Jakarta. Sovereign wealth fund Danantara wants the state-run vaccine manufacturer Bio Farma to let go of its pharmaceutical subsidiary Kimia Farma amid ambitious business overhauls.

Restructuring Indonesia’s state-run enterprises has been on top of Danantara’s to-do list, and the health sector will go under the knife sooner or later. Danantara Chief Operating Officer Dony Oskaria revealed on Wednesday that work was in place to separate Kimia Farma (IDX: KAEF) from Bio Farma. The same goes for KAEF’s retail subsidiary Kimia Farma Apotek (KFA).

“Let me reveal our plans for 2026. … So we want to make Bio Farma no longer a holding for KAEF and KFA. Kimia Farma will directly be under Danantara,” Dony told the Investor Daily Roundtable in Jakarta.

Dony sees these changes as necessary, citing the differences in the companies’ business nature and problems. 

Bio Farma revolves around vaccine production and is expected to ramp up research. KAEF deals with drug manufacturing, so their task is more about how to market the medicines and make production more efficient. Dony said that the company had been struggling to boost the utilization of its factories. KFA is in pharmaceutical retail, so it has to not only find the best location, but also keep up with its stock-keeping units, according to Dony. Going forward, KFA will not only sell medicines, but also beauty products. “An ongoing review is underway to have KFA operate independently”, according to Dony.

He admitted that KFA had trouble with foreign investment, which eventually led to an international arbitration.

“Before Danantara existed, KFA had invited a foreign investor, who now feels that they are being betrayed by what [Kimia Farma] presented in their financial statements. And they now want their money back,” Dony said.

“There are also operational problems. Foreign investors cannot own pharmacies [in Indonesia].”

The senior official was alluding to CIZJ pursuing international arbitration against KFA over financial statement manipulation, as reported by the news agency Tempo back in September 2025. CIZJ is a subsidiary of China’s Silk Road Fund(SRF). Indonesia’s sovereign fund INA had previously partnered with SRF to invest around Rp 1.86 trillion (around $111.1 million) in KFA. The company’s official website shows INA’s Akar Investasi Indonesia and CIZJ hold 20% stakes in KFA, respectively.

When news of the dispute broke, KAEF's then-acting finance director Disril Revolin Putra said that the company would "abide by the laws and regulations", while also being "cooperative to authorities". 

"KFA has taken various steps and efforts to improve its financial reporting to meet applicable accounting standards," Disril announced at the time.

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