PACRA Maintains Entity Ratings of Pharmagen Limited

Pharmagen Limited (“PL” or the “Company”) is recognized as the leading manufacturer of Active Pharmaceutical Ingredients (APIs) in Pakistan, serving a diverse range of clients, including prominent pharmaceutical companies such as GlaxoSmithKline Pakistan Limited, Sami Pharmaceuticals (Pvt.) Limited, Getz Pharma (Pvt.) Limited, AGP Limited, and Bosch Pharmaceuticals (Pvt.) Limited, among others. With an unwavering commitment to quality and innovation, Pharmagen Limited continues to be a key player in the pharmaceutical industry. Pharmagen Limited is reinforcing its market position by investing in advanced production facilities and expanding its product portfolio. The Company has recently completed its Paracetamol capacity expansion project, increasing the annual production capacity from ~960 MT to ~3,600MT. Additionally, an expansion project for Cefixime is currently underway, aimed at further enhancing the Company's revenue-generating potential. The pharmaceutical industry in Pakistan is able to produce merely ~15% of its required APIs domestically. As a result, the sector depends on imports for the remaining ~85%, underscoring the need for enhanced local production infrastructure and investment. The sector's cost of sales is significantly influenced by raw materials, which account for ~80% of the total. With DRAP regulating drug prices, profit margins are highly susceptible to fluctuations in exchange rates and changes in raw material costs. PL’s top 5 products include Amoxycillin, Cephradine, Cefixime, Paracetamol and Ciprofloxacin, these contribute ~89% of total revenue. According to the management accounts, FY24 revenue has experienced a modest increase of ~5.5%. Despite cost-push inflation causing a decline in gross and operating margins, net margins showed slight improvement, driven by a reduction in debt servicing costs. The assigned ratings are supported by SAMI's strategic partnership with Pharmagen Limited, a key driver of PL's growth and sustainability. The Company also benefits from the sponsor's extensive industry experience and strategic vision, providing clear direction for long-term success. Going forward, management will prioritize process improvements, cost optimization, and expanding the product portfolio to enhance operational efficiency. The financial profile of the Company is considered adequate, with comfortable coverages, cashflows, and working capital cycle. The capital structure is modestly leveraged, with borrowings primarily consisting of short-term for working capital requirement.
The ratings are dependent on the successful execution of the proposed strategy, with a focus on maintaining the current market position and ensuring profitability, which aligns with the Company's growth objectives. Nevertheless, adherence to maintaining its debt metrics at an acceptable level is a prerequisite.

About the Entity
Pharmagen Limited, an unquoted public limited Company, has been a key player in Pakistan's Active Pharmaceutical Ingredients (APIs) sector since 1990. The Company is engaged in the manufacturing and sale of pharmaceutical products and over the years it has become the leading producer of APIs (Active Pharmaceutical Ingredients) in Pakistan. Pharmagen is primarily owned by Mr. Parvez Hussain’s family (~44%) and Mr. Shamim Ahmed’s family (~30%). Other strategic partners include Mr. Rahim Khan Trust / Kashmir Education Foundation (~15%), Mr. Rasheed Khan’s family (~7%), and others (~4%). Mr. Parvez Hussain Sufi serves as the CEO of the Company.