7-Eleven enters JV to expand into Indonesia’s pharma market

PETALING JAYA: 7-Eleven Malaysia Holdings Bhd, via its 75%-owned subsidiary Caring Pharmacy Retail Management Sdn Bhd, has entered into agreements for a proposed joint venture with PT Era Prima Indonesia to distribute, market and sell pharmaceutical products in Indonesia.

According to the group’s filing with the exchange, the joint venture will entail the establishment of a new company in Indonesia, PT Era Caring Indonesia (DistributionCo), which will be facilitated by a shareholders’ agreement with Era Prima.

The DistributionCo will undertake the distribution business of pharmaceutical products and Caring will subscribe to a 50.1% stake in the company for a cash subscription of IDR5.03 billion (RM1.48 million).

In addition, the joint venture will also entail a mandatory convertible bond subscription agreement with Era Prima and its 98.46%-owned subsidiary PT Era Farma Indonesia (RetailCo) for the proposed cash subscription of principal amount of RM7.07 million unsecured mandatory convertible interest-bearing bonds in Era Farma. Era Farma will undertake the retailing business of the products under the brand name of Wellings in Indonesia.

7-Eleven stated that the proposal represents an opportunity for it to venture into the pharmaceutical industry in Indonesia, which is one of the fastest growing pharmaceutical markets in Southeast Asia.

“The fast growing pharmaceutical industry in Indonesia as well as the partnership with the Erajaya group as the local partner bode well with 7-Eleven group’s first overseas venture of its pharmaceutical business. The 7-Eleven group is leveraging on the reputation of the Wellings brand among the Indonesians medical tourists who frequent the group’s pharmacy outlets under the Wellings brand in Penang, Malaysia,” it said.

Once the businesses of the DistributionCo and RetailCo are on-stream, they are expected to contribute positively to the future earnings of the group.

The sale of medicine in Indonesia stood at US$7.6 billion (RM32 billion) in 2020 and it is projected to expand to US$12.6 billion by 2025, which translates to a compound annual growth rate of 9.8%.