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[Lion Heart]

Wyeth Pakistan
Wyeth Pakistan was incorporated in 1949 with head quarters in Karachi.

It is a multinational that is engaged in the manufacturing and marketing of research-based and other pharmaceutical products in the country.

Besides Pakistan, it markets its products in Philippines, Kuwait and Sri Lanka.

The company primarily offers anti-tuberculosis products, nutritional and vaccines.

Wyeth Pakistan has been a subsidiary of Wyeth LLC in US with a total holding of Wyeth USA of 72.10 percent in Wyeth Pakistan.

The company was known for its biotech drugs.

However, as a result of global acquisition of Wyeth by Pfizer Inc in October CY09, Pfizer now owns Wyeth as the principal shareholder and parent company.

Wyeth LLC still has the same shareholding in the local counterpart, but has been bought by Pfizer, making Pfizer the ultimate owner.

The Merger The total amount of the deal was 68 billion dollars which made Pfizer the primary shareholder of Wyeth globally.

The cash and stock merger in CY09 aimed at providing stability to Pfizer's revenue stream and product diversity through Wyeth's presence in biotech drugs and vaccines.

However, as recently as March CY12, Pfizer Inc has shown signals to spin off the animal health and infant nutrition businesses as two global units between June CY12 and June CY13.

The speculations about breaking up and getting leaner, flatter, core business and focused has led Pfizer stock riding up in the global markets.

Revenues and Profitability The murky economic environment due to weak law and order situation, and uncertainty in the political arena were the major damper for the company and the pharmaceutical industry as a whole.

Amid such turbulent times, the company was able to post a 32 percent increase in the top line for CY11.

The revenue generation was primarily driven by the institutional orders of anti-tuberculosis medicines and pioneering in the addition of a new vaccine, Prevenar 13.

Certainly the valued product mix was also a key reason for the growth in the bottom line.

During the CY11, the selling, marketing and distribution expenses increased by more than 20 percent versus CY10 on account of new launches and investments in new and existing product mix.

However, due to provision for bad debts during CY10, the company was able to tone down the administrative costs by almost 14 percent from Rs 107.9 million in CY10 to Rs 92.6 in CY11.

The other operating expenses ballooned by more than four times due to the net exchange losses incurred on account of depreciating rupee.

Debt Management Wyeth Pakistan reduced it borrowings during the period under review.

The company has a running finance facility from a bank amounting to Rs 283.84 million as of CY11 with mark-up of KIBOR plus two percent.

The funding facility expires in November CY12.

As a result, the finance cost which constitutes mark-up on running finance and bank charges, dropped by more than 70 percent YoY in CY11.

Operations and Efficiency The company has been showing healthy fixed asset turnover.

During the year Wyeth Pakistan carried out capital expenditure of Rs 15.85 million on property, plant and equipment and better fixed asset turnover ratio shows that the pharmaceutical company has been effective in using the investment in fixed assets to generate revenues.

After CY08, a year which weighed heavy on not only the pharmaceutical sector but other industries, the company's return on equity has trotted up.

And this was especially after Pfizer take-over of Wyeth globally to benefit from the synergies of the collaboration.

Results 1QCY12 During the said period, the company's revenues increased by less than a percent from what they were in 1QCY11 on account of weaker export position.

Also the sluggish markets and international business put a lid on the top line.

During the quarter, the bottom line of the company expanded by 21.87 percent versus comparable period of CY11, primarily due to higher exchange losses and rupee depreciation.

Contrary to the similar period in CY11, the first quarter of CY12 had little investments and no new launches.
However, this also had a positive impact on the bottom line as marketing, distribution and selling expenditure fell by almost 26 percent YoY in 1QCY12.

The rest of the year is expected to do better in terms of revenues and earnings.

Time will tell how what the progress is amid generic industry as well as company challenges and issues.

Industry Challenges & Outlook The company and hence the industry continue to face quality regulation issues, particularly affecting the company in the international markets, ongoing energy crisis, counterfeit drugs, patent expiration, bureaucratic procedures, and transparency in pricing mechanism.

Issues pertaining to IPR and data exclusivity remain serious issue plaguing the sector.
Moreover, the industry is heavily controlled in terms of price and this slows down the pace and to some extent restricts the innovation and R&D initiatives.

The sector remains heavily price controlled which is a severe blow to the companies operating in the industry.
The absence of any general price increase in the industry for almost a decade now has left the industry painfully underplayed.

An issue which is unique to the country is that with the passing of the functions of MOH to provinces under the 18th Amendment, concerns loom over the future of the regulatory framework of the industry.

To much extent, the viability of the pharmaceutical companies depends upon the progress in this regard.
The decision on setting up an autonomous Drug Regulatory Authority (DRA) is a step that has lifted hopes in the industry with regard to the delay of registration and pricing of the medicines and pharmaceutical products.