Business & Finance Print edition: 2026-10-07

Pharma listed cos: FY26 profits surge 28pc to Rs42.2bn YoY

Published October 7, 2026 Updated October 7, 2026 05:37am

3 min

By Muhammad Saqib

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KARACHI: Profitability of Pakistan’s listed pharmaceutical sector increased 28 percent year-on-year (YoY) to Rs42.2 billion in FY26, mainly supported by price-led growth and lower finance costs, according to a Research report issued.

However, sector earnings declined 2 percent YoY and 26 percent quarter-on-quarter (QoQ) in 4QFY26, primarily due to the loss posted by The Searle Company Limited (SEARL) during the quarter. Excluding SEARL, sector profitability increased 6 percent YoY but declined 4 percent QoQ to Rs9.3 billion in 4QFY26.

For FY26, profitability of the listed pharmaceutical sector excluding SEARL increased 22 percent YoY. Despite the improvement in earnings, the sector’s market capitalisation excluding SEARL and Liven Pharma recorded only a 0.4 percent YoY increase. On a cumulative basis, listed pharma market capitalisation excluding Liven Pharma increased 2.3 percent YoY as of June 30, 2026.

The sector’s net sales increased 10 percent YoY to Rs377.9 billion in FY26 from Rs342.6 billion in FY25, mainly supported by higher prices, according to Topline Research. In 4QFY26, sales reached Rs88.9 billion, up 3 percent YoY but down 3 percent QoQ.

Among major listed companies, Abbott Laboratories (ABOT) contributed 20 percent of sector sales, followed by GlaxoSmithKline Pakistan (GLAXO) at 18 percent, Haleon Pakistan (HALEON) at 11 percent and SEARL at 10 percent.

The sector’s annual gross margin reached an all-time high of 42.8 percent in FY26, compared with 38.9 percent in FY25. The gross margin also stood at 42.8 percent in 4QFY26, up from 40.4 percent in 4QFY25 and slightly higher than 42.7 percent in 3QFY26.

Topline Research attributed the improvement in gross margins primarily to 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 percent in FY26, followed by Highnoon Laboratories (HINOON) at 56.1 percent and SEARL at 52.0 percent.

Selling and distribution expenses increased 21 percent YoY to Rs69.5 billion in FY26. During 4QFY26, these expenses stood at Rs17.6 billion, up 11 percent YoY but down 2 percent QoQ.

Finance costs declined 42 percent YoY to Rs3.6 billion in FY26 amid a stable interest-rate environment and lower debt levels of companies. In 4QFY26, finance costs declined 29 percent YoY and 13 percent QoQ to Rs822 million.

Other income increased 2 percent YoY to Rs6.5 billion in FY26. During 4QFY26, other income rose 85 percent YoY and 2.7 times QoQ to Rs2.5 billion, with the increase mainly attributed to a higher contribution from Hoechst Pakistan Limited (HPL).

The sector’s effective tax rate (ETR) stood at 42.5 percent in FY26, compared with 39.8 percent in FY25. In 4QFY26, the ETR increased to 50.4 percent, compared with 42.2 percent in 4QFY25 and 40.6 percent in 3QFY26.

Looking ahead, Topline Research expects pharmaceutical sector volumes to recover from the first half of 2027, supported by a low base effect in 2026 and expanding product portfolios of pharmaceutical companies.

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