DIRECTORS' REVIEW FOR
THE QUARTER\HALF YEAR ENDED DECEMBER 31, 2005

We are pleased to present your company’s individual and consolidated un-audited accounts for the halfyear ended December 31, 2005. The consolidated accounts incorporate the Company’s 98% owned Farmacia retail venture.

Net Sales of your Company during the six months ended December 31, 2005 were Rs. 378.972 Million, an improvement of 27.10% over the figure of Rs. 298.176 Million achieved during the first half of the previous year. Net Sales for the Quarter ended December 31, 2005 were Rs. 194.514 Million, a growth of 28.36% over the figure of Rs. 151.533 Million achieved during Quarter II of last year.  Owing to a much improved performance of the Company’s Farmacia venture, Consolidated Net Sales including Farmacia also registered a healthy growth during the quarter and half-year under review.  Consolidated Net Sales for the half year were Rs. 424.120 Million for the six-month period, a growth of 26.61% over the Sales of Rs. 334.991 Million for the same period of last year. For the Quarter ended December 31, Consolidated Net Sales stood at Rs. 216.967 Million, an improvement of 27.64% over Rs.  169.978 Million achieved in the corresponding quarter of last year.  Gross Profit (GP) of your company improved by 28.71% during the half year under review, from Rs. 171.326 Million for HY 2005 to Rs. 220.513 Million at the close of HY 2006. For the Quarter ended Dec 31, 2005, the GP stood at Rs. 108.149 Million, an increase of 31.62% over the GP of Rs. 82.166 Million achieved during the same quarter of last year.

Administrative Expenses of the Company increased by 111.36% and 59.03% for the quarter and half-year respectively. This increase is driven primarily by donations made by your Company towards relief for victims of the devastating earthquake that hit the North of Pakistan on October 8, 2005. Your Company donated medicines to the Red Crescent and cash towards the government’s relief fund, Edhi and Islamic Relief. With the Board’s approval, your company also financed the construction of a girls’ high school in Hassa, near Balakot, which is now fully operational.

Selling and Distribution costs were kept under control, and increased by 9.68% to Rs. 72.022 Million during the Half Year under review. For the Quarter ended December 31, the increase in Selling and Distribution costs was a nominal 3.54%. Financial Cost, though lower for the Quarter by16.16%, increased by 22.65% to Rs. 0.997 Million for the half-year under review.

Your Company’s Net Profit from Operations for the half-year stood at Rs. 122.108 Million, an improvement of 37.38% over the figure of Rs. 88.883 Million achieved during HY 2005. After incorporating its share in Profit of Farmacia, other income and changes on remeasurement of short term investments, the Profit Before Taxation after deduction of Workers’ Profit Participation and Central Research funds stood at Rs.  126.935 Million and Rs. 61.290 Million for the Half-year and Quarter under review, respectively.  After a provision for taxation of Rs. 33.500 Million (2005: Rs. 28.600 Million), the net Profit After Tax (NPAT) of your Company for the half-year stands at Rs. 93.435 Million, an improvement of 50.11% over the Net Profit of Rs. 62.246 Million achieved during the same period of the previous year. The NPAT for the Quarter stands at Rs. 50.791 Million, a growth of 65.55% over the figure of 30.679 Million achieved during the corresponding Quarter of last year.

The basic Earnings per Share (EPS) of your Company on its increased paid up capital after issue of 30% bonus shares last year, stand at Rs. 5.06 and Rs. 9.30 per 10-rupee share for the Quarter and the Half-year ended December 31, 2005, respectively.

While the Board considered the possibility of an interim dividend based on the improved financial results for the half year, it was decided - in view of the company’s expansion into the new area of biotech pharmaceuticals at its site in Lahore - to defer the decision for the half year. The new plant is Inshallah expected to substantially improve the company’s sales and profitability in the years to come.

Future Scenario

Your Company has completed the engineering and layout design phase of its proposed biotech plant in Lahore in partnership with its principals, the Bagó Group of Argentina. Construction is expected to commence in March, and the plant is Inshallah expected to come online by the middle of 2007. As mentioned in previous reports, the plant has been designed to meet European Union and USFDA regulatory Standards, and will Inshallah help your company develop a significant export base in the years to come, in addition to providing the highest standard of treatment for the patients of Pakistan at a lower cost.

                              For and on behalf of the Board of Directors

(Mrs. Akhter Khalid Waheed)
Chairperson & Chief Executive

RAWALPINDI
JANUARY 31, 2006

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