PACRA Assigns Initial Entity Ratings to Ferozsons Laboratories Limited

Ferozsons Laboratories Limited (“Ferozsons” or “the Company”) is primarily engaged in the manufacturing and sale of pharmaceutical products, along with the import and distribution of medical devices. Ferozsons maintains a diverse product portfolio of over 100 brands, catering to specialized therapeutic areas such as gastroenterology, hepatology, cardiology, diabetes, metabolic health, dermatology, and pediatrics. It operates a modern, state-of-the-art manufacturing facility that is compliant with current Good Manufacturing Practices (cGMP) standards. The Company has established strategic partnerships, notably with Gilead Sciences Inc., through which, along with in-licensed generic manufacturing, it also imports and distributes a range of Gilead branded products for viral hepatitis and HIV in the local market. Recently, the Company was granted a license for the generic manufacturing of ‘Lenacapavir (HIV medicine)’ by Gilead Sciences Inc., both for local and exports to 120 low- and middle-income countries. Additionally, Ferozsons has strengthened and diversified its revenue base through its medical devices portfolio, developed in collaboration with Boston Scientific (USA), Nihon Kohden, etc. This segment—comprising core cardiology, endoscopy, electrophysiology, urology, neuromodulation, ultrasound, and other diagnostic equipment—contributes ~32% of total revenue. The Company’s portfolio remains balanced, with ~60% in acute care products and ~40% in chronic therapies. Leading products include Omega, Carveda, Xavor, and Esomega. Assigned ratings also take benefit from Ferozsons’ strategic investment in BF Biosciences Limited, Pakistan’s first biotech company, engaged in the production and sale of biological and non-biological injectable medicines. The Company upholds a strong corporate governance framework, supported by well-defined policies and procedures that enable effective oversight and decision-making by the Board of Directors. Its management team comprises industry professionals with extensive experience, while strong internal control and compliance mechanisms are implemented across the organization. During CY24, Pakistan’s pharmaceutical sector recorded a ~22% year-over-year growth, reaching total revenue of PKR 962bln. This expansion was largely supported by price adjustments approved by DRAP and stabilization of the Pakistani Rupee (PKR)—critical for an industry heavily reliant on imported active pharmaceutical ingredients (APIs). During 1HFY25, Ferozsons posted a revenue growth of ~16.8%, primarily driven by increased volumes. Gross margins improved slightly to ~42.6% (FY24: ~40.8%), while net margins remained steady at ~4.5%. Ferozsons’ financial risk profile is characterized by moderate coverage ratios and cash flow generation, though it faces a stretched working capital cycle. The capital structure is moderately leveraged, with borrowings primarily consisting of short-term debt to finance working capital requirements.
The ratings are dependent on the sustainability of the growth trajectory in the topline and profitability matrix. The adequacy of cash flows and the coverages remain imperative. Furthermore, the consistency in the performance indicators, as illustrated in the shared financial projections, will continue to be paramount.

About the Entity
Ferozsons Laboratories Limited is a publicly listed company operating in Pakistan’s pharmaceutical sector since 1956. The sponsoring family holds ~47.78% ownership in the Company. The Board of Directors comprises seven members, including four non-executive, two independent, and one executive director. Mrs. Akhter Khalid Waheed serves as the Chairperson, while Mr. Osman Khalid Waheed holds the position of Chief Executive Officer.