The Pakistan Credit Rating Agency Limited
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Muhammad Harris Ghaffar

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PACRA Maintains Entity Ratings of Martin Dow Marker Limited

Rating Type Entity
(02-Jun-23 )
(03-Jun-22 )
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Martin Dow Marker Limited (herein referred to as "MDM" or the "Company") formerly known as Merck (Pvt.) Ltd, is a notable name in the pharmaceutical segment of Pakistan. The Akhai family entered the pharmaceutical industry in 1960. The Company operates under the umbrella of Martin Dow Group, one of the largest locally owned pharmaceutical companies, comprises three other companies and constitutes well-known brands under its domain: Rocephin, Concor, Evion & Glucophage etc. MDM has a diversified portfolio in chronic and acute therapeutic segments. The group is known for its high-end acquisitions and investments, denoting good financial strength. According to IQVIA , the local pharmaceutical industry size has reached up to PKR 717.6bln and reflects 12.6% YOY growth where Martin Dow as group is ranked at No.06 with a group size of PKR ~29bln as of Feb’23. 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. In May 2023, DRAP has allowed the pharma industry an across-the-board price increase @14% on essential medicines and 20% on non-essential medicines. The leadership flows from its distinctive ownership that vests in the hands of two reputable families coming with enriched professional backgrounds; Marker’s & Akhai family, while MDM is mainly governed by the descendant of the latter, demonstrating profound business acumen. The Group is extremely conscious about quality standards, following international best practices and guidelines. The assigned rating takes comfort in Martin Dow Group association and strategic alliances with renowned multinational groups such as Roche, Merck, Sanofi & Boehringer Ingelheim. From time to time the Company has invested in modernizing and integrating new technologies into its manufacturing facilities. During the year under review, the Company has successfully launched new products in different Therapeutic Classes. The margins of the Company are slightly under stress mainly on the back of the following factors: (i) massive PKR devaluation, & (ii) Higher finance and energy cost burden. The financial risk profile of the Company is considered adequate with sufficient coverages and cashflows. The working capital cycle of the Company is stretched which depicts industry norms. The management is mindful of the essence of corporate structure and is keen towards change for the better. This lends support to ratings.
The ratings are dependent on upheld sustainable profits and market share while retaining sufficient cash flows and coverages. However, adherence to maintaining its debt metrics at an adequate level is a prerequisite. Improvement in governance structure remains important for the ratings.

About the Entity
Martin Dow Marker Ltd is a subsidiary of Martin Dow Limited. Martin Dow Limited holds 75%shareholding while Marker Family holds the remaining 25%. Martin Dow Limited is owned by the Akhai Family, mainly Ali Akhai – son of late Mr. Jawed Akhai (the founding chairman of Martin Dow Group). Mr Ali Akhai is the chairman of the Board of Directors. MDM has a three-member board including the Chairman, Mr Javed Ghulam Muhammad the company's CEO and Mr Syed Dawood – the independent Director.

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.