The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Harris Ghaffar

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Initial Entity Ratings to Martin Dow Limited

Rating Type Entity
(02-Sep-22 )
Action Initial
Long Term A+
Short Term A1
Outlook Stable
Rating Watch -

Martin Dow Limited (herein referred to as "MDL" or the "Company"), is an operating and holding company of the Martin Dow group and one of the leading pharmaceutical groups in the Pakistan pharma industry currently ranked at No. 6 according to the latest IQVIA report. The Akhai family entered the pharmaceutical industry in 1960. As of now, four companies operate under the umbrella of MDL group (MDG) which include; (i) Martin Dow Limited (ii) Martin Dow Marker Limited (iii) Martin Dow Specialties (Private) Limited & (iv) Seatle (Private) Limited. Martin Dow has a diversified portfolio in chronic and acute therapeutic segments.The business growth is driven through organic portfolio growth and new launches. MDL had also been known for its high-end acquisitions. In the past, Martin Dow achieved the largest acquisition in the Pakistan Pharma industry by acquiring industrial assets (plants & machinery) and leading brands of ROCHE with licensing rights in 2010 followed by Merck Pakistan acquisition in 2016. The group produces and sells well-known brands under its domain: Rocephin, Synflex, Concor, Evion, Glucophage, Lexotanil & Sangobion. The group is well poised in the industry with a group size of PKR ~26bln as of Dec’21. The rating takes comfort in Company’s association and strategic alliances with renowned multinational groups such as Roche, Merck, Sanofi & Boehringer Ingelheim. From time to time the Company has invested in modernising and integrating new technologies into its manufacturing facilities. The board of MDL comprises of experienced and professional experts. The Board size is considered adequate as the management is mindful of the corporate governance requirements and fulfils the applicable statutory criteria. The pharma has some industry-specific challenges which hinder its growth and profitability matrix like a high cost for imported APIs due to PKR devaluation & DRAP pricing policy. The Company’s gross margins have shown upward trajectory trends over the last three years. In the coming years, some new brands are also in pipeline. The financial risk profile is considered adequate as the working capital management of the Company is stretched along with moderate coverages and cashflows. Capital structure is leveraged where borrowings are comprised of long-term and short-term tenor to support brand acquisitions and working capital requirements. The financial risk profile is expected to improve as the company enters the consolidation phase in future. The benefits of consolidation are yet to be seen.
The ratings are dependent on management’s ability to sustain its growth in revenues, margins and profitability. Prudent management of the working capital, and maintaining sufficient cash flows and coverages are imperative. Further improvement in governance structure remains important for the ratings.

About the Entity
MDL was incorporated in Pakistan on February 6, 1995, as an unlisted public limited company. In 2010, MDL acquired the Roche facility in Pakistan along with the acquisition and brand licensing of the global product lines from Hoffman-La Roche, Switzerland. Mr Ali Akhai – son of Mr Jawed Akhai(late) is the ultimate beneficial owner of the Company. MDL has a three-member board including the Chairman, Mr Javed Ghulam Muhammad the CEO of the company and Mr Syed Dawood - the Independent Director. Mr Ali Akhai is the present Chairman. He is a foreign qualified double Master’s degree holder from UK & France.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.