South East Asian Health News

Focus: 2^nd Tier SE Asian Pharmaceutical Companies

Business summary: PT Darya-Varia Laboratoria (DVL), Indonesia’s second largest pharmaceutical company, began operations in 1976, as the first soft-gel capsule manufacturer in SE Asia. In 1994, DVL became a public company. 

Product range: DVL produces more than 380 products and owns four manufacturing facilities in the Greater Jakarta area.  The company produces various pharmaceutical products, including: soft-gel capsules, syrups, dry-syrups, granulated powder, sugar coated tablets (dragees), plain and film coated tablets, lozenges, injectables, eye-drops and contact lens care solution. 

Partners: In 1989, the company formed a strategic alliance with PT Indoncom Mutiara Pertiwi and First Pacific Group (associated with the troubled Salim Group).  In 1997, DVL disposed of its shareholdings in PT Tandbam Jaya, PT Smith, Nephew Indonesia, and also disposed of its stake in PT Gelatindo Mukti Graha.  The company has also received significant support from First Pacific in connection with its aggressive acquisition activities. 

Revenues: Net sales increased in 1997 to Rp254.0bn (US$17.4m) from Rp203.2bn (US$13.9m) in 1996.  Net profit in 1997 increased to Rp28.5bn (US$1.9m) from Rp23.7bn (US$1.6m) in 1996. 

Senior management: Sonny Kalona, President Director; Delfin L. Warren, Managing Director; Oscar E. Carag, Director of Finance and Administration; Roberto Libarnes, Director of Sales and Marketing and Utoyo Pusposuharto, Director. 

Strengths and weaknesses: With the acquisition of Prafa and Hoslab and 90% acquisition of Kenrose, DVL should become more efficient and strengthen its position in the ethical drugs market.  However, productivity improvement will only be seen next year as DVL is having problems digesting the acquired companies.  Growth this year will be slower than had been expected. 

Key issues for any venture: DVL is controlled by the Salim Group’s Hong Kong-based First Pacific arm, through PT Indocom Mutiara Pertiwi which owns 49% of DVL.  The crisis may provide incentive for First Pacific to divest DVL, a non-core business. 
 

Business summary: Tempo Scan Pacific (TSP) is Indonesia's second largest pharmaceutical-cum-personal care company.  TSP is the holding company of the pharmaceutical, personal care and distribution business of the Tempo Group. The company manufacturers mainly OTC products, which account for 75% of pharmaceutical sales. The remaining 25% is the sale of ethical drugs. 

Product range: The company's two major products are Bodrex (cold medicine) and Hemavaton (multivitamins). 

Partners:  TSP's major shareholder is PT Bogamulia Nagadi (75.4%).  The company has also acquired Supra Usadhatama, a leading OTC player in the Indonesian market. 

Revenues: Net sales increased in 1997 to Rp655.2bn (US$45.0m) from Rp474.2bn (US$32.5m) in 1996.  Net profit decreased to US$3m in 1997 from US$4m in 1996. 

Senior management: Handojo Selamet Muljadi, President Director and Joseph Ronald Kosasih, Vice President. 

Strengths and weaknesses: The increasing dominance of MNCs such as Unilever will make it very difficult for the company to increase market share or to launch new products.  However, TSP's acquisition of Supra will provide a stronger marketing position, a wider product portfolio and will give the company efficiencies from operational synergies. 

Key issues for any venture: Tempo Scan Pacific is well placed for the introduction of a patent law in 2000, as only 11% of its revenues are derived from ethicals. Tempo Scan Pacific has acquired 60% of the distributor PT Tempo which, has greatly improved its distribution capabilities and has added over ten new principals to TSP’s stable. 
 

Business summary: DHA, member of the Haw Par Group, is a leading Singaporean pharmaceutical manufacturer.  The company is a wholly owned subsidiary of Tiger Medicals Ltd, the pharmaceutical division of Haw Par Brothers International Ltd.   

Product range: DHA produces generic ethical pharmaceuticals and is the contract manufacturer of Tiger Balm and Kwang Loong Oil.  In addition to DHA's domestic sales, the company also sells its products to Malaysia, Brunei, Hong Kong, Philippines, Sri Lanka, Papua New Guinea, Vietnam, Myanmar, the Maldives and the Pacific Islands.  DHA's products manufactured include: creams, tablets, capsules, liquid preparations, powders and granules - all large scale.  Over 40% of the company's pharmaceuticals are exported. 

Partners:  DHA is a member of the Haw Par Group of Haw Par Brothers International, Ltd. 

Revenues:  Revenues for 1997 were US$20m. 

Senior management: Quek Chin Teck, Senior Manager of Marketing. 

Strengths and weaknesses: DHA, like other generic pharmaceutical manufacturers, has a difficult time using its company name to sell its products in pharmacies.  Consumers tend to buy products made by brand names that they are familiar with, such as competing pharmaceutical giants Pharmacia & Upjohn, Glaxo Welcome and Schering Plough. However, DHA has a considerable presence in the market, selling through general practitioners rather than pharmacies. 

Key issues for any venture: Haw Par has always stated that it is a long-term owner of DHA, but it needs technical assistance.  The portfolio is focused on Chinese herbal remedies with strong brand names but with little technical sophistication. 
 

Business summary: Biophile began as a public care facility providing low and no cost dermatological treatment for limited income patients.  The company developed into the leading producer of medicated cosmetics in Thailand. 

Product range: Biophile is organized into four distinct divisions: 

PCIC includes the Pan Cosmetics and MCI brands and covers production, marketing and distribution of medicated cosmetics, skin/personal care, color cosmetics and perfumes. 

RPC International includes Topderm, Rajdevee Pharmaceutical / BioConcepts and covers production, marketing and distribution of pharmaceuticals, healthfood supplements and medical instruments. 

PBC includes Pan Clinics, Pan Beauty Care Centers and La Bretagne and provides treatment and advice on skincare by dermatologists and technicians. 

RC Group includes Rajdhevee Polyclinics, Ploenchit Hi-Tech Laser Centers, Lions Suphanahong Dermatology Clinic, Suphanahong Medical center and the Haircenter Clinic and covers the provision of medical care with a focus on dermatology. 

Partners: The company is a partner in Mehl/Biophile International (USA) and Sls Biophile (Wales).  Biophile works in cooperation with Kunming Medical College in Malaysia. 

Revenues:  Approximately US$50m per annum post devaluation, including approximately US$30m in medicated, branded cosmetics. 

Senior management:  Khun Pinsawat Suvanprakorn, Dr. Anucha Chintakanond and Ms. Chutamas Premchonporn. 

Strengths and weaknesses: Biophile plans to extend its business overseas through JV activities.  The company has specialized in cosmetic products, some specifically for Asian skin types, as well as reaching out to a larger, international population.  Biophile will continue its aggressive R&D policy, providing improved products in each of its four groups. 

Key issues for any venture: The company has significant name and brand recognition in Thailand as well as a large and efficient distribution network.  Biophile is interested in further developing its skin care/medicated cosmetics and pharmaceutical business. 
 

Business summary: Medicap is a Thai manufacturer of soft-gel capsules.  The company owns Medicraft and Natural Care brands.  Medicap distributes its products through its subsidiary company Mega Products, with facilities in Vietnam, Myanmar, Cambodia and Thailand. 

Product range: Medicap produces soft-gel capsules while its Mega Products subsidiary manufactures "Nutritional" or "Nutracuticals" products such as vitamins, minerals and "alternative" and "complementary" medicine.  The alternative medications produced include antioxidants, fat/weight loss products, cholesterol reducers, natural anti-depressants and beauty and skin care. 

Partners:  Japan Asia Investment Co Ltd invested US$1m in Medicap in 1996. 

Revenues:  Projected net sales for 1998 are US$8.2m. 

Senior management: Kirit C. Shah, Chairman and Vivek Dhawan, Managing Director. 

Strengths and weaknesses: Although Medicap faces stiff competition from companies such as Diethelm, Inchcape and Zuellig, Medicap is relying on its flexible services and low fees to compete.  Medicap's plans for future development and success are based on growth in existing markets, with new products and new principals, as well as new markets in Russia, Indonesia and some African countries. 

Key issues for any venture: Medicap is one of the largest soft-gel capsule manufacturers in SE Asia, but will have trouble competing against foreign market entrants.  The company is beginning to consider the need for foreign partners.