Big pharma posts big gains, but market turmoil mutes investor optimism

Infographics: TBS

Bangladesh's pharmaceuticals and chemicals sector delivered a broadly upbeat earnings picture in the July-September quarter of FY26, offering investors a rare dose of optimism at a time when the capital market remains mired in volatility and dwindling confidence.

Of the 34 listed companies in the sector, 23 have so far disclosed their first-quarter results. Fourteen of these firms posted year-on-year profit growth, six reported declines, while three slipped into losses. The majority – 18 companies – are involved in manufacturing medicines, with the rest operating in chemicals and medical equipment.

Investors looking for signs of resilience found strong performances among several major players. Industry heavyweight ACI made a dramatic turnaround to profit after suffering losses in the same period last year. Square Pharmaceuticals, the sector's bellwether, reported a robust 22% profit increase to Tk680 crore, supported by its expanding domestic and export operations. Renata also continued its steady upward trajectory with a 25% profit rise.

Other firms recorded even more striking jumps. Asiatic Laboratories posted a staggering 417% surge in profit, IBN Sina Pharmaceuticals saw earnings climb 160%, while Wata Chemical's profit more than doubled. Beacon Pharmaceuticals, ACME Laboratories, Navana Pharma, Reckitt Benckiser Bangladesh, and Orion Infusion all reported solid growth for the quarter.

Chemical and consumer brands within the sector also performed well, with Kohinoor Chemical reporting a 33% profit rise and Marico Bangladesh registering a 5% uptick.

However, not all companies were able to capitalise on favourable market dynamics. ACI Formulations, Ambee Pharma, Techno Drugs, Advent Pharma, Far Chemical, and JMI Hospital Requisite posted declines in profitability, largely due to higher finance costs stemming from rising interest rates.

Three firms – Central Pharmaceuticals, JMI Syringes, and Orion Pharma – fell into losses during the quarter, raising concerns among investors about their financial health.

Revenue figures provided further insight into sector momentum. ACI led the pack with Tk3,696 crore in revenue, followed by Square Pharma at Tk2,159 crore and Renata at Tk1,119 crore. Beacon Pharma, ACME Labs, IBN Sina, and Navana Pharma also posted strong revenue growth compared to the previous year.

Industry insiders attributed the sector's overall earnings growth to increased demand for medicines amid a rise in seasonal and chronic illnesses, coupled with the easing of raw material pressure as foreign exchange volatility moderated. The stabilising dollar rate helped companies reduce input costs, directly supporting margin improvement.

But despite this resilient financial performance, the stock market tells a different story. Pharma stocks – long considered a safe haven for investors – have faced continued selling pressure for the second straight week. The sector saw a negative return of 3.7% last week, following a 2.4% decline the week before, as broader market jitters overshadowed company fundamentals, said a senior analyst of a brokerage firm.

At the close of Thursday's trading session, the pharma sector's market capitalisation stood at Tk52,484 crore, making it the third-largest sector in the capital market. Square Pharma alone accounted for Tk18,890 crore of this, followed by Marico Bangladesh and Renata, according to the Dhaka Stock Exchange data.

For investors, the sector's strong earnings may offer a glimmer of stability in an otherwise turbulent market. But until confidence returns and liquidity strengthens, even resilient sectors like pharmaceuticals may continue to face unwarranted pressure on the bourse – leaving many to question when solid fundamentals will once again be reflected in share prices, said a managing director of a brokerage firm.