PACRA Maintains Entity Ratings of Pharmatec Pakistan (Pvt.) Limited

Pharmatec Pakistan (Pvt.) Limited (“Pharmatec” or “the Company”) is a well-established pharmaceutical manufacturer operating in Pakistan since 1993. The Company’s core operations comprise toll manufacturing of oral products for leading multinational corporations (MNCs), including Haleon Pakistan (a subsidiary of GSK) and Abbott, alongside the manufacturing and marketing of an expanding proprietary portfolio of 50+ products across various therapeutic segments such as cardiovascular, diabetes, analgesics, antibiotics, and vitamins. Over time, Pharmatec has continued to invest in the modernization and expansion of its production infrastructure, which is now fully GMP and GLP compliant and supports a broad product range including injectables, creams, ointments, gels, liquids/drops, tablets, and capsules. Despite a large number of registered pharmaceutical entities in Pakistan, the sector remains highly concentrated, with the top 50 players accounting for ~80% of the market. The industry continues to rely heavily on imported APIs, exposing manufacturers to inherent exchange rate risk. Being a price-regulated sector, the ability to pass on cost escalations remains limited in essential drugs category; however, recent price adjustments in non-essential drugs category and currency stabilization have supported margin recovery across the industry. Within this context, the Company’s long-standing association with leading MNCs provides stability and visibility to its revenue base. Notably, Pharmatec is the exclusive manufacturer of the Panadol brand in Pakistan. To mitigate revenue concentration risk inherent in toll manufacturing, the Company has strategically expanded its own product portfolio, which now contributes ~50% to total sales. Furthermore, the recent inclusion of “ENO,” another top-selling Haleon brand, into the toll manufacturing portfolio is expected to further strengthen future revenues. In FY25 exports remained stagnant due to ongoing geopolitical challenges, contributing ~22% to the topline, offering a natural hedge against foreign exchange volatility to some extent. During the period under review, the Company reported revenues of PKR 5,458 million, reflecting a growth of ~12.6%, driven by both price and volumetric gains thus profitability margins largely sustained at all levels. The Company’s governance framework provides room for improvement, as the Board comprises only two members and lacks independent oversight. Nevertheless, a clearly defined organizational structure and adequate internal control mechanisms are in place. Pharmatec’s financial risk profile remains sound, supported by an adequate working capital cycle, strong cash flow coverages, and a low-leveraged capital structure. Going forward, the sponsors intend to expand production capacity, including the establishment of a new OTS facility, funded through a mix of debt and equity, while continuing to broaden the Company’s product portfolio.
The ratings remain dependent on the Company’s ability to continue expanding its topline while sustaining healthy profitability margins. The timely and successful execution of the envisaged expansion plans, in line with the shared financial projections, will be essential. Furthermore, maintaining an adequate leverage profile and adhering to prudent financial management practices will remain critical for the sustainability of the ratings.

About the Entity
Pharmatec Pakistan (Pvt.) Limited was initially incorporated in 1973 as Sterling Products Pakistan (Pvt.) Limited, a subsidiary of Sterling Winthrop Inc., USA. In 1993, following Sterling Winthrop’s decision to divest its operations in Pakistan, the Company underwent a management buyout and was subsequently renamed Pharmatec Pakistan (Pvt.) Limited. Mr. Pervez Hayat Noon holds ~98% shareholding. He is a graduate of Babson College, Boston, USA, and brings over four decades of diversified experience within the pharmaceutical sector. The Board comprises two members: Mr. Pervez Hayat Noon, serving as Chairman, and Dr. Shahida Qaiser, serving as Chief Executive Officer.