ISLAMABAD: The Pakistani pharmaceutical industry has recorded a landmark achievement, reporting its highest-ever quarterly sales of Rs237 billion in the fourth quarter of FY24. This marks a 25% year-on-year (YoY) increase, according to data released by IQVIA, a leading healthcare data company.
According to Topline Pakistan Research, ou of this 25% YoY jump, a significant 20% can be attributed to price increases, while the remaining 5% is due to higher sales volumes. The substantial price hike is primarily the result of government-approved deregulation of drug prices for non-essential categories and a one-time increase in the prices of 146 drugs in February 2024.
The deregulation, initially approved by the government on February 6, 2024, faced legal challenges when the Lahore High Court issued a stay order on February 22, 2024, seeking clarification from the Federal Government. However, the pharmaceutical industry received a favorable ruling on April 2, 2024, when the court vacated the stay order, allowing the deregulation of Maximum Retail Prices (MRPs) of drugs to proceed.
This favorable regulatory environment has led to a full-year FY24 pharmaceutical sales figure of Rs916 billion, reflecting a 22% YoY growth. In US dollar terms, this growth translates to a 7% YoY increase, surpassing the last five-year compound annual growth rate (CAGR) of 17%.
Industry analysts have reiterated their optimistic outlook, as detailed in the strategy report “Index to Reach 87k by Dec 2024, 106k by Jun 2025; PE to Revert to Its Mean in 3 Years” released on May 11, 2024. The report highlighted that the deregulation of the pharmaceutical sector would enable companies to more effectively pass on costs to consumers, thus restoring gross margins to their historical levels. Currently, the sector’s gross margins stand at a decade-low of 26%.
The record-breaking performance of the pharmaceutical sector in FY24 underscores the significant impact of regulatory changes, as well as the industry’s resilience and adaptability in the face of economic challenges. As the sector continues to navigate this evolving landscape, stakeholders remain cautiously optimistic about future growth prospects.
