This article first appeared in The Edge Malaysia Weekly on June 9, 2025 - June 15, 2025
PERTUBUHAN Keselamatan Sosial (Perkeso), also known as the Social Security Organisation (Socso), could emerge as a substantial shareholder of Practice Note 17 (PN17) outfit Pharmaniaga Bhd (KL:PHARMA) if it takes up a private placement offered by the company, sources familiar with the matter tell The Edge.
In response to questions from The Edge on whether Perkeso will take up the share placement, Pharmaniaga managing director Zulkifli Jafar says: “As part of our approved regularisation plan, there is a private placement component. While we have received interest from multiple investors to participate in the private placement, no final decision has been made at this stage.”
Nevertheless, The Edge understands that talks between Pharmaniaga and Perkeso have been progressing well and something concrete may come out of the negotiations. Perkeso had not responded to The Edge’s queries as at press time.
It is learned that other parties are in talks with Pharmaniaga, but the details are scarce.
While it is not etched in stone yet, sources say Perkeso could end up with a stake as high as 20% in Pharmaniaga if all goes well. This would make it the second-largest shareholder after armed forces fund Lembaga Tabung Angkatan Tentera (LTAT), which has an indirect shareholding of 47.12% via its wholly-owned Boustead Holdings Bhd and a direct stake of 7.83%, bringing its total equity interest to 54.5%. There are no other substantial shareholders in Pharmaniaga.
To recap, Pharmaniaga fell into the PN17 category status in February 2023 after facing an impairment of RM552.3 million brought about by unsold supply of Covid-19 vaccine. The impairment led to its worst quarterly net loss of RM664.39 million in the financial quarter ended Dec 31, 2022 (4QFY2022). Its full-year net loss came to RM607.32 million.
As part of its plan to revive its financials, Pharmaniaga’s regularisation plan — which is slated to be completed by the end of August this year — received the approval of the stock exchange regulator at end-November last year.
The regularisation plan entails a rights issue of 3.53 billion shares aimed at raising as much as RM353.5 million, a private placement of 2.14 billion shares to raise up to RM300 million, an injection of up to RM190.1 million by parent Boustead Holdings and LTAT, and a RM520 million capital reduction exercise, among others.
The 2.14 billion placement shares make up 30.4% of the enlarged issued share capital after the proposed rights issue and proposed private placement under the maximum scenario B, as outlined in its circular to shareholders.
The proceeds raised will be used to repay borrowings as well as for business expansion plans. Back-of-the-envelope calculations indicate that the placement of 2.14 billion shares will see LTAT’s stake in Pharmaniaga reduced to 38.3% from 54.9%. But there is an urgent need to address the debts that are weighing down on Pharmaniaga and the bigger plan involves exiting the PN17 category after two consecutive profitable quarters.
In April, independent auditor Ernst & Young PLT (EY) raised concerns about Pharmaniaga’s financial sustainability and its ability to continue as a growing concern. This was the third straight year such concerns were raised.
In its audit, EY highlighted that as at end-December 2024, Pharmaniaga’s current liabilities exceeded its current assets by RM748.8 million at the group level and RM827.2 million at the company level. The auditor also pointed out a capital deficiency of RM145.9 million at the group level, indicating “the existence of material uncertainties that may cast significant doubt on the group and the company’s ability to continue as a going concern”.
Pharmaniaga currently has operations in Malaysia and Indonesia (via 73%-owned PT Millennium Pharmacon International Tbk, which is listed on the Indonesia Stock Exchange).
Despite being in the PN17 category, the pharmaceutical company’s concession to supply medicines to public hospitals was renewed in January 2024, retrospectively taking effect from July 1, 2023, for a period of seven years.
As it stands, Pharmaniaga’s financials seem to be improving. For its first quarter ended March (1QFY2025), it posted a net profit of RM29.58 million on revenue of RM1.05 billion. Its net operating cash was at RM22.2 million. It achived a net profit of RM25.65 million from RM964.96 million in revenue in the previous corresponding period.
Pharmaniaga had cash and bank balances of RM138.19 million at end-March. Its current liabilities stood at RM1.05 billion and non-current liabilities at RM99.72 million. Its accumulated losses amounted to RM344.12 million. The company incurred finance costs of RM17.29 million.
On its prospects, Pharmaniaga says: “We commenced 2025 with positive momentum, supported by advancements in our biopharmaceutical portfolio, the introduction of new pharmaceutical products and continued operational improvements across both Malaysia and Indonesia.”
In March, Pharmaniaga launched its first flu vaccine and penetrated the insulin market, which could spell better things for the company. It had a market capitalisation of RM367.5 million after its share price closed at 25.5 sen last Friday.
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