PETALING JAYA: Duopharma Biotech Bhd
maintains the view that the impact of the Middle East conflict remains manageable for now, supported by the group’s inventory buffer of three to six months’ worth of active pharmaceutical ingredients (API) alongside the strengthening ringgit, analysts say.
That said, TA Research noted the conflict has exerted upward pressure on key input costs, with API prices rising by 20% to 30% as well as increases in packaging and diesel expenses.
“Should the conflict persist for another six months, margins could come under pressure as the group can pass on higher costs for selected products within the private sector only. Nevertheless, we expect the gross profit margin to remain relatively resilient at 38.7% in financial year 2026 (FY26) compared with 39% in FY25,” the research house said in a report yesterday.
TA Research said on the export front, Duopharma shared that revenue edged up marginally to RM59.9mil in FY25 (RM59.5mil in FY24), impacted by shipment delays stemming from the Middle East conflict.
The research house noted that if the war escalates further, it may hinder the group’s expansion in the region.
“Encouragingly, Asean – which accounts for 89% of export sales – will remain the group’s primary focus, particularly in the Philippines, Singapore, Brunei and Indonesia.
“Looking ahead, we anticipate stronger demand for its halal-certified products in Indonesia, supported by regulatory developments such as the requirement for over-the-counter products to be fully halal-compliant by 2027,” it said.
TA Research said FY25 marked a strong year for Duopharma, with net profit rising significantly by 39.6% to RM87.5mil. This was driven by a 14.5% increase in revenue to RM931.7mil, supported by higher sales across all business segments, favourable API prices and a stronger ringgit.
It expects the group’s FY26 earnings to grow further to RM101.4mil, underpinned by the same key drivers observed in FY25.
“Notably, demand from the government sector is anticipated to peak as this marks the final year of the current approved products purchase list (APPL) contract.
“Under this contract, the group supplies 100 pharmaceutical and non-pharmaceutical products to Malaysian government healthcare facilities with a total value of RM684.2mil through Dec 31, 2026.
“Management indicated that tenders for the upcoming APPL contract have been submitted, and we expect the new contract value to exceed the existing one.”
Meanwhile, the interim three-month extension for the supply of human insulin formulations to the Health Ministry (MOH), valued at RM65.1mil, is set to expire on May 15, 2026.
TA Research said it expects the group to secure a new three-year contract in the near term, likely under a dual-supplier arrangement between Duopharma and Pharmaniaga Bhd, in line with MOH’s policy which requires a minimum of two suppliers.
“Based on our estimates, human insulin is expected to contribute around 9% to 11% of the group’s revenue in FY26, compared to about 12% in FY25.”
TA Research has a “buy” call on Duopharma with an unchanged target price of RM1.72 per share, based on 16 times 2026 earnings per share.
Moreover, UOB KayHian Research said the Middle East conflict has limited direct impact on Duopharma’s operations thus far, with raw material supply from India and China remaining stable and manageable.
