Friday 29 Mar 2024
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KUALA LUMPUR (March 29): The government ought to be open to the idea of allowing other providers to supply and distribute medicines to the public health sector as it has proved too risky to depend on a single provider, the Malaysian Medical Association (MAA) said on Wednesday (March 29), urging serious contemplation of the ramifications flowing from the financial plight of its sole concessionaire in the segment.

“This of course will take time to implement. In the meantime, urgent steps are needed to secure [an] ample supply of medicines for public health care,” MAA president Dr Muruga Raj Rajathurai said in a statement.

The association urged the government to take Pharmaniaga Bhd’s financial problems more seriously after the government-linked company was classified as a financially distressed company earlier this year after it had to provide for a massive RM552 million in impairment stemming from large volumes of Covid-19 vaccines that it could not sell.

Pharmaniaga fell into Practice Note 17 (PN17) status after it recorded negative equity following its largest ever quarterly net loss of RM664.39 million for the last quarter ended Dec 31, 2022, even though revenue improved 21.2 % to RM862.72 million.

Muruga pointed out the situation may have a significant impact on the country’s supply of public health medicines.

According to the MMA president, suppliers may also reduce or stop their supplies of medicines to Pharmaniaga if the issue is prolonged, as they would be seeing losses if outstanding payments “are not settled”.

“The supply of essential medicines (medicines to treat emergency and acute cases) can be affected if such a scenario were to happen,” Muruga stressed.

Pharmaniaga was initially granted a concession agreement to supply public health facilities with medicines and medical supplies by the Ministry of Health (MOH) in 1994. The concession is slated to expire in June this year. At the height of the pandemic, Pharmaniaga had supplied 12.4 million doses of Sinovac vaccines until July 2021.

According to its annual report, the pharmaceutical outfit — part of the Boustead Group — supplies more than 700 products in the MOH’s Approved Product Purchase List (APPL), which comprises medicines and other medical items to government hospitals, institutions and clinics.

Pharmaniaga's borrowings increased by 35% last year to RM1.16 billion, and it has appointed MIDF Amanah Investment Bank Bhd as its principal advisor for its regularisation plan to address its financial condition.

Allowing other suppliers into the segment would end Pharmaniaga's monoploy as the sole provider of medical supplies to government run-healthcare facilities.

Asked to comment, a Pharmaniaga group spokesperson told The Edge, "We will issue a statement tomorrow (Thursday, March 30)."

The MOH, meanwhile, was unable to provide comment at this juncture.

In 2019, then health minister Datuk Seri Dr Dzulkefly Ahmad announced an end to the concession which had a duration of 25 years, opting to replace it with an open tender system, before Pakatan Harapan was ousted as the ruling government.

Pharmaniaga has been the sole concession holder for a quarter of a century since Putrajaya privatised the drug procurement system in 1994. Former finance minister Lim Guan Eng had previously observed that Pharmaniaga's drug procurement concession was a "monopoly" that cost the government over RM1 billion annually.

Edited ByLam Jian Wyn
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