This article first appeared in The Edge Financial Daily on April 12, 2018

PETALING JAYA: Pharmaniaga Bhd said its Indonesian business is “doing very well” with its halal products gaining more traction amid the population growth and increasing affluence in the country.

Its chairman Tan Sri Lodin Wok Kamaruddin said the group is forecasting a revenue growth of up to 18% this year from the Indonesian operations.

“Both of our operations there, namely PT Errita Pharma and PT Millennium Pharmacon International Tbk, were profitable last year,” Lodin told reporters after the group’s annual general meeting yesterday.

For the financial year ended Dec 31, 2017 (FY17), Pharmaniaga’s revenue grew 6% year-on-year to RM2.3 billion, of which about 32% or RM734 million came from the Indonesian operations.

“We are confident that Indonesia will continue to do well and contribute profits to the group in the future,” said Lodin.

For FY18, Pharmaniaga is putting aside RM75 million for capital expenditure which will be used to upgrade its machinery in Indonesia and warehousing facilities in Malaysia.

Managing director Datuk Farshila Emran said the group’s planned halal vaccine plant is on track.

“There are currently no vaccine plants in Malaysia. We are on the right track to make sure that the facility is made available. We are currently in the process of doing feasibility studies. We expect to have our first commercial batch by 2024,” Farshila said, adding that the plant would be ready between 2020 and 2022.

She added that the site could be in Seri Iskandar, Perak, or Sungai Petani, Kedah, and not in Puchong, Selangor, as earlier announced.

In December 2017, Pharmaniaga said it would be investing RM100 million over three years to establish a plant to manufacture halal vaccines.

It signed a collaboration agreement with the Technology Depository Agency (TDA) and India-based Hilleman Laboratories.

Under the collaboration, Pharmaniaga and TDA will work hand in hand to coordinate the efforts in developing and manufacturing vaccines that can be incorporated into Malaysia’s National Immunisation Programmes while Hilleman Labs will provide vaccine know-how and technologies.

Moving forward, Pharmaniaga also plans to continue reducing its dependency on its concession business, which contributes 49% to total earnings currently. It plans to do this by having a better share in the private sector.

Farshila added that the group will also step up its marketing of products to the European Union (EU).

“We are also now aggressively registering our products in the EU region. We have managed to register two products so far. EU has a different set of standards but we are in compliance with that,” she said.

Pharmaniaga currently has more than 200 products, with more than 60 of them halal-certified.

According to its annual report, the group expects to receive halal certification for more than 150 pharmaceutical products by the end of 2019.

While the group is focused on growing its non-concession business, Lodin said the concession segment will remain, and is confident it will be renewed.

The pharmaceutical group has a 10-year concession agreement with the health ministry, which began on Dec 1, 2009. The concession enables the group to supply and distribute pharmaceutical products to medical institutions under the ministry via its logistics and distribution division until 2019.

Pharmaniaga’s share price rose two sen or 0.48% to RM4.20 yesterday, with a market value of RM1.09 billion.