KUALA LUMPUR, Feb 21 — Pharmaniaga Berhad posted a net loss of RM178.7 million in the fourth quarter last year over a pharmacy information system it developed for the Ministry of Health (MOH).
The local pharmaceutical company said its profitability was affected because it had to absorb a remaining RM247 million for its unamortised Pharmacy Information System (PhIS) in Q4, when its 10-year concession with MOH ended in November 2019. PhIS is an IT system that Pharmaniaga developed and managed to distribute drugs and medical supplies to MOH facilities.
The RM247 million sum referred to expenditure on hardware and software for PhIs. Compared to the RM179 million net loss in the fourth quarter ending December 31, 2019, Pharmaniaga made close to RM5 million net profit in the fourth quarter of 2018.
Pharmaniaga also made RM9.4 million loss on a stock write-off for the voluntary recall of ranitidine, a popular medicine that treats heartburn and stomach ulcers. Last September, Malaysian health authorities recalled the product after Singapore found low levels of probable carcinogen NDMA in the medication. US and European regulators said that month they were reviewing the safety of ranitidine, Reuters reported.
“This saw the Group recording a loss before zakat and taxation of RM238 million for the fourth quarter.
“This loss recorded for the quarter under review is a direct impact of Pharmaniaga fulfilling the contractual obligations of the PhIS under the concession agreement by the government,” Pharmaniaga said in a statement yesterday.
Pharmaniaga, however, reported a higher revenue of RM716 million for its fourth quarter of 2019, marking a 20 per cent increase from RM597 million in the same quarter in 2018, which it attributed to improved demand from concession, non-concession, and Indonesia businesses.
Pharmaniaga’s net loss for the 2019 financial year was about RM150 million, compared to RM43 million net profit for the preceding financial year.
But the government-linked company (GLC) posted stronger revenue for the 2019 financial year at RM2.8 billion, up from RM2.4 billion in the previous year. Loss before zakat and taxation amounted to RM192 million last year, compared to RM70 million profit before zakat and taxation in 2018.
Pharmaniaga managing director Farshila Emran said the company, a member of Boustead Group, would not be burdened by the PhIS amortisation moving forward.
“The fact that we continued to register solid growth in revenue is indeed encouraging and bodes well for the Group’s prospects,” she said in Pharmaniaga’s statement.
“From a long-term perspective, we are confident that the outlook is positive for Pharmaniaga. The new contract secured with MOH for the provision of medicines and medical supplies to MOH facilities from 1 December 2019 to 31 December 2021, as well as logistics and distribution services to MOH for five years ending 31 December 2024, are set to be key contributors to the Group’s earnings.”
MOH extended Pharmaniaga’s exclusive drug procurement concession for two years until 2021, after their decade-long concession ended last November, so that the government can take over the Bumiputera tender agent’s functions and purchase medicines directly from pharmaceutical manufacturers without going through a middleman.
Pharmaniaga, which has warehousing and logistics facilities, 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 makes up over a third of the government’s drug supply. Pharmaniaga also separately provides logistics and distribution of all products in the APPL for MOH, beyond the 700 items it procures. This contract was extended for five years until 2024.
The Pakatan Harapan administration decided to replace Pharmaniaga’s concession for public drug procurement with an open tender system, after Finance Minister Lim Guan Eng deemed it a “monopoly” that cost the government over RM1 billion annually.