Kuala Lumpur, 19 April 2023 — The decision by the Government to extend the concession agreement with Pharmaniaga Bhd for the provision of medicines and medical supplies to the Ministry of Health’s healthcare facilities for another 10 years represents a major blow to much needed healthcare reforms and towards strengthening the country’s resiliency and security of its health system.
“This decision, while representing a big win for the company and good news for its shareholders, signals a confirmation that the Malaysian health system is vulnerable, at risk and heavily dependent on a single company for more than a third of the government’s branded and generic drug supply, and most if not all of its logistics and pharmaceutical supply chain. It also contradicts and refutes the previous denials that there is no such dependency,” said Azrul Mohd Khalib, Chief Executive Officer of the Galen Centre for Health and Social Policy commenting on this development.
“The government’s practice of exclusive concessions which grant individual companies such as Pharmaniaga and other GLCs, a dominant grip, and major influence over large portions of our healthcare system, including hospital services has created an unhealthy over-dependence in the belief that these companies will be considered indispensable and become “too big, too fail”. This decision confirms that perception.”
“Despite being included into Bursa Malaysia’s Practice Note 17 classification of financially distressed companies, found by the Auditor General to have provided faulty ventilators to the Ministry of Health during a public health emergency which threatened the lives of many, and problematic business decisions regarding COVID-19 vaccines costing more than half a billion ringgit which cost the former CEO his job, this decision is baffling, disappointing, and will be seen as rewarding the company regardless of its performance or the risk it represents. Will this be the approach whenever this GLC runs into financial trouble?”
“The government’s decision will also send a signal to all pharmaceutical players that there is no point in building, investing, and growing its business here in Malaysia to compete for the provision of medicines under the concession arrangement as Pharmaniaga has practically locked it up for another decade. This is poor business practice, deprives the Malaysian public healthcare system and the people of this country from the benefits of healthy competition, reduces the diversity of providers, and maintains the existence of tender agents as middlemen which unnecessarily increase the costs of medicines.”
“The lack of courage, vision and inability to seize the opportunity of this crisis, which is practically limited to one private company, to introduce much needed and long argued reforms for a more cost effective and efficient system, is disappointing. Allowing suppliers to negotiate and bid directly with the Government could potentially enable millions in public funds saved, lower prices, increase cost effectiveness and for newer therapies to be made available for patients. It will introduce improved diversity of suppliers, reduce vulnerability and increase resiliency. It will force companies like Pharmaniaga to improve and not take their business for granted. A renewal of a concession agreement lasting for a decade will unlikely have that effect.”