RHB Research said the company is likely to chart steady revenue growth in 2024 post-finalisation of the APPL tender.
PETALING JAYA: Despite the key risks of lower-than-expected sales volumes and depreciation of the ringgit against the US dollar, Duopharma Biotech Bhd
is on a strong footing to rake in steady revenue growth by next year.
The attributing factors which would support the pharmaceutical company’s revenue stream include the Approved Product Purchase List (APPL) tender and higher healthcare budget allocations for next year.
RHB Research said in a recent post-results briefing, the company is likely to chart steady revenue growth in 2024 post-finalisation of the APPL tender, which is likely to be completed by the first quarter of next year (1Q24), and the increase in budget allocations for the healthcare sector.
The APPL contract has been rolled over until December this year after it expired in June. The tendering process for the new APPL contract has started and is expected to be concluded by 1Q24.
“We are positive on this development, as the drug supply contract has been carried out on a rollover basis (based on 2017 terms) and its contract terms do not reflect the latest exchange rates.
“We remain upbeat on the company’s local sales post-finalisation of the APPL contract, as the segment growth is set to be underpinned by higher budget allocations in 2024 (RM5.5bil versus 2023’s RM4.9bil).
Although the private sector sales saw a minor hiccup, given that one of the agency lines terminated its distribution agreement with the company, the management believes the loss of revenue may be compensated by a replacement alternative supplier, of which discussions are ongoing, it noted.
The weakness in the consumer healthcare segment is expected to extend into 4Q23, albeit at a lower quantum. Moving into 2024, the research house said Duopharma anticipates consumer healthcare sales to begin picking up gradually, owing to the low base effect in 2023.
