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