Pharma Sector Hits Record Profits YoY

Pakistan’s listed pharmaceutical sector has recorded its highest-ever profitability in 2025, with net earnings increasing by 78% year-on-year to Rs42.2 billion, according to a report issued by Topline Securities. The growth has been primarily driven by robust sales performance, reduced input costs, and a significant decline in finance expenses.

On a quarterly basis, sectoral profitability rose by 53% year-on-year, reaching Rs14.2 billion in the fourth quarter of 2025, compared to Rs9.3 billion in the corresponding period of the previous year.

Net sales for the sector expanded by 14% to Rs365.7 billion in 2025, up from Rs319.6 billion in 2024. This growth has largely been attributed to price adjustments following the deregulation of non-essential pharmaceutical products. In the fourth quarter alone, sales increased by 18% year-on-year to Rs102.1 billion.

Key contributors to overall sectoral revenue included Abbott Laboratories (21%), GlaxoSmithKline Pakistan (18%), Haleon Pakistan (12%), and The Searle Company (8%).

Profitability gains were further supported by margin expansion, with gross margins increasing to 41% in 2025, compared to 35% in the preceding year. During the fourth quarter, margins improved to 44%, up from 39% in the same period of 2024.

The enhancement in margins has been partly attributed to a reduction in the cost of active pharmaceutical ingredients (APIs), with approximately 53% of APIs experiencing a median price decline of 11% year-on-year between January and October 2025.

At the individual company level, AGP Limited, Highnoon Laboratories, and The Searle Company reported the highest gross margins, at 60%, 55%, and 55%, respectively.

Finance costs for the sector declined significantly by 49% year-on-year to Rs4.2 billion in 2025, reflecting both a reduction in interest rates and lower leverage levels. On a quarterly basis, finance costs also decreased by 52% to Rs902 million.

The sector’s effective tax rate remained largely stable at 39.9% in 2025, compared to 40.3% in 2024, with total tax contributions amounting to Rs27.9 billion.

Dividend distributions increased to Rs21.1 billion during the year, up from Rs12 billion in 2024, maintaining a payout ratio exceeding 50%. Major contributors to dividend payouts included GlaxoSmithKline Pakistan (Rs5.4 billion), Abbott Laboratories (Rs3.9 billion), Haleon Pakistan (Rs3.5 billion), and Highnoon Laboratories (Rs2.6 billion).