Not all collagen is the same, it’s time to choose the right one Company Update Unaudited YTD September 2014 October 2014 Forward Looking Statement This presentation has been prepared for informational purposes only by PT Kalbe Farma Tbk. (“Kalbe” or the “Company”). This presentation has been prepared solely for use in connection with the release of 30 September 2014 unaudited results of the Company. The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of their respective affiliates, and their respective commissioners, directors and employees, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Any decision to purchase or subscribe for securities of the Company should not be made on the basis of the information contained in this presentation. The presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. This presentation and its contents are confidential unless they are or become generally available as public information in accordance with prevailing laws and regulations (other than as a result of a disclosure by you) and must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person. This presentation does not constitute a recommendation regarding the securities of the Company. This presentation, including the information and opinions contained herein, is provided as of the date of this presentation and is subject to change without notice, including change as a result of the issuance of 30 September 2014 unaudited results of the Company . This presentation includes "forward-looking statements". These statements contain the words "anticipate", "believe", "intend", estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans, objectives relating to the Company's products and services and anticipated product launches) are forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. The Company expressly disclaims any obligation or reflection of any change in the Company's expectations with regard thereto, or any change in events, conditions or circumstances on which any statement is based. Market data and certain industry forecasts used in this presentation were obtained from market research, publicly available information and industry publications which have not been independently verified, and no representation is made as to the accuracy of such information. 2 Table of Contents Corporate Overview 4 Market Overview 7 Business Overview 13 Financial Overview 31 Strategies and Outlook 2014 37 Appendix 42 3 Not all collagen is the same, SECTION 1 it’s time to choose the right one Corporate Overview Corporate Overview Largest Publicly-Listed Pharmaceuticals Company in Southeast Asia • Established in 1966 and headquartered in Jakarta • A public company since 1991 and listed in the Indonesia Stock Exchange • The largest publicly-listed pharmaceuticals company in Southeast Asia • Sales breakdown by segment and by geographical location for YTD September 2014 is as follows: Prescription Distribution & Export Pharmaceuticals 5% Logistics 25% 32% Consumer Health Domestic 17% 95% Nutritionals 26% Total Sales = Rp 12,758 Bn Total Sales = Rp 12,758 Bn 5 Corporate Strategy Kalbe has a long track record of sustainable growth Inception and Entrepreneurial Enhanced Focus and Consolidation Regionalization Driven Expansion 1996–2005 2006–2015 1966–1995 2010: 2012: Disposed of Kageo Igar Jaya ♦ Generic production 1981: 1995: Established a joint venture facility comes on stream Spin-off the 1994: Disposed of 50% company, Asiawide Kalbe ♦ Acquired PT Hale distribution business Entered 2006: Philippines Inc. International of food business 2005: 1966: to PT Enseval due to 1991: energy drink (PT Bukit Scale through Inaugurated Panca Sradha ♦ Established a joint Consolidation Company government Kalbe Farma business Manikam Sakti) mergers and Kalbe as our Corporate venture company PT of Kalbe Group founded regulation IPO EPMT IPO to Arnotts acquisitions Values Kalbe Milko Indonesia 1966 1977 1981 1985 1989 1991 1993 1994 1995 1997 2005 2006 2007 2010 2011 2012 2013 1977: 1997: 2007: 2011: 2013: Strengthen 1985: 1989: 1993: Disposed of Kalbe’s Launch of new corporate EPMT Rights Issue to Cancellation of pharma Expansion to Igar Jaya Strengthening remaining 50% logo as part of finance expansion the Company’s business by consumer and nutritionals ownership in PT Bukit transformation process Increased dividend Treasury Stocks establishing health Dankos business by Manikam Sakti to Products entered every payout ratio to 50% 0f 7.7% Dankos Lab through IPOs acquiring Arnotts ASEAN countries (except acquisition of Sanghiang Perkasa Disposed glass Laos) Bintang and consolidating packaging division to nutritional business Opening of the Stem Cell Toedjoe and Schott and Cancer Institute in pharma to Sanghiang Acquired Woods Implementation of end-to- through Perkasa Peppermint brand end supply chain Hexpharm Acquired 80% of Saka management Jaya 1600 Farma Integrated information 18,000 acquisition 1400 technology systems 16,000 1200 14,000 1000 12,000 bn) (IDR 10,000 800 8,000 600 (USD mm)(USD 6,000 400 4,000 200 2,000 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sales USD Sales IDR 6 Not all collagen is the same, SECTION 2 it’s time to choose the right one Market Overview Indonesia’s Health Spending Trends Healthcare Expenditure/GDP 2010 • Total expenditure on health averaged 2.1% of 5.00% 4.8% 1.2 GDP over the 11 year period 1999-2009. 4.50% 4.1% 3.8% 1 4.00% 3.5% 3.50% 3.3% 0.8 3.00% • BPJS Health program has commenced on2.50% 2.1% 0.6 2.00% 0.4 January 2014 and with a target to cover 40%1.50%- 1.00% 0.2 50% of the population in 2014 and the entire0.50% 0.00% 0 Indonesian population by 2019. Malaysia Thailand Philippines India Singapore Indonesia Source : Business Monitor International: Pharmaceutical & Healthcare Report, Q3 2011 (Indonesia, Malaysia, Thailand, Philippines, India, Singapore) Total Healthcare Expenditure BPJS Coverage - Roadmap (Rp Tn) Growth of 13.9% 2014 2019 312 343 281 251 221 194 168 250 mn people 122 139 100% coverage 120 mn people 50% coverage 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F Up to date, more than 128 mn people have been covered, including 76.4 mn people covered by Source : Business Monitor International: Indonesia Pharmaceuticals & Healthcare Report Q3 2012 Jamkesmas program before the launch of BPJS Source : Roadmap to National Health Insurance 2012 - 2019 8 National Healthcare Insurance (Jaminan Kesehatan Nasional – JKN) Towards a universal coverage in 2019 • Mandatory for all Indonesians. • All participants to pay monthly premium to BPJS Kesehatan as administrator. Premium Payment Categories Monthly Premium Poor & near Rp 19,225 / person /month Subsidized poor residents 5% of the salaries and compensations: Formal sector • 4% paid by the employers workers • 1% paid by the employees (as of July 1, 2015) Non- subsidized Informal Rp 25,500 (class III) / person /month sector Rp 42,500 (class II) / person /month workers Rp 59,500 (class I) / person /month BPJS Kesehatan Card 9 National Healthcare Insurance (Jaminan Kesehatan Nasional – JKN) Health financing on limited resources Healthcare Tariff Reimbursement Scheme Capitation system / tariff Out Primary healthcare per capita Rp 3,000 – Rp Patient facilities 10,000 / person / month Non Capitation Primary healthcare Rp 25,000 – Rp 750,000 facilities In Patient Diagnosis-related group : Secondary & fixed payment for a bundling tertiary healthcare of treatments & medicines facilities based on diagnosis Drug Procurement • Improving availability, cost efficiency and transparency through centralized electronic procurement • Electronic tender using price caps as ceiling price 10 Pharmaceuticals Market Breakdown Kalbe – No. 1 in the Pharma Industry Kalbe continues to lead in the highly fragmented pharmaceuticals industry with over 200 players Pharma Market Breakdown Market Share Kalbe 12% a 6% OTC b 5% 41% c 5% d 4% Others 68% Branded & Ethicals Licensed Pharma Industry (Prescription) 86% (in trillion Rupiah) 59% 53.8 47.6 43.2 Unbranded 35.5 38.6 CAGR 14% 10.95% Total Market FY 2013 Rp 53.8Tn Source: IMS Health ITMA YTD 12 2013 Note: Restatement of 2012 IMS market data FY2009 FY 2010 FY 2011 FY 2012 FY 2013 11 Recent Indonesian Pharmaceuticals Regulatory National Healthcare Insurance System Presidential Decree No. 101 Year 2012 regarding Recipients of Health Insurance Premium Subsidy • Government will subsidize health