DIRECTORS' REVIEW FOR THE QUARTER/NINE MONTHS ENDED MARCH 31, 2007

We are pleased to present your company’s individual and consolidated un-audited financial statements for the Quarter as well as the 9 months ended March 31, 2007.

Net Sales of your Company’s pharmaceutical operations registered an increase of 27% for the Quarter, from Rs. Rs. 180.649 Million in Q III, 2006 to Rs. 229.429 Million during the Quarter under Review. For the nine-month period, Net Sales increased from Rs. 559.622 Million for the first three quarters of last year to Rs. 685.342 Million for the corresponding period of the current year, an improvement of 22.47%.

Similarly, Consolidated Net Sales including the Farmacia Venture of your company stood at Rs.253.255 Million for the Quarter ended March 31, a growth of 25.62% over Rs. 201.604 Million achieved in the corresponding quarter of last year. Consolidated Net Sales for the nine-month period grew by 20.98% to Rs. 757.004 Million, compared to Rs. 625.724 Million achieved during the corresponding period of last year.

Owing to a higher cost of Sales resulting from an increased share of imported Biotech products in the Company’s sales mix, and an erosion of the rupee against the Euro, your Company’s Gross Profit (GP) for the Quarter could not grow in proportion to the sales growth. GP for the Quarter under review rose to Rs. 119.423 Million from Rs. 105.322 Million, an increase of 13.39%. For the nine months under review, the GP stood at Rs. 372.980 Million, an increase of 14.47% over the GP of Rs. 325.836 Million achieved during the same period of last year.

Operating expenses increased by 31.35%, from Rs. 54.694 Million during Quarter III 2006, to Rs. 71.841 Million during the Quarter under review. Operating Expenses for the 9 Months were Rs. 198.346 Million, an increase of 29.55% over the figure of Rs. 153.099 Million incurred during the same period of the previous year. Of the operating costs, the greatest increase has been in the distribution and selling costs, which grew by 47.37% in the Quarter and 44.20% in the 9 month period. This increase has been driven by your Company’s efforts to establish its new products as well as its presence in the speciality areas of Oncology and Transplantation.

After adjusting for Other Income of Rs. 8.218 Million, loss of Rs. 0.318 Million on remeasurement of your Company’s equity investment portfolio, and share of profit in Farmacia of Rs. 2.911 Million (2006: Rs. 1.701 Million), Profit Before Tax of your company, net of Workers’ Profit Participation and Central Research Funds, stood at Rs. 55.567 Million for the Quarter, a reduction of 1.90% over the figure of Rs. 56.644 Million achieved during Quarter III of last year. For the Nine Months under review, the Net Profit before Tax stands at Rs. 190.856 Million, an improvement of 3.96% over the figure of Rs. 183.579 Million achieved during the same period of the previous year.

Net Profit after Tax (NPAT) of your Company stood at Rs. 42.367 Million for the Quarter, a decrease of 4.67% over the NPAT of Rs. 44.444 Million achieved during the third Quarter of last year. For the Nine Month period under review, NPAT of your Company grew by 6 % to Rs. 146.155 Million (2006: Rs. 137.879 Million).

The Basic Earnings per Share (EPS) of your Company for the Quarter ended March 31, 2006 stand at Rs. 3.51 per share (2006: Rs. 3.69 per share). The 9-monthly EPS stands at Rs. 12.12 per share, compared to Rs. 11.44 achieved during the same period last year.

Future Scenario

As can be seen from the growth in Net Sales and selling expenses, your Company has made aggressive efforts in its sales and marketing during the current year. Your company is now also ranked 3rd by IMS Statistics amongst all local and multinational companies in the field of Oncology and transplantation, a position we have achieved in a short span of 3 years in this segment. We also hope to cross the Billion rupee mark in our consolidated sales during the year, and hope we will be able to consolidate the gains made and bring about a continued substantial increase in company revenues and profitability, particularly as our subsidiary, BF Biosciences Limited, under which these products and the company’s hepatology products will be further developed, comes into operation towards the close of the calendar year.

For and on Behalf of the Board of Directors

(Mrs. Akhter Khalid Waheed)
Chairperson & Chief Executive

April 28, 2007

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