In a landmark decision, the Lahore High Court has vacated the order that prevented the deregulation of Maximum Retail Prices (MRPs) for non-essential drugs, a move that is being hailed as a significant positive development for the pharmaceutical industry.

The outgoing government’s policy to deregulate non-essential drugs marked a major shift from the previous Drug Policy, which mandated that drug prices be regulated by the government and linked to the annual Consumer Price Index (CPI). This deregulation allows pharmaceutical companies to independently set the prices of non-essential drugs, aiming to address supply-side issues and enhance the profitability outlook for the sector.

Industry experts believe that this deregulation represents a breakthrough for the pharmaceutical industry, potentially improving the sector’s fundamentals amidst the current economic challenges. Companies with a significant portion of their revenue coming from non-essential drugs—over 50%—are expected to see noticeable gains.

Among the primary beneficiaries are AGP, ABOT, HINOON, and HALEON, all of which have more than half of their sales composition from non-essential drugs. Additionally, GlaxoSmithKline and Searle are also expected to benefit, albeit to a lesser extent, with less than 50% of their sales mix in non-essential drugs. This policy decision, initially recommended by the previous Ministry of Health, is now set to potentially transform the pharmaceutical landscape, offering a ray of hope for better profitability in trying times.