PETALING JAYA: The prospects of Pharmaniaga Bhd remain positive, given that the integrated pharmaceutical group’s strength in its strong partnerships and robust portfolio going forward.

       This is the conclusion that MIDF Research has come to in its latest report, which added this favourable outlook was taken despite the ongoing risks of increased inflationary pressures on raw materials used in the production of medical drugs and pharmaceutical supplies, and currency exchange volatility.

       However, it noted that while it was optimistic with the numerous strategies to ensure a resilient financial performance in the near future, MIDF Research said the materialising of such strategies may not come to fruition immediately.

       “Hence, we make no changes to our earnings estimates for financial year 2022 and 2023. Thus, we maintain our target price at RM0.91 for Pharmaniaga,” MIDF Research said in the report.

       On Pharmaniaga’s expansion opportunities in Africa, the research house said this would offer “huge prospective ground for the group’s vaccine business”.

       Pharmaniaga is reportedly in talks with the Islamic Development Bank with regards to a Covid-19 vaccine distribution deal for 15 of the Organisation of Islamic Cooperation (OIC) countries in Africa.

       MIDF Research said “although the nations mentioned by Pharmaniaga were not specified, it is worth noting that the OIC member states in Africa comprise 27 countries.”

       Should a deal of this nature be secured, the research house expects Pharmaniaga’s revenue in the coming quarters to be comparable to last year.

       “The OIC member states in Africa also have a large Muslim population – almost 70% – which could potentially be another market expansion opportunity should Pharmaniaga continue its partnership with these nations in the future,” added MIDF Research.

       It noted that the group has a solid niche in the manufacturing of halal pharmaceutical products, and tapping into the African halal market beyond Covid-19 vaccines would position it on a sound footing in the region.

       On the local front, Pharmaniaga’s new logistics and distribution concession agreement with the Health Ministry will be completed by the end of the year.

       Previously, the group mentioned that the agreement was to be completed by the third quarter of its 2022 financial year.

       This extension allows the group to pursue further opportunities and expand on the variety of products it supplies to government hospitals and clinics.

       Once the concession agreement pulls through, MIDF Research said Pharmaniaga is expecting revenue of top RM1.5bil and growth of 2% per year, with local distribution to grow by double-digits.

       Additionally, the group is also looking at potential mergers and acquisitions, to be able to distribute products from multiple suppliers to multiple clients.