March 27, 2009 / 11:45 AM / 10 years ago

Indonesia minster says may delay merger of 2 drug firms

JAKARTA, March 27 (Reuters) - Indonesia may delay a plan to merge two small state-controlled pharmaceutical firms, PT Kimia Farma (KAEF.JK) and PT Indofarma (INAF.JK), due to regulatory issues, the state enterprises minister said on Friday.

Both stocks have outperformed the Jakarta benchmark index .JKSE this month on news of the planned merger.

Kimia Farma shares rose 59 percent in March and Indofarma rose 42 percent, while the index is up 10.5 percent.

“We are unable to work fast because of the regulations. This ministry cannot do it alone,” minister Sofyan Djalil told reporters when asked about the progress of the planned merger, adding that his ministry needs to obtain approvals from other ministries and from parliament.

Indonesia is due to hold parliamentary elections in April and many legislators are busy campaigning.

Both Kimia Farma, with a market cap of $58 million, and Indofarma, market cap $19 million, produce and distribute generic drugs in the world’s fourth-most populous country.

Shares of Kimia Farma ended up 2.5 percent at 124 rupiah on Friday, while Indofarma shares fell 1.4 percent to 70 rupiah, compared to a 3 percent rise in the overall market. ($1=11,485 Rupiah) (Reporting by Sonya Angraini; Editing by Sara Webb)

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