Pakistan’s listed pharmaceutical sector posted a strong earnings performance in FY26, with GlaxoSmithKline Pakistan emerging as the most profitable company after reporting a profit after tax of Rs10.41 billion.
GSK’s annual profit increased 15 per cent from the previous year, while its sales and gross profit also recorded healthy growth. The company’s performance came as the wider listed pharmaceutical sector benefited from higher product prices and lower financing costs.
GSK Leads Listed Pharma Companies
GlaxoSmithKline Pakistan recorded net sales of Rs67.1 billion in FY26, representing a 7 per cent year-on-year increase.
Gross profit rose 24 per cent to Rs25.6 billion, while profit before tax increased 20 per cent to Rs17.6 billion.
With a profit after tax of Rs10.41 billion, GSK recorded the highest earnings among listed pharmaceutical companies during the year.
Listed Pharma Sector Profit Rises 28%
The combined profit of Pakistan’s listed pharmaceutical companies increased 28 per cent to Rs42.2 billion in FY26.
Sector net sales rose 10 per cent to Rs377.9 billion from Rs342.6 billion in FY25.
The earnings improvement was driven largely by higher prices and a reduction in finance costs. The increase in sales did not necessarily reflect a broad-based recovery in volumes, with price-led growth accounting for much of the sector’s revenue expansion.
Fourth-quarter sector sales reached Rs88.9 billion, up 3 per cent year-on-year but down 3 per cent compared with the preceding quarter.
Abbott Laboratories contributed 20 per cent of annual sector sales, followed by GlaxoSmithKline with 18 per cent, Haleon with 11 per cent and Searle with 10 per cent.
Pharmaceutical Gross Margins Reach Record High
The sector’s annual gross margin increased to 42.8 per cent in FY26 from 38.9 per cent a year earlier, marking an all-time high.
The fourth-quarter gross margin also stood at 42.8 per cent, compared with 40.4 per cent during the same period of FY25.
AGP, Highnoon Laboratories and Searle recorded the highest gross margins among the companies, at 60.4 per cent, 56.1 per cent and 52.0 per cent, respectively.
Inventories across the listed pharmaceutical sector averaged around 60 days.
Earnings Growth Has Limited Impact on Market Value
Despite the strong improvement in earnings, the increase was only modestly reflected in pharmaceutical sector valuations.
Excluding Searle, full-year earnings still increased 22 per cent. However, fourth-quarter earnings declined 2 per cent year-on-year and 26 per cent quarter-on-quarter, largely following Searle’s quarterly loss.
Excluding Searle, quarterly sector profit stood at Rs9.3 billion, up 6 per cent year-on-year but down 4 per cent from the previous quarter.
The sector’s market value, excluding Searle and Liven Pharma, increased only 0.4 per cent during the year. Including Searle, the increase was 2.3 per cent as of June 30, 2026.
The combined market value of listed pharmaceutical companies stood near Rs464 billion as of October 5.
Finance Costs Decline Despite Higher Operating Expenses
Selling and distribution expenses increased 21 per cent to Rs69.5 billion during FY26, putting pressure on operating costs.
However, the sector benefited from a sharp decline in financing expenses. Finance costs fell 42 per cent to Rs3.6 billion, supported by relatively stable interest rates and lower debt levels.
Other income increased marginally by 2 per cent to Rs6.5 billion for the full year. The contribution increased more significantly during the fourth quarter, supported by a larger contribution from Hoechst Pakistan.
The effective tax rate increased to 42.5 per cent from 39.8 per cent and reached 50.4 per cent in the fourth quarter.
Abbott and Haleon Also Post Strong Earnings
Following GSK, Abbott Laboratories reported profit of Rs8.56 billion, representing a 29 per cent increase.
Haleon Pakistan posted profit of Rs6.60 billion, up 16 per cent year-on-year, while Hoechst Pakistan’s earnings increased 58 per cent to Rs3.76 billion.
Highnoon Laboratories and AGP recorded profits of Rs4.18 billion and Rs4.21 billion, respectively.
Otsuka’s profit also increased sharply, although the rise came from a relatively small base.
Searle, Citi Pharma and Macter Face Earnings Pressure
Not all pharmaceutical companies benefited from the sector-wide earnings improvement.
Searle’s full-year profit fell to Rs535 million, representing a 139 per cent decline, following its loss during the fourth quarter.
Citi Pharma and Macter also reported lower earnings during the year.
Searle’s performance had a notable impact on the sector’s quarterly results, contributing to the decline in overall fourth-quarter earnings.
Pharma Volumes Expected to Recover in 2027
Despite the strong price-led performance in FY26, the sector’s outlook remains linked to a recovery in volumes.
Pharmaceutical volumes are expected to improve from the first half of 2027, supported by the low base established during 2026 and companies expanding and diversifying their product portfolios.
The combination of stronger volumes, broader product offerings and continued cost management could provide additional support to pharmaceutical earnings, although the sector will continue to face pressure from taxation, operating expenses and changing market conditions.