Lahore High Court has vacated the order against the deregulation of Maximum Retail Prices (MRPs) of non-essential drugs by pharmaceutical companies.
The said development is positive for the pharmaceutical sector, according to market experts.
“We believe deregulation of non-essential drugs would be a breakthrough for the sector and would improve sector fundamentals amid economic woes,” Vice President at JS Global Muhammad Waqas Ghani told ProPakistani.
For background, the outgoing government approved deregulation of non-essential drugs, allowing the industry to independently raise prices, which is a paradigm shift from the former Drug Policy according to which prices were regulated by the government and were linked with the annual CPI.
Waqas remarked that the said policy decision was taken on the recommendation of the previous Ministry of Health to overcome supply-side issues and is expected to improve the profitability outlook for industry players.
He predicted that pharmaceutical companies with a significant proportion of revenue derived from non-essential drugs (>50 percent) are expected to experience noticeable gains.
It is expected that the deregulation will positively impact the listed pharmaceutical companies.
AGP Limited (PSX: AGP), Abbott Laboratories (Pakistan) Limited (PSX: ABOT), Highnoon Laboratories Limited (PSX: HINOON), and Haleon Pakistan Limited (PSX: HALEON) are expected to be primary beneficiaries, as they all have 50 percent or above of non-essential drugs in their sales composition. Additionally, GlaxoSmithKline and Searle are anticipated to benefit with a lower proportion (less than 50 percent non-essential in the mix).
