DIRECTORS' REVIEW OF ACCOUNTS FOR
THE QUARTER & HALF-YEAR ENDED DECEMBER 31, 2004

We are pleased to present your company's individual and consolidated un-audited accounts for the half-year ended December 31, 2004. The consolidated accounts incorporate the Company's 98% owned Farmacia retail venture.

Net Sales of your Company during the six months ended December 31, 2004 were Rs. 298.175 Million, an improvement of 29.64% over the figure of Rs. 230.008 Million achieved during the first half of the previous year. Net Sales for the Quarter ended December 31, 2004 were Rs. 151.533 Million, a growth of 27.50% over Quarter II of last year.

Consolidated Net Sales including Farmacia were Rs. 334.991 Million for the six-month period, a growth of 7.80% over the Sales of Rs. 310.752 Million for the same period of last year. For the Quarter ended December 31, Consolidated Net Sales stood at Rs. 169.978 Million, an improvement of 7.32% over Rs. 158.386 Million achieved in the corresponding quarter of last year. The dilution in Consolidated Net Sales is a result of the closure of Farmacia's loss making branches, a necessary action, which although has led to a reduction in sales of this venture, has also made it financially healthier and poised for sustainable growth in the future. From a loss of Rs. 1.173 Million from its 98% share in Farmacia during the first half of last year, the company has earned a profit of Rs. 3.010 Million during the same period of the current year, an improvement of 156.61% in performance.

Gross Profit (GP) of your company improved by 19.24% during the six months under review, from Rs. 143.681 Million for HY 2004 to Rs. 171.326 Million at the close of HY 2005. For the Quarter ended Dec 31, 2004, the GP stood at Rs. 82.166 Million, an increase of 10.91% over the GP of Rs. 74.085 Million achieved during the same quarter of last year.

It is important to point out that your company carried out a reclassification of expense heads in its accounts during the current year in order to improve its cost allocation and budgeting for management accounting purposes. As a result, the allocation of figures between manufacturing, administrative and selling expenses has changed. While this does not of course affect the bottom-line reflected in the accounts, a true comparison of the various individual expense heads during the current year becomes difficult as a result. The primary drivers of increase in overall cost of Sales and Operating costs during the current year so far have been the higher cost of raw materials, resulting from a slightly weaker rupee, and increased depreciation on newly acquired plant, equipment and vehicles.

Your Company's Net Profit from Operations for the half-year stood at Rs. 88.883 Million, an improvement of 42.24% over the figure of Rs. 62.413 Million achieved during HY 2004. After incorporating its share in Profit of Farmacia, other income and gains on remeasurement of short term investments, the Profit Before Taxation after deduction of Workers' Profit Participation and Central Research funds stood at Rs. 90.846 Million and Rs. 43.279 Million for the Half-year and Quarter under review, respectively.

After a provision for taxation of Rs. 28.600 Million (2004: Rs. 19.130 Million), the net Profit After Tax (NPAT) of your Company for the Half-year stands at Rs. 62.245 Million, an improvement of 44.13% over the Net Profit of Rs. 43.186 Million achieved during the same period of the previous year. The NPAT for the Quarter stands at Rs. 30.679 Million, a growth of 40.99% over the figure of 21.760 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 40% bonus shares last year, stand at Rs. 3.97 and Rs. 8.05 per 10-rupee share for the Quarter and the Half-year ended December 31, 2004, respectively.

In view of the six-monthly performance, the Board of Directors is pleased to declare a cash dividend of 25%, i.e. Rs. 2.50 per 10-rupee share held, for the six months ended December 31, 2004.

We are pleased to report that during the month of December 2004, your Company reached an agreement with its alliance partner Laboratorios Bagó SA Argentina to collaborate in setting up a biotechnology-based pharmaceutical plant - the first of its kind in the country - at your Company's recently acquired 27 acre plot near Raiwind, Lahore, for the manufacture of its products used in the treatment of Cancer and Hepatitis C. The plant will be constructed to European Union Standards, and will target export markets in addition to serving the patients of Pakistan. We are very hopeful that its coming on line will not only help lower the cost of treatment of these deadly diseases in the country, but will also help your Company gain greater market share and at the same time put Pakistan on the world map as an exporter of biotechnology products to the most highly regulated and demanding markets.

For and on Behalf of the Board of Directors
President
January 28, 2005

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