Pharmaniaga seen as among frontrunners for vaccine tender
PETALING JAYA: Positive developments in the development of a Covid-19 vaccine will continue to lift interest in local pharmaceutical manufacturers, including Pharmaniaga Bhd, which is touted to be among the frontrunners to win a tender for the vaccine.
MIDF Research said Pharmaniaga has several advantages to clinch the fill and finish tender given its well-established logistics and distribution network nationwide.
Additionally, the company has a large capacity of sterile and liquid plant to conduct the process for the vaccine. Pharmaniaga’s small volume injectable (SVI) plant in Puchong, Selangor has the capacity to produce 10 million doses per month.
“We understand that to undertake the fill and finish process for the vaccine, Pharmaniaga will require a small capital expenditure investment of RM2mil which will be spent towards retrofitting its existing SVI plant. The retrofitting will take a month to complete which would also include putting in place new machinery, ” said the research house.
There is no information on the financial impact on Pharmaniaga if it were to land the tender. However, MIDF expected the volume to be quite substantial – to the tune of 44.8 million doses for a minimum of two doses for Malaysia to produce herd immunity.
Using available external data, MIDF estimated that Pharmaniaga’s FY21F earnings could be lifted by 3.4% to 7.4% or in the range of RM2.77mil to RM6.04mill depending on how the vaccines would be administered and on what type of container the Covid-19 vaccine would require.
This is because the packaging and distribution method would be highly-reliant on whether the vaccine will be orally or parenterally administered.
MIDF’s assumptions took into account, among others, price inflation from potential surge in demand for vaccine containers, local currency exchange rate, scalability of Pharmaniaga versus international peers, expected margin from the tender and a 50%-50% tender split with Duopharma Biotech.
“We deem the estimates as fair given the urgency of the vaccine and potential difficulty that the company might face in transporting the vaccine, which might increase the total cost of delivery of the vaccine, ” it said.
All things considered, MIDF maintained its “neutral” recommendation on Pharmaniaga with an unchanged target price of RM4.74.