DIRECTORS' REVIEW FOR THE QUARTER ENDED SEPTEMBER 30, 2006

We are pleased to present your company’s individual and consolidated un-audited accounts for the Quarter ended September 30, 2006. The consolidated accounts present the combined financial results of the Company’s pharmaceutical manufacturing operations and its retail Farmacia Division, which was separated as a legal entity under permission of the Shareholders on May 26, 2003, as well as its newly-formed JV subsidiary, BF Biosciences Limited, which is not yet operational.

Your company’s Net Sales improved by 17 % during the Quarter under review, from Rs. 184.458 Million in the first Quarter of last year to Rs. 215.815 Million during Q1 of the current year.

Consolidated Net Sales of your company inclusive of Farmacia increased by 15.97% to Rs. 240.244 Million, compared to Rs. 207.153 Million achieved during the first Quarter of last year. At the same time, your Company’s share in the profit of Farmacia improved by 58.04% for the Quarter to Rs. 2.834 Million, from Rs. 1.793 Million during the same period last year.

Cost of Sales of the Company increased by 34.84%, from Rs. 72.094 Million in Q1 of last year to Rs. 97.210 Million during the Quarter under review. This increase reflects a reduction in inventory in imported items, as well as higher depreciation due to a change in the company’s depreciation policy.

As a consequence, Gross Profit of your Company increased by 5.55% to Rs. 118.606 Million, from Rs. 112.365 Million achieved during the same quarter last year.

Administrative Expenses during the period increased by 30.97% to Rs. 11.865 Million from Rs. 9.060 Million during the same Quarter of last year. Selling and Distribution Expenses increased by 36.02% to Rs. 49.943 Million for the Quarter. Unusual expenses include the National Sales Conference in Karachi, which was held for the first time, as well as the launch of the company’s new product Orlis, an anti-obesity product. We are hopeful that both these activities will bear fruit in the coming quarters in the shape of higher employee motivation, as well as improved sales from the company’s new product line.

After a provision for taxation and other government levies of Rs. 16.354 Million, (last year: Rs. 26.923 Million), the Net Profit After Tax of your company for the Quarter under review stands at Rs. 48.996 Million, an increase of 14.89% over the figure of Rs. 42.645 Million over the corresponding period of last year. The Quarterly Earnings per Share (EPS) of your Company on its increased paid-up capital (after issue of 20% bonus shares for the year ended June 30, 2006) stand at Rs. 4.06, compared to Rs. 3.54 achieved during the First Quarter of last year.

We are confident that the performance of your company will Inshallah improve during the coming quarters

For and on Behalf of the Board of Directors

(Mrs. Akhter Khalid Waheed)
Chairperson & Chief Executive

October 27, 2006

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