SUBMITTED BY: Imran Akbar BBA-VIl 08-0144

SECURITY ANALYSIS & VALUATION

SUBMITTED TO: MR BABAR ALI (Course Instructor)

FOUNDATION FOR ADVANCEMENT OF SCIENCE & TECHNOLOGY

INTRODUCTION

HISTORY OF COMPANY:
We are a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Our products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Our comprehensive line of products encircles life itself addressing important health needs from infancy to the golden years. With over 70,000 employees worldwide and a global presence in more than 130 countries, Abbott is committed to improving people's lives by providing cost effective health care products and services that consistently meet the needs of our customers. Abbott Pakistan is part of the global healthcare corporation of Abbott Laboratories, Chicago, USA.

A BRIEF OPERATING HISTORY OF THE BUSINESS.

Abbott started operations in Pakistan as a marketing affiliate in 1948; the company has steadily expanded to comprise a work force of over 1500 employees. Currently two manufacturing facilities located at Landhi and Korangi in Karachi continue to use innovative technology to produce top quality pharmaceutical products. Abbott started operations in Pakistan as a marketing affiliate in 1948; the company has steadily expanded to comprise a work force of over 1500 employees Abbott Pakistan has leadership in the field of Pain Management, Anesthesia, Medical Nutrition and Anti-Infectives. Our wide range of products is managed and marketed through three marketing arms. On June 29, 2005 Abbott Pakistan Achieved Class 'A' accreditation against the Oliver Wight ABCD Check list. This was an outstanding achievement, which puts Abbott Pakistan amongst some of the best global companies in terms of operational excellence. It achieve sales of 10 billion in the year of 2010

DESCRIPTION OF THE LOCATION OF THE FACILITIES OF THE BUSINESS.

Abbott Laboratories (Pakistan) Limited
Head Office : Abbott Laboratories (Pakistan) Limited, Diagnostics Division, Opposite Radio Pakistan Transmission, Hyderabad Road, Landhi, Karachi. Office: +92-21-5015045-49 (111 222 688) Ext:3500 Dir: +92-21-5100422 Fax : 92-21-5042952 Lahore :

Abbott Laboratories (Pakistan) Limited, Diagnostics Division, House No: 123 - A, Ahmed Block, New Garden Town, Lahore. Telephone#: 042 5854141 , Fax#: 042 5844737 Islamabad : Abbott Laboratories (Pakistan) Limited, Diagnostics Division, House #35,Street #39,I-8/2 Islamabad. Office 051-4445670 Fax 051-4445671 Peshawar : Abbott Laboratories (Pakistan) Limited, Diagnostics Division, House # 663/9, Old Bara Road, University Town, Karachi Market, Khyber Bazar, Peshawar. Office +92+91-5840252 Fax +92-51-5840252

DESCRIPTION OF THE PRODUCT MIX. ABBOTT NUTRITION PAKISTAN

Abbott in Pakistan has pioneered the nutritional care and support in health and disease. Abbott Nutrition Pakistan with its pediatric and medical nutrition ranges, is striving to fulfill the promise of life by providing nutrition support, with our wide range of products for infants, children, moms and adults. Abbott Nutrition Pakistan's Nutrition range includes:

Similac Advance with IQ system of nutrients, an infant nutritional product. Isomil for babies who require lactose free soy based nutrition. Pediasure Complete a complete and balanced nutrition for children who are picky eaters and have to catch up for growth. Formance a scientifically formulated nutritional supplement for pregnant and nursing mothers. Ensure a leading source of complete, balanced nutrition to help adults maintain an active, healthy lifestyle, and to recuperate from illness. Glucerna RTF and Glucerna SR to support the special needs of Diabetics and to help optimize their glycemic control.

ABBOTT PHARMACEUTICAL PAKISTAN

Abbott in Pakistan has become the biggest Pharmaceutical Company in Pakistan. It provides lots of product which will serve against mostly all kinds of diseases. Abbott Pharmaceutical Pakistan provides variety of Product like syrup and tablets of weight. These are the products of Abbott Pharmaceutical Pakistan: A Abbutol Abocain Abocal Abozole Acyclovir Arinac Artifen B Becefol Bejectal Bevidox Brufen Burnol

C Calcijex Cecon Cofcol Citro Soda Cremaffin D Dayalets Daycor Dijex Dopamine E Enoxabid Entamizole Epival Erybron Erythrocin Eryderm F Flexin Forane Froben G Ganaton H Hytrin I Iberet K Klaricid L Lucrin Lincomycin Loftyl M Moculator Mospel N Neophage Nicor

O Optilets-M P Pentothal Pramet - FA Prothaiden Protium R Rashnil Rondec S Savourane Selsun Silliver Somogel Sparaxin Survanta Surbex T Trividox Tronolane U Urixin V Vancomycin Vi-Daylin

ABBOTT DIABETES CARE:

In Abbot Diabetes Care, we find only one product that is Optium Xceed is a large display numbers for easy reading, fast and discreet testing, Test starts automatically, just insert strip, Optional Confirmation beep, Clear backlit display for poor lighting conditions, Recalls up to 450 results with time and date, Compact, light weight and durable design., 3 buttons make it easy to review your previous results or averages, Ideally shaped to fit comfortably in the palm of the hand and 7,14and 30 days test average.

Board Committees Attendance

AUDIT COMMITTEE
Shamim Ahmad Khan Chairman - Non Executive director Munir A. Shaikh Member - Non Executive director Kamran Y. Mirza Member - Non Executive director Syed Anis Ahmed By invitation - Chief Financial Officer Siraj Lawai By invitation - Chief Internal Auditor Malik Saadatullah Secretary

HUMAN RESOURCE COMMITTEE

Munir A. Shaikh Chairman - Non Executive director Asif Jooma Member- Chief Executive Officer Shamim Ahmad Khan Member - Non Executive director Hassham M. Malik Secretary

SHARE TRANSFER COMMITTEE

Asif Jooma Chairman - Chief Executive Officer Sadi Syed Member - Alternate Director to Thomas C. Freyman Syed Anis Ahmed Member - Chief Financial Officer Malik Saadatullah Secretary

BANKING COMMITTEE
Munir A. Shaikh Chairman - Non Executive director Asif Jooma Member - Chief Executive Officer Sadi Syed Member - Alternate Director to Thomas C. Freyman Syed Anis Ahmed Member - Chief Financial Officer Malik Saadatullah Secretary

A BRIEF DESCRIPTION OF THE MAJOR COMPETITORS OF THE COMPANY.

These are the major competitors of the Abbott which are fighting for getting highest market share. Feroz Glaxo Hinoon IBLHL OTSU SAPL SEARL WYETH Ferozsons (Lab) GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare Ltd Otsuka Pak Sanofi-Aventis Searle Pakistan Wyeth Pak Limited

FEROZSONS
Incorporated as a Private Limited Company in 1954, Ferozsons Laboratories Limited is one of the oldest and largest pharmaceutical companies serving the cause of health and wellbeing in Pakistan. We were the first Pakistani Pharmaceutical Company to be listed on the Karachi Stock Exchange (KSE) in 1960, and are a five-time recipient of the KSE Top 25 Companies Award. With approximately over 200 health care representatives covering 100 territories across country, we take pride in our track record of manufacturing products to high levels of excellence, building brands, and providing one of the highest shareholder returns in the pharmaceutical sector. The Company possesses strong brands in cardiology, gastroenterology, oncology and dermatology. We also have a long history of contract manufacture for Multinational Corporations, and a successful track record of in-licensing of products. Among other principals, Ferozsons currently represents the Boston Scientific Corporation, USA, for its range of interventional products and devices in the Pakistan market. In joint venture with the Bago Group, our partners in oncology and hepatology, we have set up BF Biosciences Limited at Lahore. BF Biosciences is Pakistans first biotech pharmaceutical company set up to manufacture drugs for treating Cancer and Hepatitis C in full compliance with USFDA and EU standards. Ferozsons also has a rich history of exports to the Middle East, Africa and Asia

GLAXOSMITHKLINE PAK
GlaxoSmithKline Pakistan Limited was created on January 1st 2002 through the merger of SmithKline and French of Pakistan Limited, Beecham Pakistan (Private) Limited and Glaxo Welcome (Pakistan) Limited- standing today as the largest pharmaceutical company in Pakistan As a leading international pharmaceutical company we make a real difference to global healthcare and specifically to the developing world. We believe this is both an ethical imperative and key to business success. Companies that respond sensitively and with commitment by changing their business practices to address such challenges will be the leaders of the future. GSK Pakistan operates mainly in two industry segments: Pharmaceuticals (prescription drugs and vaccines) and consumer healthcare (over-thecounter- medicines, oral care and nutritional care). GSK leads the industry in value, volume and prescription market shares. We are proud of our consistency and stability in sales, profits and growth. Some of our key brands include Augmentin, Panadol, Seretide, Betnovate, Zantac and Calpol in medicine and renowned consumer healthcare brands include Horlicks, Aquafresh, Macleans and ENO. In addition, we are also deeply involved with our communities and undertake various Corporate Social Responsibility initiatives including working with the National Commission for Human Development (NCHD) for whom we were one of the largest corporate donors. We consider it our responsibility to nurture the environment we operate in and persevere to extend our support to our community in every possible way. GSK participates in year round charitable activities which include organizing medical camps, supporting welfare organizations and donating to/sponsoring various developmental concerns and hospitals. Furthermore, GSK maintains strong partnerships with non-government organizations such as Concern for Children, which is also extremely involved in the design, implementation and replication of models for the sustainable development of children with specific emphasis on primary healthcare and education.

A BRIEF DESCRIPTION OF THE MARKETS THE COMPANY SERVES. PHARMACEUTICAL PRODUCT

The macroenvironment for the Pakistani pharmaceutical market is positive despite economic concerns. Economically, the Economist Intelligence Unit (EIU) projects that Pakistan will be the fourth smallest economy in the Asia Pacific region covered by Espicom in 2016. In per capita terms, Pakistan will rank the second lowest in the Asia Pacific region by 2016. Real GDP growth is projected to increase to 4.7% in 2016. According to the EIU, Pakistan will remain heavily dependent on multilateral institutions and bilateral donors for concessional loans and emergency aid. Demographically, the EIU projects that Pakistan will have the fourth largest population in the Asia Pacific region by 2016. The elderly population represents a very small proportion of the population; it will be the second lowest rate in the Asia Pacific region by 2016.

NUTRITION PRODUCT
Today the sale of all types of nutritional Product is due to great demand by people has increased. In todays market, a large growth of all dietary supplements have seen that includes specialty juices like acai, mangosteen and goji. Most of the special nutritional supplements contain detailed analysis of sales and also market share trends. There are many types of food in the market segments that calcium, child, eye, energy, heart, men, women, the brains and digestion, but also includes cosmetics.

ECONOMIC ANALYSIS

Economic Analysis
This part will get you to see real situation of economy and also this part assist you to predict Pakistans economy for next five years through various indicators. These all indicators will also capture the main theme of the economy. Following are the indicators which I will use to evaluate economy: Trade Deficit Rupee Exchange Rate (USDPKR) Current Account Exports Imports GDP Growth Rate Government Budget Government Debt to GDP Inflation Rate Interest Rate Population Unemployment Rate Liquid liabilities (M3) as % of GDP in Pakistan Foreign direct investment Pakistan Stock Market index

Following are the indicator which I will use to predict Pakistan economy: GDP at constant prices GDP at current prices in US dollars GDP based on Purchasing Power Parity (PPP) Consumer Prices Index average Inflation average Population Current account balance in US dollars Current account balance in percent of GDP

Current Condition of Pakistan Economy

The major exports of Pakistan are rice, furniture, cotton fiber, cement, tiles, marble, textiles, clothing, leather goods, carpets and rugs and food products. Pakistan imports mainly petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel and tea. Now you can judge Pakistan economy through various indicators.

Trade Deficit
Indicator
Balance of trade

Reference
Jul/2011

Scale
Million

Unit
USD

Actual
-1486

Previous
-1980

It shows a trade deficit or trade gap of 1486. Its means that import of the country is more than its export. So due to several reason company wants to import. Like, low in cost, unavailable within country, and barriers to produce in country.

Rupee Exchange Rate Chart (USDPKR)

Indicator
Rupee Exchange Rate (USDPKR)

Reference
Sep/2011

Actual
87.52

Previous
87.75

It shows that the power of 1 rupee increase from 0.011396 to 0.011425. The increasing percentage is 0.25% in 1 rupee.

Current Account
Indicator
Current Account

Reference
Jun/2011

Scale
Million

Unit
USD

Actual
604.00

Previous
52.00

It indicates the surplus of 604 in Pakistan current account. It impacts positive to economy of Pakistan. If the current account is in surplus, the country's net international asset position increases equally.

 Exports
Indicator
Exports

Reference
Jul/2011

Scale
Million

Unit
USD

Actual
2203.00

Previous
2427.00

It specifies that the exports were decrease as compared to previous year. So it is not impact positive to Pakistans economy. Also that reflects many issues for the government.

GDP Growth Rate

Indicator
GDP Growth Rate

Reference
Jun/2011

Scale
Percentage

Actual
2.39

Previous
3.76

GDP drops from 3.76 to 2.39. The negative change of 36.4%.it means that the decline in the value of product and services produced by an economy.

Government Budget
Indicator
Government Budget

Reference
Dec/2010

Scale
Percentage

Actual
-6.30

Previous
-5.20

It is a government budget deficit equivalent to 6.30 of the GDP in 2010. A budget deficit occurs when a government spends more money than it takes in. So government should look towards their expenditure.

And try to control or less the expenses against revenues.

Government Debt to GDP

Indicator
Debt to GDP

Reference
Dec/2010

Scale
Percentage

Actual
56.80

Previous
57.30

Government debt as a percent of GDP, also known as debt-to-GDP ratio, is the amount of national debt a country has in percentage of its Gross Domestic Product. Basically, Government debt is the money owed by the central government to its creditors. The higher the debt-to-GDP ratio, the less likely the country will pay its debt back, and more likely the country is to default on its debt obligations.

 Inflation Rate
Indicator
Inflation Rate

Reference
Jul/2011

Scale
Percentage

Actual
13.77

Previous
13.92

It indicates that inflation is slightly less. Due to which it impacts positively to economy of Pakistan. But overall if we can see that inflation is too much high. So it impacts on our economy like, price rises

Interest Rate
Indicator
Interest Rate

Reference
Aug/2011

Scale
Percentage

Actual
13.50

Previous
14.00

For the investment point of view, lower the interest rate decrease foreign investment.But for public it is better to have a lower interest rate. So I think that it is not good for economy of Pakistan to have a lower interest rate.

Population
Indicator
Population

Reference
Dec/2010

Scale
Million

Actual
175.00

Previous
169.71

High population is negatively impact to any economy. So 3.11% increasing change in population is not good for the economy of Pakistan. It impacts negative for growth of economy.

Import
Indicator
Import

Reference
Jul/2011

Scale
Million

Unit
USD

Actual
3689

Previous
3863

It indicates that the import drop from 3863 to 3689. It means that economy depends on its own product. To some extent its better for the economy and it sounds positively for economy.

Unemployment Rate
Indicator
Unemployment Rate

Reference
Dec/2009

Scale
Percentage

Actual
5.50

Previous
5.20

This clearly shows that the government not working well. Thus the unemployment rate increases by the rate of 5.76%. So it impacts negative for Pakistans economy .Government should make plans to decrease the unemployment rate.

Liquid liabilities (M3) as % of GDP in Pakistan

M3 is 51% of GDP in Pakistan.

Foreign direct investment

Indicator
FDI

Referen ce
Jul/2011

Scale
Million

Unit
USD

Actual
0.112

Previous
1.573

It actually sounds bad for the Pakistan. FDI declines rapidly from several years. Due the lack trust and instable political conditions of our countries foreigners dont want to invest here.

Pakistan Stock market Index

Indicator Stock Market Reference Sep/2011 Scale No. Actual 11761.97 Previous 11606.86

It shows the overall performance of all the listed companies or in other words it shows the economy performance in terms of industry.

FORECAST CONDITION OF PAKISTAN ECONOMY

Indicator
GDP At Constant Prices GDP At Current Prices In US Dollars GDP Based On Purchasing Power Parity (PPP) Consumer Prices Index Average Inflation Average Population Current Account Balance In US Dollars Current Account Balance In Percent Of GDP

Scale
Billions Billions Billions Index Percent Millions Billions % Of GDP

unit
PKR U.S Dollars Dollars 2000=100 Persons U.S Dollars

2010
5859.58 177.9 451.97 221.18 11.5 166.58 -6.8 -3.82

2015
7477.63 246.23 630.25 300.18 6 180.54 -8.41 -3.42

INTERPRETATION:
Forecast condition is based on the adoption of a strong reform agenda, there is likely to be some return of investor confidence in the economy. Private investment starts picking up from 2012-13 onwards and the GDP growth rate begins to rise rapidly, approaching 6 percent by 2014-15. The fiscal deficit position improves significantly, primarily on the back of a significant increase in the taxto-GDP ratio and some containment of public expenditures. There are some changes in the composition of public expenditure with the share of subsidies and debt servicing falling somewhat while that of development expenditure and social expenditure rising. The inflation moderates, at least up to 2013-14. The current account deficit remains manageable, although foreign exchange reserves could fall below safe levels by 2013-14. This, of course, depends upon the extent of support received from the international community by a newly elected government with an effective majority, which appears committed to a strong reform agenda. This hereby shows that the overall GDP is increased in 2015 but it will surely does not cover up the current account balance because of the development will do. It will surely impact the economy in the board way because it will create a new prospect for the economy of the country and it will booster the economy and industry as well.

INDUSTRY ANALYSIS

PHARMACEUTICAL INDUSTRY IN PAKISTAN Introduction:

Pakistan has a very vibrant and forward looking Pharmaceutical Industry. At the time of independence in 1947, there was hardly any pharma industry in the country. Today Pakistan has about 400 pharmaceutical manufacturing units including those operated by 25 multinationals present in the country. The Pakistan Pharmaceutical Industry meets around 70% of the country's demand of Finished Medicine. The domestic pharma market, in term of share market is almost evenly divided between the Nationals and the Multinationals. The National pharma industry has shown a progressive growth over the years, particularly over the last one decade. The industry has invested substantially to upgrade itself in the last few years and today the majority industry is following Good Manufacturing Practices (GMP), in accordance with the domestic as well as international Guidance. Currently the industry has the capacity to manufacture a variety of product ranging from simple pills to sophisticated Biotech, Oncology and Value Added Generic compounds. Although Pakistans pharmaceutical and healthcare sectors are expanding and evolving rapidly, about half the population has no access to modern medicines. Clearly this presents an opportunity, but much more work needs to be done by the government and industry's stakeholders. The value of pharmaceuticals sold in 2007 exceeded US$1.4bn, which equates to per capita consumption of less than US$ 10 per year and value of medicines sold is expected to exceed US$2.3 B by 2012. Pakistan is a developing pharmaceutical market, with a large population and economic progress evident, but per capita drug spending was rather low at around US$9.30 in 2007. Private spending accounts for 65% of total healthcare expenditure sourced through out-of pocket payments, international aid and religious or charitable institutions. Pharmaceutical spending accounts for less than 1% of the country's GDP, comparable to levels in some neighboring countries but above that in some of the South Asian countries. The forecast period is likely to witness the marginal strengthening of the generics sector, albeit more in terms of volumes than values. The share of generics is also likely to increase further as major drugs come off-patent in the near term, to the likely benefit of the generics-dominated local industry. The Pakistan pharma industry is relatively young in the international markets with an export turnover of over US$ 100 Million as of 2007. Pakistan Pharma Industry boasts of quality producers and many units are approved by regulatory authorities all over the world. Like domestic market the sales in international market have gone almost double during last five years. The pharma industry is focusing to an Export Vision of USD 500 Million by 2013. In the meantime, exports are also likely to be boosted by new regional and global opportunities. The Pakistan Pharmaceutical Industry is a success story, providing high quality essential drugs at affordable prices to Millions. Technologically, strong and self reliant National

Pharmaceutical Industry is not only playing a key role in promoting and sustaining development in the vital field of medicine within the country, but is also well set to take on the international markets

SOME KEY STATISTICS OF THE INDUSTRY

Companies operating in the industry Number of employees Registered Drugs Registered Molecules R&D expenditure Average growth Rate Market share of Multinationals companies Market share of Local companies Market Leader 600 100000 47000 1100 1% of the profit 11% 45% 55% GlaxoSmithKline

Some key statistics of the industry

PRODUCTS
The demand of the product is very high and also the supply of the product is satisfying the local demand and also in foreign demand. Communicable diseases Rh disorders Nutritional deficiencies Accidents / Injuries
Diabetes / Cardiovascular diseases Neuro / Psychiatric diseases Other non communicable Diseases 38.4% 12.5% 5.8% 11.4% 10.6% 2.6% 18.9%

The Pricing of the products varies the kind of diseases you have and what kind of tablet suggest by the doctor and also it varies with the power of the medicine. The life cycles of the product are in the middle of growth and maturity stage. Most of Products dont have substitutes, because there are some of the diseases that are cant cure by taking medicines. The drugs like anti cancer drugs have to be imported because we dont have the technology and expertise to produce these drugs, therefore its much cheaper to import.

Share %
2.5 2 1.5 1 0.5 0

Share %

Biotechnology
Simple molecules are found through trial and error to treat the symptoms of a disease or illness. It offers promise in augmenting existing technologies in the pharmaceutical industry. The field shows immense importance.

Engineering Industry
The local demand is not currently fulfilled by our engineering sector. All of the critical equipment and machinery is imported from abroad such as China, Italy, Germany and India. Tablet Coating Machines, Capsule Manufacturing Machines

RAW MATERIAL

These raw materials are bought from India, China, U.K, Switzerland, Germany, and Japan. The raw materials are mostly imported from China and India in the last 34 years The raw materials are mostly imported from China and India in the last 3 4 years. These raw materials are very much expensive to develop. Pakistan does not have the technology to produce these chemicals. Raw materials for the purpose of packaging are purchased from the local market such as glass bottles, plastics and paper. Solvents such as ethylene chloride, ethane, methanol etc are used for the production of medicines. Sugar and lactose which are produced in Pakistan are also a few of the ingredients needed for production of drugs. Other major materials used in the capsule manufacturing are dyes, dye aids, preservatives and glycerin. Research shows that if a certain medicinal drug is imported, it would be priced around Rs. 8000 in Pakistan. If the required raw material is imported, and the drug manufactured in Pakistan, its price would be Rs. 6000. If the medicine is completely produced locally, its price would be as low as Rs. 3500 to patients. Our Government provides incentives to companies who manufacture raw materials such as Duty free import of plant and equipment Tax holidays for raw material manufacturers. Raw materials are, mostly, kept in quarantine area after their arrival at the plant. After the testing in QC laboratory, approved and rejected materials are transferred and stored in separate sections. After satisfy the local demand of the country, we export our products to Nepal, Afghanistan, Bangladesh, Srilanka, Iran and Africa.

EQUIPMENT

The pharmaceutical industry is highly capital intensive. The development expenditure on Health is around 14,272 billion rupees. The installation of a small manufacturing plant requires around 2 million rupees. Most of the manufacturing machines are imported from foreign countries.

Counting the number of machinery

Packaging

Manufacturing

Machines used for packaging and counting the number of medicines are locally produced. Locally manufactured machines constitute about 1015% of the overall machinery. Mixing and blending vessels Granulating machines Drying chambers Autoclaves and ovens Tablets Compression Machines Tablets Coating Machines Capsule Manufacturing Machines Encapsulation Machines

The manufacturing machines are mostly imported from China. This kind of machinery is outdated and obsolete. Pharmaceutical plants are inspected by Federal, Provincial drug inspectors 23 times in a year. The licensed Pharmaceutical plants are also subjected to detailed inspection by Federal Inspection team once in 2 years. Quality control Laboratory: Most of the plants have their own laboratories to for quality control and quality assurance of the raw materials

Ventilation Systems: They maintain the quality of the working atmosphere by taking away the chemical fumes and vapors, released from processes to the occupational atmosphere and by supplying the fresh air to the process areas Chillers and Cooling Towers: Chillers and cooling towers are provided, where centralized air conditioning systems are installed. Water Distillation Unit: Distilled water is used in Injections and in a variety of other medicines. Distillation process is applied to produce such water. Generators: In most of the plants, electric generators are provided as standby facility, in event of main power failure. Hydraulic Press: Some plants have hydraulic presses, for damaging the empty raw materials drums, prior to their dispatch to the contractor Shredder: Some plants have installed shredders to break the rejected bottles, prior to their dispatch to the contractor for recycling or disposal purposes. This process prevents the possible direct use of these contaminated bottles. Incinerator: Few plants have incineration facilities for the safe disposal of their hazardous solid and liquid wastes.

HUMAN RESOURCES

The pharmaceutical industry provides employment to about one million skilled and semiskilled personnel. It directly employs about 162000 personnel with large number of science graduates. The manufacturing side requires its employees to have a minimum of a bachelors degree. It indirectly employees 1 billion people. Sales Representatives are recruited by pharmaceutical companies. Training sessions are conducted on a monthly and quarterly basis by the multinational firms. Local companies usually conduct training sessions once a year for their employees. Employees are sent to Germany for their training sessions. Companies ensure safe working conditions for their employees. They make sure that a safe working condition is given to the employees. Dispensaries are set up to provide first aid to the employees in case of an accident. Merck, one of the MNCs has set up a separate department known as HSSE (health, safety, security and environment) department.

REGULATORY ENVIRONMENT
The strict government control over pricing under Essential Drug List (EDL) has made many drugs uneconomical Our Government provides incentives to companies who manufacture raw materials such as Duty free import of plant and equipment Tax holidays for raw material manufacturers.

INDUSTRY CLASSIFICATION

LIFE CYCLE
The Pakistan pharma industry is relatively young in the international markets with an export turnover of over US$ 100 Million as of 2007. Pakistan Pharma Industry boasts of quality producers and many units are approved by regulatory authorities all over the world. The Pharmaceutical of Pakistan is in the middle of growth and maturity state.

BUSINESS CYCLE
Pharmaceutical companies are affected by competitive market shares, the pace of FDA approvals, patent lives and the strength of the R&D pipelines. Many biotechnology firms are still in the development stage with their fortunes largely determined by investor perceptions of the relative merits of their R&D pipelines. With future new financing likely to be more difficult to obtain than in the past, strategic alliances between major drug companies and biotech firms are expected to increase.

EXTERNAL FACTORS

TECHNOLOGY
The pharmaceutical industry is highly capital intensive. The development expenditure on Health is around 14,272 billion rupees. The installation of a small manufacturing plant requires around 2 million rupees. Most of the manufacturing machines are imported from foreign countries. Machines used for packaging and counting the number of medicines are locally produced. Locally manufactured machines constitute about 1015% of the overall machinery.

GOVERNMENT
Our Government provides incentives to companies who manufacture raw materials such as Duty free import of plant and equipment Tax holidays for raw material manufacturers. The strict government control over pricing under Essential Drug List (EDL) has made many drugs uneconomical

FOREIGN
Huge chunk of our local production is exported to Middle Eastern Countries, African countries, Canada, Singapore and some European countries. The exports of our medicines were $40 million in 2000 and now it is above $60 million. These are a great source to attract Foreign Direct Investment. The drugs like anti cancer drugs have to be imported because we dont have the technology and expertise to produce these drugs, therefore its much cheaper to import.

FDI ($mn)
50 45 40 35 30 25 20 15 10 5 0 2003-04 2004-05 2005-06 2006-07 2007-08 FDI ($mn)

DEMOGRAPHIC
Population

187,342,721
Age structure

0-14 years: 35.4% (male 34,093,853/female 32,278,462) 15-64 years: 60.4% (male 58,401,016/female 54,671,873) 65 years and over: 4.2% (male 3,739,647/female 4,157,870)
Median age

Total: 21.6 years male: 21.5 years female: 21.6 years (2011 est.)
Population growth rate

1.573%
Birth rate

24.81 births/1,000 population

Death rate

6.92 deaths/1,000 population

Literacy

Definition: age 15 and over can read and write total population: 49.9% male: 63% female: 36%
Health expenditures

2.6% of GDP (2009)

Physicians density

0.813 physicians/1,000 population (2009)

Hospital bed density

0.6 beds/1,000 population (2009)

DEMAND ANALYSIS

The population of 160 million people is a basic demand driver. There is an annual growth of 2% in the population. The declining health conditions and the burden of diseases demand the local pharmaceutical industry to produce products that could cure them. These are the disease in their respective share in Pakistan. Communicable diseases Rh disorders Nutritional deficiencies Accidents / Injuries
Diabetes / Cardiovascular diseases Neuro / Psychiatric diseases Other non communicable Diseases 38.4% 12.5% 5.8% 11.4% 10.6% 2.6% 18.9%

The pharmaceutical companies assess demands of their products and what products to produce by looking at the age structure and gender ratio of the population.

On an average a household spends about 77% of their household health budget on purchasing medicines. 8085% of the local demand is met by our pharma industry, however, there are certain medicines that we import. The demand for these medicines is 510%. Such medicines include hepatology (hepatitis vaccines) and oncology (drugs to cure cancer).

Creation of Demand
Sales Representatives of the pharmaceutical companies play an important role in creating demand for the product. These Representatives have a list of the products they have to promote to different doctors. Different techniques are used by these representatives for convincing the doctor. These sales representatives either convince the doctor of the benefits of their products in comparison with other products of the same type. Or the company gives the doctor commission (for example 20%). The doctors are also given free gifts (silent reminders), lunches and dinners and paid vacation trips with their families. Some companies also engage themselves in academic activities. They give doctors medical books and send them abroad to attend conferences. Promotional activities Example: Elite Pharma gave warid USB worth Rs. 13000 to 50 doctors.

PROFITABILITY ANALYSIS

SUPPLY/DEMAND ANALYSIS
At present there are 17 Pharmaceutical companies on the list of Karachi Stock Exchange and they command more than 70 per cent of total pharmaceutical sales in the country. Total equity of these companies stood at Rs. 29.40 million. Total sales of these companies in 1993 stood at Rs. 11.704 billion as compared to Rs. 10.600 billion in the preceding year, showing a rise of 10.41 per cent. Pretax Profit has also increased from Rs. 752.32 million in 1992 to Rs. 1101.67 million in 1993 depicting a rise of 46.38 per cent. Increase may be attributed to higher price allowed by the government for pharmaceuticals and depreciation of rupee

PRICE
Pharmaceutical companies have to operate in a highly regulated environment; the degree of regulation to a significant extent depends on the country and type of the product. One of the most important aspects of government regulation for pharmaceutical companies is price regulation, and different countries have different policies on this issue. In the United States the largest and the most attractive pharmaceutical market currently there is no direct price control for non-government drug sales. At the same time, it is expected that Medicare Prescription Drug Improvement and Modernization Act will potentially increase downward price pressure.

INTERNATIONAL COMPETITION AND MARKETS

The pharmaceutical industry is characterized by a high level of concentration with fifteen multinational companies dominating the industry. Table 1.1 contains information about these major pharmaceutical companies that are sorted in the order of their 2004 revenues from the sales of pharmaceutical products. Numbers provided in this table include sales of all subsidiaries and affiliated companies that are consolidated in annual reports of the corresponding companies. In order to facilitate a comparison of different companies revenues of all of them are shown in US dollars.
Table 1.1. Major pharmaceutical companies.
HQ location NY, U.S. UK NJ, U.S. NJ, U.S. UK Switzerland France Switzerland NY, U.S. NJ, U.S. IL, U.S. IN, U.S. Japan NJ, U.S. Germany Revenue of pharmaceutical segment, mln USD 46,133 31,434 22,190 21,494 21,426 18,497 17,861 17,460 15,482 13,964 13,600 13,059 8,648 6,417 5,458 Total sales, mln USD 52,516 37,324 47,348 22,939 21,426 28,247 18,711 25,168 19,380 17,358 19,680 13,858 10,046 8,272 37,013 Share of pharmaceutical segment, % 87.85% 84.22% 46.87% 93.70% 100.00% 65.48% 95.46% 69.37% 79.89% 80.45% 69.11% 94.23% 86.09% 77.57% 14.75%

Company

Pfizer GlaxoSmithKline Johnson & Johnson Merck AstraZeneca Novartis Sanofi-Aventis Roche Bristol-Myers Squibb Wyeth Abbott Eli Lilly Takeda Schering-Plough Bayer

CONCLUSION:
Collaborations with the Indian companies that are already looking to enter the market would be another opportunity that can be cashed by local pharmaceutical companies. Pakistani exporters also need to focus on African regions, and develop markets in these regions. A fast changing international market demands the setting up of exclusive export houses separate from the manufacturing. An aggressive promotional campaign identifying Pakistan with quality products in the international market is the need of the hour. Pakistani manufacturers should keep themselves abreast of the expired patent medicines in order to manufacture drugs with lower cost. The local pharmaceutical companies need to shift their focus towards developing communication channels with multinationals, to form strategic alliances and also benefit from their technological advancements. In Pakistan, a strong association and collaboration between the academic institutes and industry needs to be established. The govt. should take effective action against unethical marketing practices employed by some multinationals as well as local Pharma manufacturers. The Government incentives on R&D and encouraging industrial policies, if adopted, will encourage companies to set up their own. R&D units and set up manufacturing units at tax free zone. The govt. should provide research infrastructure & laboratories to the domestic universities and other academic institutions.

COMPANY ANALYSIS

SWOT ANALYSIS: -

STRENGTHS: Good company reputation. Strong distribution network. Strong brand positioning. Have deep roots in the Pharma business. Excellent professional management team.

WEAKNESSES: Comparatively high price. Lacking of deep rural penetration. Employee reduction - High Field Force turnover. OPPORTUNITIES: Increase per capita income. High rate of population increase in Pakistan. Promotion intensive market. Increasing healthcare awareness.

THREATS: High inflation rate. Foreign Exchange Rates Political conditions of Pakistan. Govt. restriction on price Low price local Pharma product.

Abbott Pakistan Limited

Balance Sheet
Forcasted
2010 (Rupees 000)
SHARE CAPITAL AND RESERVES

2011 (Rupees 000)

2012 (Rupees 000)

2013 (Rupees 000)

2014 (Rupees 000)

Share capital Reserves

979,003 2,933,536 3,912,539

979,003 5,832,005 6,811,008

979,003 6,822,845 7,801,848

979,003 7,982,129 8,961,132

979,003 9,338,491 10,317,494

NON CURRENT LIABILITIES

Deferred taxation

115,182 115,182

144494
144,494

150238
150,238

156210
156,210

162419
162,419

CURRENT LIABILITIES

Trade and other payables

1,762,700 5,790,421

1,639,226 8,594,728

1,704,385 8,936,368

1,772,135 9,291,589

1,842,577 9,660,929

Equity+Liabilities

Forcasted
2010 (Rupees 000) PROPERTY, PLANT AND EQUIPMENT Fixed assets - property, plant and equipment Long-term loans and advances Long-term deposit Long-term prepayments Total CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Loans and advances Trade deposits and short-term prepayments Accrued profit Other receivables Taxation recoverable Cash and bank balances 72,430 2,069,633 263,267 130,868 134,170 705 74,386 2,125,513 270,375 134,401 137,793 724 81,867 294,542 104,758 3224359 6,020,590 76,394 2,182,902 277,675 138,030 141,513 744 84,078 302,494 108,922 3312752 6,259,909 78,457 2,241,840 285,173 141,757 145,334 764 86,348 310,662 113,252 3403586 6,508,740 80,575 2,302,370 292,872 145,585 149,258 784 88,679 319,049 117,754 3496926 6,767,462 1,877,596 39,203 2,801 14,148 1,933,748 2,011,375 41,996 3,001 15,156 2,071,528 2,154,685 44,988 3,214 16,236 2,219,124 2,308,206 48,194 3,443 17,393 2,377,236 2,472,666 51,628 3,689 18,632 2,546,615 2011 (Rupees 000) 2012 (Rupees 000) 2013 (Rupees 000) 2014 (Rupees 000)

79,715
286,798 819,087 3,856,673

Assets

5,790,421

Forcasted
2010 (Rupees 000) 10,995,701 7308663 3,687,038 1,601,101 2011 (Rupees 000) 12,864,970 8500529 4,364,441 1,801,096 Administrative expenses Other operating income Other operating expenses Finance cost Profit before taxation Provision for taxation NET PROFIT AFTER TAXATION 2012 (Rupees 000) 15,052,015 9945619 5,106,396 2,107,282 2013 (Rupees 000) 17,610,858 11636374 5,974,483 2,465,520 2014 (Rupees 000) 20,604,703 13614558 6,990,146 2,884,658

Sales - net COST OF SALES Gross Profit Selling and distribution expenses

267,915 308,759
109,957 186,927 3,530 1,737,522 -560,781 1,176,741 128,650 218,704 3,530 6,516,421 -684,416 5,832,005

361,248
150,520 255,884 3,530 7,623,613 -800,767 6,822,845

422,661
176,109 299,385 3,530 8,919,027 -936,898 7,982,129

494,513
206,047 350,280 3,530 10,434,661 -1,096,170 9,338,491

CASH FLOWS FROM OPERATING ACTIVITIES Net Income NIC Interest fixed Capital investment Working capital Free Cash Flow 1,176,741,000 256102,000 2,446,00 174,822,000 493,611,000 766,857,000

Indicate the basis of estimation of different components of the projected cash flow statement.

The Sales is increasing due to increase in demand of the product They also need to import machinery in order to meet the demand They also need to make the new plant thats why the Plant and Machinery account is increasing They also need to patent their new product

VALUATION ANALYSIS

Beta
An asset has a Beta of zero if its returns change independently of changes in the market's returns. A positive beta means that the asset's returns generally follow the market's returns, in the sense that they both tend to be above their respective averages together, or both tend to be below their respective averages together. A negative beta means that the asset's returns generally move opposite the market's returns: one will tend to be above its average when the other is below its average. The beta coefficient is a key parameter in the capital asset pricing model (CAPM). It measures the part of the asset's statistical variance that cannot be removed by the diversification provided by the portfolio of many risky assets, because of the correlation of its returns with the returns of the other assets that are in the portfolio. Beta can be estimated for individual companies using regression analysis against a stock market index.

Calculation of beta of Abbott Pakistan Return of Abbott Return of KSE 0.009021842 0.001179146 -0.000474608 -0.002352743 -0.005076142 -0.002681639 0.001655433 0.007174207 0.000828402 -0.004787904 -0.001536098 0.003117627 -0.004352941 0.006103764 -0.014721224 0.005283791 0.003022904 0.007037418 -0.00058099 -0.002738788 0.011162026 0.000856604 -0.010923881 0.006466075 -0.001044811 -0.012430822 -0.020913844 -0.014929129 -0.01698324 -0.002593274 -0.023245662 0.00318899 -0.004670867 -0.001424621 -0.010213955 -0.001171842 -0.006515702 -0.001587832 0.012108108 -0.007547483 0.003907098 0.001828002 0.011416026 0.006607561 0.013010119 0.024331734 -0.019729671 -0.019818609 -0.002717687 0.002441283 0.005355191 -0.004441837 0.009042788 -0.006660007 -0.006246575 -0.001994018 -0.005124291 0.006186256 0.007912088 -0.000417816 0.024774775 0.005461267 -0.024711697 -0.002347024 -0.002301118 0.003870751 -0.005665722 0.000505136 0.001309186 -0.007934519 -0.003153888 -0.004738155 -0.011183998 -0.008244023 -0.000107527 -0.003122945 -0.008845785 -0.00245942 0.009467456 -0.002208589 0.001184834 0.002460025

Closing Rate
1-Apr-11 4-Apr-11 5-Apr-11 6-Apr-11 7-Apr-11 8-Apr-11 11-Apr-11 12-Apr-11 13-Apr-11 14-Apr-11 15-Apr-11 18-Apr-11 19-Apr-11 20-Apr-11 21-Apr-11 22-Apr-11 25-Apr-11 26-Apr-11 27-Apr-11 28-Apr-11 29-Apr-11 2-May-11 3-May-11 4-May-11 5-May-11 6-May-11 9-May-11 10-May-11 11-May-11 12-May-11 13-May-11 16-May-11 17-May-11 18-May-11 19-May-11 20-May-11 23-May-11 24-May-11 25-May-11 26-May-11 27-May-11

Closing Rate 11,887.00 11,873.00 11,901.00 11,933.00 11,848.00 11,905.00 11,868.00 11,796.00 11,734.00 11,652.00 11,684.00 11,674.00 11,599.00 11,745.00 11,923.00 11,954.00 11,916.00 11,933.00 11,947.00 11,966.00 12,057.00 12,035.00 11,956.00 11,672.00 11,908.00 11,879.00 11,932.00 12,012.00 12,036.00 11,962.00 11,967.00 11,902.00 11,930.00 11,884.00 11,878.00 11,973.00 12,030.00 12,130.00 12,168.00 12,198.00 12,225.00

85 84.24 84.28 84.71 84.57 84.5 84.63 85 86.27 86.01 86.06 85.11 86.05 86.14 87.98 89.5 91.63 92.06 93.01 93.62 92.5 92.14 91.1 89.93 91.74 91.99 91.5 90.68 91.25 91.72 91 88.8 91.05 91.26 91.78 91.66 91.95 92.99 93 93.83 92.95

30-May-11 31-May-11 1-Jun-11 2-Jun-11 3-Jun-11 6-Jun-11 7-Jun-11 8-Jun-11 9-Jun-11 10-Jun-11 13-Jun-11 14-Jun-11 15-Jun-11 16-Jun-11 17-Jun-11 20-Jun-11 21-Jun-11 22-Jun-11 23-Jun-11 24-Jun-11 27-Jun-11 28-Jun-11 29-Jun-11 30-Jun-11 4-Jul-11 5-Jul-11 6-Jul-11 7-Jul-11 8-Jul-11 11-Jul-11 12-Jul-11 13-Jul-11 14-Jul-11 15-Jul-11 18-Jul-11 19-Jul-11 20-Jul-11 21-Jul-11 22-Jul-11 25-Jul-11 26-Jul-11 28-Jul-11 29-Jul-11 1-Aug-11 2-Aug-11

92.84 92.52 92.69 92.69 92.7 93.89 93.04 93.15 93.42 94.63 93.64 93.9 92.8 93 92.27 91 90.51 91.07 93.71 93.71 92.52 91.21 93.12 93.49 93.99 94.75 95 94.58 94.58 94.88 94.25 95.5 94.68 96.09 95.72 95.4 95.5 96.1 96.1 96.5 95.91 94.09 93.26 96.61 95.5

12,195.00 12,123.00 12,264.00 12,179.00 12,336.00 12,211.00 12,314.00 12,367.00 12,330.00 12,377.00 12,353.00 12,337.00 12,317.00 12,369.00 12,361.00 12,169.00 12,326.00 12,369.00 12,508.00 12,464.00 12,464.00 12,362.00 12,423.00 12,496.00 12,560.00 12,576.00 12,533.00 12,441.00 12,390.00 12,291.00 12,191.00 12,262.00 12,267.00 12,346.00 12,318.00 12,433.00 12,433.00 12,474.00 12,476.00 12,394.00 12,364.00 12,098.00 12,190.00 12,253.00 12,266.00

0.003458712 -0.001834071 0 -0.000107875 -0.012674406 0.009135856 -0.001180891 -0.002890173 -0.012786643 0.010572405 -0.002768903 0.011853448 -0.002150538 0.007911564 0.013956044 0.005413766 -0.006149116 -0.02817202 0 0.012862084 0.01436246 -0.020511168 -0.003957643 -0.005319715 -0.008021108 -0.002631579 0.004440685 0 -0.003161889 0.00668435 -0.013089005 0.008660752 -0.014673743 0.003865441 0.003354298 -0.00104712 -0.006243496 0 -0.004145078 0.0061516 0.019343182 0.00889985 -0.034675499 0.011623037 0.006640666

0.005939124 -0.011497065 0.006979227 -0.012726978 0.010236672 -0.008364463 -0.004285599 0.003000811 -0.003797366 0.001942848 0.001296912 0.001623772 -0.004204059 0.000647197 0.015777796 -0.012737303 -0.003476433 -0.011112888 0.003530167 0 0.008251092 -0.004910247 -0.005841869 -0.005095541 -0.001272265 0.003430942 0.007394904 0.004116223 0.008054674 0.008202773 -0.005790246 -0.000407598 -0.006398834 0.002273096 -0.009249578 0 -0.003286837 -0.000160308 0.006616105 0.002426399 0.021987105 -0.00754717 -0.005141598 -0.00105984 0.027217151

3-Aug-11 4-Aug-11 5-Aug-11 8-Aug-11 9-Aug-11 10-Aug-11 11-Aug-11 12-Aug-11 15-Aug-11 16-Aug-11 17-Aug-11 18-Aug-11 19-Aug-11 22-Aug-11 23-Aug-11 24-Aug-11 25-Aug-11 29-Aug-11 30-Aug-11 5-Sep-11 6-Sep-11 7-Sep-11 8-Sep-11 9-Sep-11 12-Sep-11 13-Sep-11 14-Sep-11 15-Sep-11 16-Sep-11 19-Sep-11 20-Sep-11 21-Sep-11 22-Sep-11 23-Sep-11 26-Sep-11 27-Sep-11 28-Sep-11 29-Sep-11 30-Sep-11 4-Oct-11 11-Oct-11 20-Oct-11 21-Oct-11 3-Nov-11 4-Nov-11

94.87 94.87 90.15 92 92 92 94.75 95.05 94.5 99.22 96.93 96.9 95.59 97.4 96.5 101.2 98.01 97.01 97.02 97 96.03 97 96.98 97 101.31 103.1 101.83 103 102.99 101.1 101.62 103.21 102.01 101.08 96.56 99 98.01 98.96 100.2 99 101.98 104.13 103.01 101.92 104.97

11,941.00 11,846.00 11,375.00 11,404.00 11,034.00 11,311.00 11,264.00 11,262.00 11,166.00 11,123.00 11,269.00 11,128.00 10,879.00 10,894.00 10,842.00 10,941.00 10,901.00 10,903.00 11,070.00 11,152.00 11,319.00 11,329.00 11,348.00 11,286.00 11,180.00 11,264.00 11,297.00 11,302.00 11,353.00 11,355.00 11,522.00 11,851.00 11,690.00 11,606.00 11,265.00 11,531.00 11,561.00 11,642.00 11,761.00 11,933.00 12,054.00 11,685.00 11,525.00 11,807.00 11,957.00

0 0.052357182 -0.020108696 0 0 -0.029023747 -0.003156234 0.005820106 -0.047571054 0.023625297 0.000309598 0.013704362 -0.018583162 0.009326425 -0.046442688 0.032547699 0.010308216 -0.000103072 0.000206186 0.01010101 -0.01 0.000206228 -0.000206186 -0.042542691 -0.017361785 0.012471767 -0.011359223 9.70968E-05 0.018694362 -0.005117103 -0.015405484 0.011763553 0.009200633 0.046810273 -0.024646465 0.01010101 -0.009599838 -0.01237525 0.012121212 -0.029221416 -0.020647268 0.010872731 -0.018672002 -0.01990576 0.00981241

0.008019585 0.041406593 -0.002542967 0.033532717 -0.024489435 0.004172585 0.000177588 0.008597528 0.003865864 -0.012955897 0.01267074 0.022888133 -0.001376905 0.004796163 -0.009048533 0.003669388 -0.000183436 -0.015085818 -0.007352941 -0.014753954 -0.00088269 -0.001674304 0.005493532 0.009481216 -0.007457386 -0.00292113 -0.0004424 -0.004492205 -0.000176134 -0.014494011 -0.02776137 0.013772455 0.007237636 0.03027075 -0.023068251 -0.002594931 -0.006957567 -0.010118187 -0.01441381 -0.010038162 0.031578947 0.013882863 -0.023884137 -0.012544953 -0.00100259

10-Nov-11 11-Nov-11 14-Nov-11 15-Nov-11 16-Nov-11 17-Nov-11 18-Nov-11 21-Nov-11 22-Nov-11 23-Nov-11 24-Nov-11 25-Nov-11

103.95 103.99 102.05 102.05 103.78 103 102.51 102.74 102 101.24 100.31 100.37

11,969.00 12,038.00 12,008.48 11,994.01 11,992.77 11,913.42 11,937.81 11,894.79 11,767.00 11,633.97 11,729.41 11,648.14

0.019917582 0.019010289 0 -0.016669879 0.007572816 0.004780021 -0.002238661 0.007254902 0.007506914 0.009271259 -0.000597788

-0.005731849 0.002458263 0.001206436 0.000103396 0.006660556 -0.002043088 0.00361671 0.010860032 0.011434618 -0.008136812 0.00697708

Return on KSE
0.05 0.04 0.03 0.02 Axis Title 0.01 0 -0.01 -0.02 -0.03 -0.04 Time 1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103 109 115 121 127 133 139 Series1

Return on Abbott
0.06 0.04 0.02 Axis Title 0 -0.02 -0.04 -0.06 1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103 109 115 121 127 133 139

Series1

Time

The beta is 0.50537

Interpretation:
The beta 0.5053 shows that the closing price of Abbott and closing price of Karachi Stock Exchange is positivity correlated that is the price of the Karachi Stock Exchange increase it cause 50% increase in the Abbott Pakistan prices.

KE = RF + E(RM RF) Ke = 12% + 0.505(2.25) Ke = 13.13%

Interpretation:
It shows that the Abbott Stock is giving the return of 13.13 on their stock.

CASH FLOWS FROM OPERATING ACTIVITIES Net Income NIC Interest fixed Capital investment Working capital Free Cash Flow 1,176,741,000 256102,000 2,446,00 174,822,000 493,611,000 766,857,000

Value of the Firm = 766,857,000/ 5,832,196 = 131.486

Interpretation:
The Value of the Firm if we compared to the current value of the stock is 100, then the stock value is undervalued and it will be useful to hold the stock because it will increases as the time passes and it will give the higher return.