KUALA LUMPUR: Pharmaniaga Bhd’s Practice Note 17 status does not affect its logistics arm’s service in distributing medicines to the Health Ministry’s facilities, says Dr Zaliha Mustafa.
In a Parliamentary written reply to Tan Hong Pin (PH-Bakri) dated June 6, Dr Zaliha said the ministry was made to understand that the PN17 status imposed on Pharmaniaga was due to accounting streamlining that had to be done according to the Malaysian Financial Reporting Standards (MFRS) and the practices of good governance.
“The PN17 status is due to the allocation of the Covid-19 vaccine which was a slow-moving stock. Nevertheless, the Health Ministry understands that the PN17 status does not affect the operations of its subsidiary Pharmaniaga Logistics Sdn. Bhd (PLSB) in conducting logistics activities and distributing medicines to MOH facilities nationwide,” she said.
“On top of that, Pharmaniaga Bhd is owned directly and indirectly by the Armed Forces Fund Board which is under the Defense Ministry,” she added.
She said Pharmaniaga subsidiary Pharmaniaga Logistics Sdn. Bhd. (PLSB) has experience in the supply and logistics of medical products, which is on par with international logistics companies such as DKSH and Zuellig Pharma.
Zaliha added that PLSB had successfully built logistics networks comprising Bumiputera and local entrepreneurs. The company also has the logistics capacity for cold chain products.
She added that PLSB had given an “excellent” performance and fulfilled the obligations in the concession agreement with the government, including hitting the Key Performance Indicator (KPI) of over 98% by fulfilling orders within Peninsula Malaysia in 7 days and 10 days for Sabah and Sarawak.
She said the government had agreed with the proposal to give PLSB a fresh ten-year Medicines Supplies Logistics Service concession, given the company’s performance. Under the concession, the company will manage the logistics and supply network for medicines to MOH facilities.
She added the MOH’s facilities will not have to store an ample supply of medicines in their stores, as they will be able to source the needed supply within seven to 10 days.
She also said this requires the concessionaire to have a strong financial footing to ensure there is no disruption in supply.
Tan had asked whether the ministry was ready to end Pharmaniaga’s monopoly on medicines concession, given its PN17 status and having reported a net loss of RM664.39mil in the fourth quarter that ended Dec 31, 2022.
Pharmaniaga was admitted to the PN17 category on Bursa Malaysia on Feb 27.
In a filing with the stock exchange, the pharmaceutical company said it had triggered the PN17 criteria pursuant to its audited consolidated financial statements for the period ending Dec 31, 2022.
For its first quarter ended March 31, 2023, Pharmaniaga’s net profit dipped to RM2.65mil from RM27.73mil in the previous corresponding quarter.
Revenue declined by 8.5% to RM880.45mil from RM962.17mil previously, mainly due to lower customer demand in both the concession and Indonesia segments.