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Pharma Aids has planned to increase production by 20 per cent to meet the growing demand but through toll manufacturing.
The company's capacity falls short to manufacture a higher volume of glass ampoules than what it produces now, and that makes it consider signing a deal with a private company to supply the excess products, according to a stock exchange filing on Thursday.
At present, the pioneer ampoule manufacturer in the country can produce up to 0.45 million glass ampoules a day. Through the agreement, it will be able to deliver 0.10 million more pieces of ampoules.
Company secretary Md Humayun Kabir said a private company would supply ampoules on a trial basis for the six months through March 2024.
He, however, refused to disclose the name of the company that Pharma Aids is going to forge a partnership with.
"The decision is still at the initial stage.
"If we get good quality products during the trial period and customers accept the products, we will go for a final deal," Mr Kabir said.
Then the company will reveal the name.
Toll manufacturing is one kind of contract manufacturing, in which the client provides raw materials, specifications and formulas to the supplier for processing those into finished or semi-finished goods.
Pharmaceutical companies have increasingly been engaging in toll or contract manufacturing and gaining popularity nowadays, as it creates a win-win situation for both parties.
Listed in 1987, the stock of Pharma Aids has been stuck at Tk 790.70 (floor price) each share since November last year.
Pharma Aids suffered losses in the past two quarters through March this year owing to a decline in net sales and an increase in the cost of production.
The company reported a loss of Tk 6.15 million in total in the immediate past two quarters through March.
It made a profit of only Tk 0.15 million in the nine months through March this year, down from Tk 47.76 million in the same period a year before.
The company also reported a 31 per cent plunge in profit to Tk 34.75 million for FY22, compared to the previous fiscal year, mainly for deferred tax expenses.
Moreover, bad debt expenses, changes in the accounting estimates, tied to gratuity, and write-off of unsettled VAT shown as asset in prior years dragged profit down.
Despite a drop in profit, the company paid 50 per cent cash dividend for FY22 in continuation of the return its shareholders received for the previous four fiscal years.