Malaysia: More stringent hygiene in US hospitals and labs could boost sales for Malaysian rubber glovemakers who produce three out of every five pairs used in the world.
Demand for medical gloves is seen increasing ahead of guidelines from the US Pharmacopeia (USP) Convention that come into effect December 2019. Known as the USP 800, the best-practices standard for pharmacies and hospitals will recommend health workers don two pairs of gloves to handle hazardous drugs.
As the US accounts for a third of global demand for medical gloves, the new standards – if widely enforced – could push demand from that market well above its “normal” 8% to 12% annual growth rate, said Malaysian Rubber Glove Manufacturers Association (Margma) vice-president Supramaniam Shanmugam.
“If it’s mandatory – then boom!” Supramaniam said in an interview in Kuala Lumpur last Thursday. “I know the amount of gloves that we export is going to be double now. But we’re still studying how the implementation is going to be like.”
The region accounts for about a fifth of sales at Riverstone Holdings Ltd and UG Healthcare Corp, both Singapore-listed but Malaysia-based producers.
In a market update this week, Singapore Exchange Ltd noted that the three glovemakers on its bourse – Riverstone and UG Healthcare along with Top Glove’s secondary listing – averaged a 12-month total return of 35%. The exchange said prospects for the global rubber glove industry were robust given expanding health-care demand.
Ross Cameron, a portfolio manager at Northcape Capital Ltd, which manages A$10bil (US$7.3bil) in assets under management and owns 45.3 million shares in Top Glove, said the potential impact from the forthcoming guidelines is “not at all” priced in.
“This is a material positive uplift to earnings as volume numbers will have to be increased as a consequence,” Cameron said by phone from Japan. “It is kind of a kicker to what is already an attractive story.”
Other investors say it’s hard to quantify the exact impact from the new guidelines.“It’s true that USP 800 might drive some incremental demand for gloves, although the quantum of that additional demand may not be material in the context of current global glove demand,” said David Smith, the head of corporate governance at Aberdeen Standard Investments Ltd., which owns Riverstone shares.
Read more at https://www.thestar.com.my/business/business-news/2018/09/01/us-hygiene-push-could-fuel-a-rubber-glove-boom-in-malaysia/#FpZH9oiomue2g4pY.99
