Report

Pakistan Pharmaceuticals: Impressive 1QCY18 performance; GMs key for 2QCY18

  • 1QCY18 earnings growth was robust (+12%YoY) for selected pharma cluster (GLAXO, ABOT, SEARL, HINOON & AGP), up 8%YoY when including FEROZ. Within our coverage, SEARL and AGP stood out as clear outperformers with 52%/18%YoY bottom-line growth for the period.
  • Despite two rounds of PKR devaluations, full impact on imported APIs is yet to be felt, where 1QCY18 industry GMs (ex. FEROZ) inched up to 38% (1QCY17: 37%). We therefore anticipate devaluation impact to fully reflect in 2QCY18. Volumetric growth remain our preferred attribute (1Q sales: up 16%YoY) where both SEARL & AGP continue to focus on growing their product offerings.
  • Upcoming changes in Draft Drug Policy may lead sector tailwinds for the industry GMs, where DRAP is looking to raise the cap on scheduled and non-scheduled drug prices to 70% and 100% of CPI (existing 50% and 70% respectively). For the companies we track (ex Feroz), annualized P/E and P/S comes to 22.6x and 3.1x, having gained 6.0%CYTD.
Underlyings
AGP
AGP

AGP Limited is a Pakistan-based pharmaceutical company that manufactures, markets and distributes pharmaceutical and healthcare products. The Company provides products in the areas of anti-infective, antihistamines, antidepressants, anti fibrinolytic, antiobesity, bile therapy and cholagogue, iron preparation, narcotic analgesic, proton pump inhibitor, vitamin B12, anti-inflammatory enzyme, anti-diarrheal, antidiabetic, anti haemorrhoidal, antispasmodics, calcium preparation, medical food supplement, non-narcotic analgesic, tonic, vitamin D plain, anti allergics, antibiotics, antidiarrheal supplement, antimalarial, antiviral, expectorant, muscle relaxant and venotropic agent. The Company sells products under various brands, including Ceclor, Rigix, Osnate, Anafortan, MyHep, Keflex, Chymoral Forte, Splasler P, Urso and Rubifer.

Searle

The Searle Company Limited is a holding company, which is principally engaged in the manufacture of pharmaceutical products and other consumer products. In addition, the Company is engaged in sale of food and consumer products, and manufacture of pharmaceutical products for other companies. The Company operates through three segments: Pharma, Consumer and Investment property. The Company's geographical segments include Pakistan, South Asia, East Africa, South-East Asia and Middle East. The Company's portfolio includes three divisions: Pharma, Consumer Health and Nutrition. Its products include Selanz SR, Levoxin, Lomotil, Xaroban, Vitrum, Rhulef, Canderel, Peditral, Ezium, Hydryllin, Xadine, Zenbar, Extor, Adronil, Nuberol/Nuberol Forte and Byscard. The Company has pharmaceutical range across therapeutic areas, such as cardiovascular, respiratory care, gastroenterology, pain management, orthocare, neuropsychiatry, probiotics, antibiotics and nutritional care.

Provider
Intermarket Securities Limited
Intermarket Securities Limited

​Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.

Analysts
Yusra Beg

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