SEARL is the second largest pharmaceutical company

The Searle Company Limited (SEARL) conducted its corporate briefing session on 25th Nov 2020 to discuss the key outcomes of 1QFY21. To recall, the company posted Sale, PAT, and EPS of PKR 4.07Bn, 592Mn and 2.69, compared to Sale, PAT, and EPS of PKR 4.06Bn, 547Mn and 2.49 in the same quarter last year, respectively.

Key Takeaways

Owned by the IBL group, SEARL is the 2nd largest pharmaceutical company in the country by volume and the 4th largest by value.

The company has presence in 15 international markets, while penetration in 7 potential markets is under process. The local and export mix is 89% and 11% of the total geographical sales, respectively.

The company owns six manufacturing facilities in Lahore and Karachi, with annual production above 250Mn units.

The company has always focused on developing and launching new products. Presently, 61% of the revenue is derived from products launched after 2010, while products developed before 2010, only make up 39% of the sales. This is expected to further improve.

Essential and non-essential drugs make up 20% and 80% of the sales portfolio, respectively.

The financial reports include an intangible asset of PKR 9Bn. The management has stated that this includes goodwill and tax credit arising from a merger in FY 2019. The tax consultants are confident that the benefit will carry forward.

On the topic of government tenders, the management stated that such tenders are not as profitable as the retail sector, but they do boost volume and act as a marketing channel.

The management has not given any concrete development of a vaccine in the short term. Stating that the stage will be set by international players like Pfizer & Moderna Inc.

The company is not planning any immediate mergers in the future but is open to opportunities to grow the company. Moreover, no major R&D expenditure is expected in FY 2021.

The management aims to focus on the local market, as it has shown great potential. While international sales face several hurdles like regulatory requirements and red-tapism.

BMA Capital Management Ltd.

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