PHARMACEUTICAL INDUSTRY IN PAKISTAN

S.M. ABBAS ZAIDI,
Research Analyst
, PAGE
Mar 9 - 15, 2009

Pharmaceutical Industry is one of the major manufacturing industries in Pakistan providing employment to thousands of people directly and indirectly.

At the time of independence, pharmaceutical manufacturing industry was non-existent. In the early period, multinational pharmaceutical manufacturers set up their plants, which not only fulfilled the growing demand of quality medicines but also trained and educated score of pharmacists and professionals who, later on, laid the foundation of local pharmaceutical manufacturing industry.

Today Pakistan has about 386 pharmaceutical companies, registered with ministry of health, including those operated by 30 multinationals. The industry meets around 80% of the country's demand of finished medicines and 20% through imports. The domestic pharma market is almost evenly divided between the national and the multinational enterprises.

PROVINCE-WISE BREAK-UP OF PHARMACEUTICAL COMPANIES
PROVINCE NATIONAL MULTINATIONAL TOTAL
Punjab 204 05 209
Sindh 92 23 115
NWFP 50 - 50
Balochistan 07 02 09
Azad Jamu & Kashmir 03 - 03
Total 356 30 386
Various sources
*Companies Registered with Ministry of Health

RAW MATERIALS

FDI IN PHARMACEUTICAL & OTC* PRODUCTS SECTOR
(IN MN USD)
YEARS FDI
2003-04 13.2
2004-05 38.0
2005-06 34.5
2006-07 38.4
2007-08 45.6
Various sources

Almost 95% of the basic raw materials used for the manufacturing of medicines are imported from various countries such as China, India, Japan, the United Kingdom, Germany and the Netherlands, etc.. However, few firms are now engaged in producing the raw materials locally.

EXPORTS

The pharmaceutical products of Pakistan enjoy a fair market access in foreign markets. They have in fact better opportunities in the markets of industrial countries because of their comparatively lower tariffs. Presently, pharmaceutical products manufactured in Pakistan are exported to Africa, Middle East, Asia and CIS markets.

Exports of Pakistan's pharmaceutical products have registered 10% increase during 2008 mainly due to better marketing approach by the local pharmaceutical companies and their sustained efforts to enhance the quality of medicines. Pakistan is ranked far below in the list of major medicine exporting countries of the world. Multifarious factors could be blamed for impediments hampering fast track progress of the pharmaceutical industry during several decades.

EXPORTS OF PHARMACEUTICAL PRODUCTS
(000 US $)
  JULY - JUNE
  2003-04 2004-05 2005-06 2006-07 2007-08
Pharmaceutical products 69,215 64,923 67,943 78,952 86,508

IMPORTS

Although, the Health Ministry discourages the import of pharmaceutical products except those at the high end, foreign pharmaceutical products enjoy open access to Pakistan's market. However, companies are obliged to get their products registered before these can be exported in Pakistan. Imported high tech products include different vaccines including hepatitis, therapies for HIV, oncology, dialysis, surgical etc.

IMPORTS OF PHARMACEUTICAL PRODUCTS
(000 US Dollar)
  JULY - JUNE
  2003-04 2004-05 2005-06 2006-07 2007-08
Pharmaceutical products 287,478 276,210 329,366 342,234 354,235

MAIN CHALLENGES

Currently, the industry is facing many challenges, which are hindering its growth. The major challenge faced by the industry is the complete freezing price of pharmaceutical products since 2001. The prices of pharmaceutical products are determined by Ministry of Health and the Ministry has not increased the prices since 2001.

With medicine prices still at the 2001 level, while fuel, electricity, raw material prices, and labor wages are sky rocketing, pharmaceutical companies have to cut their profit margins as many are finding it hard to control expenses.

Pakistan is the only country in the entire Asian region that has not given its pharma and biotech industry tax breaks and R&D incentives. Government's requirement that drug production lines should be separate is raising cost and reducing the ability of local manufacturers to compete in the global market as well as at home.

Most of the raw materials are imported from different countries of the world. If rupee depreciates against the dollar, it raises the cost of raw materials which adversely affect the profitability of the local manufacturers.

The industry's turnover is $ 1.9 bn approximately. The industry is trying to increase its exports to $ 600 mn by the end of 2010, a target that can be made realistic and attainable only if the government solves the problems being faced by the pharmaceutical industry.

TOP TEN PHARMACEUTICAL COMPANIES IN PAKISTAN DURING 2008
S.NO COMPANIES MARKET SHARE % GROWTH %
1 GSK 11.59 8.9
2 Sanofi Aventis 4.15 7.4
3 Getz Pharma 3.76 26.7
4 Abbott Lab 3.69 4.7
5 Roche 3.13 14.4
6 Merck (Pvt.) Ltd. 2.89 16.6
7 Parke Davis 2.86 3
8 Sami 2.79 28
9 Novartis Pharma Speciality 2.26 11.6
10 Novartis Consumer Health 1.71 12.1
Various sources

FUTURE OUTLOOK

Pakistan's pharmaceutical industry is considered to be one of the cheapest pharmaceutical industries in the world and despite producing low-priced medicines is maintaining the quality and packaging according to the international standard. Unlike all other industries, pharmaceutical industry is not supported by the government. Therefore, there is an urgent need that government should evolve a comprehensive policy in consultation with all stakeholders to prop up the industry at least for five years before it can stand on its feet.