August 14, 2023
The Analysts Value Phapros' Revenue Growth Better Than Other Similar Companies.
JAKARTA, August 14, 2023 - Macroeconomics has a significant influence on the pharmaceutical industry's growth in Indonesia. Despite being hit by the pandemic in 2020 and experiencing a decrease in GDP (Gross Domestic Product) growth, post-Covid-19, this figure has increased and is now in positive territory. The IMF even predicts that Indonesia's GDP will reach 5 percent in 2023.
According to Salvian Fernando, an Investment Analyst from BNI Life Insurance, Indonesia remains consistent in economic growth, with inflation rates as of July at 3.08 percent. Data from Bloomberg also shows that Indonesia's probability of experiencing a recession is only 2 percent, much lower than other countries.
"Our inflation is controlled within the government's target range of 2-4 percent. From the healthcare industry perspective, government spending through the JKN KIS program has increased in terms of the number of participants. The percentage has reached 90 percent, meaning that the majority of Indonesians now have the Healthy Indonesia Card," he said during the webinar on PT Phapros Tbk's Sustainability Transformation to Enhance Efficiency and Competitiveness Post-Pandemic on Thursday (10/8).
According to the facilitator at the CSA Institute, the government has allocated IDR 205 trillion for the healthcare sector, indicating consistent efforts to enhance healthcare programs for the public. "Our national budget prioritizes healthcare for improvement. In the future, the government will be more serious about improving healthcare infrastructure."
Apart from the government's efforts, changes in people's behavior in accessing healthcare facilities and products have also had a significant impact on the pharmaceutical sector. According to data released by Ciptadana Sekuritas, public awareness of disease prevention has increased after 2020.
"Preventive spending includes vitamins, fitness, healthcare treatments, and more. Moreover, the percentage of the population experiencing health complaints was quite high in 2022, reaching 29.94 percent. This is a catalyst for pharmaceutical companies like Phapros," he added.
Looking at fundamental revenue aspects, Salvian further stated that Phapros' (PEHA) stock has remained relatively stable since 2015. Although it was affected by the Covid-19 outbreak in 2020, there has been improvement post-pandemic. "Revenue growth in 2022 reached 11 percent, which is quite good compared to competitors. From a gross profit perspective, it is also quite good, reaching 12 percent."
Salvian also appreciated the significant growth in net income for PEHA. "And consistently sharing dividends, with the lowest being 40 percent and the highest being 70 percent. This is a plus point for Phapros."
This state-owned pharmaceutical company, a member of the pharmaceutical state-owned holding, is also seen as fulfilling the government's mandate by prioritizing local suppliers over international ones. "There are 532 local suppliers, while international ones are only 18. And in terms of market share, there has been a 0.9 percent increase, surpassing its competitors. For comparison, Phapros' net income growth reached 153.55 percent, far superior to its peer pharmaceutical companies."
Corporate Secretary of PT Phapros Tbk, Zahmilia Akbar, stated that the pandemic has had a significant impact not only on the pharmaceutical sector but also on various other industries. Its impact on Phapros' business has prompted management to adopt new measures such as operational digitization.
"When lockdowns occurred in some countries like India, China, and Europe, it certainly affected our production, especially in the procurement of raw materials. Difficulty in importing raw materials resulted in disruptions in the supply chain from upstream to downstream, including currency instability against the US dollar," she explained.
"Our flagship product during the pandemic also experienced a decline, such as Antimo, which is a product for travel comfort. With the implementation of PPKM (Community Activity Restrictions), it certainly affected the tourism industry, resulting in a decrease in Antimo's revenue."
However, Zahmilia noted that multivitamin products like Becefort experienced significant growth due to increased demand for Covid-19 prevention products. "Its growth was over 200 percent. During the pandemic, we restructured our portfolio, shifting from OGB to OTC and ethical products. From prescription drugs to multivitamin products. Previously, marketing was done manually, but we transformed by using digital technology. We developed our own applications. Our focus is on products with the best net profit performance."
The results of implementing this strategy, she added, can be seen in the growth of generic products, which reached 29.3 percent, whereas the national growth rate was only 15 percent. "Our strategy during the pandemic not only allowed Phapros to survive but also to thrive," she concluded.