With strong partnerships, Pharmaniaga remains in positive territory

PETALING JAYA: The outlook for Pharmaniaga Bhd remain positive, given the strength of the integrated pharmaceutical group in its solid partnerships and its solid portfolio for the future.

This is the conclusion reached by MIDF Research in its latest report, which adds that this favorable outlook has been taken despite the continuing risks of increased inflationary pressures on raw materials used in the production of medicines and pharmaceutical supplies, and the exchange rate volatility.

However, he noted that while he was optimistic about the many strategies aimed at ensuring resilient financial performance in the near future, MIDF Research said the realization of these strategies may not materialize immediately.

“Therefore, we are making no changes to our earnings estimates for fiscal 2022 and 2023. Thus, we maintain our target price at RM0.91 for Pharmaniaga,” MIDF Research said in the report.

Regarding Pharmaniaga’s expansion opportunities in Africa, the research house said that this would offer “huge prospective ground for the group’s vaccines business”.

Pharmaniaga is reportedly in talks with the Islamic Development Bank regarding an agreement to distribute Covid-19 vaccines for 15 of the Organization of Islamic Cooperation (OIC) countries in Africa.

MIDF Research stated that “although the nations mentioned by Pharmaniaga were not specified, it should be noted that OIC Member States in Africa comprise 27 countries”.

If an agreement of this nature is reached, the research house expects Pharmaniaga’s revenues over the next few quarters to be comparable to those of last year.

“OIC Member States in Africa also have a large Muslim population – close to 70% – which could potentially provide another opportunity for market expansion if Pharmaniaga continues to partner with these countries in the future,” said added MIDF Research.

He noted that the group has a strong niche in manufacturing halal pharmaceuticals, and tapping into the African halal market beyond Covid-19 vaccines would position it on a strong footing in the region.

Locally, Pharmaniaga’s new logistics and distribution concession contract with the Ministry of Health will be finalized by the end of the year.

Earlier, the group mentioned that the deal was expected to close by the third quarter of its 2022 financial year.

This extension allows the group to pursue new opportunities and expand the range of products it provides to public hospitals and clinics.

Once the concession deal is completed, MIDF Research said Pharmaniaga expects revenue of RM1.5 billion and growth of 2% pa, with double-digit growth in distribution local.

In addition, the group is also studying potential mergers and acquisitions, in order to be able to distribute the products of several suppliers to several customers.