticipate fluctuations of rupiah towards US dollar by increasing raw material supplies,” he said.
National pharmaceutical manufacturers have added their raw material supplies since early second half of 2011 to ensure that they will be able to meet demands until the end of the year. Around 95 percent of raw materials are still imported from China, India, and Europe. With large dependency towards imported products, raw material cost components makes up around 25 percent national pharmaceutical production costs in Indonesia.
Based on BI, the rupiah exchange rate weakened to Rp 8,988 per US dollar in the fourth week of September 2011.
He explained that national pharmaceutical manufacturers have conducted production efficiency to maintain operating margins. This step is a solution so that pharmaceutical manufacturers do not directly adjust drug sales price when raw material prices increases. “Manufacturers cannot directly raise sales price if there are fluctuations in production costs,” he said.
The association projects that national pharmaceutical raw material imports in the second half of 2011 will reach Rp 4.77 trillion (US$ 543.78 million) to Rp 4.81 trillion (US$ 548.34 million), down 18.1 percent from the first half of 2011.
The decline of raw material purchases by pharmaceutical manufacturers in the second half is affected by Ramadan and Idul Fitri, when drug sales is estimated to decline up to 15 percent. The decrease of raw material imports in the second half is also in line with the national pharmaceutical sales decline in the second half of 2011, of 18.1 percent to Rp 17.1 trillion, from Rp 20.9 trillion in the first half of this year.
PT Pyridam Farma Tbk (PYFA), a local pharmaceutical manufacturer, said that all of the company’s raw materials are imported from several countries such as China, India, and European countries. China and India are the largest importers of raw materials for prescription drugs in Indonesia, since raw material costs of the two countries are cheaper than European countries.
Ryan Arvin, Corporate Secretary of Pyridam Farma, said that the company buys raw materials from importers in Indonesia, and the transactions always use US dollar. “The strengthening of rupiah and yuan towards US dollar in the first half of 2011 has caused raw materials for drug prices to become cheaper,” Ryan said.
Pyridam’s share price on Friday’s trade closing slightly dropped 0.6 percent to Rp 154.
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