The pharmaceutical sector in Pakistan faced unprecedented challenges during the fiscal year ending June 30, 2023, primarily driven by a 50% depreciation of the Pakistani rupee against the US dollar. This substantial currency devaluation significantly increased production costs, particularly for Active Pharmaceutical Ingredients (APIs) sourced internationally.
Despite the economic turbulence, Searle demonstrated impressive sales growth of 22% YoY, reaching at PKR21.6bn in FY23, compared to PKR17.7bn in SPLY. The net profit after tax clocked in at PKR302mn (EPS: PKR0.77/sh) compared to PAT of PKR2.1bn (EPS: PKR5.36/sh) in SPLY.
This growth in topline is attributed to consistent volume expansion and a diversified product portfolio, showcasing a compounded annual growth rate (CAGR) of 12.36% over the past six years.
Searle faced significant profitability challenges in the same period due to macroeconomic factors, including the continuous depreciation of the Pakistani currency and rising interest rates. The gross margins contracted by 4.70%, declining from 48.80% to 44.10% in the period under review.
To address the challenges, the Federal Cabinet granted a one-time price increase of 20%, aiming to alleviate the impact of escalating operational
costs. This adjustment, particularly a 14% increase for essential drugs and 20% for non-essential drugs in the last quarter, is expected to positively affect the company’s financial outlook in the coming year.
Additionally, finance costs surged to PKR3.3bn, up by 74% YoY, compared to PKR1.9bn in SPLY that significantly affected the company’s bottomline. This drastic increase in interest costs is attributed to the rise in average interest rates during the noted period.
In terms of the ongoing CPI adjustment, management informed that it is pending in court and is hopeful for resolution in the next couple of months. Searle is actively expanding its global footprint, exporting to 20 countries with plans to increase this number by 8 more countries. The company is closely monitoring economic and political situations for its upcoming IPO.
Additionally, Searle has entered into various agreements and obtained GMP approval for its manufacturing facility in Oman, signed a license agreement with Mabwell Pharmaceuticals China, and registered a manufacturing site in the UAE. These strategic moves position the company for a promising future.
Important Disclosures
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