Lahore, December 31, 2019 (PPI-OT): Getz Pharma is the second-largest pharmaceutical company of Pakistan, by market share and sales revenues. The strength of the company is based on the product suite that it markets in the local market and also in the export. The hallmark of the company is the accreditation that it has obtained from World Health Organization (WHO), Geneva as well as it is the first and only company in Pakistan that is certified and accredited by the European based Pharmaceutical Inspection Cooperation Scheme (PIC/s).
The company has the research base in Pakistan as well as the production facilities; through which it feeds multiple countries around the globe. Top product concentration is adequate and reflects some of the repeat prescriptions. In terms of turn over, the local market is dominated and the export window is diverse. The export revenue hedges the company’s cost of imports of raw material from adverse impact, rendering it’s gross margins stable than pharma companies which do not have substantial exports. The profitability margins are very strong with the history of dividend pay-outs.
Lately, the financial profile has seen debt being accumulated but when compared to equity and cash flows it remains well managed. The debt has been procured for an expansion project, which the company has been funding hitherto with internally generated equity. The production will start gradually, yet the current operations remain capable of servicing the debt. This project is being envisaged as a giant leap for the company of which success is really crucial. The governance framework may improve in line with the standards for the large corporates.
The ratings are dependent on the continued sustainability of profits and market share. Adequacy of cash flows and the availability of alternative resources to make debt-related payment remains critical. Meanwhile, compliance with internally-defined leveraging metrics is a prerequisite. Sanguine governance practices are essential.
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The Pakistan Credit Rating Agency Limited (PACRA)
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Category: General Business News