Pakistan pharma sector profits rise 11% in 1QFY27 as margins reach 43.7%

KARACHI: Pakistan’s listed pharmaceutical sector recorded combined profit of Rs11.6 billion in the first quarter of FY27, registering an increase of 11% year on year and 54% quarter on quarter, as higher sales and improved gross margins supported earnings.

Net sales across the sector increased 5% year on year and 11% quarter on quarter to Rs98.8 billion, while gross margins improved to 43.7%, compared with 41.9% in the corresponding quarter of FY26 and 42.8% in the preceding quarter.

The financial performance was outlined in a sector report issued by Topline Research on November 2, 2026. Analyst Muhammad Abdur Rafay attributed the growth in profitability mainly to higher sales and improved gross margins, reflecting a combination of price and volume increases.

Despite the improvement in earnings, the combined market capitalisation of listed pharmaceutical companies declined 24% year on year and 13% quarter on quarter to Rs505.2 billion, indicating that stronger quarterly financial results have not been accompanied by an increase in the sector’s overall market value.

Sales increase despite suspension of Afghanistan exports

The sector’s net sales reached Rs98.8 billion during the quarter, with growth attributed mainly to a combination of higher prices and sales volumes.

Notably, the increase was recorded despite a higher comparative base in the first quarter of FY26, which included exports to Afghanistan. Pharmaceutical exports to the country have remained suspended since October 2025.

Among the major contributors to sector sales, ABOT accounted for 21%, followed by GLAXO at 17%, SEARL at 11% and HALEON at 10%. Together, these four companies represented 59% of the sector’s reported sales contribution during the quarter.

Gross margins improve to 43.7%

Gross margins remained a key strength in the sector’s first-quarter performance, increasing to 43.7% in 1QFY27 from 41.9% in 1QFY26 and 42.8% in 4QFY26.

Topline Research attributed the improvement to higher sales volumes and prices during the period.

Among individual companies, AGP reported the highest gross margin at 64.6%, followed by SEARL at 57.2% and HINOON at 57.1%.

The margins recorded by these companies were the highest among those highlighted in the report, reflecting their stronger gross profitability during the quarter.

Selling, administrative and finance costs increase

Alongside higher sales and improved gross margins, pharmaceutical companies also recorded increases in operating and financing expenses.

Sector-wide selling and distribution expenses reached Rs18.6 billion in 1QFY27, increasing 6% year on year and 5% quarter on quarter.

Administrative expenses rose 14% year on year and 5% quarter on quarter to Rs3.6 billion during the same period.

Finance costs recorded a sharper increase, rising 22% year on year and 44% quarter on quarter to Rs1.1 billion. According to Topline Research, higher finance costs reported by GLAXO, AGP and HALEON contributed to the increase in the sector’s overall financing expenses.

Other income falls as tax rate declines

The sector’s other income declined 15% year on year and 69% quarter on quarter to Rs802 million in the first quarter of FY27.

Topline Research attributed the decline mainly to lower contributions from HPL, GLAXO and SEARL.

Meanwhile, the sector’s effective tax rate (ETR) decreased to 37.9% in 1QFY27, compared with 39.4% in 1QFY26 and 50.4% in 4QFY26.

In absolute terms, the combined tax charge of the sector stood at Rs7.1 billion during the quarter.

Winter demand expected to support pharma volumes

Looking ahead, Topline Research expects pharmaceutical-sector volumes to improve, supported by a relatively low base, new product launches and increased seasonal demand during the winter months.

The expected improvement in demand could support sales growth in subsequent quarters. However, the sector will also need to manage rising selling and administrative expenses, higher finance costs and lower other income.

The first-quarter results present an improvement in the sector’s overall profitability, with higher earnings and stronger gross margins despite the suspension of exports to Afghanistan and a decline in market capitalisation. The extent to which seasonal demand, new product launches and higher volumes sustain this performance will be important to watch during the remainder of FY27.

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