Beyond insulin: Duopharma’s next act

DUOPHARMA Biotech Bhd’s loss of lead-supplier status in Malaysia’s government human insulin contract has raised questions over whether one of the country’s most established pharmaceutical players is beginning to lose ground in a segment it helped anchor for years.

While Pharmaniaga Bhd’s RM281.67mil insulin contract win changes market optics, it is not projected to fundamentally alter Duopharma’s earnings trajectory.

In fact, it may even accelerate the latter’s broader strategic pivot into higher-value pharmaceuticals, biosimilars and export-driven growth.

The reshuffle follows Pharmaniaga’s emergence as the successful bidder for a three-year contract to supply human insulin to government hospitals, with production to be undertaken at its Puchong facility, making it the first local company to manufacture human insulin at scale.

The award gives Pharmaniaga an estimated 50% to 65% share of the Health Ministry’s (MoH) latest human insulin requirement and strengthens its ambitions in biopharmaceutical manufacturing.

For Duopharma, however, management stresses that the financial impact is limited.

“The expected impact to our immediate earnings is neutral, as the share of the human insulin tender value between Duopharma and our partner, Biocon, will be similar to the previous contract,” group chief executive officer Wan Amir-Jeffery Wan Abdul Majid tells StarBiz 7.

That statement reflects a reality analysts have also pointed out: Despite insulin’s strategic importance, the segment contributes less than 5% to Duopharma’s earnings base.

CIMB Securities described the contract reshuffle as “neutral”, arguing that even though Pharmaniaga appears to have captured a larger portion of the contract value, the bottom-line impact on Duopharma remains negligible, as margins from human insulin are relatively thin compared with other parts of its business.

The research house trimmed its target price slightly to RM1.88 from RM1.93, while maintaining a “buy” call.

This partly explains why Duopharma’s management does not view the development as a setback, but rather as part of a broader industry evolution in which dual suppliers and wider supply security are becoming the norm.

“Regardless of contract size and status, we are engaged with other stakeholders to support the government’s long-term strategy for sustainable insulin supply,” Wan Amir-Jeffery said.

The group remains active within the insulin ecosystem. It has secured an interim recombinant human insulin tender worth RM65mil effective from February to May 2026, and also won analogue insulin-related tenders worth RM68mil, including the recent RM53mil insulin Aspart award.

This is important because analogue insulin increasingly represents where future value lies.

While human insulin remains essential in public healthcare, pharmaceutical competition globally is moving towards more advanced formulations, delivery systems and newer diabetes therapies.

Duopharma appears intent on following that trend rather than defending volume at all costs.

“Our strategy for the long term is to move further upstream to double down on our expertise in development and manufacturing of high value biologics, including insulin,” Wan Amir-Jeffery says.

That upstream move is central to Duopharma’s next growth cycle.

Rather than competing solely on tender size, the group is building around biologics, biosimilars and specialty therapeutics, where margins are structurally stronger and barriers to entry are higher.

This is also where its partnership with Biocon remains strategically relevant. Biocon’s Johor manufacturing presence continues to anchor local biologics capability, even as Pharmaniaga expands its own manufacturing footprint.

At the same time, Wan Amir-Jeffery says earnings growth in 2026 is expected to come increasingly from outside insulin.

“We expect the overall earnings growth contribution for Duopharma in 2026 to come from our ethical specialty and ethical classic range of products, as well as our consumer healthcare business,” he explains.

This diversified earnings base has become more important as procurement competition intensifies.

The MoH tender system is increasingly structured around dual-supplier resilience, designed to reduce dependence on any single provider after supply disruptions in recent years.

“The government’s procurement policy of a minimum of dual suppliers is one of the key factors that allows players to participate in tenders,” he points out.

Maintaining strategic relevance

That means future public contracts may become more about maintaining strategic relevance across multiple therapeutic categories.

Duopharma believes it remains well positioned because of its broader product portfolio and manufacturing reliability.

“With our manufacturing credibility and supply reliability, we will continue to align with and support national objectives, while continuing to be a key supplier for MoH tenders in the mid to long term,” Wan Amir-Jeffery emphasises.

Another important pillar is local manufacturing.

Malaysia’s industrial policies, including the New Industrial Master Plan 2030 and healthcare priorities under the 13th Malaysia Plan, increasingly favour domestic pharmaceutical production, especially for critical medicines, biologics and active pharmaceutical ingredients.

“Local manufacturing capability is critical in order to safeguard the supply of medicine in the country,” Wan Amir-Jeffery says.

In anticipation of that shift, Duopharma is working on a masterplan to expand sterile manufacturing capacity.

This is not merely defensive – it positions the company to capture future opportunities in injectables, oncology therapies and contract manufacturing.

Beyond diabetes, Wan Amir-Jeffery has identified anaemia and cancer therapies as priority therapeutic areas.

“Other than diabetes, the therapies we are focusing on address unmet needs in chronic conditions such as anaemia and cancer, areas where we see rising demand both locally and regionally,” he adds.

Export growth

Export growth forms the third major leg of the strategy.

Exports currently contribute around 7% to 8% of total revenue, but management clearly sees that ratio rising over time.

“Our immediate focus is on Indonesia and other Asean markets, where we see growing demand for halal-certified products and familiar regulatory environments,” Wan Amir-Jeffery says.

Indonesia is particularly important because regulatory changes there, requiring halal certification for over-the-counter medicines by 2026, align closely with Duopharma’s longstanding halal positioning.

The group also holds European Union Good Manufacturing Practice or EU-GMP certification for its highly potent active pharmaceutical ingredients facility, allowing it to pursue more regulated export markets.

That certification could eventually matter more to valuation than short-term tender shifts.

At present, Duopharma trades at roughly 14 to 15 times earnings – below historical averages and well below Pharmaniaga’s current multiple above 30 times.

Analysts generally still favour Duopharma because of earnings visibility under MoH-linked contracts, a stronger balance sheet profile and better operating margin discipline.

Pricing discipline itself remains a major strategic lever.

“We review our pricing strategy for tenders based on many factors. The ultimate objective is to generate higher earnings and ensure a good product mix that will contribute positively to our margins. And we did the same for the insulin tender as well,” Wan Amir-Jeffery shares.

This reflects a more mature posture that not every contract is worth chasing if margins are diluted.

Instead, Duopharma appears increasingly willing to accept lower market dominance if profitability and portfolio quality improve.

The larger competitive question now is not whether Duopharma lost one contract leadership position.

It is whether it can convert its biologics capability, halal advantage and manufacturing expansion into stronger earnings over the next five years.

If it succeeds, losing lead insulin status may ultimately be remembered not as a retreat, but as the point when the company shifted decisively into a broader pharmaceutical growth model.