We are pleased to present your Company's audited accounts for the year ended June 30, 2003.

Your Company's Net Sales for the year increased by a healthy 21.80% to Rs. 492.847 Million from Rs. 404.636 Million achieved during the Financial Year elided June 30, 2002.

In comparison, we are glad to report that your Company was successful in containing the Cost of Sales during the year under review. Against an increase in Sales of almost 22%, Cost of Sales rose by 14.27%. As a consequence, Gross Profit improved by 30.68%, from Rs. 185.683 Million during the year ended June 30, 2002 to Rs. 242.658 Million during the year under review.

Primarily due to your company's increased investment in the key areas of Human Resources and Marketing, and the launch of a number of technically sophisticated products in our Gastroenterology and newly formed Oncology divisions, both Administrative Expenses as well as Selling Expenses increased by over 35% during the year under review. Administrative expenses during the period increased by 35.15% to Rs. 30.133 Million, owing to increased depreciation on vehicles acquired for the sales team, a better-paid workforce and increased contribution towards Worker Welfare Fund.

Selling expenses increased by 35.70% to Rs. 110.618 Million during the year (2002: Rs. 81.518 Million). While the rise in Selling and Administrative expenses could correctly be termed as high, these were necessary to ensure that we enter our new areas of operation with a solid team in place and with the required noise level. We are certain that these investments will bear fruit in the years to come.

Despite these increases, your company's cash flows continued to improve during the year, with financial expenses during the year falling from Rs. 1.554 Million last year to Rs. 1.044 Million during the year under review.

Other Income, also driven by your company's improved cash flows and stock market operations, increased by 32.30% from Rs. 3.020 Million in 2002 to Rs. 3.995 Million during the year under review.

After a provision for taxation, Workers' Participation Fund and Central Research Fund of Rs. 36.921 Million (2002: Rs. 31.771 Million), the Net Profit of the company stands at Rs. 68.083 Million for the Year, an improvement of 30.44% over the figure of Rs. 52.193 Million achieved during 2002. The Earning per share. (after tax) for the Year, on the basis of your company's expanded paid up capital, stands at Rs. 15.42 (2002: Rs. 11.82).

In view of the year's financial performance, the Board of Directors is pleased to recommend a final cash dividend at 45%, i.e. Rs. 4.50 per share, as well as stock dividend (bonus shares) at 25% i.e.: one bonus share for every four shares held. Added to the interim cash dividend of 30% already declared during the year, this would amount to a total payout of 100% for the year ended June 30, 2003.

The year under review saw some very important launches undertaken by your company. In our core area of gastroenterology, we undertook the highly successful introduction of Novapressin injection, the only internationally approved therapy for bleeding varices in patients suffering from chronic liver disease. Similarly, with the addition of INF injection (Interferon Alpha 2b) to its range, your company now also offers a complete therapy for the treatment of Hepatitis B and C in combination with Xolox, the company's leading antiviral brand. These products have been supplemented during the 1st Quarter of 2003-04 by the addition of Omega Infusion, which is the most effective injectable therapy for the treatment of bleeding ulcers, and promises to greatly enhance the value of the Omega range, which is already the most highly-prescribed brand in its market segment.

Your company has also launched the first three products in its Oncology range under license from the Bago’ Group, SA, Argentina. These products treat a variety of cancers including leukemia, lung cancer, breast cancer, and neutropenia in patients under chemotherapy. We are certain that your company's Oncology Division will play a key role in defining our future growth, and will go a long way in establishing us as a trusted provider of world class cure of life-threatening diseases.

We are also glad to report that your Company's cardiology and dermatology franchises continued to exhibit strong growth during the year under review. In addition to its Xavor and Xavor-DIU brands in cardiology, your company plans to launch new products for the treatment of hypertension, chronic heart failure and hyperlipidemia, during the coming year.

As mentioned, the industry has benefited from the macro-economic stability, particularly the firmness of the Rupee, which helped contain the cost of raw materials during the year under review.

There is, however, a great need for the Government to deregulate the pharmaceutical sector, and to consider achieving its goal of reduction in drug prices through increased competition rather than price fixation and rigidity in regulatory mechanisms. Deregulation has led to unprecedented growth and lower prices in China and India, and has enabled the industries in these countries to become significant players on a global scale. If a similar approach is adopted in Pakistan, there is no reason why our industry would not be able to achieve similar results and add a new dimension to Pakistan's exports in the very near future.

The Company's Auditors, Messrs Taseer Hadi Khalid and Co., Chartered Accountants stand retired and have offered themselves for reappointment.

A statement as to the value of investments of provident fund, based on their respective audited accounts is as under:

Defence Saving Certificate Rs. 24,604,000
NIT Units Rs. 6,534,000
Total Rs. 31,138,000

The company does not operate gratuity and pension funds.

We feel privileged, once again, to thank the company staff and workers at all levels for their dedication and professionalism, without which these results would not have been possible.