Quick take: Pharmaniaga shares continue to fall, down 3.6%

KUALA LUMPUR: Shares in Pharmaniaga Bhd continued to slide in early Friday trade on news that concession for Health Ministry (MOH) will end.

The integrated pharmaceutical company shed 3.62%, or eight sen to RM2.13, its lowest since mid April. The stock closed down 11.6% Thursday.

Health Minister Dzulkefly Ahmad said there would no longer be a concessionaire for logistics and distribution services as an open tender system would be introduced.

Pharmaniaga’s concession to purchase, store, supply and distribute at least 700 pharmaceutical products on the Approved Product Purchase List (APPL) will end on Nov 30.

However, to ensure that medical supplies and health services are not disrupted, Pharmaniaga's services will be extended until the Cabinet decides on the mechanism to manage the open tender.

In June last year, Dzulkefly had refuted that Pharmaniaga was monopolising the supply of medicine to the ministry.

He said the ministry had spent RM3.3bil on medicine and consumable items in 2017 and only 33.4% or RM1.1bil of the ministry’s pharmaceutical spending was from Pharmaniaga, while 66.6% (RM2.2bil) was purchases by the facilities through central contracts or quotations.

Knanga research has downgraded Pharmaniaga to “underperform” from “market perform” after slashing its FY20 net profit forecast by 32% on an expected 18% contraction in revenue.

The research house reduced the group's target price to RM1.60 from RM2.21 previously based on an unchanged 11x FY20E EPS.