PETALING JAYA: Pharmaniaga Bhd
’s latest insulin supply contract secured from the government is considered a major step in strengthening the company’s biopharmaceutical ambitions while bolstering the long-term earnings outlook, analysts say.
To recap, the company secured a RM282mil contract from the Health Ministry to supply biosimilar insulin products from June 2026 to June 2029.
Analysts viewed the contract as strategically important, not only from an earnings standpoint but also in addressing Malaysia’s growing diabetes burden through more affordable biosimilar insulin solutions.
“By securing this contract, the group is poised at the forefront of managing a major national health burden,” MBSB Research said, noting that around 21% of Malaysia’s adult population lives with diabetes while prevalence among the elderly has reached 39%.
MBSB Research added that the procurement would also help stabilise the government’s medical supply chain amid geopolitical tensions that could potentially disrupt overseas insulin imports.
However, it cautioned that risks remain, including logistics bottlenecks, production delays, strict regulatory requirements for biosimilars, inflationary pressures on raw materials and shipping costs, as well as challenges in shifting patient acceptance from originator insulin products to biosimilars.
Despite the risks, the research house expects the contract to provide stable and predictable revenue through mid-2029.
It estimates the contract could contribute about RM8mil in profit before tax in the financial year ending Dec 31, 2026 (FY26), rising to RM16mil to RM17mil annually from FY27 onwards.
Following the development, MBSB Research raised its FY26 to FY28 earnings forecasts by between 14% and 17%, while revising its target price sharply higher to RM1.44 from 36 sen previously, after factoring in the proposed five-for-one share consolidation exercise. It maintained a valuation based on a price-earnings ratio of 16.5 times, in line with the pharmaceutical industry median.
It also pointed to Pharmaniaga’s transition towards localised insulin manufacturing at its biopharmaceutical plant, targeting production of about 25 million cartridges annually by early 2028.
