KUALA LUMPUR (Oct 31): Pharmaniaga Bhd's share price took a nosedive in the afternoon session after the health ministry announced that the company's 10-year concession will not be renewed.

The selling on Pharmaniaga shares emerged when the news broke. The stock plunged 32 sen or 12.8% to RM2.18 — the lowest in six months since mid-April this year.

Health Minister Datuk Seri Dr Dzulkefly Ahmad was quoted by the media as saying that there would be no more concessionaires for logistics and distribution services for medical supplies and an open tender system would be introduced instead.

This will mean that Pharmaniaga will have to go through the open tender process to win back the public contract that will expire by the end of next month. Consequently, the company may have to embrace thinner profit margin due to competition.

In a statement issued shortly after the Minister's remark, Pharmaniaga said it is optimistic of its capabilities to continue serving the nation. "As the government believes in meritocracy, the company is confident that its performance will be the key factor to continue its services either through extension of concession or open tender contract," the pharmaceutical company said. 

The concession to supply to public hospital generates 70% of Pharmaniaga's revenue and about 26% of its net profit in the financial year ended Dec 31, 2018.

Due to the surge in selling on the stock, Bursa Malaysia announced today that proprietary day trading (PDT) and intraday short selling (IDSS) of Pharmaniaga shares have been suspended for the rest of the day after the securities' price dropped more than 15% from the reference price.

"The short selling under PDT and IDSS will only be activated the following trading day, Friday, Nov 1, 2019 at 08:30am," it said.