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chika sembiring

on 17 November 2013

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Transcript of KALBE FARMA, TBK

Stock Risk, Business Risk, Market Risk and Business Portfolio

Risk is defined as this uncertainly of outcome, whether positive opportunity or negative threat, of action and events. The risk has to be assessed in respect of the combination of the likelihood of something happening, and the impact which arises if it does actually happen.
It is important for the company to consider about stock return and risks. Stock return represented by capital gains/losses that calculated by the movement of stock prices. Market Return represented by gains/losses of market that calculated by the movement of market indexes (Jakarta Composite Index/IHSG). The risk calculated by the deviation standard of stock return and market return. Capital gain or capital losses can we see when the return is positive or negative. When the return is positive, it will be capital gain. When the return is negative, we can call it as capital losses.
BCG matrix is a chart that was created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations to analyze their business units, that is, their product lines. BCG Matrix helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.
When examining business risk there are four ratio to focus on: the debt-to-equity ratio, interest coverage ratio, maximum earnings decline ratio, and the financial leverage ratio.
To be the best Indonesian healthcare company driven by innovation, strong brands, and excellent management.
To improve health for a better life.
The Scientific Pursuit of Health for a Better Life

Kalbe Farma applies some risk management in order to manage the risk of the fluctuation of exchange rate by:
1. Increase 2%-3% of the selling price of the milk, nutrition, and over-the-counter drugs products as the impact of increasing cost of productions, such as labor wages and cost of energy.
2. Production efficiency by finding alternatives of other cheaper raw materials in similar quality.
Compared to its neighboring countries, Indonesia’s healthcare market is still relatively small. This is partially due relatively low health insurance penetration within the population, so health related expenditures are largely financed by households, out-of-pocket payments. (Source: Business Monitor International 2012). As country with vast population and growing middle class base, Indonesia has the potential to be a lucrative healthcare and pharmaceuticals market, projected to reach Rp312 trillion by 2015. In the long run, the outlook for the healthcare sector is very promising, especially given the still relatively low healthcare spending in Indonesia. The purpose of this study is to analyze about the risk, stock return and market return of one of the biggest pharmaceutical company in Indonesia that is Kalbe Farma. Beside of that we also analyze the BCG matrix of Kalbe Farma product division in Indonesia’s pharmaceutical sector.
The story of Kalbe Farma begins from a humble beginning in the founder’s garage in 1966 as a pharmaceutical company driven by a set of basic principles: innovation, strong brands and excellent management.

Growing both organically and through mergers & acquisitions, Kalbe’s business interests are spread across 22 subsidiaries, grouped into four business divisions

Internationally, the Company has established its footprint in Southeast Asia and Africa, positioning Kalbe as a national pharmaceuticals company with a competitive edge in the export market.

Today Kalbe is a leading provider of “comprehensive healthcare solutions”, from pharmaceuticals, nutrition, health foods and beverages to medical devices, including primary healthcare services. Kalbe is the largest publicly-listed pharmaceutical company in Southeast Asia, with a market capitalization of Rp53.8 trillion and Rp13.6 trillion sales turn over by end of 2012
Prescription Pharmaceuticals Division
Consumer Health Division
Nutritionals Division
Distribution & Logistics Division
Factors that affect stock prices are as follows:
Fundamental condition of company.
Interest Rate
Foreign Currencies
Stock Price Index (IHSG)
News and Rumors
Beside the ratio, we also analyze the business risk with the fluctuation of sales, operating profit, net profit margin and net income. Business risk is the possibility that a company will have lower than anticipated profits, or that it will experience a loss rather than a profit. Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, and the overall economic climate and government regulations.
Rate of market growth is an increase in the demand for a particular product or service over time. Market growth can be slow if consumers do not adopt a high demand or rapid if consumers find the product or service useful for the price level.
Relative market share indexes a firm’s or a brand’s market share against that of its leading competitor. The purpose of the “relative market share metric” is to access a firm’s or a brand’s success and its position in the market. Relative market share offers a way to benchmark a firm’s or a brand’s share against that of its largest competitor, enabling managers to compare relative market positions across different product markets.
KALBE FARMA: Distribution and Logistics Division.
Nutrition's Division :Prenagen and Diabetasol
Extra Joss.
KIMIA FARMA: Pharmaceutical and Generic Drugs.
KALBE FARMA: Animal Health Product
KIMIA FARMA: Cosmetic Product (Marcks Powder)
KALBE FARMA: OTC Drugs (Promag and Mixagrip)

KALBE FARMA :Nitros ( a product extention of extra joss brand). The market share of Nitros is still low, but because the extention product of Extra Joss, the growth rate is increase continously
KIMIA FARMA : OTC. The market growth is increase, but the market share is low because other competitor in similar product like promag has higher market share than magasida.
Based on the analysis above, we can conclude that:
1. Due to the low growth of pharmaceutical industry in Indonesia, even there a lot of pharmaceutical companies, but the number of companies that has good performance is small. This causes Kalbe Farma as one of pharmaceutical company in Indonesia beside pharmaceutical industry belong to the Government (Kimia Farma) have a strong position in health care sector. It can be proved by the number of Beta stock return of Kalbe Farma is greater than 1 (1.33) in the market.
2. Pharmaceutical Industry in Indonesia is vulnerable to the fluctuation of exchange rate. It caused by more than 90% of raw materials are imported from other countries. Compared to its neighboring countries, Indonesia’s healthcare market is still relatively small. Among ASEAN countries, Indonesia has one of the lowest total expenditures on health, averaged at only 2.6%-2.7% of its GDP. This is partially due relatively low health insurance penetration within the population, so health related expenditures are largely financed by households, out-of-pocket payments.

Optimistically, we sure that Indonesia’s positive operating environment is expected to continue in 2013. The global economy is definitely improving with China and the U.S. showing encouraging recovery, giving some important support to global economic activity. In the long run, the outlook for the healthcare sector is very promising, especially given the still relatively low healthcare spending in Indonesia. Kalbe maintained its dominance in the highly fragmented Indonesian pharmaceuticals market, with a market share of 12% (source: IMS Health 2012) among the 200 players. With a complete product range of patented, branded generic and unbranded generic drugs, Kalbe caters to all income groups of the society.
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