KUALA LUMPUR (March 30): Pharmaniaga Bhd has acknowledged recent delays in payments to its suppliers, but said this will be normalised soon, and that most obligations have been cleared.

In a statement, Pharmaniaga said the Ministry of Health (MoH) spends 35% of its pharmaceutical expenditure with the group, and that the government is not over-relying on its services, contrary to recent claims.

It said this following calls for the government to consider allowing other companies to be involved in distributing medicines to public hospitals amid concerns over Pharmaniaga’s current financial position.

“Pharmaniaga today vehemently dismisses claims by certain quarters that the government is over-relying on the group as its pharmaceutical logistics and distribution services provider,” it said.

Regarding the MoH, Pharmaniaga said its role is “limited to managing the logistics and distribution of the products”, as well as holding a drug stockpile to the tune of RM400 million as at end-2022.

“The selection of suppliers, products and prices are all determined by the MoH after it concluded an open tender,” it said.

Pharmaniaga clarified it serves nearly 2,000 government health facilities including in remote areas of Sabah and Sarawak, with over 450,000 annual deliveries supported by 500 local employees.

It said it has “consistently achieved more than 98% score of the KPIs (key performance indicators), which is a result of “long-term commitment” to the investment of logistics infrastructure and network nationwide.

“That includes facilities provided by 14 pharma-grade warehouses and distribution centres located strategically in the Klang Valley, Penang, Sabah and Sarawak, as well as managing a fleet of more than 300 vehicles,” it added.

“Pharmaniaga remains committed to its obligations towards both businesses with MOH and the private sector despite experiencing challenges after announcing its Practice Note 17 (PN17) status recently due to the provision of Covid-19 vaccine stocks,” it said.

Pharmaniaga added that it is business as usual for its Indonesian operations.

Pharmaniaga said as a responsible government-linked company - it is part of the Boustead Group, the listed entity of the Armed Forces Fund (LTAT) - Pharmaniaga “has never defaulted on any of its obligations to the financial institutions”.

However, it said it “acknowledges the recent unexpected delays in payments to its suppliers and assures the situation will be normalised soon”.

“Most of the obligations have since been cleared, and the group will continue to honour all obligations to ensure patients’ access to medicine remains uninterrupted and continues to be intact,” it added.

The company, which fell to PN17 status after writing off RM552.3 million worth of Sinovac Covid-19 vaccines, had cash of RM52.85 million at end-2022. Payables stood at RM802.7 million from RM858.41 million the year before.

Shares of the pharmaceutical group settled unchanged at 29 sen , giving it a market capitalisation of RM379.96 million. Year to date, the counter has retreated by 46.79%.

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