GlaxoSmithKline Pakistan Limited registered losses to the tune of Rs321.83 million during the half year ended June 30,2023, as compared to profit-after-tax of Rs631.21 million in the same period of the previous year, as rising cost of sales dent profits.
The pharma giant posted a loss per share of Rs1.01, as compared to earning per share of Rs1.98 in same period last year (SPLY), the company said in its financial statements provided to the Pakistan Stock Exchange (PSX) on Monday.
As per the condensed profit and loss statement, Glaxo reported Rs23.26 billion in revenues, as compared to Rs18.17 billion a year prior, showing a growth of 28%.
However, the company’s gross margin for the year was 7%, which indicates a decline of 14% from same period last year
“This decline is driven by significant currency devaluation, inflation and increased fuel prices,” said the pharmaceutical. “However, the impact of margin dilution was partially mitigated through industry-wide one-off inflationary adjustment allowed by the government, with more visible impact in Q3,” it added.
Owing to high cost of sales, the company’s gross profit declined to Rs1.6 billion in 6MCY23, as compared to Rs3.9 billion, a slump of nearly 59%.
During the six month period, the company earned Rs2.29 billion in other income, as compared to Rs1.07 billion in SPLY, an increase of over 114%.
Operating expenses remained on the higher side, which lowered operating profit by 72% to Rs717.12 million in 6MCY23, as compared to Rs2.56 billion in SPLY.
High cost of finance to the tune of Rs366.2 million further reduced profit-before-tax to Rs350.92 million in 6MCY23, a year-on-year decline of 84%.
Sharing its concerns on the economic outlook of the country, the pharmaceutical in its report said that Pakistan’s economy remains under significant pressure on account of low forex reserves.
“The IMF Standby Agreement has unlocked funds from other donors and avoided default in the short term. However, long term reforms are required for sustainable growth.
“In this context we have also seen reduction of subsidies and increase in interest rates/taxes resulting in higher cost of doing business,” Glaxo maintained.
The company shared that the macroeconomic indicators remain challenging at the close of second quarter.
“The pharmaceutical industry is amongst the worst impacted by inflationary pressures with inherent inability to pass on the increased cost of doing business being price controlled,” it noted.
The company said that the one-time inflationary adjustment granted on pharmaceutical products is not enough to ensure sustained availability of quality medicines for the patients in Pakistan.
It urged the government to make all efforts to provide a conducive environment for business to grow specially for pharmaceutical industry.