PETALING JAYA: Pharmaniaga Bhd
is poised for a stronger second half of the financial year ending Dec 31, 2026 (2H26), with sustained demand from government hospitals, expansion in private healthcare and the start of a RM282mil human insulin supply contract expected to underpin a new phase of earnings growth, according to BIMB Research.
The research house remains positive on the pharmaceutical group’s prospects, saying 2H26 should mark the beginning of a new growth phase as it transitions towards a higher-margin manufacturing- and biopharmaceutical-led business model.
The outlook is also supported by lower finance costs following its successful regularisation exercise.
For BIMB Research, Pharmaniaga’s 1H26 core profit after tax and minority interest (Patami) surged 54% year-on-year (y-o-y) to RM61mil after excluding inventory write-downs, intangible asset impairment and foreign-exchange losses.
This represented 70% of its full-year forecast and 67% of consensus’ expectations.
The strong performance was driven by higher approved products purchase list (APPL) orders from government hospitals, stronger manufacturing contributions and lower finance costs.
Demand for key in-house products, including Plecaz, Covinace, Simvastatin and Noradrenaline, remained robust.
BIMB Research maintained a “buy” recommendation on the stock and a RM2 target price, based on 13 times its 2026 forecast enterprise value-to-earnings before interest, taxes, depreciation and amortisation multiple.
MBSB Research also kept a “buy” call on Pharmaniaga, with an unchanged target price of RM1.44, although it noted that the group’s second-quarter results were affected by a “downcycle of concession volume”.
It said the 1H26 earnings came within expectations and consensus’ estimates.
MBSB Research pointed to higher APPL volumes, increased private-sector sales and stronger concession demand as key drivers. It said 1H26 revenue rose 12% y-o-y to RM2.2bil, while normalised Patami increased 41% to RM41mil.
Manufacturing emerged as the standout segment. Its 1H26 revenue increased 23.1% y-o-y to RM194.1mil, while profit rose 69.7% to RM47.5mil.
The growth was supported by stronger demand for the group’s portfolio of internally manufactured medicines.
However, the logistics and distribution business remains a drag on profitability.
Although 1H26 revenue rose 18.1% to RM1.71bil, segment profit plunged 97.4% to just RM100,000, mainly due to higher warehouse rental expenses and a RM7mil provision for respirator stocks affected by specification-related issues.
BIMB Research expects further catalysts from the human insulin contract, progress in the PCV13 vaccine localisation programme and continued expansion of Pharmaniaga’s diabetes and pain-management portfolio.
These initiatives should strengthen manufacturing earnings and support the group’s longer-term shift towards higher- margin businesses.
MBSB Research added that Pharmaniaga completed the PCV13 vaccine validation and achieved good manufacturing practice compliance for localised production.
The group is also expanding its pharmaceutical range through the Zemi product line, while four automated, cost-saving warehouses are scheduled for completion in 2027.
Meanwhile, an analyst told StarBiz that Pharmaniaga’s biopharmaceutical segment is expected to be one of the group’s strategic growth pillars.
He said the company’s first major human insulin supply contract marked a significant milestone in the commercialisation of its biopharmaceutical business. He expects the contract to contribute from 2H26.
“The group is already positioning itself for 2028 tenders for insulin analogues – including Glargine and Aspart – as well as anti-obesity drugs, while pursuing halal certification for its insulin products.
“This reflects the typical progression among insulin manufacturers, which generally move from human insulin into insulin analogues and subsequently expand into anti-obesity treatments to establish a sustainable product pipeline,” the analyst said.
