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Monday, January 13, 2014

RHB: Time is of the essence for Hovid


TIME is of the essence for pharmaceutical firm Hovid Bhd, if it wants to see revenue expanding and stock increasing by year-end, according to RHB Research.

Seventeen multi-billion ringgit drug patents with an estimated US$15 billion (RM49.15 billion) annually are set to expire this year.

This will bring in a mad rush from generic drug manufacturers to launch their own version of top selling innovator drugs.

"Hovid needs to develop these drugs real fast and market them successfully as soon as the patent wears off, before other generic drug manufacturers get to it.

"It's a race and if they come out at the bottom they won't be able to make as much as those who come before them," said Chong Oi Ming, analyst at RHB Research.

To that end, Hovid is going by a three-prong approach to support its ambitions of manufacturing up to 12 generic drugs this year.

The approach includes increasing capacity of its tablet and capsule plant by 30 per cent, setting up its own bioequivalence text centre for generic drugs and building a new central warehouse to better manage the inventory.

RHB Research said even if Hovid is able to launch two of the lowest selling drugs, Tricor and Niaspan, to capture just 0.1 per cent of the market, it will translate to RM6.2 million in new sales or 3.6 per cent of financial year.

The research house has forecast net profit compound annual growth rate for Hovid at RM192.2 million, RM214.2 million and RM239 million for financial years 2014, 2015 and 2016 respectively.

Hovid, the country's pharmaceutical export leader, produces more than 350 types of generic drugs and exports to 45 countries.

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