Pakistan pharma profits rise 28% to PKR 42.2 billion in FY26

Pakistan’s listed pharmaceutical sector posted a 28% increase in profitability from a year earlier to PKR 42.2 billion in fiscal 2026, driven mainly by price-led growth and lower finance costs, according to a report by Topline Securities.

Quarterly earnings, however, declined 2% from a year earlier and 26% from the previous quarter in the fourth quarter of FY26, mainly because of a loss recorded by The Searle Company Ltd.

Excluding Searle, sector profitability rose 6% from a year earlier but declined 4% from the previous quarter to PKR 9.3 billion.

Despite the 28% increase in profitability, the listed pharmaceutical sector’s market capitalization, excluding Searle and Liven Pharma, increased just 0.4% from a year earlier, Topline said.

On a cumulative basis, the listed pharmaceutical sector’s market capitalization, excluding Liven Pharma, increased 2.3% from a year earlier as of June 30, 2026, the brokerage said.

Topline said sector profitability excluding Searle increased 22% from a year earlier during FY26.

What drove Pakistan pharma profits higher in FY26?

Price-led sales growth and lower finance costs drove pharmaceutical sector earnings higher in fiscal 2026. Listed companies’ net sales rose 10% to PKR 377.9 billion, while gross margin reached a record 42.8%. Finance costs fell 42% to PKR 3.6 billion amid a stable interest rate environment and lower company debt levels.

Net sales of the listed pharmaceutical sector increased 10% from a year earlier to PKR 377.9 billion in FY26 from PKR 342.6 billion, mainly supported by higher prices, according to Topline.

Quarterly sales reached PKR 88.9 billion in 4QFY26, up 3% from a year earlier but down 3% from the preceding quarter.

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

The sector’s gross margin reached an all-time high of 42.8% in FY26, compared with 38.9% in FY25.

Gross margin also improved to 42.8% in 4QFY26 from 40.4% a year earlier and 42.7% in 3QFY26.

“We believe the improvement in gross margins was primarily led by the uptick in prices,” Topline said, adding that pharmaceutical companies maintained average inventories of about 60 days.

Among individual companies, AGP Ltd. reported the highest gross margin at 60.4% in FY26, followed by Highnoon Laboratories at 56.1% and Searle at 52%.

Finance costs decline 42%

Selling and distribution expenses increased 21% from a year earlier to PKR 69.5 billion in FY26.

The expense stood at PKR 17.6 billion in 4QFY26, up 11% from a year earlier but down 2% from the previous quarter.

The sector’s finance costs declined 42% from a year earlier to PKR 3.6 billion in FY26, reflecting a stable interest rate environment and lower debt levels at companies, Topline said.

Finance costs fell 29% from a year earlier and 13% from the previous quarter to PKR 822 million in 4QFY26.

Meanwhile, other income increased 2% from a year earlier to PKR 6.5 billion during FY26.

In the fourth quarter, other income surged 85% from a year earlier and increased 2.7 times from the previous quarter to PKR 2.5 billion, primarily due to a higher contribution from Hoechst Pakistan Ltd., according to the brokerage.

The sector’s effective tax rate rose to 42.5% in FY26 from 39.8% in FY25.

In 4QFY26, the effective tax rate stood at 50.4%, compared with 42.2% in 4QFY25 and 40.6% in 3QFY26.

Pharma volumes expected to recover in 2027

Topline expects pharmaceutical sector volumes to recover from the first half of calendar 2027, supported by a low base effect from 2026 and expansion in companies’ product portfolios.

The brokerage said the expected recovery in volumes, alongside the sector’s improved pricing dynamics, could provide further support to pharmaceutical companies’ earnings in the coming periods.