The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Maintains Entity Ratings of CCL Pharmaceuticals (Pvt.) Limited

Rating Type Entity
(20-Oct-22 )
(20-Oct-21 )
Action Maintain Initial
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

CCL Pharmaceuticals (Pvt.) Limited (hereinafter referred as ‘CCL’ or ‘the Company’) is primarily engaged in the development, manufacturing, & marketing of branded generic pharmaceuticals products. The ratings reflect Company’s reputable business profile in pharmaceutical industry of Pakistan with legacy built 50+ years and exports in 22+ countries worldwide. With population growth rate and rising health issues, the sector grew by ~12% YoY. Dependency on imported APIs (basic raw material) is significant, thus sustaining efficient supply chain is of utmost priority for local manufacturers. However, non-reliance on any single country for imported APIs provides mitigation against potential disruptions. The Company’s flagship products include brands like Sita Met, Pulmonol, Maxflow, Paraxyl CR and Orinase Met, contributing the highest in revenues. CCL has installed state-of-the-art GMP compliant manufacturing facility enabling to produce dry powder, liquid orals, solid orals, liquid injectable, and powder injectable. Besides, substantial CapEx is underway to upgrade manufacturing facility aligned with PICs & other international compliances. It has been accredited as one of the fast-growing pharmaceutical entities among top 25 players in Pakistan following sponsors’ vision to capitalize growth trajectory. The Company is governed by qualified professionals having diversified experience at upper-level hierarchy in MNCs and reputed local pharmaceutical setups. CCL is cognizance of corporate governance structure; reflected by committees formed at board & management level. The oversight role is played by the stockholders in collaboration with independent advisors on the board. As per the management accounts, CCL recorded revenue growth of ~25% at end June’22 with adequate margins. The ratings draw comfort from constant demand of products and strong market share in Anti-Diabetic, Anti-Depressants & Expectorants. According to IQVIA report, CCL’s ranking improved to 17th on YTD basis. Financial risk profile is demonstrated by efficient working capital management & healthy cash flows. Capital structure is leveraged to support BMR (to align with PICs and other international compliances) and capacity expansions. The Company benefits from more formal group structure with incorporation of CCL Holdings. Going forward, CCL attempts to (a) ramp up its market share with new molecules and through brand acquisitions (b) explore export destinations after aligning with PICs and other international compliances.
The ratings are dependent on upheld profits and market share while retaining sufficient cash flows and coverages. Nevertheless, adherence to maintain its debt metrics at an acceptable level is a prerequisite.

About the Entity
CCL Pharmaceuticals (Pvt.) Limited was incorporated on April 28th, 1985 under the Companies Ordinance, 1984 (now the Companies Act, 2017) as a private limited concern. It is involved in the manufacturing and sale of all sorts of medicines, drugs and allied activities. At present, the sponsoring family is 2nd generation and owns entire stake of the Company through CCL Holdings – a subsidiary of Dilsons (parent entity). Shareholding is divided equally among family members; Mr. Kashif Sajjad (25%) - Board's Chairman, Mr. Asim Dilawar (25%), Mr. Hassan Zubair (25%) & Mr. Nadeem Bin Javaid (25%). Dr. Shahzad Khan is the CEO who possesses more than 25 years’ experience in medical research, business strategy and marketing & sales of pharmaceuticals.

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.