Pakistan Pharma Profits Hit Record Rs42 Billion in 2025 on Deregulation: Searle, Abbott, AGP, Highnoon

Pakistan's listed drug makers had their best year on record in 2025. Sector profit jumped 78 percent to a record Rs42.2 billion, as the freeing up of non-essential drug prices met a fall in raw material costs and pushed margins sharply higher. The result confirmed what a string of price and shortage stories through the year had hinted at: deregulation has been a powerful tailwind for the industry.

What the 2025 pharma results showed

Net sales for the sector grew 14 percent to Rs365.7 billion, up from Rs319.6 billion in 2024, largely on price led growth after the government deregulated the prices of non-essential medicines. Crucially, profit grew far faster than sales, because margins widened at the same time. Gross margins rose to 41 percent in 2025 from 35 percent a year earlier, and reached 44 percent in the final quarter. Part of that came from cheaper inputs: about 53 percent of active pharmaceutical ingredients, the core raw materials, saw a median price fall of 11 percent year on year between January and October 2025.

Among the listed names, The Searle Company was one of the larger contributors to sector sales, while Abbott Laboratories was the single biggest at around a fifth of the total. On profitability, AGP, Highnoon Laboratories and Searle reported the richest gross margins, around 60, 55 and 55 percent respectively.

Why deregulation matters for pharma stocks

For years, the prices of many medicines were tightly controlled, which capped what drug makers could earn even as their costs rose. Deregulating non-essential drug prices lets companies pass on costs and price to the market, which lifts both sales and margins. When that meets a fall in imported raw material costs, as it did in 2025, the effect on profit is amplified. The flip side is that pricing freedom can attract scrutiny if medicine prices rise too far, so the policy backdrop remains something to watch.

Which stocks, and why

The record year is a positive backdrop for the listed pharma names. The Searle Company, Abbott Laboratories, AGP and Highnoon Laboratories all operate in the deregulated, branded segment where margins expanded most, with AGP, Highnoon and Searle posting the strongest gross margins in the group. The read is positive but measured, because the gains lean on a policy decision and a favourable raw material cycle, both of which could shift. Companies with stronger brands and higher margin portfolios are best placed to hold onto the gains.

What to watch

The key signals are the durability of drug price deregulation, any political pressure to roll it back given the rise in medicine prices, and the trend in active ingredient costs, which can reverse. Watch each company's gross margin and volume growth in the next results, since that will show whether 2025 was a one off margin reset or the start of a sustained higher level of profitability.