Pakistan's listed pharma profit rises 28% to Rs42.2bn in FY26
Profitability of Pakistan's listed pharmaceutical sector rose 28% year-on-year to Rs42.2 billion in FY26, according to a Topline Research report, supported mainly by price-led growth and lower finance costs. The brokerage said sector earnings nevertheless fell 2% year-on-year and 26% quarter-on-quarter in 4QFY26, primarily because of the loss posted by The Searle Company Limited during the quarter.
Excluding Searle, sector profitability rose 6% year-on-year but declined 4% quarter-on-quarter to Rs9.3 billion in 4QFY26, while for the full year it increased 22% year-on-year, Topline said. Sector net sales rose 10% year-on-year to Rs377.9 billion in FY26, from Rs342.6 billion in FY25, again attributed mainly to higher prices. Fourth-quarter sales reached Rs88.9 billion, up 3% year-on-year but down 3% quarter-on-quarter. Among major listed companies, Abbott Laboratories contributed 20% of sector sales, followed by GlaxoSmithKline Pakistan at 18%, Haleon Pakistan at 11% and Searle at 10%.
The sector's annual gross margin reached an all-time high of 42.8% in FY26, compared with 38.9% in FY25, and also stood at 42.8% in 4QFY26, up from 40.4% a year earlier and slightly above 42.7% in 3QFY26. Topline attributed the improvement primarily to higher prices. AGP Limited recorded the highest gross margin at 60.4% for the year, followed by Highnoon Laboratories at 56.1% and Searle at 52.0%. The sector held average inventories of around 60 days, while selling and distribution expenses rose 21% year-on-year to Rs69.5 billion in FY26 and stood at Rs17.6 billion in the fourth quarter, up 11% year-on-year but down 2% quarter-on-quarter.
Below the operating line, finance costs fell 42% year-on-year to Rs3.6 billion in FY26, which the report linked to a stable interest-rate environment and lower debt levels at companies; in 4QFY26 they declined 29% year-on-year and 13% quarter-on-quarter to Rs822 million. Other income rose 2% year-on-year to Rs6.5 billion for the year, and in the fourth quarter increased 85% year-on-year and 2.7 times quarter-on-quarter to Rs2.5 billion, mainly on a higher contribution from Hoechst Pakistan Limited, according to Topline. The sector's effective tax rate came in at 42.5% in FY26 against 39.8% in FY25, rising to 50.4% in 4QFY26 from 42.2% a year earlier and 40.6% in 3QFY26. Despite the earnings improvement, market capitalisation excluding Searle and Liven Pharma recorded only a 0.4% year-on-year increase, while on a cumulative basis market capitalisation excluding Liven Pharma rose 2.3% year-on-year as of June 30, 2026.
Looking ahead, Topline Research expects pharmaceutical sector volumes to recover from the first half of 2027, supported by a low base effect in 2026 and the expanding product portfolios of pharmaceutical companies.
