KUCHING: Apex Healthcare Bhd (Apex) has a challenging short-term outlook due to Covid-19 as the performance of the pharmaceutical industry depends on the Malaysia government’s ability to contain and control the number of Covid-19 cases, analysts observed.
AmInvestment Bank Bhd (AmInvestment Bank) gathered that dragged by another wave of Covid-19 outbreak, patient visitation to clinics and hospitals has declined recently, driving down demand from this customer base.
The research firm noted that there were also lower incidences of non-Covid-19 transmissible respiratory cases, leading to less demand for Apex’s respiratory products.
“Apex’s large portfolio of nearly 5,200 line items has provided it some buffer against the seasonal nature of certain illnesses,” AmInvestment Bank said.
“Originally, the group’s bestsellers included cough and cold preparations Bena and Sedilix.
“As the incidence of cough and cold cases has declined, Apex is now shifting its marketing emphasis to cardiovascular and other therapeutic products.
“Ultimately, the performance of the pharmaceutical industry depends on the Malaysia government’s ability to contain and control the number of Covid-19 cases.
“We believe that a stable and long-lasting recovery in the industry is dependent on the advent of vaccines, with visible effects in the second half of 2020 (2H20).”
On strict industry regulations, AmInvestment Bank highlighted that it may stifle Apex’s growth and increase recall risk.
“The regulations of the pharmaceutical industry, whether local or abroad, may come in the form of more stringent product manufacturing and registration processes.
“As a result, Apex may take longer to get drug approvals, leading to longer testing periods and less frequent product launches.”
The research firm further highlighted that as Apex manufactures generic off-patent pharmaceuticals, it may face intense price competition from numerous pharmaceutical peers in Malaysia and other countries.
“Nonetheless, Apex has taken steps to diversify its earnings base, most notably with its contract manufacturing arm.
“Also, Apex has a proven manufacturing track record backed by various international accreditations.”