Ilustration: merck officeJakarta - As mandated by the Social Security Providers (BPJS) Law, Indonesia will implement a system of universal health coverage starting in 2014, creating opportunities for companies such as publicly listed pharmaceutical and chemical firm PT Merck, a Germany-based multinational.

The Jakarta Post’s Linda Yulisman recently spoke with Merck president director Markus Bamberger on the opportunities ahead. Below are the excerpts of the interview. 

Question: What are your business expansion plans?

Answer: From an economic point of view, we will have a huge change in Indonesia after the country expands health care coverage in 2014. At Merck, we have decided to focus on preparing our infrastructure to get ready to become the most efficient [firm]. 

For example, regarding our pharmaceutical business, we are finishing a project to build the next 
step in our internal pharmaceutical warehousing system in 
preparation for the new changes. We are also focusing on the moment on efficiency programs to use resources well. 

We are also a chemical company. Just last year, we outsourced our chemical warehouse to support a new warehouse provider, giving us the opportunity for future growth. 

Are you preparing other infrastructure? 

Regarding our production, I would say it’s an ongoing process of staying at the state of the art. We are not looking for a new big manufacturing site at the moment, but are looking to utilize what we have at best and to continue the flow of investment. 

What about opportunities outside Java? 

We try to cover volume in Indonesia. If you look into our capabilities in different regions, it’s crucial to find partners with the right coverage. It is the key factor in this business. I would say that the coverage is getting better and better. This is also due to the fact that a lot of cities and medium-sized cities are growing very well. 

We also need to think about structural coverage for the different places that surround Indonesia to have better market access. 

Will you build new infrastructure to help you expand distribution? 

We are focusing on our core business and not on distribution. We are trying to find the best partners to serve our needs. We need local partners here, which is also good. In a lot of areas, we have very good and reliable local partners who are working with many multinationals.

Do you have targets for the next several years?

We are competing in our chemical business, for example, not in the mass volume market. We are a specialist company. In the chemical business, we have a very strong opportunity to grow, especially in the pharmaceutical and food business with our new products lines of Merck Millipore. 

With the integration of the Millipore business in chemical, we can now perfectly fit the needs of pharmaceutical and food companies and serve them at best with full package solutions. This is the way we are working. 

We have a second chemical division, which works on performance materials, which in Indonesia are mainly pigments. 

Our pigments are mainly sold to motorcycle and car manufacturers. This is also our strength, and this is something that I can say is a future trend of our businesses. The pharmaceutical business is also on a very good track.

What will be the major contributor to your revenue in the future? 

The growth of the general market segment in pharmaceuticals for sure will be hugely impacted by universal [health] coverage. In the next five years, universal coverage will have a huge impact on all 
pharmaceutical companies. 

What are your prospects in other markets in the region? Will there be a change local production to take advantage of the expert market.

Exports have been increasing constantly year by year. In the past year it was 25 percent of our total production. Now it’s more than 30 percent. The proportion is still increasing. 

How big is the contribution of Merck’s operations in Indonesia to its global business, and how will that change in the future? 

We never measure the impact of Indonesia on Merck globally because we cannot compare the business in part. For example, in the chemical business worldwide, we still have a liquid crystal business, which is part of the performance material business, which is not available in Indonesia because we have no customers here. 

In certain areas, Indonesia is not that massively impactful, but on the other hand, we have been contributing and growing very well for 40 years. We’re still in the business and get investment. This is the measurement I take. 

Merck Indonesia had a turnover of about US$90 million last year. It’s not a small operation. But if you look at our big picture, the Merck Group has a ¤10 billion ($13 billion) turnover worldwide, so it’s 
quite a lot. 

We have another very important role here as the production base for Southeast Asia. We are 
exporting 30 percent of our production to neighboring countries, such as the Philippines, Vietnam and Thailand. This is something that is outside the value of pure turnover.

source: thejakartapost.com