Pharma profits seen rising 22% in 2025's fourth quarter on price deregulation

Pakistan’s pharmaceutical sector is expected to post a roughly 22% year-on-year increase in profit in the fourth quarter of 2025, driven by price deregulation of non-essential medicines and stable-to-lower raw material costs, according to a report by Optimus Capital Management.

The brokerage said earnings for its coverage universe are projected to reach about PKR 8.3 billion in 4QCY25.

Optimus said the anticipated growth is primarily supported by the deregulation of prices for non-essential drugs and a stable to downward trend in prices of commonly used active pharmaceutical ingredients (APIs).

Volumes dip year-on-year

Despite stronger earnings, the report noted that volumes for the covered companies fell 1.8% year-on-year to 213 million units in the fourth quarter, though rising 9.3% quarter-on-quarter on seasonal demand.

The year-on-year decline was largely attributed to GlaxoSmithKline Pakistan Limited, which accounts for around 40% of the universe’s total volumes and saw a 10.7% annual drop. Optimus said Glaxo’s repeated price increases on non-essential products affected sales volumes as lower-priced generics remained available in the market.

On a sequential basis, volumes improved due to higher winter demand for allergy and antibiotic products. Industry-wide volumes closed 2025 at 3.8 billion units, up 1.24% year-on-year.

API price trends mixed

API prices showed a mixed pattern during the quarter. Pain-management ingredients such as Aspirin and Ibuprofen recorded modest price increases due to higher raw material and freight costs. In contrast, Paracetamol, Ascorbic acid and Amoxicillin prices declined amid global overcapacity.

However, APIs relevant to AGP Limited, including Cetirizine and Amlodipine, saw price increases due to supply tightening and port congestion, the report said.

Company outlooks

Optimus expects Haleon Pakistan Limited to post earnings per share of PKR 13.99 in 4QCY25, up 19% year-on-year, with profit after tax projected at PKR 1.6 billion. Growth is likely to be driven by price hikes and new product launches, including Sensodyne variants and Centrum. The brokerage expects a dividend of PKR 15 per share.

Glaxo’s quarterly earnings are projected at PKR 3.7 billion, or PKR 11.59 per share, up 25% year-on-year. The increase is attributed to more than 20% annual price growth in non-essential products and stronger seasonal volumes in pain, allergy and cough segments. Optimus expects a dividend of PKR 10 per share.

AGP’s profit is expected to decline 6% year-on-year to PKR 1.2 billion, or PKR 4.00 per share, amid lower exports to Afghanistan and a 22% rise in selling and distribution expenses linked to new product launches. A dividend of PKR 3.5 per share is anticipated.

Meanwhile, Abbott Laboratories Pakistan Limited is forecast to post a 46% year-on-year surge in profit to PKR 1.9 billion, or PKR 19.2 per share, driven by price increases of 15% to 20% and a 5.6% rise in volumes. Optimus expects Abbott to announce a dividend of PKR 30 per share.

Sector outlook

Optimus maintained an “outperform” stance on the pharmaceutical sector, projecting earnings growth of 20% to 25% in 2026, assuming no major escalation in API prices and stable macroeconomic conditions.

However, it cautioned that sustained volume growth remains a key risk to the investment thesis.