Intermarket Perspective - Pharmaceutical Sector - Initiation of Coverage
- We initiate coverage on the Pakistan Pharmaceutical sector with a Marketweight stance and a preference for local companies (SEARL: Neutral; AGP: Buy). Burgeoning demand in a 200mn+ population has led to a 12% 5yr sales CAGR and a US$3bn market size (c. 1% of GDP). We think growth momentum can increase, with push from annual price increases under the Drug Policy 2015.
- Further impetus can come from continued introduction of branded generics, diversification into nutritional segments, and US FDA approvals which can be an important precursor to mimic Indian pharmaceuticals. Pakistani companies exhibit many of the same underlying characteristics as India with one important distinction – exports are c. 50% of pharmaceutical sales in India vs. < 10% in Pakistan.
- Pakistan’s Pharmaceutical space has traditionally been dominated by MNCs but the landscape is changing. More nimble local players are quickly gaining market share, their offerings of branded generics well suited for a market where low affordability is a major hurdle. We see the industry growing in the early teens going forward, with local companies anticipated to grow even faster, in the 15-20%YoY range.
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.
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.
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.
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