Price deregulation: Pakistan’s pharma sector sales hit $3.3bn in FY24, 22% higher year-on-year

Pakistan’s pharmaceutical industry achieved sales of Rs916 billion (USD 3.3 billion) in FY24, a 22% year-on-year (YoY) increase in PKR terms and a 7% YoY rise in USD terms, stated brokerage house Topline Securities, citing data from IQVIA, a leading healthcare data company.

“This growth is also higher than the last five-year (FY20-FY24) CAGR [Compound Annual Growth Rate] of 17%,” said Topline Securities.

On a quarterly basis, the country’s pharma sector recorded highest ever sales of Rs237 billion (USD 860 million) during the fourth quarter of FY24, an increase of 25% when compared with the same period of the previous year, said Topline Securities.

It said that of the 25% YoY jump in pharmaceutical sales, “20% is due to a price increase while 5% is due to an increase in volumes”.

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Pakistan’s pharmaceutical sector is a mix of local and multinational companies, with local firms holding a substantial share of the market. Notable players include Getz Pharma, The Searle Company, and Ferozsons Laboratories. Multinational companies such as GlaxoSmithKline (GSK) and Abbott Laboratories also play a crucial role.

Meanwhile, the report highlighted that the significant price hikes were largely driven by the government’s approval of deregulating drug prices for non-essential categories and a one-time price increase for 146 drugs in February 2024.

“To recall, the government approved deregulation of non essential drugs on February 6, 2024. However, on February 22, 2024, the Lahore Court stayed this decision to seek clarification from the Federal Government.

“Later, on April 2, 2024, the Lahore High Court ruled in favor of the pharmaceutical industry, thus vacating the stay order against the deregulation of Maximum Retail Prices (MRPs) of drugs,” the report noted.

“We reiterate our previous stance … that the deregulation of the pharmaceutical sector will enable companies to efficiently pass on costs to consumers and subsequently return to their historic gross margins,” the report stated.

Currently, the sector’s gross margins are at a decade-low of 26%, it added.