KUALA LUMPUR: Pharmaniaga Bhd has clarified that the government is not solely dependent on the group as all measures are taken to ensure a diversified supply chain to avoid overreliance on a single company.

“Contrary to the claims, the Ministry of Health (MoH) spent approximately only 35% of its pharmaceutical spending via Pharmaniaga, with the group’s role limited to managing the logistics and distribution of the products, as well as holding the drug stockpile in the tune of RM400mil as of Dec 31, 2022,” the pharmaceutical group said in a statement.

It added that the selection of suppliers, products and prices is determined by the MoH after concluding an open tender exercise.

“We believe that making a blanket statement that a single company, such as Pharmaniaga, has a dominant grip and major influence over large portions of our healthcare system in Malaysia is baseless,” Pharmaniaga said.

Earlier this week, MoH confirmed that Pharmaniaga’s concession agreement to provide medicine and medical supplies to the ministry’s facilities has been extended for 10 more years.

“Pharmaniaga was selected for the concession based on its successful track record in meeting the MoH’s stringent KPIs, achieving more than 98% score consistently. Heavy monetary penalties are imposed by MoH for any non-conformances,” it said.

To date, Pharmaniaga operates 15 pharma-grade warehouses and distribution centres at strategic locations throughout the country, supported by a fleet of more than 300 vehicles.

“The warehouses keep approximately RM300-RM400mil worth of drugs and medical supplies at any time, acting as the national drug stockpile that provides continuous and adequate supplies of drugs to the country,” it said.

Pharmaniaga said it has invested approximately more than RM600mil over the years, in developing the whole logistics infrastructure that supports an extensive and efficient distribution network throughout the country.

This includes the RM400mil Pharmacy Information System (PhIS), as well as substantial investments in human capital, digitalisation and ESG based activities which are part of the group’s continuous improvement initiatives to enhance operational efficiency.

The group also rejected that the extension of its concession will discourage other pharmaceutical companies from doing business in Malaysia.

“This is a flawed argument because the supply for Approved Product Purchase List (APPL) products is a competitive tender-based system that allows any qualified suppliers to participate and win tenders. All winning tenders are decided by the MoH,” Pharmaniaga explained.

It added that the concession given to Pharmaniaga was merely for the logistics and distribution of APPL products.

Currently, there are 729 APPL products, supplied by 96 companies that are selected via open tender, it said.