Company Update Indonesia 11 November 2019 Healthcare | Pharmaceuticals Kalbe Farma (KLBF IJ) Buy (Maintained) Ground Checks: Investment In The Future; BUY Target Price (Return) IDR2,000 (+25%) Price: IDR1,595 Market Cap: USD5,309bn Avg Daily Turnover (IDR/USD) 49bn/3.5m Maintain BUY and IDR2,000 TP, 25% upside plus c.2% yield. We recently Analysts visited the Kalbio Global Medika (KGM) production facility in Cikarang, West Java. KGM, KLBF’s subsidiary, specialises in biosimilar products, in Jessica Pratiwi partnership with South Korean biotechnology R&D company, Genexine Inc. +6221 5093 9845 The facility has a land area of 11,000 sqm and 195 employees. The site visit
[email protected] was hosted by Daniel Iskandar Wirawan (site head) and Fahrizal Nugraha (QC manager) from KGM, and Megawati Purnama and Marcella Cloudia (KLBF investor relations team). Michael W Setjoadi Higher biosimilar sales to support declining pharma margins. Competition +6221 5093 9844 in the biosimilar market is not as strong as in generic drugs given the high
[email protected] development costs and production complexity (c.2 months/batch). The two local competitors are Combiphar Dong-A and Daewoong Infion. EBIT margin Share Performance (%) in this segment is also much more attractive at 23-25% vs 8-10% for unbranded YTD 1m 3m 6m 12m generics. Absolute 4.3 (2.8) 10.8 5.7 14.0 Currently, 90% of KLBF’s biosimilars, mainly the Hemapo drug (c.3,000 Relative 4.7 (5.5) 11.5 7.8 10.2 units/year), are for National Social Health Insurance (JKN) patients.