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1- DECLINE TREND OF RICE CROPPED AREA
2- ENCOURAGING PRIVATE SECTOR
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IMPACT OF WTO ON PHARMA SECTOR
4- THE DEVELOPMENT OF GWADAR
5- THE AUTO PARTS BUSINESS

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IMPACT OF WTO ON PHARMACEUTICAL SECTOR

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The threats for the local pharmaceutical industry are due to free trade, extension of patent period and implementation of TRIPS

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By MUHAMMAD ASIF

Oct 18 - 24, 2004
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After the independence, our pharmaceutical needs were fulfilled mainly by the imported drugs. Initially some multinationals and later on some national companies started their business in Pakistan. Currently there are over 400 pharmaceutical companies carrying out business in Pakistan. The number of local pharmaceutical companies and their market shares has increased more than that of multinationals. The number of multinationals companies has decreased over the passage of time due to mega mergers but they are still in a strong position to hold the sufficient market share and control the supply of many vital medicines. Local pharmaceutical industry had not yet completely sprouted its wings when it came across the threatening of WTO regime.

The threats for the local pharmaceutical industry are due to free trade, extension of patent period and implementation of TRIPS (Trade Related Aspects of Intellectual Property Rights) regulations of WTO. In addition lack of research and development, decreased productivity, high manufacturing cost and poor quality of medicines can make the situation worse.

The first threat for the Pakistani pharmaceutical sector in the post WTO regime is the free trade. New WTO regime will bring an influx of low priced products from the other countries especially India, China, Indonesia and Malaysia. These low priced products will fill our markets and give a tough time to their local competitors and many of the later will be wiped out from competition. On one hand the imports will increase and on the other hand exports will decrease since the competition will be based mainly on the good quality and low prices. Further more Pakistani exporters will be required to produce to their customers the documented evidence of following good quality management system (ISO-9000), a proof of being environment friendly (ISO-14000) and following Good manufacturing practice (GMP), Good storage practice (GSP) and Good laboratory practice (GLP). An increase in import and decrease in export could produce a distortion in trade balance. At its worst the new scenario could be catastrophic.

In the last few years many of the large multinationals companies have undergone mergers. Glaxo and SmithKline merged to form Glaxo SmithKline, Pfizer joined Upjohn, Ciba Geigy and Sandoze merged to form Novartis, Wyeth and Lederle merged with each other. The local pharmaceutical industry feels quite desolated in these mega merger scenarios. Also these mega mergers have resulted in the business giants that have deep pockets and can easily withstand any shock as against the local companies where a single shock affects the whole of business.

Another threat for the local pharmaceutical industry is the new TRIPS regulations of WTO. The nutshell of these TRIPS regulations is that the actual value of new medicines and many high technology products lies in the amount of innovations, inventions, research and design involved in their preparation. Creators must be given the right to prevent others from using their inventions, design etc. These rights are known as TRIPS and they may take the form of copyrights (as in case of books), patent (as in case of new medicines or other high tech. products) and trademarks (for brands and logos). In pharmaceutical sector threat is from patent period which has been extended to at least 20 years. In the post WTO regime the patent laws will be followed more strictly.

The patent malpractices are more severe in China and India. This is due to better coordination between pharmaceutical manufacturers and government regulatory agencies of the respective countries. But this not a matter to worry about, such subversive practices can not be carried out over longer period of time. However in Pakistan, like other countries of the world, a better coordination between government and pharmaceutical industry is needed to resolve the ever conflicting issues of price fixation, high tariffs on the import of raw materials and other tax rates.

Secondly Ministry of Health should have a friendly yet professional approach towards pharmaceutical manufacturers. It must not be merely a watch dog having the job description of finding contraventions of drug act or the violations of Good Manufacturing Practice (GMP), rather it should adopt the role of an advisory committee and counseling body determined to improve the quality standards and the uplift of pharmaceutical industry for provision of better and economic health care, the ultimate benefit of which will go to the poor masses.

 

The most important impact of extension of patent is that multinationals that hold patent rights for the majority of medicines, will enjoy this monopoly for an extended period of time and local companies will manufacture only those medicines whose patent periods have expired or otherwise wait for the expiry of patent. The consequence will be that multinationals will be in a strong position to control the supply of many important medicines in the market which could precipitate the problems beyond the imaginations.

Although Pakistani pharmaceutical industry is raising voices at different forums for various exemptions regarding patent rules relaxation, but this is not the long lasting solution to the problem. This is the type of problem which can not be solved by pharmaceutical industry alone, rather government should come ahead to bring pharmaceutical industry out of deep waters. Government must provide sufficient financial aid or incentive to the companies going for ISO-9000 certification, environmental standards certification and labor standards compliance certification since going for any one or more of these certifications is a costly process and requires hundreds of thousands of rupees.

Our local pharmaceutical companies have not reached yet that level of good quality and expertise where they could compete multinationals. In fact quest for quality is more a matter of mentality and commitment of top management than anything else. A commitment for improvement in the quality and a change in organizational culture is the need of time. Local companies have to change from the "Saith culture" to the "Corporate culture" for a better work environment and effective combat of WTO challenges. Local pharmaceutical manufacturers are working with old outdated machinery and unskilled workforce leading to low productivity, high manufacturing cost and poor quality of products. Government should facilitate the transfer of technology from developed countries to Pakistan. Facilitating transfer of technology is the best role which government can play in this regard.

Currently our educational institutes are teaching only theoretical knowledge that is hard to integrate with the practical work in pharmaceutical organizations. Pakistan Pharmacy Council and Pharmacy institutes have the responsibility to harmonize the pharmacy syllabi with the future needs of Pakistani pharmaceutical industry. Currently there are 10 teaching institutes of pharmacy accredited with Pakistan Pharmacy Council and over 400 pharmaceutical companies. Collaboration between teaching institutes and organizations can produce human resource that that can successfully fulfill the needs of Pakistani pharmaceutical industry as well as boost the research and development activities. Synthesis of new drug molecules is imperative. A shift from the conventional drug manufacturing to genetically engineered medicines requires greater research and collaboration than ever before.

Although the new regime will also benefit the manufacturers by waiving all the import duties on the raw materials that will eventually reduce the manufacturing cost of locally manufactured medicines but increase in import, decrease in export, non compliance with the international standards and extension of patent period can effectively nullify any beneficial effect of WTO.

BRIEF BIODATA

Mr. Mohammad Asif is a pharmacist by profession and holds a masters degree in Total Quality Management. Quality Management is his favorite area of work. His various projects include Quality management in Primary Education and Quality Management in Pharmaceuticals. He is currently associated with Medipharm Pvt.. Ltd., a licensee of Schering A.G. Germany, as quality control officer. He can be reached at mohammadasiff@hotmail.com.