Pakistan listed pharma sector profits rise 28% to Rs42.2bn in FY26
KARACHI: Pakistan’s listed pharma sector recorded a 28% year-on-year increase in profitability to Rs42.2 billion during 2025-26, driven mainly by price-led growth and lower finance costs, according to a sector report.
The report said the sector’s earnings, however, declined 2% YoY and 26% quarter-on-quarter (QoQ) in 4QFY26, mainly due to the loss posted by The Searle Company Limited (SEARL).
Excluding SEARL, the sector’s profitability increased 6% YoY but declined 4% QoQ to Rs9.3 billion during the fourth quarter.
During FY26, listed pharmaceutical companies posted a 22% YoY increase in profitability on an ex-SEARL basis. Despite the strong earnings growth, the sector’s market capitalisation, excluding SEARL and Liven Pharma, recorded only a marginal 0.4% YoY increase.
On a cumulative basis, the listed pharmaceutical sector’s market capitalisation, excluding Liven Pharma, increased 2.3% YoY as of June 30, 2026, compared with a 28% increase in sector profitability.
Pharma sales rise 10%
The sector’s net sales increased 10% YoY to Rs377.9 billion in FY26, compared with Rs342.6 billion in FY25. The increase was primarily attributed to higher product prices.
During 4QFY26, sector sales reached Rs88.9 billion, showing a 3% YoY increase but a 3% decline QoQ.
Among major listed companies, Abbott Laboratories Pakistan Limited (ABOT) contributed 20% of total sector sales, followed by GlaxoSmithKline Pakistan Limited (GLAXO) with 18%, Haleon Pakistan Limited (HALEON) with 11% and SEARL with 10%.
Gross margins hit record high
The sector’s annual gross margin reached an all-time high of 42.8% in FY26, compared with 38.9% in FY25.
The gross margin also stood at 42.8% in 4QFY26, compared with 40.4% in the same quarter of the previous year and 42.7% in 3QFY26.
According to the report, the improvement in gross margins was primarily driven by higher prices. The sector maintained average inventories of around 60 days during the year.
Among individual companies, AGP Limited recorded the highest gross margin at 60.4% in FY26, followed by Highnoon Laboratories Limited (HINOON) at 56.1% and SEARL at 52%.
Finance costs fall 42%
The sector’s selling and distribution expenses increased 21% YoY to Rs69.5 billion in FY26. In 4QFY26, these expenses stood at Rs17.6 billion, up 11% YoY but down 2% QoQ.
Meanwhile, finance costs declined 42% YoY to Rs3.6 billion during FY26, supported by a stable interest-rate environment and lower debt levels among companies.
In 4QFY26, finance costs fell to Rs822 million, down 29% YoY and 13% QoQ.
Other income rises
Other income of the listed pharmaceutical sector increased 2% YoY to Rs6.5 billion in FY26.
During 4QFY26, other income surged to Rs2.5 billion, rising 85% YoY and 2.7 times QoQ. The report attributed the significant quarterly increase mainly to a higher contribution from Hoechst Pakistan Limited (HPL).
The effective tax rate (ETR) of the sector increased to 42.5% in FY26 from 39.8% in FY25.
During 4QFY26, the sector’s ETR stood at 50.4%, compared with 42.2% in 4QFY25 and 40.6% in 3QFY26.
Pharma sector outlook
The report expects pharmaceutical sector volumes to rebound from the first half of 2027, supported by the low base effect of 2026 and expanding product portfolios of pharmaceutical companies.
The outlook suggests that improving volumes, alongside the sector’s pricing gains and lower finance costs, could support earnings growth in the coming period.
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