PETALING JAYA: Pharmaniaga Bhd
is poised for an earnings recovery from financial year 2027 (FY27), driven by the ramp-up of its human insulin business, vaccine commercialisation and higher-margin oncology products, after the group navigates a near-term trough in FY26.
MBSB Research said the Health Ministry (MoH) human insulin contract of RM282mil across a three-year supply tenure requires the delivery of over 60 million cartridges.
The official letter of acceptance was received in May 2026, and physical supply to MoH facilities kicked off in mid-June 2026.
As such, FY26 will only capture six to seven months of delivery.
“The group guided that the estimated gross profit (GP) margin stands at 20% to 25% and the estimated profit after tax (PAT) margin at 13% to 17% in FY26.
“FY27 would see a similar projection, as the commercialisation of both insulins and vaccines would still be ongoing in 2027,” the research house said in a report yesterday, following Pharmaniaga’s second quarter of FY26 (2Q26) analyst briefing recently.
MBSB Research said the group in FY28 is expected to see a surge in GP margin (30% to 40%) and PAT margin due to local production efficiencies.
“Given this guidance, we estimate that the initial rollout phase of the insulins would bring in a net profit catchment of RM7mil to RM9mil with an estimated top-line revenue of RM51mil in the remainder of FY26,” the research house said.
MBSB Research said concession revenue surged 23% year-on-year (y-o-y), while stock-keeping unit (SKU) volume growth expanded 7% y-o-y.
The research house said as of writing, the six-month period of FY26 (6M26) SKU volumes had consistently outperformed 6M25 baselines.
“Nevertheless, the group highlighted a tender award deferral to 2Q27 for an upcoming MoH concession contract.
“MoH is purposefully holding back the final award until market prices stabilise, aiming to secure optimal fiscal pricing,” the research house said.
“The proposal evaluations had been completed by the group, and MOH is physically auditing manufacturing plants to assess factory and supply chain readiness.”
MBSB Research said that process will soon be followed by a final eight-week tender closing and evaluation, which will remain pending before 2Q27.
It said while the deferred contract award removes a near-term catalyst from the second half of FY26 (2H26), it believes the underlying asset health remains intact.
“That said, more provisions are expected for the group in FY26 which may create a short-term hit to the company’s financials,” MBSB Research said.
“The group guided that the core operational baseline is roughly RM5mil in net profit per quarter during this near-term stabilisation phase,” the research house said.
Meanwhile, MBSB Research said the vaccine commercialisation process is underway. It noted the commercialisation of three major in-house vaccines will carry a cumulative estimated value of RM209mil; PCV-13 (RM56mil), Hexavalent vaccine (RM120mil), and HPV (RM33mil).
“Securing these contracts will provide long-term guaranteed demand, fully underwriting Pharmaniaga’s investment into local fill-and-finish capabilities.
“Once finalised, these commercial terms will provide clear earnings visibility in FY26 to FY28,” the research house said.
MBSB Research said Pharmaniaga has successfully onboarded a portfolio of six oncology brands and nine SKUs designed to establish immediate therapeutic coverage.
The research house said the current drug lineup specifically targets four high-incidence cancer categories, prostate, breast, lung, and blood.
“As of writing, the group is in the process of submitting tenders for five additional oncology products, which carries an estimated market value of RM178mil under the approved products purchase list (APPL) framework.
“Oncology carries a structurally superior gross margin; hence, we believe that the successful securing of the drugs under the APPL will inject significant, high-margin profit (to note, therapeutic drugs typically hold GP margins of 35% to 50%) into Pharmaniaga’s long-term earnings trajectory,” the research house said.
MBSB Research maintained its “buy” call on Pharmaniaga with a target price of RM1.44. BIMB Research said it remains encouraged by the manufacturing division, where 1H26 earnings before interest, tax, depreciation and amortisation rose 10.5% y-o-y to RM55.6mil, driven by stronger demand for their in-house products.
The research house said the next leg of growth is increasingly shifting towards biopharmaceuticals, anchored by the group’s RM282mil, three-year insulin contract, with deliveries commencing mid-June 2026.
BIMB Research reiterated its “buy” call on Pharmaniaga with a target price of RM2.14 (from RM2).
Releasing its results for 2Q26 (ended June 30, 2026) last week, Pharmaniaga saw net profit more than triple y-o-y to RM12.5mil, as revenue also climbed 12.3% to RM1.04bil.
The group credited 2Q26 top line growth primarily to the higher-volume order from government hospitals under the APPL and increased sales from the private segment.
For the six months ended June, Pharmaniaga saw the bottom line increase by 31.1% y-o-y to RM44mil, as turnover grew 12% to RM2.2bil.
It said revenue growth was primarily driven by heightened customer demand in the concession segment, while a realised interest saving of RM14.2mil following the partial repayment of borrowings through proceeds from the Regularisation Plan, supported by effective inventory management, also contributed to the rise in net profit.
