KUALA LUMPUR (June 21): Duopharma Biotech Bhd’s approved product purchase list (APPL) contract could possibly be extended again by up to 12 months when it expires at the end of this year, said managing director Leonard Ariff Abdul Shatar.

“We believe, and it is subject to MoH’s final decision, that there might be some negotiation to extend the current tender slightly longer a bit, six or 12 months,” he told reporters after the group’s annual general meeting on Tuesday (June 21).

About 43% of Duopharma’s overall revenue comes from supplying pharmaceutical products to the government sector, and the APPL contract constitute about 40% of this segment, he said.

“Usually when the government wants to tender out such a large tender, they would usually start the tender about eight to nine months prior to expiry. So for December expiry they should start the tender process around April, [but] we are now in the second half of June, the tender process has not started,” he said.

However, Leonard Ariff said the group would “struggle to agree” to a contract extension because of the ringgit's weakness against the US dollar.

“When we last tendered for this business, the exchange rate [for ringgit against US dollar] was circa 4.2, today we are talking about an exchange rate of circa 4.4.”

Ongoing labour shortages are another issue.  

“We have the raw material and capacity, but labour is getting more challenging,” he said, noting that labour shortages have also limited the utilisation rate at its production plants.

Leonard Ariff said the utilisation rate for the group’s Klang facilities are around 80% to 90%, but its Bangi facilities are running at just 60%.

Shares of Duopharma settled three sen or 1.89% lower at RM1.15, valuing it at RM1.1 billion.

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