Pharma sector profits set to surge 110% in 2QCY25
Pakistan’s pharmaceutical industry is poised for record growth in the second quarter of 2025, with profits after tax expected to rise by nearly 110 percent year-on-year.
Industry estimates project that earnings for the sector will close at around PKR 6.2 billion in 2QCY25, driven by deregulation of non-essential medicines, falling active pharmaceutical ingredient (API) costs, and modest improvements in demand volumes. The strong performance highlights how regulatory changes and favorable cost dynamics are reshaping the sector’s growth outlook.
Volume growth has supported earnings momentum. Total industry sales volumes are projected at 930 million units for the quarter, reflecting a 3 percent year-on-year increase and a 2 percent sequential rise. Analysts attribute this to seasonal upticks in demand, new product launches, and an overall recovery in consumer health spending. Within the coverage universe of listed pharmaceutical firms, volumes are expected at 190 million units, up 5 percent quarter-on-quarter but just 1 percent higher year-on-year. The quarterly increase has been fueled in particular by ABOT, which posted a 13 percent rise, and Haleon, which recorded a 12 percent boost due to seasonal sales gains and new stock-keeping unit (SKU) launches, including CAC-1000 and Panadol Night.
On the cost side, API prices softened in 2QCY25, supporting gross margins for manufacturers. Inputs such as Azithromycin, Cetirizine, Amoxicillin, and Amlodipine saw price declines amid subdued Chinese demand, excess global inventory, and reduced production costs. These favorable trends helped offset inflationary pressures in freight and logistics. However, some APIs registered price increases due to concerns over US-China tariff escalations, which caused port congestion and drove up landed costs.
The deregulation of non-essential medicines has been identified as a key catalyst for sector growth, allowing companies to launch new SKUs and exercise full control over pricing. This policy shift, analysts say, has opened a new era for the pharmaceutical industry, enabling firms to enhance profitability while diversifying product portfolios. The measure contrasts with the longstanding government practice of capping medicine prices, which industry stakeholders had argued stifled innovation and margin expansion.
Within the sector, ABOT, AGP, and GlaxoSmithKline Pakistan are emerging as top picks for investors, thanks to their relatively high exposure to non-essential products. These companies are expected to benefit the most from pricing flexibility and product innovation. ABOT, in particular, is riding the momentum of strong seasonal demand, while AGP and Glaxo are expected to leverage their extensive brand recognition and ability to scale new product launches quickly.
The positive results come against a backdrop of steady global headwinds. While Pakistan’s pharmaceutical sector remains vulnerable to currency volatility, raw material supply disruptions, and regulatory risks, the combination of deregulation and declining input costs has improved earnings visibility for 2025. Analysts also point to ongoing shifts in consumer behavior, with greater demand for over-the-counter remedies and wellness products, as a structural tailwind for the industry.
Comparisons with past quarters underscore the turnaround. In 2QCY24, sector profitability was under pressure due to elevated API costs and strict price caps, which limited manufacturers’ ability to pass on cost increases to consumers. By contrast, 2025’s deregulated environment has given firms greater operational flexibility, resulting in a sharp improvement in profitability.
Looking forward, the industry is projected to maintain its momentum, with further upside potential if global API prices remain stable and domestic demand continues to strengthen. The sustainability of this growth, however, will depend on how effectively companies manage supply chain risks, currency depreciation, and potential policy shifts.National Assembly Committee Proposes Strategic Healthcare Overhaul
Pakistan’s pharmaceutical sector is set to deliver its strongest quarterly performance in years, with profits after tax rising by around 110 percent year-on-year to PKR 6.2 billion in 2QCY25. Volume growth, lower API costs, and deregulation of non-essential medicines are driving the surge, positioning leading players such as ABOT, AGP, and Glaxo to capture outsized gains in the months ahead.