Is Haleon stock ready to soar on new Panadol variants?

In Pakistan’s evolving pharmaceutical landscape, few brands hold as dominant a position as Panadol. Now, Haleon Pakistan Ltd (HALEON) is doubling down on this flagship product line, betting big on product innovation, pricing reforms, and market expansion to fuel its next phase of growth. Backed by stable macroeconomic conditions and a more flexible regulatory environment, Haleon’s strategy presents investors with a compelling growth narrative anchored in consumer health.

Powering growth with panadol

Panadol remains the crown jewel in Haleon’s portfolio, generating a massive PKR 19.5 billion in CY24, roughly 50% of the company’s topline. Recognizing this strength, Haleon is expanding the product line with new launches such as Panadol Migraine and Panadol Ultra, the latter being a US FDA-approved formulation.

With Pakistan’s pharmaceutical sector recently deregulating non-essential drug pricing, Haleon secured hardship approvals to increase Panadol prices by 10% YoY, while broader non-essential categories saw price hikes of 33% on average. This gives Haleon much-needed flexibility to manage input cost inflation while protecting margins.

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Expanding capacity and reach

To support demand, Haleon has invested in expanding its Jamshoro manufacturing plant, part of a broader shift toward domestic production. This capacity enhancement also enables the firm to internalize production currently outsourced to Pharmatec, further boosting operational efficiency.

Additionally, Haleon has ambitious export plans. Despite a temporary dip in export sales due to regulatory challenges stemming from its rebranding, export licenses are now renewed, and Haleon has shipped its first Centrum consignment to Kenya. The company expects to expand into 15 new markets, positioning itself for global revenue diversification.

Margins are bouncing back?

After years of volatility caused by surging active pharmaceutical ingredient (API) costs—like paracetamol spiking from PKR 600/kg to PKR 2,600/kg, API prices have now stabilized. As a result, Haleon’s gross margins rebounded from a trough of 6% to 34% in CY24, with projections pointing to consistent margins of 36% in the coming years.

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Financial outlook

Haleon is expected to deliver:

• EPS growth from PKR 39.1 in CY24 to PKR 58.8 in CY26
• Dividend per share rising to PKR 26 by CY26
• Topline growth at a 3-year CAGR of 16%
• Return on Equity (ROE) staying strong at 41% in CY25E

Currently trading at a forward P/E of 15.2x, Haleon’s fair value is estimated at PKR 878/share, representing an 18% upside from current levels.

Source: Optimus Capital Management Research

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →