Pharmaniaga upbeat on securing govt concession extension

The current CA for Pharmaniaga to supply medicines to public health facilities nationwide will expire in November 2019


Pharmaniaga Bhd remains confident of securing an extension to its concession agreement (CA) with the federal government, despite authorities studying the firm for a potential monopoly in the pharmaceutical sector.

The current CA for Pharmaniaga to supply medicines to public health facilities nationwide will expire in November 2019.

Pharmaniaga MD Datuk Farshila Emran (picture) said the firm is able to continue as a government concessionaire as it has a proven track record in delivering cost savings and high efficiency, in addition to being a Malaysian company, while its two competitors are multinational companies.

“We are very confident, looking at our performance. We think that we also promote healthy competition, so we have no issues…because we believe in our capacity and capabilities,” she told reporters after the company’s AGM in Petaling Jaya yesterday.

Farshila said Pharmaniaga has fulfilled all government-backed key performance indicators (KPIs) such as fast delivery and availability in remote areas, while also having the necessary infrastructure and technology in place.

“With all these things, it will be very, very difficult for others to deliver what we are delivering to the government.

“Nobody can do what we are doing at this point in time. Being local and efficient is what the government is looking at,” she said when queried on the possibility of the CA not being renewed.

Earlier this month, Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail said Pharmaniaga is among four firms being reviewed by a Cabinet committee for monopoly. The committee is chaired by Economic Affairs Minister Datuk Seri Mohamed Azmin Ali.

Pharmaniaga was previously alleged of being the sole concession holder to purchase, store and distribute drugs and other medical products to public health facilities nationwide, although the Health Ministry (MoH) said in June last year the speculation was untrue as there were other vendors supplying directly to public hospitals and clinics.

According to Pharmaniaga director Mohd Suffian Haron, the group has engaged the MoH and other related authorities on the matter.

“The processes that we have gone through seem to give a very encouraging trend and we don’t see any negative outcome from what has been happening. So far, everything leads to a favourable conclusion.

“We would like to believe that this can be concluded in the short term, before the concession ends at the end of this year. But the trend is to extend the period to enable negotiations between us and the authorities,” he said.

The company’s concession business currently contributes about 53% to Pharmaniaga’s total revenue.

Going forward, Farshila said Pharmaniaga’s financial performance this year is set to surpass that of 2018, where its net profit was 21.1% lower year-on-year (YoY) at RM42.47 million due to higher financing costs, while revenue was 2.6% stronger YoY at RM2.38 billion.

Farshila said the group’s earnings this year will be driven by increased product offerings and distribution, both domestically and in Indonesia, where it has manufacturing and distribution operations, as well as a greater penetration into the private sector via over-the-counter products.

It has allocated RM174 million for capital expenditure in 2019, to be spent across various segments including warehouse expansion, as well as research and development into oncology and vaccines.