Karachi: VIS Credit Rating Company Limited has reaffirmed the credit ratings of OBS Pharma (Private) Limited at 'A/A-1', recognizing the company’s good credit quality and strong likelihood of timely repayment of short-term obligations.

According to VIS Credit Rating Company Limited, OBS Pharma, a Special Purpose Company formed in 2022 to acquire pharmaceutical brands and a manufacturing facility from Bayer AG, maintains a stable outlook in the robust pharmaceutical sector of Pakistan. This sector is characterized by stable demand due to factors like population growth and emerging health concerns, although profitability is pressured by regulatory price caps.

The entity's ratings reflect its strategic position within the pharmaceutical industry, with a significant part of its operations involving the import, marketing, and manufacturing of health products. Key brands under OBS Pharma’s portfolio include Ciproxin and Primolut N, focusing on women’s healthcare and dermatology.

The report also notes OBS Pharma’s financial performance, which showed favorable outcomes in the last calendar year, bolstered by a one-time inventory purchase discount from Bayer Pakistan. Despite challenges such as lower production capacity utilization and continued reliance on third-party outsourcing, OBS Pharma is planning to internalize manufacturing to enhance future margins.

The firm's financial stability is further supported by a positive working capital cycle and effective cashflow management. The ratings anticipate improvement in the company’s gearing and leverage ratios over time, dependent on successful business execution and profitability retention.