Abbott Lab. launches four new products, sales declined 17% during 9-month 2019
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KARACHI: Abbott Laboratories (ABOT) has launched four new products out of which one product related to disease (Diarrhea) has been very successful and is considered as one of the top ten new launches in 2019.
In 2018, the company had launched eight new products.
Mospel (mosquito repellent liquid) is a seasonal product from which company expects to generate revenue of $2 million for 2019, the company officials said in a corporate briefing to the brokerage analysts.
The Company’s Gross Profit margin contracted by 5ppts down to 31 per cent in nine months 2019, mainly due to foreign exchange losses (Rs 2.4 billion YTD) due to falling Pak-rupee and inflationary pressures amidst increased utilities costs. So far in 2018 and 2019 (9 months) Abbot has incurred total exchange loses of Rs 3.5 billion.
ABOT products has significant market share in their respective categories Brufen (10 per cent), Klaricid (9 per cent), Surbex Z (30 per cent) & Duphaston (11 per cent).
The management further highlighted that its business model does not allow to hedge its foreign currency exposure.
However, the recent stability in PKR/USD exchange rate suggests better margins going forward.
The Company cannot compromise on quality imported materials which is why imported costs rose sharply, the officials said.
The Company also recorded decline in sales of 17 per cent YoY during nine months of 2019, mainly due to pricing issues & documentation drive (CNIC condition for traders). The government has deferred the CNIC condition till end of Jan-20 and as a result sales are normalizing.
During 3rd quarter 2019 in spite of a falling sales, margins remain stable due to cost rationalization.
Management further highlighted that Pharma Industry of Pakistan is mainly import based as 75 per cent of raw material/API is imported by companies which cannot be replaced with local raw material due to quality concerns.
Currently ABOT has no pending hardship cases in the Supreme Court and it is also considering to acquire established brands to achieve synergies.
Due to Indo-Pak tensions in Feb-2019, there were some concern on imports from India. However, the government has allowed companies to continue their import from India as 60 per cent of API is imported from India by Pakistan Pharma companies.
ABOT imports its raw material from USA, China, India & some European countries as well.
DRAP policy allows increase in prices of essential drugs by 70 per cent of CPI and for non-essential drugs by 100 per cent of CPI. ABOT has a mix of 60 per cent essential drugs and 40 per cent of non-essential drugs.
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