PACRA Upgrades the Entity Ratings of Global Marketing Services

Global Marketing Services (GMS or "the Company") has established a strong reputation within the clinical and medical laboratory equipment sector, which plays a crucial role in health diagnostics. GMS operates through two distinct business divisions: Clinical and Medical. These divisions encompass a diverse range of products, including offerings from core and molecular diagnostics, Onco DX, medical and hospital solutions, and clinical genomics. The Clinical division contributed ~71% to the topline during FY24 and focuses on laboratory diagnostic and testing equipment, while the Medical division contributed ~29% to the topline during FY24 and primarily specializes in equipment related to cardiology, electrophysiology, surgical connections, and infection prevention technologies. The rating upgrade reflects a substantial growth of approximately ~23% in the Company’s top line during FY24, along with improved profitability margins at all levels, despite a challenging macroeconomic environment characterized by high inflation and elevated interest rates during much of the year. However, GMS benefited from the stabilization of the PKR during FY24, further bolstering its financial performance. Additionally, the ratings also take comfort from the Company’s strong relationships with over 15 globally recognized principals, including Biomerieux, Abbott Medical, Cordis, Johnson & Johnson Medical, and Steris Corporation, as well as its robust customer base comprising esteemed health institutions in both public and private sectors. The recent acquisition of a sizeable product range of Abbott Medical has remained instrumental in sales growth of ~48% in the medical division. Looking ahead, the sponsors plan to corporatize both business divisions separately. The process for the Medical division is already underway, with the existing operations being transferred to "Global Medical Solutions (Pvt) Ltd." However, completion is contingent upon navigating the technicalities associated with transferring the business to the new entity, particularly in light of relevant DRAP regulations. GMS has implemented an internal audit and compliance function that conducts regular audits to ensure adherence to pertinent quality standards. The Company is led by Mr. Zafar, the majority stakeholder in both divisions, with support from other partners. As GMS imports all of its inventory, it is susceptible to currency fluctuations and related foreign exchange risks. To mitigate these risks, the Company has secured long-term contracts with major customers, allowing it to price products based on the prevailing USD exchange rate. The current governance structure lacks formal board committees and independent oversight thus depicts room for improvement.The overall financial risk profile of GMS is characterized by sound working capital management, stable cash flows and coverage, a solid capital base, and a non-leveraged capital structure. The Company is well-positioned to sustain its position as health awareness increases, prompting greater public focus on personal well-being and preventive healthcare.
The ratings are contingent on the firm’s ability to sustain its top line, maintain profitability metrics, and generate sufficient cash flows to drive growth. Successfully executing the proposed business and corporatization plan is essential. Furthermore, improvement in the governance structure shall remain imperative.

About the Entity
GMS, established as a partnership in 1999, has been serving the healthcare industry for over two decades. The firm has steadily expanded its product offerings across various diagnostic segments, achieving a strong reputation in healthcare and Research/Life Science Solutions. The ownership structure of GMS is divided between two business divisions. In the Clinical division, Mr. Zafar Mehmood holds the majority share at 68%, followed by Muhammad Ayub with 20% and Miss Naheed Dilshad with 12%. In the Medical division, Mr. Zafar also holds a 58% stake, while Miss Naheed Dilshad owns 32% and Mr. Muhammad Ayub has a 10% ownership interest.