MBSB Research said two major challenges could face Pharmaniaga’s FY26 to FY27 financial performance – policy changes in drug pricing and government tenders.
PETALING JAYA: Despite challenges, the main positive driver for Pharmaniaga Bhd
lies in its continued collaboration with the government to distribute its products to government hospitals, according to MBSB Research.
The research house also emphasised that it expects that manufacturing of biopharmaceuticals, consumables trading and improvements in its Indonesia segment will be the growth areas for the group moving forward.
MBSB Research believes that ongoing concessions with the Health Ministry (MoH), as well as the continuous expansion in the group’s logistics and distribution and manufacturing segments, would continue to contribute to Pharmaniaga’s growth potential.
As governments and healthcare providers focus on reducing healthcare costs, Pharmaniaga’s generic drug portfolio offers an attractive upside, being cheaper and readily available, while its biopharmaceutical products are expected to contribute significantly from the second half of financial year 2026 (2H26) onwards.
“We also noted that Pharmaniaga has the potential to explore growth opportunities in digital healthcare solutions in supply chain automation and warehouse optimisation, as well as for research and development for more innovative drug discovery,” it noted.
The research house said the company has guided that it is expecting stock-keeping unit volume for its logistics and distribution business to be between 10% and 12% year-on-year (y-o-y) for 2H25, subsequently guiding revenue for this segment to grow at 15% to 20% y-o-y.
“We input this in our revenue forecasts.
“However, for the financial year 2026 (FY26) forecast and onwards, we expect improved performance on the basis of uninterrupted operations and expansion, strong cash flow post-regularisation plan, and continuous government support from regulations and concessions,” it added.
The research house said two major challenges could face Pharmaniaga’s FY26 to FY27 financial performance – policy changes in drug pricing and government tenders.
“Pharmaniaga has clinics and pharmacies as its buyers for generic drugs.
“However, profit margins from both buyers are different, with margins from clinics being higher,” it further added.
“With MoH considering the consolidation in pricing of drugs in the future, this will impact these margins.
“Pharmaniaga may see reduced initial profits upon the implementation of these pricing policy changes, although we expect this impact to be minimal in the long run.
“Another downside risk is the tender to be awarded by MoH.”
MBSB Research is also expecting the group to exit its Practice Note 17 status by the first quarter of FY26.
“We revised Pharmaniaga’s valuation to include this update, as well as its long-term plans for its logistics and distribution and manufacturing operations moving forward,” it said.
All in all, the research house is recommending a “buy” call for Pharmaniaga, with a target price of RM0.32.
