Millennium Pharmacon Targets Revenue Growth of 19.4%

PT Millennium Pharmacon International Tbk (SDPC) targets revenue in 2011 to grow 19.4 percent to Rp 1 trillion (US$ 117 million) compared to 2010, in line with the growth in demand for drugs and health equipment in the domestic market. Andrew Loke, President Director of Millennium Pharmacon, said that the increase in revenue will boost the company's net profit which is targeted to increase 16.6 percent to Rp 4 billion this year.

He said that the company's increased revenue target is also encouraged by national pharmaceutical market growth which is predicted to be 11 percent to Rp 38 trillion in 2011. Also, its growth target is based on the increased sales targets of its principal partners.

Millennium Pharmacon budgeted a capital expenditure (capex) of Rp 9.6 billion for revitalization and expansion in 2011. It plans to fund the expansion from internal capital and bank loans from Standard Chartered Bank.

The capex will be used for the development of a new branch building, the purchase of office space for the new branch, and for the addition of delivery units.

Andrew said that the revenue growth target can be achieved based on sales in the first quarter of 2011. According to company financial report, Millennium Pharmacon generated revenues of Rp 226.07 billion in the first quarter of 2011, up 8.94 percent compared to the same period in 2010 of Rp 207.5 billion. Company net profit showed a significant increase in the first quarter of 2011, growing 4.8 percent to Rp 746.68 million from Rp 15 million in the same period in 2010.

He added that the company's revenues decreased in 2010 with the termination of its partnership with PT Merck Tbk (MERK) in December 2009. With the entrance of two local principals, PT Tobbest Busindo in the first quarter of 2010 and PT Maharupa Gatra in the second quarter of 2010, MIllenium Pharmacon targets that revenues can increase again this year.

Merck Partnership

Based on IFT Research Department analysis, Millennium Pharmacon's revenue grew an average of 22 percent in the period of 2002-2009 before decreasing 17 percent in 2010 due to the partnership termination with Merck. By using Millennium Pharmacon's annualized revenue in the first quarter of 2011, the company's revenue projection in 2011 only reached Rp 904.28 billion, below the management target of Rp 1 trillion.

The partnership termination with Merck in December 2009 resulted to a 19.6 percent decline in revenue to Rp 207.5 billion from Rp 258.2 billion in the first quarter of 2009.

In the first quarter of 2011, the company's revenue started to recover, increasing by 8.9 percent compared to 2010, although not as high as in the first quarter of 2009, when Merck was still its partner.

When the IFT Research Department compared Millennium Pharmacon's revenues in the first quarters of 2009, 2010 and 2011, it showed that the company's partnership with Merck was sufficient to support its revenue in 2009.

By partnering with two new local principals in the first and second quarters of 2010, its revenue has picked up starting from the first quarter of 2011.

Millennium Pharmacon's shares on Thursday’s trade closing increased 1.35 percent to Rp 75.