One good news out of 2020 has been the performance of the pharmaceutical sector. Players across the industry posted profitability in the green, a refreshing change in an otherwise solemn year.
Abbott Laboratories (Pakistan) Limited (PSX: ABOT) saw one of the highest growth rates in its topline at 17 percent in almost a decade, clocking in at over Rs35 billion. Historically, a major part of its revenue is generated locally, while exports form an insignificant part. While a sales breakdown for CY20 is not yet available, it is safe to assume that the trend has maintained. Another trend is that most of the revenue and profitability historically has been contributed by the adult nutritional segment.
However, the rising topline is not the sole reason for the growth and profitability; it has also been complimented by a reduction in costs. Given that the pharmaceutical industry largely relies on imported raw materials, exchange rate fluctuation plays a significant role. This is also evident in fluctuation of cost of production year on year. CY19 saw notable exchange rate fluctuation post the general elections of 2018, combined with the general inflationary pressures. The onset of Covid-19 at the beginning of 2020 was a blessing in disguise, as the exchange rate stabilized to a certain extent, aiding in cost reduction.
As per the reports by IQVIA - an American information and research company, Pakistan’s pharmaceutical industry has been one of the fastest growing industry in the world in 2020, and Abbott Laboratories numbers for the year provide testament to this.