Price hikes drive pharmaceutical sector growth to 194pc

KARACHI: Pakistan’s pharmaceutical sector has experienced a remarkable surge, climbing 194 percent year-to-date (YTD), far outpacing the benchmark KSE-100 Index, which has risen over 84 percent, reported nukta.com

After three consecutive years of underperformance (CY21-CY23), the sector’s turnaround can be largely attributed to increased drug prices and the partial deregulation of non-essential drug prices. This shift has also led to an improvement in gross margins and earnings, resulting in impressive stock market gains.

Among the listed pharmaceutical companies, HALEON stands out as the best performer with an extraordinary YTD increase of 436 percent, followed by GLAXO and MACTER, which have registered gains of 362 percent and 315 percent, respectively.

Industry analysts predict that the growth of the pharmaceutical sector is set to continue, influenced by factors like cost optimisation, a stable currency, reduced raw material costs, and ongoing price hikes. The sector’s profit after tax has significantly improved, reaching Rs18.2 billion—a 130 percent year-over-year (YoY) increase based on the trailing four quarters.

As of October, Pakistan’s pharmaceutical industry is valued at Rs982 billion, marking a 22 percent YoY growth and a compound annual growth rate (CAGR) of 19% over the past four years. The industry has also recorded a volumetric growth of 3.5 percent YoY, with expectations of further enhancements in earnings in the upcoming quarters.

Recent data indicates that the drug and medicine price index grew by 15 percent YoY in November, in stark contrast to the consumer price index (CPI), which stood at 4.9% percent for the same period. Experts anticipate a continuation of this trend as pharmaceutical companies gradually increase prices in response to competition and various market factors.

AGP remains a favoured choice among Pakistan’s listed pharmaceutical stocks, with an anticipated target price of Rs 250 by December 2025, bolstered by its strong growth potential, established brands, cost efficiencies, and leading industry margins.