The largest pharmaceutical company in Pakistan, GlaxoSmithKline Pakistan Limited (PSX: GLAXO) is continuing its journey of topline growth; for the nine months ended 2016, sales growth was 14 percent year-on-year. However, the bottomline has been in trouble, and the period saw a decline of 16 percent over last year in net profit.
The third quarter in particular has seen enormous topline growth (20 percent year-on-year). As per the half-yearly Director's Report, key growth drivers during the first half were respiratory, antibiotics, analgesics, and dermatology portfolios. Moreover, the company also launched Seretide Diskus - the first dry powder inhaler in Pakistan for the treatment of asthma and COPD (chronic obstructive pulmonary disease).
However, gross margins declined over the period, as is the case with all pharmaceuticals, due to higher costs. Moreover, there has been a shift in GSK's product mix. GSK's consumer healthcare business ("Discontinuing Operations") was demerged with effect from April 01, 2016 to a new entity - GlaxoSmithKline Consumer Healthcare Pakistan Ltd - leaving behind the pharmaceutical segment, which carries lower margins.
Finally, a huge blow came to the company's bottomline due to significantly lower other income in the third quarter. This pushed the net profit for the third quarter down by 45 percent over last year.
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