Liberation reinforces drug profits by 210% on an annual basis

Karachi:

Due to the liberalized prices, the Pakistani pharmaceutical sector observed a significant increase in profitability, publishing 210% on an annual basis (YOY) an increase in RS13.5 billion in the calendar year 2024, according to data compiled by Arif Habib Limited (AHL).

The net revenue of the sector increased by 21.1% on a yearly basis, reaching 196.8 billion Rs, with top contributions from AGP (+33.8% on an annual basis), Glaxo (+23.2% annual

“This 210% increase (or 3.1 times) annual years is due to higher volumes of sales and prices after releasing drug prices,” said AHL Menka Kirpalani analyst at The Express Tribune.

Gross profit also increased a significant 64.9% increase on a yearly basis, reaching 68.6 billion Rs, backed by better pricing strategies, coins stability and lower costs of active pharmaceutical ingredients (API). Companies such as Glaxo (+339.2% on an annual basis), ABBOTT (+67% on an annual basis) and AGP (+44.4% on an annual basis) played a key role in this extension. The total gross margin for the sector improved to 34.9%, with Hinoon (51.4%) and AGP (47.8%) driving the road. Net margins also increased to 6.9%, reflecting improved functional effectiveness.

The impact of demand was negligible. Demand for medicinal products and medicines is naturally increasing as the population is growing, Kirpalani said. However, the main issue for the pharmaceutical sector was that their prices were regulated. Basic drugs are subject to a maximum prices associated with 70% of the Consumer Price Index (CPI) and non -basic drugs to 100% of the CPC, which means that companies could only increase prices to this limit.

In February 2024, government -liberated prices for the non -basic department, allowing companies to adjust prices based on their own costs and profitability needs. As a result, mixed margins improved and tumors have also increased.

Previously, some products had been delayed by low margins – for example, Panadol was not temporarily available because companies were unable to maintain profitability at the regulated prices. With liberalization, both margins and sales have now increased, benefiting the industry.

Despite positive performance, financial expenses increased by 4.7% annually to 4.7 billion Rs, mainly due to higher interest rates. In addition, other revenue decreased by 44.4% on an annual basis, affected by companies such as Glaxo (-50.8% on an annual basis) and Abbott (-51.6% annually).

Among the individual companies, Glaxo reported a profit of 6.5 billion Rs (+12.2 times on a yearly basis) with EPS of RS20.52, while Abbott recorded 5.2 billion Rs (+20 times a year) with RS53.46. Hinoon has published RS3.2 billion in profit (+35.4% annually) with EPS RS61.41 and AGP reported RS2.08 billion (+75.1% on an annual basis) with EPS 7.44. However, Searl suffered a loss of RS3.6 billion, facing operational challenges.

Several companies, such as Glaxo, Abbott and Hinoon, announced dividends RS10, RS10 and RS40 per share, respectively, rewarding shareholders for strong financial results.