Surgical Industry: opportunities and threats!?

Much has been heard about Sialkot for its sports goods and surgical instrument manufacturing. The surgical instruments industry in Pakistan centered in Sialkot exports around 80-90 percent of its products to over 140 countries around the world. With a target of $247.1 billion for FY12, the exports of the sector for 1HFY12 increased by more than 19 percent. The surgical goods and medical instruments exports climbed to $142 million for 1HFY12 versus $119 million during 1HFY11. On a relative basis, the six months of FY12 have been better than the corresponding period of FY11. This has been primarily due to the higher quality adherence and better orders from the importing countries worldwide. Sialkot alone exports around 20 percent of its $1.25 billion worth of exports in shape of surgical and medical equipment. Averaging to $225 annually, the exports of this industry have been a stable source of income for the country. However, the characteristics of this sector speak much more. The industry has a potential with many untapped geographical areas higher than what is being achieved. At present the country is manufacturing two types of surgical instruments; majority of the exports comprise of the disposable instruments while reusable instrument contribute to 19 percent of the total exports. The country has little dexterity with advance instruments with only 1 percent share in total exports. Though it is amongst the five zero rated exports for the import of raw material, still its contribution towards total exports by this sector is 1 percent and this share in total exports have remained stable over years. The country has huge potential in countries like Hungary as proposed by the envoy from the prospective country. Moreover, the rising demand in Asian and African countries also remains a big opportunity for Pakistan. Presently, Pakistan exports over 70 percent of surgical and medical equipment to USA, Europe, Australia and Japan. With the opportunity, come the hook ups. Globally, the emerging technologies are replacing the conventional ones and markets are becoming highly regulated. Due to changes in the vendor production practices and need of skilled labour subdue margins of the sector. In the turbulent times like these, compliance with labour, quality and environmental standards increase the costs. As a result, the exports of related market - pharmaceutical products - stood at $63 million in 1HFY1, a decrease of more than 8 percent over 1HFY11. Going forward, with trade relations normalising with India in the wake of MFN status, the negotiation and final take regarding non-tariff barriers on the import of textile, leather, surgical goods and cement by Pakistan will affect route surgical and pharma exports take.