AGP Ltd is a pharmaceutical company in the fold of the OBS Group, which claims to be the eighth largest pharmaceutical group in the country. OBS Pakistan Ltd holds 50.53 per cent of AGP’s paid-up capital. The ultimate parent company is West End 16 Pte Ltd, Singapore.

AGP Ltd was the second company that floated an initial public offering (IPO) in 2018. Matco Foods was the other company that entered the Pakistan Stock Exchange (PSX) earlier in 2018. With the market meltdown starting in mid-2017, dozens of prospective entrants into the capital market put their plans on hold.

AGP offered 35 million shares (12.5pc of the company’s capital) to foreign, local, institutional and high net worth individual investors through book building, which was followed by public subscription in February. At the offered price of Rs80 per share, the company managed to raise Rs2.8 billion. The significant feature of the AGP listing was that it was the first public offering by a pharmaceutical company in over 23 years.

The pharma company has received pricing approval from the Drug Regulatory Authority for its breast cancer treatment drug

At the gong-ringing ceremony on the first trading day of the newly listed company (March 5), AGP Chairman Tariq Moinuddin Khan affirmed that the ratio of foreign to local companies in the country’s pharmaceutical sector was 70:30 a decade ago. “That has now turned upside down to 70 locals against 30 foreign pharmaceutical firms,” he said.

AGP started its commercial operations in 1989 as an independent pharmaceutical manufacturing company in Karachi. At the time of the IPO, the company prospectus stated that it offered a broad range of 54 drugs, including some well-known names like Rigix, Ceclor, Osnate, Anafortan, Keflex etc.

AGP has partnered with Mylan, the world’s second largest generic drug manufacturer based in the United States. In 2016, the company launched a hepatitis C drug, MyHep, which is a bio-equivalent of Sovaldi. Additionally, the Drug Regulatory Authority of Pakistan (Drap) approved the pricing of a breast cancer treatment drug, which was expected to provide an affordable treatment option to people.

The delivery of AGP’s products is managed by Muller & Phipps (M&P), the largest pharmaceutical distributor in Pakistan with coverage across 1,850 towns and over 32,400 pharmacies. Analyst Farheen Irfan of Elixir Securities commented that AGP had undertaken expansion of its two production sites at a combined cost of Rs700m. “This will allow the company to meet burgeoning demand and support revenue growth where the management projects AGP Plant 1 expansion to add Rs500m to the top line by 2022 while AGP Plant 2 is projected to propel Ceclor to being a billion-rupee brand in the next few years,” the analyst said. AGP also planned to set up a nutraceutical manufacturing facility, which was expected to commence operations by 2019, at Rs200m.

AGP has partnered with Mylan, the world’s second largest generic drug manufacturer based in the United States

For the latest half year ending on June 30, sales grew by 22.3pc to Rs2.87bn from Rs2.34bn a year ago. Directors explained in their report appended to the accounts that the growth in sales was mainly on the back of a large government institutional order for the hepatitis C products and due to a healthy off-take in the overall portfolio of the company. During the half-year period, the company launched four new products in the anti-infective therapeutic-class hepatology. Pre-tax profit of the company increased to Rs801m from Rs681m last year.

Total assets of AGP on June 30 stood at Rs8.87bn. Paid-up capital amounted to Rs2.8bn and the company carried Rs3.04bn as un-appropriated profit. Apart from OBS Pakistan Ltd, other major interests included Muller & Phipps (13.54pc), Baltoro Growth Fund (9.57pc) and Aspin Pharma (4.79pc) as of Feb 26. Local interests included 21 banks, development finance institutions and non-banking finance companies with an aggregate stake of 5.67pc and 26 mutual funds holding 4.11pc of the company’s paid-up capital. As many as 5,840 local investors held 9.6m of company shares, working out at 3.41pc of the entire shareholders’ block.

About future prospects, company CEO Nusrat Munshi said the rupee depreciation resulted in a major cost escalation for the pharmaceutical industry in general as approximately 95pc of active pharmaceutical ingredients were imported. The CEO affirmed that the company remained optimistic about the future outlook of the business given its internal economies of scale, strength and growth of the current product mix along with a strong new product pipeline.

“The company is determined to explore new avenues of growth in both domestic and export markets. The focus on new product launches will continue. The company has plans to launch four new products in the second half of 2018,” she said.

Published in Dawn, The Business and Finance Weekly, August 20th, 2018