Karachi: Pakistan's pharmaceutical sector experienced significant growth in the fourth quarter of calendar year 2025, with a 16% year-on-year increase in net revenue, reaching Rs95 billion. This growth is attributed to deregulated non-essential drug prices and an optimal product mix. Additionally, the sector's gross margin improved by 5 percentage points to 44%, driven by higher pricing, lower active pharmaceutical ingredient prices, cost efficiency measures, and a stable currency.

According to JS Global, the sales of a sample of nine listed pharmaceutical companies grew by 10% quarter-on-quarter, reflecting peak demand for key drugs such as anti-virals, antibiotics, and painkillers during the winter season. Gross margins improved by 2 percentage points during the same period. However, the sector underperformed the KSE-100 by 3% year-to-date due to escalating geopolitical tensions and a suspension of land trade with Afghanistan.

The sample companies are trading at a price-to-earnings ratio of 14 times, compared to 15.6 times in December 2025 and 23 times in December 2024. JS Global suggests that the anticipated weaker sales and profitability in the first quarter of 2026 should be viewed as a buying opportunity, given the sector's improving prospects. AGP and GlaxoSmithKline (GLAXO) are highlighted as top picks in the sector.