RECORDER REPORT

KARACHI: The pharmaceutical sector continued on a growth trajectory during the first quarter of FY21.

Sales during the quarter depicted robust growth (20 percent YoY) amid high demand for pharmaceutical products coupled with the impact of the latest price increases.

Higher sales during the quarter also led to overall earnings growth, which increased by 58 percent YoY. Companies that outperformed the sector average earnings growth included Sanofi-Aventis (SAPL, 411 percent) and Abbott (ABOT, 270 percent). The sector is currently trading at trailing P/E of 19.1x and P/S of 1.96x, compared to 22.0x and 2.1x at the time of our last quarterly sector update (Oct 1, 2020). Various positives have played out favourably for the sector of late, including an appreciating rupee, relaxation of Covid-19 restrictions (leading to higher demand of OPDs), price increases (particularly in hardship cases) and higher demand for pharmaceutical products amid the pandemic, an analyst at the JS Global Capital said.