PACRA Maintain 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 healthcare diagnostics. GMS operates through two distinct business divisions, Clinical and Medical, encompassing a diverse range of products including core and molecular diagnostics, Onco DX, medical and hospital solutions, and clinical genomics, with the Medical Division specialising in equipment related to cardiology, electrophysiology, surgical connections, and infection prevention technologies. The sponsors have completed the corporatization of both divisions under a single consolidated entity, Global Marketing Services (Private) Limited, marking the firm's transition from a partnership structure. Pakistan's medical devices and diagnostics market continues on an upward trajectory, supported by growing public awareness and greater accessibility to advanced diagnostic procedures. The Budget 2026-27 introduced meaningful relief for the sector, abolishing the value-added tax on imported finished pharmaceutical and diagnostic products and reducing customs duties on a wide range of tariff lines, which is expected to ease cost pressures on distributors, including GMS, going into FY27. Sector-wide import dependency has also shifted further toward China, following the suspension of trade with India. The assigned rating reflects the growth in the Company's topline, with sales of ~PKR 5,210mln recorded during 9MFY26 against ~PKR 5,282mln for full-year FY25, as the impact of the revised sales tax on previously zero-rated medical devices has progressively absorbed and demand has continued to strengthen. The Company's profitability margins improved further, with the gross margin rising to ~26.7% (FY25: ~24.7%) and the net margin strengthening to ~10.1% (FY25: ~2.8%), by effectively managing finance costs amid the declining interest rate environment and maintaining performance in the face of increasing competition from Chinese entrants in the market. The rating also derives 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 a robust customer base comprising esteemed healthcare institutions in both the public and private sectors. The addition of the Abbott Medical portfolio continues to be instrumental in driving sales growth in the Medical Division, and management anticipates further gains in sales volume and profitability through this partnership. The Company currently works with 29 distributors across Pakistan and plans to expand its network further. The control environment is adequate, with an internal audit and compliance function that conducts regular audits to ensure adherence to established quality standards. As GMS imports all of its inventory, it remains exposed to currency fluctuations and related foreign exchange risks; however, the Company mitigates these risks through long-term contracts with major customers, allowing products to be priced in line with prevailing USD exchange rates. The current governance structure, while functional, lacks formal board committees and independent oversight, leaving room for improvement. The overall financial risk profile is supported by adequate cash flows, improved coverage metrics, and a tightened working capital cycle. The capital structure remains predominantly equity-funded, with minimal reliance on institutional borrowings; however, growing reliance on related-party funding, alongside non-funded facilities for the establishment of LCs, warrants continued monitoring.
The ratings are contingent on the firm's ability to sustain its top line, maintain profitability metrics, and generate sufficient cash flows to support growth. Successful execution of the proposed business and corporatization plan is critical, while continued improvement in the governance structure remains imperative.

About the Entity
Global Marketing Services (GMS), established in 1999, is an experienced healthcare company operating across diagnostic and life science segments through alliances with leading global principals. Ownership is held by Mr. Zafar Mehmood, Mr. Muhammad Ayub, and Ms. Naheed Dilshad, with respective stakes of 68%, 20%, and 12% in the Clinical Division, and 60%, 8%, and 32% in the Medical Division.