Topline Securities hosted Pakistan Pharma Invest 2024. The first session was of Searle Pakistan (SEARL) Limited, and the speakers were Mr. Mobeen Alam, Group CFO of SEARL, along with his team.
The Searle Company Limited (SEARL) expects gross margins to recover to 46-48%, with a target of reaching 50% in the last quarter of FY25. This is primarily driven by the deregulation of non-essential drugs in February 2024.
The company expects revenue growth of over 30% for FY25. A larger proportion is expected from drug deregulation, followed by the launch of new products that were previously unavailable due to low prices and volumetric growth. The company aims to maintain a growth rate of 30% for the subsequent year.
Currently, 60% of SEARL’s volumes and 80% of its value come from the non-essential segment. With the exit of OBS, this contribution is projected to rise to 80-85%.
On the non-essential drugs side, the industry has proposed that the government increase the cap on yearly price increases from 7% to 10%. Many medicines conflict with industry and government regarding whether they are essential or non-essential, so discussions with the government are to take place to follow WHO guidelines.
Since its inception, pharma companies have proposed that DRAP be removed from the power to increase prices and given to the Chamber of Commerce or a person competent enough to handle pricing strategies.
Some essential drugs saw a price increase starting in April 2024. The old inventory was rolled over in about three months, so the full impact of this price increase will be reflected from July to December 2024 onward, with a seasonal effect also anticipated.
SEARL is Pakistan’s second-largest pharmaceutical exporter, exporting to 12 countries. This activity contributes approximately 11% to the company’s total revenue.
SEARL ranks first in cardiovascular, pain management, gynaecology, and cough supplements and second in pulmonology, neurology, and paediatrics. The company is the second-largest pharmaceutical company in units sold, with a revenue growth rate reflecting a 5-year CAGR of 17%.
The company targets closing the OBS (or SPL) deal before December 2024, including signing the Share Purchase Agreement (SPA) with the buyer.
