Pharmaniaga with Saudi firm to build RM120mil factory in Riyadh

Pharmaniaga Bhd is teaming up with Modern Group, one of the largest companies in Saudi Arabia, to build a RM120mil manufacturing plant in Riyadh.

Pharmaniaga chairman Tan Sri Lodin Wok Kamaruddin said the 50:50 joint venture was part of the company’s strategy to accelerate the growth of its pharmaceutical business and to capture the rapidly growing opportunities in Saudi Arabia.

The company expects to fork out RM60 million over the next five years as an initial investment outlay for its 50% stake in the joint venture. Modern Group will hold the other 50%. Construction work on the facility will take three years, and it is to be operational by 2017.

When asked whether there are more expansion plans in the pipeline, Lodin said that the company is always lookout for opportunities, but currently confines it to South East Asia and the Middle East market.

"We believe that for Asean, the potential for various types of generic drugs or halal drugs and herb-based drugs is tremendous. We are looking into countries like Myanmar, possibly Vietnam, the Philippines or even Thailand ," he added. "Now we have completed the acquisition of PT Errita Pharma in Indonesia , allowing us to go big way into Indonesia."

“At the same time, we are looking at enhancing our retail pharmacy outlets.  At present, we have one in Shah Alam under the Royale Pharma brand.

"Having drug stores at petrol stations is something new, I don't think there are many drug stores at the petrol stations nationwide," Lodin said. Its current arrangement to dispense ethical drugs is through alliances with standalone pharmacies. "Currently we have 20 alliances and we're looking for more," said Lodin, adding that it helps individual pharmacy outlets to reduce operational costs by using the " Royal Pharma Pharmacy" brand.

“We are now working closely with several organisations and companies to see if we can establish more outlets in the country.”

He added that Pharmaniaga’s parent company, Boustead group, owned and operated more than 300 petrol kiosks nationwide and soon all these locations would be selling the Royale Pharma products.

"We hope the non-concession's revenue contribution will increase further from 21% as of 2013, but as we grow local business at the same time, the contribution from the overseas markets is likely to remain flat at around 20% in terms of revenue contribution percentage."

Concession business is still the biggest revenue contributor for the company and contributing nearly 60% of total revenue.

Pharmaniaga reported a lower pre-tax profit of RM93mil for the year ended Dec 31, 2013, down 10% from RM103mil previously.

However, its revenue rose to RM1.9bil from RM1.8bil a year ago.

This was attributable to strong contributions from the group’s non-concession business and organic growth in the concession business as well as new tenders that it secured.

Meanwhile, Pharmaniaga has budgeted a minimum of 5% of manufacturing revenue for reserach and development work on Kacip Fatimah phyto-medicine. "Clinical stage is important before we can distribute the product." Pharmaniaga started planting Kacip Fatimah in 2011 at its landbank in Kedah.
Source: Bernama 03-04-2014 

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