Economic Challenges Impact Profits in Pakistan’s Pharmaceutical Sector

Islamabad, The pharmaceutical sector in Pakistan faced a significant downturn in profitability during the calendar year 2023, despite witnessing an 18% year-on-year growth in sales. A detailed review of the financial performance of eight leading companies, serving as a proxy for the sector’s listed entities, revealed that higher finance costs and the imposition of a super tax contributed to a sharp 61% contraction in the sector’s bottom line. Among the companies, FEROZ led with the highest sales growth of 43% year-on-year, while AGP retained the top spot for gross margins at 54% over the trailing last quarters.

According to JS Global, the pharmaceutical sector significantly underperformed the benchmark index by approximately 47% during CY23, with an overall performance of just 8%. The sector is currently trading at a trailing price-to-earnings ratio of 35 times. Analysts at JS Global believe that the deregulation of non-essential drugs could serve as a critical turning point for the industry, potentially improving its fundamentals amidst ongoing economic difficulties.

This analysis underscores the broader economic distress impacting the profitability and performance of Pakistan’s pharmaceutical sector, highlighting the need for regulatory changes to foster growth and stability.

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