We are pleased to present your company's consolidated un-audited accounts for the half year ended December 31, 2003 .

Net Sales for the six-month period were Rs. 310.752 Million, an improvement of 34.23% over the Sales of Rs. 231.504 Million for the first half of last year. For the Quarter ended December 31, Net Sales stood at Rs. 158.386 Million, an improvement of 37.61% over Rs. 115.100 Million achieved in the corresponding quarter of last year.

Gross Profit (GP) of your company has also improved by 28.24% during the six months under review, from Rs. 118.400 Million for HY 2003 to Rs. 151.838 Million at the close of HY 2004. For the Quarter ended Dec 31, 2003 , the GP stood at Rs. 77.502 Million, an increase of 30.94% over the GP of Rs. 59.189 Million achieved during the same quarter of last year.

Overall operating expenses during the half-year increased by 36.96%, from 66.196 Million during HY 2003 to Rs. 90.659 Million during HY 2004. The primary drivers of the increase in operating costs were selling and distribution expenses, which increased by 47.35% to Rs. 74.218 Million. These were necessitated by investment in your company's entry into the areas of biotechnology and oncology, and the cost of maintaining cold-chain logistics for its biotech products, which have to be stored and transported at 2-8° C. We are hopeful that as your company's presence gets more established, our selling and distribution expenses, as a percentage of total sales, would be reduced.

It is also important to mention here that your company's Farmacia venture, which earned a nominal profit of Rs. 191,265 during the first quarter of the year, ended the half-year at a net loss of Rs. 1.234 Million. This loss, which has diluted to a degree the overall profitability of your company, has been caused primarily by a reduction in the Gross Profit ratio of the operation, coupled with a slight downturn in Sales for the second quarter of the year. The management has taken serious note of these lapses, and plans to take aggressive measures to improve its discounts from suppliers, as well as increase its customer turnover and net sales.

After a provision for taxation and other government levies of Rs. 22.838 Million (HY 2003: As 18.101 Million), the Net Profit of your company for the period under review stands at Rs. 43.186 Million, an improvement of 17.50% over the Net Profit of Rs. 36.756 Million achieved during the same period of the previous year. The Earnings per Share (EPS) of your Company for the half-year ended December 31, 2003 , on its increased paid up capital after issue of bonus shares stand at Rs. 7.82. The pro rata equivalent (basic) EPS during the same period last year corresponds to Rs. 6.66 per 10-Rupee Share.

In view of the results, the Board is pleased to declare an interim cash dividend of 30%, i.e. Rs. 3.00 per 10-rupee share held, for the six months ended December 31, 2003.

Recent events, improved relations with India and the SAFTA agreement in particular, are of great significance to the future of Pakistani Industry, the pharmaceutical sector being no exception. If the Government wishes Pakistan to succeed in a free trade environment with its much larger neighbour, it must examine very carefully the differences in regulatory environment as well as operating costs in both countries, and make a rapid and earnest attempt to remove these differences to level the playing field for its domestic industry.

During the last decade, the pharmaceutical sector in India has enjoyed a far greater degree of liberalization compared to its counterpart in Pakistan . This has resulted in improved efficiencies, as well as optimal scale and competitiveness. If, on an immediate basis, the Pakistan pharma sector is not deregulated to the same degree, we will enter the South Asian Free Trade Area having been placed at a distinct disadvantage to our neighbours, and will face an uphill task in benefiting from what could otherwise be an excellent opportunity to grow and prosper in a market of almost 1.5 billion consumers.