The Role of Innovation and Operational Efficiency in Enhancing Financial Performance: Evidence from PT Kalbe Farma Tbk

Abstract

This study investigates the role of innovation and operational efficiency in enhancing the financial performance of PT Kalbe Farma Tbk during the 2015–2024 period. Using a quantitative descriptive and causal design, the research employs secondary data from audited financial reports to analyze the effects of product innovation, process innovation, and operational efficiency on profitability indicators such as Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS). The results of multiple linear regression show that product and process innovations have a positive and significant impact on financial performance, indicating that innovation contributes directly to profitability through new product development and process improvement. Operational efficiency, measured by total asset turnover, also has a significant positive effect, confirming that resource optimization enhances financial outcomes. Furthermore, mediation analysis reveals that operational efficiency partially mediates the relationship between innovation and financial performance, suggesting that efficient operations are crucial in translating innovation into financial gains. The findings conclude that the synergy between innovation and operational efficiency strengthens long-term financial sustainability. PT Kalbe Farma’s consistent profitability improvement over the study period demonstrates the strategic importance of integrating innovation with operational excellence to achieve sustainable competitive advantage in the pharmaceutical sector.