Martin Dow Marker Limited

CREDIT RATING REPORT | May-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
15-May-25 A+ A1 Stable Maintain -
31-May-24 A+ A1 Stable Maintain -
02-Jun-23 A+ A1 Stable Maintain -
03-Jun-22 A+ A1 Stable Maintain -
04-Jun-21 A+ A1 Stable Initial -
About the Entity

Martin Dow Marker Ltd is a subsidiary of Martin Dow Limited. Martin Dow Limited holds 75% shareholding while Marker Family holds the remaining 25%. Martin Dow Limited is owned by the Akhai Family, mainly Ali Akhai – son of late Mr. Jawed Akhai (the founding chairman of Martin Dow Group). Mr Ali Akhai is the chairman of the Board of Directors. MDM has a three-member board including the Chairman, Mr Javed Ghulam Muhammad the company's CEO, and Mr Syed Dawood – the independent Director.

Rating Rationale

Martin Dow Marker Limited (MDM or "the Company"), formerly known as Merck (Pvt.) Ltd., is a well-established player in Pakistan’s pharmaceutical sector. The Akhai family, with a longstanding presence in the industry since 1960, leads the business. MDM is engaged in the manufacturing and marketing of pharmaceutical products, with a diversified portfolio comprising over 70 brands. It operates across key therapeutic areas such as diabetes, cardiology, vitamins, analgesics, and antibiotics. The Company’s five flagship brands include Evion, Sangobion, Concor, Neurobion, and Glucophage, each contribute over PKR 1 billion in annual sales. MDM functions under the umbrella of Martin Dow Group, one of the largest locally owned pharmaceutical groups in Pakistan. The Group consists of four companies and houses prominent brands such as Lexotanil, Rocephin, and Glucophage, among others. Known for its strategic acquisitions and strong financial base, the Group reflects a commitment to sustained industry leadership. According to IQVIA, Pakistan’s pharmaceutical sector grew by 21.79% YoY in CY24, reaching PKR 962.5bln, primarily driven by price adjustments amid rising costs. However, unit sales remained flat, and reliance on imported APIs continues to expose the industry to FX volatility and supply chain risks. MDM has built a comprehensive product portfolio in both chronic and acute therapeutic segments. The Company’s leadership is rooted in two reputable business families Marker and the Akhai family—with governance primarily under the Akhai family, known for its strategic vision and professional excellence. The Group adheres to stringent quality standards and global best practices, underscored by alliances with multinational giants such as Roche, Merck, Sanofi, and Boehringer Ingelheim. MDM’s manufacturing facilities are cGMP-compliant, with ongoing investments in modernization and technology integration. In CY24, MDM reported topline growth of ~18%, with revenues reaching PKR 28.26 billion. The company recorded improved profitability, supported by enhanced operational efficiencies. This was reflected in better gross and net profit margins. MDM maintains an adequate corporate governance framework, while opportunities remain for further strengthening, particularly in board composition and formation of committees. The management team comprises seasoned professionals, supported by robust internal controls and compliance systems. Looking ahead, the Company is focused on launching new products aligned with evolving healthcare needs and is working toward expanding its export footprint. The financial risk profile of MDM is assessed as adequate, with moderate coverages, cash flows and an adequate working capital cycle. Capital structure is leveraged, where borrowings are mainly comprised of short-term for working capital requirements

Key Rating Drivers

The ratings are dependent on the sustainability of improvements in the profitability matrix and market share while retaining sufficient cash flows and coverages. However, it is essential for the Company to maintain adequate debt metrics and remain aligned with the shared financial projections. Improvement in governance structure remains important for the ratings.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Martin Dow Marker Limited

rating analysis

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Profile
Legal Structure

Martin Dow Marker Limited (herein referred to as ‘MDM’ or ‘the Company’) formerly known as Merck Pvt Limited, is an unlisted public limited company. The registered office of the company is located at Plot No. 7, Jail Road, Quetta Balochistan.


Background

In 2016, Merck Pakistan became part of the Martin Dow Group. Afterward, it was renamed to Martin Dow Marker Ltd. Germany’s Merck KGaA executed a binding contract to divest its shareholding in Pakistan to Martin Dow Ltd (The Parent Company), a leading pharmaceutical. At present, MDM operates under the umbrella of Martin Dow Group - founded in 1995 by Mr. Jawed Akhai (Late), Martin Dow Group stands as one of the largest locally-owned pharmaceutical companies in Pakistan.


Operations

The Company has been established to carry on manufacturing and marketing of pharmaceutical products. It holds a portfolio of 70+ brands under its name and also markets drugs for therapeutic areas like diabetes, cardiology, vitamins, analgesics, antibiotics, etc. The company’s manufacturing facilities comprise two plants: Quetta plant & Karachi Plant. It is the only authorized licensed manufacturer of 'Merck Germany’ in Pakistan. It is also the sole manufacturer of 'pharma grade soft gel' products such as Evion and Sangobion in the country.


Ownership
Ownership Structure

Martin Dow Limited has a major stake in the company with 75% shareholding while the remaining 25% is held by members of the Marker Family. The ultimate beneficial ownership lies with Mr. Ali Akhai – son of Mr. Jawed Akhai(late).


Stability

The sponsoring members of Martin Dow Group are reputed names and well entrenched in the pharmaceutical business for decades. Martin Dow is positioned in the top 10 largest pharmaceutical groups operating in Pakistan. Martin Dow has strategic alliances to manufacture licensed products from international reputes like Merck Sanofi, Roche, and P&G, providing international expertise and exposure to operate efficiently as a leading pharmaceutical group.


Business Acumen

Martin Dow has established a reputation for strategic acquisitions and high-end investments. This legacy is being carried forward by Mr. Ali Akhai, the principal sponsor, who has recently invested in a company named Welnox. Currently, 49 products under the Martin Dow Group hold the leading market position within their respective molecules.


Financial Strength

Martin Dow Group (MDG) has 4 companies: Martin Dow Limited, Martin Dow Marker Ltd, Martin Dow Specialties Pvt Ltd, and Seatle Pvt Ltd. It is well poised in the industry with a group size of PKR 44bln as of Dec’24. The future prospects of the company are considered strong.


Governance
Board Structure

MDM has a three-member board including Mr. Ali Akhai (the Chairman), Mr. Javed Ghulam Muhammad (the CEO) and Mr. Syed Dawood - the Independent Director. Mr. Dawood has been associated with MDM since 2018. All members of the board are well-qualified and professionally sound.


Members’ Profile

Mr. Ali Akhai is the present Chairman. He is a foreign-qualified double Master’s degree holder from Brunel University UK. Mr. Ali played his part in the leadership team that successfully acquired the majority shareholding of Merck (Pvt) Ltd in 2016. While the other two members have extensive expertise in the pharmaceutical industry.


Board Effectiveness

The company is compliant with its respective statutory requirements. However, there is no fixed number of meetings that are to be held in a year. Both the Chairman and the CEO conduct meetings when it is required.


Financial Transparency

The auditors of the company, A.F Ferguson & Co. (Member of PWC International), expressed an unqualified opinion on the financial statements for the year ended CY-24.


Management
Organizational Structure

The organizational structure of the company is divided into multilevel functional departments headed by able professionals. All heads of the departments report to the CEO who then reports to Chairman.


Management Team

Mr. Javed Ghulam Muhammad is the Group MD/CEO and is a qualified fellow member of the Institute of Cost & Management Accountants of Pakistan. His professional journey spreads over 30 years during which he has worked in diversified functions in several key positions at leading multinational and national companies. He is accompanied by a team of qualified and experienced professionals.


Effectiveness

The Company does not have any formal management committees in place. However, business affairs are overseen in an efficient manner due to the presence of an effective organizational structure and proper delegation of responsibilities and reporting lines.


MIS

MDM has been equipped with SAP S/4 HANA since 2018 comprising a number of SAP modules. Reporting is held on a monthly basis and reviewed by the heads of the departments.


Control Environment

Ther internal audit function of the company has been outsourcced to M/S EY Ford Rhodes & Co who report  directly to the Chairman. Further, stringent quality control mechanism is in place to ascertain the quality of products. 


Business Risk
Industry Dynamics

According to international monitoring firm IQVIA, Pakistan’s pharmaceutical sector recorded a 21.79% growth in calendar year 2024 compared to the previous year, reaching a market value of Rs. 962.5 billion. This growth has largely been driven by a deregulatory policy introduced earlier in the year, which allowed pharmaceutical companies to adjust prices for non-essential medicines in response to rising production costs. The revenue surge was primarily the result of price adjustments, rather than a significant increase in unit sales. The industry remains heavily dependent on imported active pharmaceutical ingredients (APIs), making it vulnerable to supply chain disruptions and foreign exchange volatility, particularly due to the depreciation of the Pakistani Rupee (PKR). This has constrained the industry's ability to pass on costs, especially in the essential medicines segment, where pricing remains regulated. Over the past year, the sector sold 3.7 billion units, reflecting a modest volume growth of 2.27%, while revenue growth was largely price-driven.


Relative Position

MDM is a leader in many therapeutic areas. It is ranked 10th on a YTD basis, while the MDL group stands at 6th position under the IQVIA ranking report. Martin Dow Marker is the only authorized distributor of Merck Germany in Pakistan. It is the only company to have a pharma-grade Soft gel capsule manufacturing facility in the country.


Revenues

During CY24, the company’s sales clocked at PKR 28,261mln (CY23: 23,934mln) showing a growth of ~18% during the year. Moreover, the export segment also grew by ~28% and contributed PKR 2,000mln in the topline compared to PKR 1,558mln in CY23. The top 5 selling products of the company are ‘Evion’ followed by ‘Sangobion, Concor, Neurobion, and Glucophage ’. The company has been able to sustain the growth trend although the majority of the growth is driven by price hikes.



Margins

Profitability improved during the year, supported by better operational efficiency and cost controls. The enhancement in gross and operating margins reflects improved production processes and pricing discipline. Margin recovery was further aided by higher operating leverage and a reduction in foreign exchange losses. Despite persistent pressure from elevated finance costs, the company maintained a healthier bottom line.


Sustainability

Martin Dow Marker continues to benefit from its diverse product portfolio and established market presence. The Company launched various new products in the past year and has a plan to launch 14 new products in CY25, strengthening its position in cardiovascular, antidiabetic, multivitamin, and antibiotic segments. The focus on chronic therapies continues to support sustainable demand, while product diversification provides resilience against category-specific slowdowns.


Financial Risk
Working capital

The Company maintained a stable net working capital cycle, recorded at 51 days in CY24 (CY23: 49 days; CY22: 59 days). This reflects efficient inventory and receivable management, supported by gradually improving credit terms with suppliers. Working capital continues to be supported by internal cash flows and short-term borrowing.


Coverages

Despite a rise in finance costs, the Company generated improved cash flows from operations and sustained healthy coverage ratios. The EBITDA to finance cost ratio stood at 3.0x (CY23: 2.0x), while the FCFO to finance cost ratio improved to 2.5x (CY23: 1.7x). The core coverage ratio was recorded at 2.1x, and the debt payback ratio stood at 0.8x. Enhanced profitability and stronger cash generation have contributed to the Company’s improved debt servicing capacity, despite the prevailing high borrowing costs.


Capitalization

As of CY24, total borrowings slightly declined to PKR 6,184 million (CY23: PKR 6,274 million), with short-term borrowings comprising 73.5% of the debt mix. The Company’s leverage ratio improved to 45.5% (CY23: 49.9%; CY22: 43.3%), reflecting enhanced equity position through profit retention.
 
 

May-25

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Martin Dow Marker Limited

financial summary

(PKR mln)

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Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Non-Current Assets 6,818 6,417 6,216
2. Investments 128 128 0
3. Related Party Exposure 3,307 3,344 2,808
4. Current Assets 9,221 9,276 8,018
5. Total Assets 19,474 19,165 17,042
6. Current Liabilities 4,946 5,808 4,382
7. Borrowings 6,184 6,274 5,201
8. Related Party Exposure 270 270 270
9. Non-Current Liabilities 678 509 389
10. Net Assets 7,395 6,303 6,800
11. Shareholders' Equity 7,395 6,303 6,800
B. INCOME STATEMENT
1. Sales 28,261 23,934 19,046
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 3,783 2,324 2,158
b. Net Cash from Operating Activities before Working Capital Changes 2,120 1,089 1,793
c. Changes in Working Capital (621) 196 (1,317)
1. Net Cash provided by Operating Activities 1,499 1,285 476
2. Net Cash (Used in) or Available From Investing Activities (143) (898) (268)
3. Net Cash (Used in) or Available From Financing Activities (1,037) (76) (215)
4. Net Cash generated or (Used) during the period 319 311 (6)
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 18.1% 25.7% 18.4%
b. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 11.2% 10.5% 4.4%
2. Working Capital Management
a. Gross Working Capital (Average Days) 98 102 100
b. Net Working Capital (Average Days) 57 49 59
c. Current Ratio (Current Assets / Current Liabilities) 1.9 1.6 1.8
3. Coverages
a. EBITDA / Finance Cost 3.0 2.0 4.5
b. FCFO / Finance Cost+CMLTB+Excess STB 2.1 0.7 1.1
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.8 2.7 1.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 45.5% 49.9% 43.3%

May-25

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Martin Dow Marker Limited

rating scale

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May-25

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Martin Dow Marker Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
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    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
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