Karachi: VIS Credit Rating Company Limited has reaffirmed the bank loan rating for OBS Pharma (Private) Limited’s Islamic Syndicated Finance Facility at ‘A+(blr)’, indicating good credit quality with stable outlook. This reaffirmation reflects the facility’s strong backing and the robust position of OBS Pharma in the pharmaceutical sector.
According to VIS Credit Rating Company Limited, the finance facility, amounting to Rs. 5,125 million, supports OBS Pharma’s operations which include acquiring pharmaceutical brands and a manufacturing facility from Bayer AG. The facility is structured as a seven-year Musharaka agreement with an 18-month grace period and entails quarterly profit payments tied to a floating rate benchmarked against the 3-Month KIBOR plus 1.70%.
OBS Pharma, established in 2022 and a subsidiary of Aitkenstuart Pakistan, operates under the ultimate parent company, West End 16 Pte Limited of Singapore. The finance facility is secured with a comprehensive package that includes charges over fixed assets and additional guarantees from Aitkenstuart Pakistan.
The stable pharmaceutical sector in Pakistan, driven by consistent demand and low economic sensitivity, supports the favorable rating. Factors bolstering the sector include population growth and increasing health awareness, although profitability challenges persist due to regulatory price caps. However, recent deregulations allowing price adjustments for Non-Essential Medicines have improved the sector’s outlook.
OBS Pharma’s strategic acquisition of Bayer Pakistan’s brands has enhanced its market presence, particularly in women’s healthcare and dermatology, featuring key products like Ciproxin and Primolut N. Despite challenges like high dependency on imported raw materials and fluctuating exchange rates, OBS Pharma has shown resilience with a strong product lineup and cost-effective strategies.
The company’s future plans include increasing production capacity and reducing outsourcing, aiming to bolster profitability and improve financial metrics such as gearing and leverage ratios. The company’s ability to execute these plans effectively remains crucial for maintaining its credit standing.