Business Recorder
KARACHI: Pakistan’s listed pharmaceutical sector delivered a record-breaking financial performance in 2025, with profits surging 78 percent year-on-year to Rs42.2 billion, driven by robust sales growth, easing input costs, and lower financial charges. The report, authored by analyst Muhammad Abdur Rafay, noted that the sector achieved its highest-ever profitability, reflecting improved pricing dynamics following deregulation of non-essential drugs and a favourable cost environment. On a quarterly basis, earnings also showed strong momentum, rising 53 percent year-on-year to Rs14.2 billion in the fourth quarter of 2025, compared to Rs9.3 billion in the same period last year. Net sales for the sector grew 14 percent year-on-year to Rs365.7 billion in 2025, up from Rs319.6 billion in 2024, primarily led by price-driven growth. In the fourth quarter alone, sales increased 18 percent to Rs102.1 billion. Major contributors to annual sales included Abbott Laboratories Pakistan with a 21 percent share, GlaxoSmithKline Pakistan at 18 percent, Haleon Pakistan at 12 percent, and The Searle Company Limited at 8 percent. Profitability was further supported by a significant expansion in gross margins, which rose to 41 percent in 2025 from 35 percent in the previous year. In the fourth quarter, margins improved to 44 percent compared to 39 percent a year earlier. The improvement was largely attributed to declining Active Pharmaceutical Ingredient (API) costs and higher selling prices. According to Topline Research, API prices exhibited a downward trend between January and October 2025, with around 53 percent of APIs recording a median price decline of 11 percent year-on-year, easing cost pressures for manufacturers. Among individual companies, AGP Limited, Highnoon Laboratories, and The Searle Company Limited reported the highest gross margins of 60 percent, 55 percent, and 55 percent, respectively. The sector also benefited from a sharp decline in finance costs, which fell 49 percent year-on-year to Rs4.2 billion in 2025, amid lower interest rates and reduced leverage. In the fourth quarter, financial charges dropped 52 percent year-on-year to Rs902 million. Despite improved profitability, the effective tax rate remained largely stable at 39.9 percent in 2025, compared to 40.3 percent in the previous year, translating into a tax charge of Rs27.9 billion. During the fourth quarter, the effective tax rate stood at 40.9 percent, with tax expenses rising to Rs9.8 billion. Dividend payouts also increased significantly, with the sector distributing Rs21.1 billion in 2025, compared to Rs12.0 billion in 2024, while maintaining a payout ratio of around 50 percent. Key contributors included GlaxoSmithKline Pakistan with Rs5.4 billion, Abbott Laboratories Pakistan with Rs3.9 billion, Haleon Pakistan with Rs3.5 billion, and Highnoon Laboratories with Rs2.6 billion. Looking ahead, Topline Research maintained a positive outlook on the sector, citing ongoing portfolio expansion and a strategic shift toward higher-margin products. However, it cautioned that any volatility in global API prices, particularly linked to oil price fluctuations, could pose risks to margins going forward. Copyright Business Recorder, 2026
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