BF Biosciences Limited (hereafter referred to as “BFBIO” or “the Company”) was incorporated on February 24, 2006, as an unlisted public limited company under the Companies Ordinance 1984 (now Companies Act, 2017). The Company is a joint venture between Ferozsons Laboratories Limited and the Bagó Group of Argentina. In October 2024, the Company was listed on the Pakistan Stock Exchange (PSX). The registered office of the Company is located at 197-A, The Mall, Rawalpindi.

In 2006, BFBIO was established following the signing of an agreement between Ferozsons Laboratories Limited, Pakistan (“the Parent Company”) and Bagó Group of Argentina to set up a “Biotech Pharmaceutical Plant”. The plant was completed and the Company started its operations on July 1, 2009 to manufacture biological medicines for the treatment of Cancer and Hepatitis C for the local and export markets. In 2020, BFBIO executed a non-exclusive license agreement with Gilead Sciences, Inc. for the manufacture and sale of Remdesivir, an antiviral drug used in the treatment of COVID-19 patients, under Gilead’s Global Patient Solutions (GPS) Program. This program aimed to improve access to medications for patients worldwide, particularly in developing countries. Agreements were executed with five South Asian manufacturers, and BFBIO was the only company from Pakistan licensed to manufacture Remdesivir for distribution in up to 127 countries. In recognition of its efforts, BFBIO was awarded the PESA Award in 2021 for the export of Remdesivir. Management decided that all the net cashflows generated from the Remdesivir would be invested to increase BFBIO’s production capacity through a brown field expansion (“Line II”), capable of producing biologicals and non-biologicals products. In FY 2020-21, financial close of state-of-the-art “Line II” expansion comprising of high-speed pre-filled syringes line, 42 square meter lyophilizer, a combi filling line and other ancillary accessories was achieved. In Oct-24, the Company raised funds by issuing a total of 25 million ordinary shares through an initial public offering (IPO) to meet post-expansion working capital needs, CAPEX to enhance process efficiencies, obtain export certifications (PIC/S & SRA), and new product development including Glucagon-like Peptide (GLP1).

BFBIO is primarily engaged in the manufacturing and sales of biological and non-biological medicines including the treatment of Cancer and Hepatitis C for the local and export markets as well. It has a state-of-the-art facility manufacturing facility in Sundar Raiwind Road, Lahore and it is also the 1st Biopharmaceutical plant of Pakistan. The facility is designed as per the USFDA & EMEA Standards, which is ISO 9001, 45000, and 14001 certified and fully equipped with state-of-the-art manufacturing and testing equipment. It was the first USFDA compliant pharmaceutical facility in the country, they have also helped Pakistan join the select group of companies that are exporting biotech pharmaceuticals. It produces specialized injectables in vials and prefilled syringes and has currently completed its major capacity expansion (Line-II) in 2024. This expansion was financed through debt (~70%) and internal cashflows (~30%). Notably, a majority of this debt was a subsidized loan obtained under the TERF scheme.

Ferozsons Laboratories Limited, the parent company, owned the majority stake of ~80% and the Bago Group owned a stake of ~20% in FY24. Post-IPO, the parent company, Ferozsons now holds a stake of ~57.36% and the Bago group owns ~14.34% of shares in the Company. The remaining share is held by the general public.

The ownership structure of the Company is considered stable, as it has remained under the control of the current sponsors since incorporation, with no changes expected in the foreseeable future.

With over six decades of active engagement in the pharmaceutical sector, the parent company and its sponsoring family have consistently demonstrated strong business acumen. Their core strengths include establishing strategic international partnerships (i.e. Argentine Bagó Group and Gilead Sciences), and developing strategic alliances with leading organizations in the global healthcare industry. The Bagó Group, established in 1934 and recognized as Argentina’s premier pharmaceutical group further exemplifies this acumen. This influential group comprises diverse companies focused on human health, animal health, and pharmaceutical distribution, driven by continuous therapeutic innovation and consistent investment in R&D. Notably, within the first two years of their partnership, they achieved a position among the top three companies in both the oncology and hepatology segments. The enduring commitment to excellence of both Ferozsons and Bagó has enabled the Company to effectively navigate the complexities of the pharmaceutical landscape, fostering sustained growth and continuous innovation.

The Ferozsons Group demonstrates financial strength through its strategic investments in BF Biosciences Limited (a subsidiary) and Farmacia (a partnership). With a group size of PKR 15.8bln as of Jun-24, the Company is well-positioned within the industry, and its future prospects are considered strong. Further strengthening its financial standing is its strategic alliance with the Bagó Group with extensive portfolio reaching over 47 countries across Latin America, Europe, Asia, Oceania, and Africa, with a direct presence in 22 countries and the remaining markets served through exports. This global reach ensures a diverse range of cutting-edge products, further strengthening the Company’s financial outlook.

The board comprises seven members: four non-executive directors (including the chairman), two independent directors, and one executive director who also serves as the CEO. This diverse composition ensures compliance with the corporate governance code.

All members of the Board of Directors (BoD) are seasoned professionals with extensive industry experience and long-standing affiliations with the company. The Chairman, Mr. Sebastian Martin Ferrarassi (Non-executive director) possesses over 30 years of enriched experience relating to pharma industry, which enables him to contribute effectively to the board’s decision-making process. The Board also includes independent directors Mr. Naveed Kamran Baloch and S M Wajeeh Uddin, both of whom bring over three decades of experience across various sectors, including the multinational healthcare and pharmaceutical companies. Among the non-executive directors, Mr. Osman Khalid Waheed, Mrs. Amna Piracha Khan and Mrs. Munize Azhar Paracha further strengthen the Board with their diverse professional backgrounds and extensive expertise.

The board of BFBIO has established two key committees: the Audit Committee and the HR & Remuneration Committee. Each of these is chaired by an independent director, ensuring impartial oversight and robust governance. During the year, multiple board meetings were held. Attendance of board members in these meetings remained strong and minutes are documented adequately.

M/S KPMG Taseer Hadi & Co. Chartered Accountants, which are among the Big-4 and classified in category ‘A’ by SBP with satisfactory QCR rating, are the external auditors of the Company. The firm has expressed an unqualified opinion on the financial statements for the year ended June, 2024.

The Company has a clearly defined organizational structure, comprising functional and administrative departments, each with a multilayered hierarchy, and is led by a qualified department head. Each department head reports directly to the CEO. At present, all key positions within the organization are fully staffed.

The management team is composed of highly qualified professionals who bring extensive skills and have long-standing associations with the Company. Mr. Farhan Rafiq, the Chief Operating Officer (COO), is a Chartered Accountant with over 20 years of experience in the pharmaceutical industry. Mr. Abdur Rehman, the Chief Financial Officer (CFO), is also a Chartered Accountant, contributing over 13 years of relevant expertise and a diverse skill set. This leadership is further assisted by a team of experienced professionals, ensuring good governance and strategic direction.

The Company has established clear reporting lines, further enhanced by the presence of a management committee which includes all chiefs and directors of all departments. Meetings are convened as needed to discuss key operational and strategic matters. However, the minutes of the management meeting are not fully documented. Additionally, performance reports are prepared and submitted to all department heads on a monthly basis.

Ferozsons has implemented SAP S/4 HANA by SAP SE, Walldorf, Germany, ensuring compliance with global standards for enterprise management systems. It provides a real-time, end-to-end integrated solution for operations across finance, sales & marketing, production, procurement, quality management, and human capital management.

A detailed Management Information System (MIS), featuring key performance indicators, is submitted to the CEO/CFO/COO on a monthly basis, including an income statement, segment-wise and region-wise breakdowns of revenue and profit, efficiency variance reports, as well as receivables, payables, and inventory aging reports, and an operational expenditure summary. However, an outsourced internal audit department would be viewed positively.

According to international monitoring firm IQVIA, Pakistan’s pharmaceutical sector recorded a 21.79% growth in calendar year 2024 compared to the previous year, reaching a market value of Rs. 962.5 billion. This growth has largely been driven by a deregulatory policy introduced earlier in the year, which allowed pharmaceutical companies to adjust prices for non-essential medicines in response to rising production costs. The revenue surge was primarily the result of price adjustments, rather than a significant increase in unit sales. The industry remains heavily dependent on imported active pharmaceutical ingredients (APIs), making it vulnerable to supply chain disruptions and foreign exchange volatility, particularly due to the depreciation of the Pakistani Rupee (PKR). This has constrained the industry's ability to pass on costs, especially in the essential medicines segment, where pricing remains regulated. Over the past year, the sector sold 3.7 billion units, reflecting a modest volume growth of 2.27%, while revenue growth was largely price-driven.

As per the management, the parent Company, Ferozsons laboratories limited stood at No. 20 with a consolidated topline of ~PKR 15.9bln in the latest IQVIA report (MAT- Feb 24). In addition to that, the Company’s product, ICON, is ranked at No. 154 among the Top 200 pharmaceutical industry products, holding a market share of 0.1% and demonstrating a growth of ~34.5% growth as per the latest IQVIA report (MAT- Jun 24).

During 1HFY25, the Company’s sales reached PKR 2,714mln (FY24: PKR 3,659mln, FY23: PKR 1,810mln, FY22: PKR 1,521mln), reflecting an annualized growth of ~48.3%. This growth is primarily driven by increased volumes. The Company’s portfolio is diversified, with biological medicines accounting for ~30-40% of sales and non-biological medicines constituting the remaining 60-70%. Notably, ICON, the Company’s top-selling product, contributes around 20.36% to the total revenue.

During 1HFY25, the gross margin of the Company stands at ~43.7% YoY (FY24: ~41.9%, FY23: ~24.8%, FY22: ~30.1%). This improvement is attributed to the addition of new products to the sales mix and capacity expansion. The Company’s margins experienced a slightly reduction on a year-over-year basis. The operating margin stood at ~14.7% in 1HFY25 (FY24: ~21.2%, FY23: ~16%, FY22: ~17.8%). Similarly, the net profit margin stood at ~7.2% in 1HFY25 (FY24: ~10.5%, FY23: ~8.2%, FY22: ~20.2%).

In Oct-24, BFBIO successfully completed a major expansion with the establishment of the “Biotech Plant”, a greenfield manufacturing facility. This plant is designed to support the rapidly growing local and export markets, ensuring sustained growth. By leveraging advanced technology and innovative practices, BFBIO is well-positioned to meet increasing demand and expand its market presence. To ensure its long-term sustainability, the Company establishes the targets through financial projections, meticulous budgeting plans, and proactive forecasting of procurement requirements.

The net working capital cycle of the Company slightly improved to ~60 days during 1HFY25 (FY24: ~70 days, FY23: ~93 days, FY22: ~72 days). Similarly, the gross working capital stood at ~87 days in 1HFY25 (FY24: ~92 days, FY23: ~126 days, FY22: ~108 days). However, the average receivables days remained relatively stable at ~16 days in 1HFY25 (FY24: ~15 days, FY23: ~15 days, FY22: ~31 days).

The Company maintained adequate coverage ratios as of 1HFY25, with an EBITDA to Finance cost ratio of 4.1x (4.6x in FY24, 1.2x in FY23, 5.1x in FY22) and a debt payback ratio stood at 4.7x as of Jun-24. The interest coverage ratio stood at 1.9x in 1HFY25 (FY24: 4.1x, FY23: 0.4x) and the core coverage ratio stood at 0.5x in 1HFY25 (FY24: 1.0x, FY23: 0.1x). The coverage ratios weakened in FY23 due to an increase in finance costs, driven by high interest rates.

The Company maintained a moderately leveraged structure (~34.1%) in 1HFY25 (FY24: ~50.2%, FY23: ~58.7%, FY22: ~50.8%). Short-term borrowings constitute only ~10.5% of the total borrowings as of Dec-24.