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KARACHI: The Pharmaceutical sector recorded strong growth during CY20. Sales for the chosen sample companies increased by 10 percent on YoY, where profit after tax (PAT) jumped by 61 percent on YoY. Moreover, the sector’s gross margins increased by 291bps on YoY during CY20.

Price increases during the year helped drive the sector’s top-line and provided impetus to the sector profitability. Moreover, the sales mix for a few companies was skewed towards higher margin products which also provided support to the sector’s bottom line.

Using current market caps and CY20 (last 12 months) earnings, the P/E for the sector currently stands at 17.0x, whereas the sector is trading at a P/B of 3.5x. “The improvement of the PKR/US$ parity in recent days bodes well for the sector going forward, given that most raw materials/ APIs are imported,” Ahmed Lakhani at JS Global Capital said. Moreover, re-commencement of trade relations with India should be a positive as it would allow procurement of raw materials at cheaper prices, he added.

Copyright Business Recorder, 2021

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