PACRA Maintains Entity Ratings of Pharmagen Limited

Pharmagen Limited ("Pharmagen" or "the Company") is engaged in the manufacturing of a diversified portfolio of pharmaceutical raw materials and continues to play a significant role in supporting the domestic pharmaceutical industry's backward integration initiatives. The Company operates ISO-certified and GMP-compliant manufacturing facilities for Penicillins, Cephalosporins, Multipurpose Active Pharmaceutical Ingredients (APIs), and Paracetamol API. Pharmagen serves a well-established customer base comprising leading pharmaceutical manufacturers, including GlaxoSmithKline Pakistan Limited, Sami Pharmaceuticals (Private) Limited, and Getz Pharma (Private) Limited. The Company's strategic importance stems from its contribution toward import substitution and local value addition within Pakistan's pharmaceutical sector. Despite the domestic pharmaceutical market surpassing PKR 1 trillion in size, Pakistan continues to rely heavily on imported APIs, with an estimated 85%-90% of raw material requirements sourced primarily from China. Local API manufacturers collectively cater to only a limited portion of domestic demand, highlighting significant growth potential for indigenous production. Against this backdrop, Pharmagen remains well-positioned to benefit from the long-term structural need for localization and supply chain diversification. The Company's revenue base remains concentrated in its key products, namely Amoxycillin, Cephradine, Cefixime, Paracetamol, and Ciprofloxacin, which collectively account for the majority of sales. Furthermore, the long-standing business relationship with Sami Pharmaceuticals continues to provide comfort from both business sustainability and market access perspectives. The assigned ratings also derive support from the sponsors' extensive experience in the pharmaceutical sector and their demonstrated commitment toward the Company's growth and development. During FY26, Pharmagen reported net revenues of PKR 13.3bln compared to PKR 16.4bln in FY25. The decline in topline was primarily attributable to a reduction in global API prices, which led to corresponding downward adjustments in domestic selling prices. In addition, challenges within the broader pharmaceutical sector, including supply chain disruptions and lower industry activity, exerted pressure on demand dynamics during the year. Despite the contraction in revenues, the Company demonstrated a notable improvement in profitability. Margins strengthened across all levels, primarily supported by effective cost management initiatives, lower energy costs, and enhanced operational efficiencies. The Company's financial risk profile remains adequate, characterized by comfortable cash flow generation, satisfactory coverage indicators, and a manageable working capital cycle. Pharmagen maintains a modestly leveraged capital structure, with borrowings largely comprising short-term financing utilized to support working capital requirements. Going forward, Management aims to enhance performance through operational efficiencies, cost optimization, and product portfolio expansion. Ongoing expansion initiatives are expected to support production capability and long-term growth.
The ratings are supported by Pharmagen's established market presence in the local API manufacturing sector, improving profitability, adequate financial risk profile, and the sponsors' longstanding industry experience. The ratings remain contingent upon the Company's ability to sustain operating performance, maintain profitability improvements, and successfully implement its expansion and diversification strategy. Continued healthy cash flow generation, effective management of working capital requirements, and maintenance of a conservative leverage profile will remain key rating considerations.

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 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.