KUALA LUMPUR: Pharmaniaga Bhd
fell 7.4%, the biggest single day move in two years on concerns over its concession agreement with the Health Ministry (MoH) to supply medicines.
It is the third losers at noon, plunging 7.41%, or 30 to RM3.75 with 2.2 million shares done at midday. The stock fell 11% in the past month. Pharmaniaga is trading at 15 times its estimated earnings per share for the coming year.
The Health Ministry has refuted claims that Pharmaniaga is monopolising the supply of medicines to the ministry.
Its minister Dr Dzulkefly Ahmad said that it was “strictly incorrect” to state that Pharmaniaga is the sole concession holder because there were also other vendors supplying directly to all of the ministry’s health facilities.
He also clarified that the sourcing of pharmaceutical products is done through a tendering process.
“Despite the recent change in the Federal Government we understand from Pharmaniaga that at this juncture; the concession agreement to supply medicines to MoH is still intact and business is as usual as the company is governed by the MoH’s policies,” MIDF Research said.
The research house do not discount any price revisions on the supplies in the future due to the current financial situation of the government.
“However, we take comfort in the fact that the government has announced that it will relook into increasing the annual budget allocation to the MoH from the current 4.5% to 6-7% as this would potentially mean more business for the local pharmaceutical players,” MIDF said.
MIDF has maintained its “neutral” call on Pharmaniaga with unchanged target price of RM4.20 per share.
Limited time offer:
Just RM5 per month.
