Key Challenges to Pharmaceutical Industry in Pakistan

At the time of independence in 1947, there was hardly any pharmaceutical industry in the country. Today Pakistan has about 400 pharmaceutical manufacturing units including those operated by 25 multinationals. Pakistan’s pharmaceutical industry meets around 70 per cent of the country's demand. The domestic pharmaceutical market, in terms of market share is almost divided between the national companies and multinationals. The industry provides direct employment to over 70,000 and indirect employment to around 150,000 across the country.

In Pakistan pharmaceutical 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 main industry is following Good Manufacturing Practices (GMP), in accordance with the domestic as well as international guidance. Currently the industry is capable of capacity to manufacture a variety of products ranging from simple pills to sophisticated biotech, oncology and value added generic compounds. 

Though Pakistan's 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 stakeholders. The value of pharmaceuticals sold in 2007 exceeded $1.4 billion, which equates to per capita consumption of less than $10 per year and value of medicines sold is expected to exceed $2.3 billion by 2015. 

With a large population and economic progress evident, Pakistan is a developing pharmaceutical market, but per capita drug spending is rather low. Private spending accounts for 65 per cent of total healthcare expenditure sourced through out-of-pocket payments, international aid and religious or charitable institutions. Pharmaceutical spending accounts for less than 1 per cent of the country's GDP, comparable to levels in some neighbouring 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 the patent in the near term, would be likely benefit of the generics-dominated local industry. 

Like domestic market the sales in international market have gone almost double during last five years. Pakistan pharma industry is relatively young in the international markets with an export turnover of over $100 million. Pakistan Pharma Industry boasts of quality producers and many units are approved by regulatory authorities all over the world. The pharma industry is focusing an Export Vision of $600 million by 2016. In the meantime, exports are also likely to boost due to new regional and global opportunities.

 
The Pakistan Pharmaceutical Industry is a success story, providing high quality essential drugs at affordable prices to Millions. 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. 
The country's pharmaceutical exports were $101 million in 2006-07 and growing at an annual rate of 22 per cent. In 2005-06 exports hit the mark of $83 million. Export target for FY2008 had been projected at $125 million.

On other side, Indian pharmaceutical exports stand at $6 billion, growing at a pace of 20 per cent. Country's spending on health as percentage of GDP was only 0.8 per cent as compared 5-6 per cent in Sri Lanka, 3-4 per cent in Bangladesh, 6-7 per cent in Algeria, 5-7 per cent in Mexico, 6-9 per cent in Iran and 10-15 per cent in Costa Rica and Cuba.

Pharma industry has contributed positively so far and has somehow managed to increase production by a meager 1 per cent. Similarly industry contribution and weightage surged to 6.7 per cent in total Large Scale Manufacturing (LSM) production during 1QFY09. On the other hand, LSM posted 6.20 per cent negative growth in 1QFY09 over the corresponding period of previous year mainly due to deteriorating economics of the country. 

The rapid-deteriorating business environment especially for the pharmaceutical companies in the wake of high cost of production has been burdening the local pharma sector.
Also, the cap on drug price by the government for the last seven years has aggravated the situation further.  The prices of the Active Pharmaceutical Ingredients (APIs) used for the manufacturing of drugs as well as of other raw materials like paper, plastic, glass, rubber, etc. have increased manifold since 2001. The cost of oil, gas, electricity, transportation and labour has also spiked dramatically during this period.

In these days, pharmaceutical industry is fighting for its survival. Bristol-Myers Squibb (BMS) has an annual turnover of around Rs 1.5 billion and is the second multinational pharmaceutical. But now it is going to kiss Pakistan goodbye. Earlier, Merck Sharp & Dohme (MSD) closed down its operation in Pakistan some months back and was acquired by a local pharmaceutical firm Organon Bio Sciences (OBS).

It is not the end but a new beginning for the pharmaceutical firms, especially MNCs are shutting down business because of tough business conditions. More and more MNCs are mulling to close operations in Pakistan. After MSD and BMS, two more firms will follow suit in the near future. Local pharmaceutical companies are also facing hard times and they are opting for mergers to survive in the present situation. Recently two local pharmaceutical companies Hilton Pharma and SAMI Pharmaceutical consolidated their operations in order to survive in the current situation.