Putrajaya Ends Pharmaniaga’s Medicine Concession After 25 Years

By CodeBlue | 31 October 2019

Pharmaniaga received sole concession for 25 years since 1994 to provide a third of the government’s medicine supply.

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KUALA LUMPUR, Oct 31 — The government has decided not to renew Bumiputera tender agent Pharmaniaga Berhad’s 25-year-long concession to procure medicines for the Ministry of Health (MOH) that a minister had dubbed a “monopoly”.

The Star reported Health Minister Dzulkefly Ahmad as saying that the government has decided to replace MOH’s concession system of logistics and distribution services for medical supplies with an open tender system.

But local pharmaceutical company Pharmaniaga’s services to MOH will continue — despite the end of its concession on November 30 — pending the Cabinet’s decision on the type of mechanism for the open tender that Dzulkefly hoped would be ready by the first quarter of next year, so as to prevent a disruption of MOH’s medical supplies and health services.

“There will be no concessionaires anymore,” Dzulkefly was quoted telling the press after an event here.

Finance Minister Lim Guan Eng said last month that the government was reviewing MOH’s drug procurement concession with Pharmaniaga which he described as a “monopoly” that cost the government over RM1 billion annually.

Pharmaniaga is the biggest Bumiputera tender agent in the country with exclusive concession to supply 700 items in the Approved Product Purchase List (APPL) comprising medicines and other medical items, determined by MOH, to government hospitals, institutions, and clinics. This comprises over a third of the government’s drug supply.

The company received sole concession for a quarter of a century since Putrajaya privatised the medicine procurement system in 1994.

Pharmaniaga’s concession provides distribution and logistics services for the products procured under the APPL. According to the Malaysia Competition Commission (MyCC), Pharmaniaga supplied 38.5 per cent of the RM2.3 billion total cost of medicines procured for all MOH hospitals, institutions and clinics in 2015.

The two biggest shareholders in Pharmaniaga, a public listed company, are Boustead Holdings Berhad and the Armed Forces Fund Board (LTAT), a statutory body under the Defence Ministry that provides retirement benefits to Malaysian Armed Forces officers.

Former MOH director-general Dr Ismail Merican resigned as a Pharmaniaga director on September 17, just two months after he was appointed to the board of Malaysia’s biggest pharmaceutical company on July 17.

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