Pakistan’s listed pharma sector profit rises 28% to PKR42.2b in FY26

Pakistan’s listed pharmaceutical sector recorded a 28% year-on-year increase in profitability to PKR42.2 billion in FY26, supported mainly by higher prices and a sharp decline in finance costs, according to Topline Securities.

The brokerage said sector earnings weakened in the fourth quarter, with profitability falling 2% year-on-year and 26% quarter-on-quarter, largely due to a loss posted by The Searle Company Ltd.

Excluding Searle, however, sector profitability increased 6% year-on-year but declined 4% quarter-on-quarter to PKR9.3 billion in 4QFY26. On a full-year basis, profitability excluding Searle rose 22% year-on-year.

Despite stronger earnings, the sector’s market capitalization, excluding Searle and Liven Pharma, increased only 0.4% year-on-year. Excluding Liven Pharma, market capitalization rose 2.3% as of June 30, 2026.

Sales climb 10%

Net sales of listed pharmaceutical companies increased 10% year-on-year to PKR377.9 billion in FY26 from PKR342.6 billion, primarily reflecting higher product prices.

Fourth-quarter sales reached PKR88.9 billion, up 3% year-on-year but down 3% from the previous quarter.

Abbott Laboratories Pakistan accounted for the largest share of sector sales at 20%, followed by GlaxoSmithKline Pakistan at 18%, Haleon Pakistan at 11% and Searle at 10%.

The sector’s gross margin reached a record 42.8% in FY26, compared with 38.9% in FY25. The margin also improved to 42.8% in 4QFY26 from 40.4% a year earlier.

Topline attributed the improvement mainly to higher medicine prices, while companies maintained average inventory levels of around 60 days.

AGP reported the highest gross margin among the companies covered, at 60.4%, followed by Highnoon Laboratories at 56.1% and Searle at 52%.

Finance costs fall 42%

Selling and distribution expenses rose 21% year-on-year to PKR69.5 billion during FY26. The expense reached PKR17.6 billion in the fourth quarter, up 11% year-on-year but down 2% quarter-on-quarter.

Meanwhile, sector finance costs dropped 42% to PKR3.6 billion, helped by a more stable interest-rate environment and lower debt levels.

Other income increased 2% to PKR6.5 billion during FY26. In the fourth quarter, it jumped 85% year-on-year to PKR2.5 billion, mainly due to a higher contribution from Hoechst Pakistan.

The sector’s effective tax rate increased to 42.5% from 39.8% a year earlier.

Pharma volumes may recover in 2027

Topline Securities expects pharmaceutical volumes to begin recovering in the first half of calendar 2027, supported by a low comparison base and companies expanding their product portfolios.

The brokerage said a recovery in volumes, combined with improved pricing, could provide further support to pharma earnings in the coming periods.