GlaxoSmithKline Pakistan profit nearly doubles in 2QCY25
GlaxoSmithKline Pakistan reported a 90% year-on-year rise in second-quarter earnings per share to Rs6.5, supported by improved margins and higher product prices, while declaring an interim dividend of Rs5 per share.
STAFF REPORTER: GlaxoSmithKline Pakistan Limited (Glaxo) posted strong profitability for the second quarter of calendar year 2025, with earnings per share climbing to Rs6.5 from Rs3.4 in the same quarter last year. The significant 90 percent growth was primarily driven by a sharp expansion in gross margins to 37 percent, compared to 24 percent in the prior year. The board also announced an interim dividend of Rs5 per share, reflecting improved cash generation and profitability.
The company’s topline rose 11 percent year-on-year to Rs14.7 billion during the quarter, mainly fueled by higher prices across its non-essential product portfolio, which represents 53 percent of total sales. Essential medicines, making up the remaining 47 percent of the portfolio, saw relatively stable demand. Price adjustments in the non-essential segment provided a substantial boost to revenue in a competitive healthcare market.
The most notable driver of profitability was the improvement in gross margins, which surged by 13 percentage points to 37 percent in the quarter. This margin expansion was attributed to a mix of product price hikes and easing raw material costs, which have historically weighed heavily on pharmaceutical companies operating in Pakistan due to currency depreciation and high import dependency.
Other income also contributed positively, rising to Rs526 million, more than double the Rs219 million reported in the first quarter of 2025. The increase was largely due to higher promotional allowances provided by the parent company, GlaxoSmithKline plc, which routinely supports its subsidiaries through marketing and brand-building initiatives.
However, the quarter-on-quarter performance showed some softness compared to the year-on-year surge. Earnings fell 3 percent from the previous quarter, largely because of weaker revenues. At Rs14.7 billion, sales declined 6 percent quarter-on-quarter, marking the lowest quarterly revenue in the past year. Analysts suggest that the decline reflects reduced volumes of flagship products as higher prices weighed on consumer demand, particularly in the non-essential product categories.
Despite weaker volumes, the company managed to improve gross margins sequentially, with a three percentage-point increase compared to the first quarter of 2025. This reflects effective cost management and continued benefits from easing input costs, particularly in imported raw materials. The company’s pricing strategy also helped offset volume losses, ensuring margins remained intact.
The results highlight the contrasting challenges and opportunities faced by Glaxo in Pakistan’s pharmaceutical and consumer healthcare market. While price-driven revenue gains have supported profitability, the decline in sales volumes signals a need to balance affordability with growth in a country where healthcare spending remains highly sensitive to inflation and purchasing power.
GlaxoSmithKline Pakistan, which operates as one of the largest pharmaceutical companies in the country, has a diversified portfolio spanning prescription medicines, vaccines, and over-the-counter healthcare products. The company has historically been a key supplier of essential medicines, but the current results emphasize the growing role of its non-essential portfolio in driving financial performance.
Industry observers note that the pharmaceutical sector in Pakistan continues to face structural challenges, including currency volatility, regulatory oversight of drug pricing, and supply chain disruptions. However, easing raw material costs and better exchange rate stability during 2025 have provided some relief, enabling companies like Glaxo to expand margins after several years of compressed profitability.
The interim dividend of Rs5 per share underlines management’s confidence in sustaining strong cash flows despite the quarter-on-quarter slowdown in sales. In comparison, the company had announced a lower payout in previous years when margins were under pressure, making the current dividend a positive signal for investors.
Going forward, Glaxo’s performance will likely depend on its ability to maintain volume growth while preserving margins. Balancing affordability of essential medicines with profitability in non-essential categories will be critical, especially as healthcare accessibility remains a key policy issue in Pakistan. Analysts caution that while pricing power has supported profitability in recent quarters, sustained volume declines could impact long-term growth if consumers continue to shift away from higher-priced treatments.
GlaxoSmithKline Pakistan’s second-quarter results mark a strong year-on-year rebound in profitability, underpinned by higher margins, stronger other income, and a balanced dividend policy. Despite quarter-on-quarter softness in sales, the company’s ability to expand gross margins signals resilience in navigating a challenging healthcare market, positioning it to maintain momentum in the second half of 2025.
