Karachi: The Pakistan pharmaceutical sector reported an 11% year-on-year increase in profitability for the first quarter of the fiscal year 2027, reaching Rs11.6 billion. Despite the growth, the sector's market capitalization experienced a decline of 24% year-on-year, totaling Rs505.2 billion.

According to JS Global, the sector's net sales rose 5% year-on-year and 11% quarter-on-quarter to Rs98.8 billion, driven by a combination of price and volume increases. This growth was achieved despite the suspension of exports to Afghanistan since October 2025. Major sales contributions during the quarter came from ABOT with 21%, GLAXO with 17%, SEARL with 11%, and HALEON with 10%.

The sector's gross margins remained strong at 43.7% in the first quarter, compared to 41.9% in the same period last year and 42.8% in the previous quarter. Companies such as AGP, SEARL, and HINOON reported the highest gross margins of 64.6%, 57.2%, and 57.1%, respectively.

The sector also saw an increase in selling and distribution expenses, which rose to Rs18.6 billion, up 6% year-on-year and 5% quarter-on-quarter. Administrative expenses increased by 14% year-on-year to Rs3.6 billion. Finance costs grew by 22% year-on-year to Rs1.1 billion, attributed to higher costs incurred by GLAXO, AGP, and HALEON.

Other income for the sector declined by 15% year-on-year to Rs802 million, primarily due to reduced contributions from HPL, GLAXO, and SEARL. The sector's effective tax rate was 37.9%, with a tax charge of Rs7.1 billion in the first quarter.

Looking ahead, the sector expects an increase in volumes due to a low base, new product launches, and higher seasonal demand in the winter months.