GlaxoSmithKline Pakistan Ltd (PSX: GLAXO) has just delivered one of those “two-truths” sets of numbers that investors in Pakistan’s pharmaceutical sector are rapidly getting used to: a sharp improvement in profitability metrics, alongside signs that demand is not keeping pace with the industry’s new pricing reality.
On the surface, the year looks like a breakout. Chase Securities’ briefing note highlights earnings per share (EPS) of Rs20.52 for CY24, compared to Rs1.68 in CY23 – a leap that speaks to both the operating leverage in the business and the impact of the industry’s shift in pricing power. The same note points to a still-resilient performance in the latest reported quarter: 3QCY25 EPS of Rs6.40, up from Rs6.05 a year earlier.
But revenue is telling a more complicated story – particularly in the most recent period. The company’s net sales in 3QCY25 are shown at Rs14.2 billion, down 4% year-on-year. In the same quarter, gross profit rose 29% and gross margin widened dramatically to 37% (from 27%), aided by a 16% decline in cost of sales. Put differently: pricing and product mix are now doing the heavy lifting, even when volumes and revenue wobble.
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