Pharmaniaga’s long-term outlook positive

KUALA LUMPUR: The long-term outlook for pharmaceutical firm Pharmaniaga Bhd is expected to remain positive, despite weak filled-and-finished vaccine sales during the first quarter of its current financial year.

CGS-CIMB Research in a report said it projects decent earnings growth for the group in 2023 and 2024.

The research house also expects long-term earnings contribution from the company’s entry into the manufacturing of biopharmaceuticals.

“We see manufacturing and its logistics and distribution division revenues tapering towards the end of 2022.

“However, Pharmaniaga’s longer term prospects are supported by a 10-year extension of its concession agreement (to be finalised in the third quarter of this year); its plans to set up a halal vaccine manufacturing facility by end2024; and a fill-and-finish facility for recombinant human insulin products by 2025.”

Pharmaniaga posted a net profit of Rm27.73mil in the first quarter ended March 31, 2022, a 19.8% increase over Rm23.14mil in the previous corresponding quarter.

The pharmaceuticals group reported revenue of Rm962.17mil, a 21.26% improvement over the comparative quarter.

“This improved performance was attributable to healthy growth across the group’s concession and Indonesian businesses as a result of strong demand from customers, subsequent to the resumption of normal business activities as usual after the Covid-19 pandemic,” it said in a Bursa Malaysia filing.

CGS-CIMB Reserach noted that Pharmaniaga’s first quarter core net profit climbed 21.1% year-on-year to Rm30mil on better manufacturing, logistics and distribution businesses and Indonesia earnings.

“Quarter-on-quarter, it plunged 70.2% on weaker manufacturing and logistics and distribution profits.

“While first quarter core earnings per share formed 30% and 32% of our’s and Bloomberg’s 2022 consensus’ estimates respectively, we deem this as low, due to lower-than-expected contribution from the supply of filled-and-finished Sinovac Covid-19 vaccines.”

In its filing with Bursa Malaysia, Pharmaniaga said it is in the midst of finalising the logistics and distribution contract extension agreement with the Health Ministry.

“With regards to the Indonesian business, the division successfully staged a swift turnaround, highlighting the effectiveness of the reorganisation of the business to enhance its operational efficiency through an ongoing stock optimisation exercise and aggressive payment collection.”

Going forward, Pharmaniaga said it is strengthening its business footprint in Indonesia, which the company believes has huge untapped potential.

“The group will revamp the current business model of its logistics and distribution arm, PT Millennium Pharmacon International Tbk and increase the products portfolio of its manufacturing arm, PT Errita Pharma.

“With strategic business and marketing plans in place, the group is focusing to double up the revenue for the Indonesian division,” it said.