PETALING JAYA: Duopharma Biotech Bhd, which has obtained a 25-month extension on a government contract, said it is in discussion with the government for an extension of its insulin contract which will expire this year.
Without going into details, group managing director Leonard Ariff Abdul Shatar told StarBiz that: “As far as the insulin contract is concerned, Duopharma and its partner Biocon have already started discussions for further extension of the contract.”
“We are working closely with our partner to supply insulin to the government as this forms a large component of our specialty area.”
The contract for the supply of insulin to government hospitals, which was previously extended, would expire on Dec 1,2020. This contract accounts for 15% of the company’s revenue, based on analyst estimates.
Most analysts are confident that the insulin contract would also be extended. This involved the supply of pharmaceutical and non-pharmaceutical products to hospitals for 25 months from Dec 1,2019 until Dec 31,2021.
On the extension of the government contract and whether Duopharma Biotech is upbeat about securing the contract after its expiry, Leonard noted that most government contracts are based on open tenders.
“We expect that after the 25-month extension, the government will continue with its open tenders and we will bid for them, ” he said in response to e-mail queries.
Meanwhile, UOB Kay Hian, which is maintaining its “buy” call on the counter, said: “Leading up to the expiry of government contracts, we are confident Duopharma Biotech will be able to secure more government contracts, as it is the largest local drug manufacturer and has a proven track record.”
“It intends to explore the production of specialty drugs as well, enabled by the soon-to-be-commissioned Highly Potent Active Pharmaceutical Ingredient (HPAPI) production facility, ” the research house noted.
Reiterating its “add” call on the stock, CGS-CIMB Research said Duopharma Biotech was well positioned in the Malaysian healthcare space to capture the growing demand in the public and private healthcare sectors, supported by efforts to foray into high-value and niche drug segments.
Potential re-rating catalysts are stronger healthcare demand in the private and public sectors, as well as further inroads into the high-value segment, it noted.
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