Hovid to lose millions due to plant closure

PETALING JAYA: Hovid Bhd, which is working to get the manufacturing licence of two facilities reinstated by April 2017, expects to see a RM37 million drop in turnover and RM2.7 million fall in earnings due to the closure in the first quarter of the year.

This translates to a 4.63 sen and 0.33 sen drop in turnover per share and earnings per share respectively, based on figures from its latest audited accounts. As at June 30, 2016 the company’s manufacturing division contributed 33% to its turnover of RM189.02 million.

The company announced on Monday that its manufacturing licence was revoked after an audit by the National Pharmaceutical Regulatory Agency (NPRA) revealed that its Pharmaceutical Quality System were not in compliance with the latest Current Good Manufacturing Practice (cGMP).

Hovid Berhad’s shares were the second most active stock on the exchange yesterday, with some 131.12 million shares traded. The stock hit a low of 24 sen yesterday before rebounding to settle at 30 sen, a 4.5 sen or 13.04% drop following the announcement.

In a filing with the stock exchange yesterday, Hovid said the financial impact computed was on the basis of their manufacturing licence reinstated by March 31, 2017.

The company said it believes business will resume as usual once it has regained its manufacturing licence.

Meanwhile, a company spokesman told SunBiz via email that the recalling of hypertension pills, Ternolol 50mg by the company on Jan 5, had sparked the audit on the pharmaceutical manufacturer by the NPRA which led to the revocation of its manufacturing licence.

Hovid plans to submit corrective actions to NPRA by the end of this month, and invite another audit of its facilities and cGMP immediately thereafter. It did not detail the corrective measures it will embark on.

The director-general of the Health Ministry Datuk Dr Noor Hisham when contacted told SunBiz, “the company did not comply to the standards of good manufacturing practices, but it can re-apply for its licence as soon as it has addressed the issues laid down by the Pharmaceutical Service Department”.