Assistant Research Analyst: Syed Sufyan Subhani March 12, 2013 sufyan@taurus.com.

pk

Company Information
GlaxoSmithKline Pakistan Limited was created January 1st, 2001 through the merger of SmithKline and French of Pakistan Limited, Beecham Pakistan (Private) Limited and Glaxo Welcome (Pakistan) Limited- standing today as the largest pharmaceutical company in Pakistan. As an industry leader we are committed to our mission of providing patients quality products to help improve their lives.

Mission
GlaxoSmithKline one of the world's leading research-based pharmaceutical and healthcare companies is committed to improving the quality of human life by enabling people to do more, feel better and live longe

Values
GSK values are deeply embedded in every function, across the globe. Strategic development, operations, and customer engagement are based on our values of patient focus, transparency, integrity and respect of people.

Objectives:
As a leading international pharmaceutical company we make a real difference to global healthcare and specifically to the developing world. We believe this is both an ethical imperative and key to business success. Companies that respond sensitively and with commitment by changing their business practices to address such challenges will be the leaders of the future. GSK Pakistan operates mainly in two industry segments: Pharmaceuticals (prescription drugs and vaccines) and consumer healthcare (over-the-counter- medicines, oral care and nutritional care). GSK Pakistan leads the industry in value, volume and prescription market shares, and we are committed to our mission of providing patients quality products to help improve the quality of their lives. Some of our leading pharmaceutical brands include Augmentin, Seretide, Amoxil, Velosef, Zantac and Calpol and renowned consumer healthcare brands, which include Panadol, Horlicks, Aquafresh, Macleans and ENO.
Disclaimer of Warranty and Limitation of Liability
The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be materially interested in the securities mentioned herein.

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1st Quarter Review

Review
The company posted a PAT of PKR 48.9m (EPS: PKR 4.07) for the 1QCY11 which is an increase against the corresponding periods PAT of PKR 44.79m (EPS: PKR 3.73).No dividends were declared. The gross margins for the outgoing quarter and the 1QCY12 period stood at 30% and 27% whereas, net margin for the same periods registered at 8% and 7% respectively. Net sales witnessed an improvement by PKR 101m in 1QCY12 to stand at PKR 5,833m as against last years top line of PKR 5,732m 1QCY11 to clock in for the period with change of 2% YoY.

GSK 2012 1QCY12 1QCY11 Sales Cost of Sales Gross Profit Distribution expenses Admin Expenses other operating expenses Operating Income Operating Profit Financial charges PBT Taxation Profit after Tax EPS Gross Margin Net Margin 5,833 4,102 1,731 643 194 75 82 900 3 897 412 485 1.84 30% 8% 5,732 4,212 1,520 629 194 64 138 771 4 767 349 418 1.59 26.5% 7% % Chg 2% -3% 14% 2% 0% 18% -41% 17% -30% 17% 18% 16%

Source: TSL Research & Company Accounts

Future Outlook and Challenges

The company plans to invest further in developing the Consumer Health Care Business and to invest in our leadings brands to ensure that this business segment grow to potential. The challenges that the Pakistan pharmaceutical industry is currently facing are unprecedented. The industry is subject to serious inflationary trend; the impact of currency devaluation and higher energy costs, and has been absorbing this internally. As is being consistently highlighted by the industry at various forums, the industry now facing business challenge from being unreasonably price controlled and absence of a general price increase since 2001 now poses a risk on sustainability of many products. Although the Government of Pakistan has recently approved some prices increases on certain products, their impact is very limited and is not sufficient to offset the overall impact of inflation and currency devaluation that has impacted the industry for last many years.

Disclaimer of Warranty and Limitation of Liability

The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be materially interested in the securities mentioned herein.

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Although several internal cost savings initiatives have helped the company to counter the cost inflation trends to date, the need for a price adjustment and less restrictive pricing is now urgent. Request the Government to take immediate steps to approve a pricing policy and allow an across the board price adjustment to maintain this industry After a gap of six months a Federal Drug Regulatory Agency has now put in place, which is a step that your companies, together with the industrys associations, feel is a move in the right direction. The need now is for the agency to play its part in streamlining registration and pricing procedures and take steps to take steps to regulate to improve and update local manufacturing standards to global norms, so that this industry can develop to international standards.

Disclaimer of Warranty and Limitation of Liability

The above information and advice is given in good faith, without any legal responsibility. Taurus Securities Limited or individuals connected with it may have used research material before publication and may have positions in or may be materially interested in the securities mentioned herein.

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