Vision : To be the best Indonesian global healthcare company driven by

innovation,strongbrands,andexcellentmanagement.
Mission:Toimprovehealthforabetterlife

Establishedin1966,Kalbehasgonealongwayfromahumbleoperationthat
startedinagaragetobecometheleadingpharmaceuticalcompanyinIndonesia.
Growingbothorganicallyandthroughmergers&acquisitions,Kalbeexpands
itsbusinessinterestsandtransformeditselftobecomeaproviderofanintegrated
healthcaresolutionthroughits4businessdivisions:thePrescriptionPharmaceuticals
Division (24% contribution), Consumer Health Division (17% contribution),
Nutritionals Division (29% contribution) and Distribution and Logistics Division
(30% contribution). These business divisions manage an extensive portfolio of
prescriptionpharmaceuticalsandOTCdrugs,energydrinkandnutritionproducts,as
wellasarobustdistributionarmservingoveronemillionoutletsacrossIndonesias
vast archipelago. In the international market, the Company has established its
footprint in ASEAN countries, Nigeria, and South Africa, positioning Kalbe as a
national pharmaceutical company with a competitive edge in the export market.
Since its founding, the Company has been aware of the importance of
innovationtogrowitsbusiness.KalbeFarmahasestablishedarobustresearchand
development activities in leading edge generic drug formulation and continuous
development of innovative consumer and nutritional products. Through strategic
alliances with international partners, Kalbe have also started to support several
successfulresearchanddevelopmentventureworkingoncancerdrugs,stemcellsand
biotechnologyresearch.Withmorethan16,000employees,todayKalbeFarmaisthe

largest healthcare provider in Indonesia, with unrivalled marketing, branding,

distribution,nancialstrengthandresearchanddevelopmentexpertise.KalbeFarmais
also the largest publiclylisted pharmaceutical company in Southeast Asia,
commanding a market capitalization of Rp52.1 trillion and sales turnover Rp17.9
trillionbyendof2015.
CorporateValues
1.Trustistheglueoflife
Withmutualtrustandrespect,andbyupholdingopennessandhonesty,wemanage
theCompanytodelivertheverybestforall.
2.Mindfulnessisthefoundationofouraction
Mindfulness is the foundation for us to take actions that are consistent with the
Companysvaluesinordertoalwaysberesponsivetotheneedsofallstakeholders,
society,andtheenvironment.
3.Innovationisthekeytooursuccess
Startingfromsimplicitycombinedwithaspirittosustaininnovation,wegrowto
improvethequalityoflife.
4.Strivetobethebest
We provide equal opportunity to every individualto develop their potentials and
become a reliable human being through the culture of continuous learning and
improvement.
5.Interconnectednessisauniversalwayoflife
Aspartoflife,weassumeourroleandmaintaindiversityandharmonybymaking
effortsthatareusefultoothersandtothefuturegenerations.
RecognitionsandAwards

Indonesia Pharmaceutical Company of the Year from Frost & Sullivan Indonesia

ExcellenceAwards2015Frost&Sullivan
TheWinnerofSPEx2Awards2015astheBestinPharmaceuticalIndustryGML

PerfomanceConsulting&TEMPOMediaGroup
BestCompanywithExcellentPredicateinPharmaceuticalIndustryfromIndonesia
GoodCorporateGovernanceAward2015EconomicReviewandIPMIInternational

BusinessSchool
Mother&BabyReadersChoiceAward2015forMorinagaandMilnaIndonesia

Mother&BabyMagazine
Indonesia Best Brand Platinum Award 2015 for Komix for its Achievement of
IndonesiaBestBrandAward13ConsecutiveYears(20032015)SWAMagazineand

MARSResearchSpecialist
Most Recommended Brand 2015 in Cold Medicine Category for Mixagrip from
Word of Mouth Marketing Award 2015 SWA Magazineand Onbee Marketing

Research
IndonesianCustomerSatisfactionAward2015forPromagasTheBestinAchieving
TotalCustomerSatisfactioninAntacidCategoryFrontierConsultingGroupandSWA

Magazine
TheWinnerofSPEx2Awards2015astheBestinPharmaceuticalIndustryGML

PerfomanceConsulting&TEMPOMediaGroup
Indonesia Best Brand Platinum Award 2015 for Komix for its Achievement of
IndonesiaBestBrandAward13ConsecutiveYears(20032015)SWAMagazineand

MARSResearchSpecialist
IndonesiaWOWBrand2015forMorinaga,Promag,Entrostop,WoodsLozenges,and

FatigonMarkplus,Inc
BestCompanywithExcellentPredicateinPharmaceuticalIndustryfromIndonesia
GoodCorporateGovernanceAward2015EconomicReviewandIPMIInternational

BusinessSchool
Most Recommended Brand 2015 in Cold Medicine Category for Mixagrip from
Word of Mouth Marketing Award 2015 SWA Magazineand Onbee Marketing

Research
IndonesiaWOWBrand2015forMorinaga,Promag,Entrostop,WoodsLozenges,and

FatigonMarkplus,Inc
IndonesianCustomerSatisfactionAward2015forPromagasTheBestinAchieving
TotalCustomerSatisfactioninAntacidCategoryFrontierConsultingGroupandSWA

Magazine
Top Brand Award 2015 for Diabetasol, Entrasol, Extra Joss, Mixagrip, Komix,
Promag,Entrostop,andFatigonFrontierConsultingGroupandMarketingMagazine

GlobalandIndonesianEconomy2015inReview

The world economy continued to undergo a difficult period in 2015.

UncertaintyovertheimpactofanimpendingratehikebytheUSFederalReserve,
alongwithweakeconomicdatafromkeyemergingmarketslikeChina,keptmost
economies under considerable pressures as they struggled to recover. Progress of
Eurozonerecoveryremainedfeeble,whileJapan,too,haslostmomentumin2015.
SlowinggrowthinChinaandotheremergingmarkets,hasweighedonboth
pricesanddemandforcommodities.
Asaresult,Indonesia and other key commodity exporters, have to witness
declining exports contribution, which in turn dentedthenationsGDPgrowth.
UncertaintiesovertheUSFederalReservesinterestratehasaddedfurtherworrieson
itsimpacttoIndonesiasRupiahcurrency,althoughtheratehikeattheendoftheyear
didnottriggermassivecapitalightfromemergingeconomies.Indonesiaseconomy
onlyexpanded4.79%in2015,shortofthetargeted5.7%.
The Government also faced wider budget de cit on the back of shrunken
exportandtaxshortfall,whichhavefurtherweakenedtheailingRupiah,closingat
Rp13,795againsttheU.S.Dollarbyyearend.
Annualinationhasfallentothelowestrateinveyearshowever,reachingto
just3.35%byyearend.
IndonesiasHealthCareandPharmaceuticalsIndustry

Theyear2015markedthesecondyearforIndonesiasUniversalHealthcare
Coverage,oralsoknownasJaminanKesehatanNasional(JKN).Ofciallylaunchedin
2014asthecountrysnationwideinsurancescheme,JKNsawaphenomenalgrowth
injusttwoyears,withtotalmembershipsreachingover150millionbyyearend.

Although the number of participating hospitals and healthcare provider

facilitiescontinuedtogrow,theJKNprogramisstillfacingplentyofissues,from
longqueuestoshortageofhealthcentersanddoctorsacrossthearchipelago.
Healthcareinfrastructureremainsrelativelypoorinthecountry,especiallyin
theremoteareas.
Addingtothat,theprogramhasalsobeenstrickenwithnancialdifculties
fromadecitofclaimpaymentagainstpremiumsithasreceived.Notwithstanding,
JKNiswidelyconsideredasastrategicandimportantsteptowarduniversalaccessto
healthcareservicetoallIndonesians.
Inmediumtolongterm,JKNpromisesexcitingpossibilitiesforthehealthcare
sector. JKN will increase demand for healthcare services and pharmaceuticals
products,asmorepeoplewillobtainaccesstomodernhealthcareservices.
Thissectorisstillattheearlystageofitsgrowthcurve.Indonesiaspercapita
healthcarespendingisstillbehindotheremergingeconomiesandisamongthelowest
intheworld.Healthcareinfrastructureisalsolaggingonmanymeasures,suchasthe
numbersofhospitalbeds,physiciansandnurses.
Intheprescriptionpharmaceuticalsindustry,theJKNprogramhasbecomethe
major driver behind accelerated demands for unbranded generic products as this
programmostlyprioritizesgenericdrugs.Weexpectthatsharesofunbrandedgeneric

productstotheIndonesiantotalethicalmarketwillcontinuegrowing,goingforward.
The healthcare market is also supported by Indonesias favorable
demographics.Increasedhealthawarenessandrisingpersonalincomes inthefast
growinghigherendsegmentwillliftdemandsforservices beyondthoseprovided
through the JKN scheme. This higherend segment will drive higher consumer
spendingonnutritionalproductsandfoodsupplements.
In the dairy market, Indonesias annual per capita milk consumption is
relativelylowerthanmostASEANcountries,providinglucrativemarketandgrowth
opportunitiesforthecountrysmilkprocessingindustry.
Despitethepositiveoutlook,Indonesiashealthcareindustryisstillheavily
dependentonimportedrawmaterials.ThevolatilityofRupiahcurrencyinthepast
fewyearshasexposedtheindustrytogreatercurrencyrisksthatraisesthecostsof
imports,andthuserodingprotmargins.
Inaddition,Indonesiasgeographicallandscapeandsubstandardinfrastructure
presentscostlydistributionchallengetoensureproductavailabilityacrossthecountry.
In the long run, healthcare enterprises can make a major difference in
Indonesia through strategic investments and innovative solutions, to establish the
foundationforfuturegrowth.
KalbeInternational
Kalbesinternationalventurecontinuedtoenjoyconsistentgrowthinthepast
fewyears.TotalexportrevenuereachedRp888.7billionin2015,a11.5%growth
fromRp796.9billionin2014.
KalbeInternationalbenetsfromtherapideconomicgrowthandfavorable
customer base that have made Southeast Asia an attractive market for healthcare
companies.TheimplementationofASEANEconomicCommunityin2016willopen
more exciting opportunities for the Company, as it aspires to increase Kalbes
presenceintheregionalmarket.

On top of the ASEAN markets, Kalbes consumer health, nutritionals and

pharmaceuticalsproductsarealsowellreceivedinseveralothercountriesinAsiaand
AfricathatsharethesamemarketcharacteristicsasIndonesia.
HeadquarteredinSingapore,KalbeInternationalistaskedwithmanagingthe
Companysoverseasbranchesandrepresentativeofcesin10countries:Singapore,
Malaysia, the Philippines, Vietnam, Myanmar, Thailand, Cambodia, Sri Lanka,
NigeriaandSouthAfrica.
KalbeInternationalsachievementissupportedbytargetedinitiativestoboost
the brand equity of the marketed products, with a focus on key markets in the
Philippines, Vietnam, Myanmar and Nigeria. The success also rests on efforts to
improveproductavailabilitybydeepeningourdistributionpenetrationinconjunction
withlocaldistributors.
WiththeCompanyspositionasthelargestlistedpharmaceuticalscompanyin
Southeast Asia, Kalbes diverse range of products that meet international quality
standardanditsinnovationleadership,KalbeInternationalissettodeliversustainable
businessgrowthandtobecomeanimportantcontributortoKalbeGroupsoverall
performance.
Strengths

Kalbeisamarketleaderforhealthproductsandamarketleaderforethical
product.

KalbecontinuestomaintainitspositionastheleadingplayerinIndonesias
prescriptionpharmaceuticalsmarket.ThroughitsPrescriptionPharmaceuticals
Division, the Company carries a comprehensive range of products for all
incomegroups,fromunbrandedgenericdrugsforthemassmarketsegment,to
branded generics and licensed drugs for the countrys rising middle and
premiumsegments.

ThisDivisionsmarketingteamcomprising2,500medicalrepresentativesis
consideredasthelargestmarketingarminthecountry,whichhasbecomeone

ofPrescriptionPharmaceuticalsDivisionscompetitiveedgesformanyyears.

On16December2005,Kalbemanagementhasmanagedtodothemerger
withEnsevalandPTDankosbecameonecompanyinordertocreateoneof
thelargestrecordedandpharmaceuticalcompaniesinSoutheastAsia.

PTKalbeFarmaTbkwhichestimatedthecostoftheresearchalsohelpedthe
companyinthepharmaceuticalsector

InternationalsalesofPTKalbeFarmaincreasingcontinuously

Weakness

Itsexpansiontoanoncorebusiness,suchastobusinessproperty(PTKalbe
Land)andeducation(STIEKalbe).Thisexpansionmayresultinlessthefocus
ofthecompanyinthedevelopmentofthepharmaceuticalbusiness.

FinancialRisk

Inthecourseofbusiness,KalbeGroupalsofacesfinancialrisksarisingfrom
uctuationsinforeigncurrency,budgets,nancing,andliquidity.Sincemostof
Kalbesrawmaterialsareimported,theCompanyisvulnerabletouctuations
inforeigncurrencies.Fluctuationsinforeigncurrencies,mainlyU.S.Dollars,
exertasignificantimpactonproductioncosts.

Theactiveingredientofwhichwastobeproducedinthecountrynumbersare
meaningless and yetcan beobtainedat competitiverates compared tothe
sourcesfromabroad

Threats

Indonesia'spharmaceuticalindustryishighlydependentforsome90percent
on imports of raw materials from abroad. Considering that sales in the
nation'spharmaceuticalindustryareexpandingbyaround10percentyearon
year(y/y),itimpliesimportsofrawmaterialswillcontinuetorise,especially
now the Indonesian government is eager to turn its ambitious universal

healthcarescheme(inIndonesian:JaminanKesehatanNasional,orJKN)into
asuccess.JKN,whichwasimplementedbythesocialsecurityagencyBadan
Penyelenggara Jaminan Sosial Kesehatan (BPJS) in early 2014, aims to
provideallIndonesiancitizenswithaccesstoawiderangeofhealthservices
(by2019).IfconditionsdonotchangebuttheJKNprogramisasuccess,then
itwouldimplyasignificantsurgeinimportsofrawmaterials,puttingpressure
onIndonesia'stradeandcurrentaccountbalances.

BusinessCompetitionRisk

In todays era of open markets, competition in the pharmaceutical

sectorand

otherhealthproductswillincrease,consideringthenumberof

internationaland

localproducerscrowdingtheeld.Competitionarisesin

variousaspects,including

access to nancial resources and operational

capabilities,whereinternational

competitors are leading, as well as

productinnovation,marketingandpromotion.

All players also need to

addresschangesinmarketdemand,limitedpurchasing

power

and

readinesstofaceunhealthybusinesscompetition.
Opportunities

GiventheIndonesiangovernmentiseagertodevelopitsuniversalhealthcare
program(launchedin2014),demandforpharmaceuticalproductsinIndonesia
is expected to rise further. This might be a big chance for Kalbe to keep
expandingitsbusiness.

In the 11th

economic stimulus package, released by the Indonesian

government, the government

aims to boost the domestic production of

medicines' raw materials, particularly for five product categories (namely
biotechnology, vaccines, herbal extracts, active pharmaceutical ingredients
andmedicaldevices).

PolicyRecommendation

From the net income margin, its better for Kalbe to not import the raw

materialscontinuously.

ForsolvingRiskManagement
by setting reserves in foreign currency funds to meet import
requirements,aswellas

by maintaining sufficient raw material and

finishedgoodsinventorywhilealways

paying close attention to

domesticandglobaleconomicconditions.

ForsolvingBusinessCompetitionRisk
Management of this risk can be done among others by enhancing
sensitivityto

market changes and ability to adapt and seize new

opportunities.Kalbeisalso required to increase its ability to offer more

valuesfromitsproductsandservices

ascomparedtothoseofferedby

competingrms.

Werecommendtodevelopthelocalchemicalindustrywhichcanpropupthe
procurement for the basic ingredients of making drugs. Also, Improve
coordinationbetweenrelatedindustriessuchasthepetrochemicalindustryand
thepharmaceuticalindustry.