Pumping Local Brands

Ade Tarya pioneered the local medical device industry with his AbadiNusa group of companies.

When Ade Tarya Hidayat, now 62, lost his job in 1980 at Dutch medical device company Ahrend, he was inspired to start his own company. To do so, Ade relied on his customer networks to build his business, who became clients of his medical and scientific device trading company. That firm, PT Abadi Scientific, was started the same year and had just three staff, one of them being his wife.

Today, Ade heads five separate companies, all included under the umbrella name of the AbadiNusa group, which together have a total turnover of approximately Rp 300 billion a year. All of them are privately held by Ade, who is a pioneer of Indonesia’s medical device industry. The five are PT AbadiNusa Usahasemesta, a scientific and medical equipment trading company, PT Renaltech Mitra Abadi, which produces hemodialysis supplies, PT Sutek Mitra Utama, which produces rubber resins, PT Technomed Asia, which produces medical soft bags and neuro-diagnostic components, and PT Sugih Instrumendo Abadi, which produces medical equipment. Ade also owns a 35% stake in PT. Trimitra Garmedindo, a garment company that specializes in blood pressure cuffs and medical bags, run by his brother Gagan Sugandi.

In the early days, Ade was content to import equipment. He then decided to move into manufacturing his own products after getting hit with rupiah devaluations, which made it more expensive for him to import medical devices into the country. The first product was a blood pressure meter and today Ade’s Sugih Instrumendo Abadi is Indonesia’s oldest and largest blood pressure meter manufacturer. He started first in 1990 by producing blood pressure meter components and in 1994 he moved into selling his own ABN brand of blood pressure meters. Monthly the company now produces 60,000 finished blood pressure meters and 90,000 blood pressure meter components that it supplies to blood pressure meter giant such as Riester, WA Baum and ADC. Annually, the company’s total export is around $6 million with its blood pressure components make up 88% of sales. The U.S. and Germany are its two biggest markets, taking up about 76% of the total exports while the rest are shipped to 20 other countries. Locally, Ade says that his firm has captured around 40% of the blood pressure meter market.

To start the business, he bought 10,000 blood pressure meters from a Japanese company and then studied them. He chose to develop blood pressure meters because many of its components are from rubber, and Indonesia is a rubber producer, so he figured he would have a competitive advantage. Beside blood pressure meters, AbadiNusa also produces around 20,000 stethoscopes per month, which also use rubber tubes. Ade claims to have 10% market share for stethoscopes.

He recalls how difficult it was for him to convince his first customers to buy ABN products. “At first, many doctors would immediately say no to me even before I explain about my product just because it is an Indonesian brand. So at that time, I just gave free samples to doctors that I met and then get back to them around three months later,” he says. “Most of them were surprised with the quality of the product and then after that decided to buy it.”

In Indonesia, around 90% of medical devices are still imported as local companies have no expertise in this field. In order to promote growth for this industry, ASPAKI (the Indonesian Association of Medical Device Industries) was founded and Ade is currently its chairman. Ade says that there are around 200 medical device producers registered by the Ministry of Health. Of those, about 90% are small or midsized enterprises that make low-tech items such as gloves, bandages and orthopedic components, with total exports around $55 million per year.

The Ministry of Health released a medical device industry development roadmap last year. The roadmap expects the BPJS to double or triple medical device demand this year and therefore will open many doors to new and existing producers. The roadmap outlines products where Indonesia might have a competitive advantage, such as hospital furniture and condoms. Accordingly, Ade says that around 14% of hospital spending is allocated to disposable items such as needles, masks and hand scrubs, where Indonesian firms have less than a quarter of the market. Ade suggests that local firms should at least half the market. “Indonesia has to start capturing the disposable and hospital furniture markets if we still find it hard to compete in the more technologically advanced products,” he says.

Soon, Ade will pass down the business to his two children. His son will take care of the medical device supply business while her daughter will take care of the manufacturing business. Ade hopes that ABN will continue to be a market leader and that the business will be “abadi” as it is named (abadi means eternal). He also says that the company is currently pushing for product innovation by making digital blood pressure meters. Currently, products with the ABN brand accounted for only 12% of its exports, he hopes that he will increase this to 30% in a couple years especially by capturing the demand at home where he expects to increase its sales at 15% per year. As the chairman of ASPAKI he also hopes that local manufacturing will be able to pick up the opportunity. “I urge Indonesian businessmen to start looking at the medical device sector. In relation to the BPJS where Indonesians will have wider access to medical services, I believe that there will be great opportunity for a local medical device company to grow,” he says.

Aside from being a pioneer of medical device industry, Ade also has many other contributions to Indonesian healthcare. One very notable contribution was when he received Ksatria Bakti Husada Arutala Award from the Ministry of Health in 2011 for his commitment in providing cheap hemodialysis treatment for kidney failure patients. “Most people who have to do hemodialysis are retirees who don’t have enough money to do on a regular basis. So I thought, it would be helpful if we can design a cheap hemodialysis mechanism,” he said. Ade then assembled a local hemodialysis machine through one of Abadi Nusa companies, Renaltech. As a result, his initiative reduces the cost of the hemodialysis from Rp 750,000 to Rp 225,000 enabling more people to afford such treatment.

as featured in Forbes Indonesia magazine September edition