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HIGH Source:
Pakistan Deaths
Pakistan Cases
3.17% positivity

TEXT: The size of the local pharmaceutical market is around US$ 4.5 billion. The local manufactures comprise 70% of this share and the multinationals account for the remaining. Over the recent years, the local industry has experienced impressive growth (15% double digit) as compared to multinationals in the local market. Industry sources report that the potential in this market is huge. The market size can easily exceed US$7 billion by 2021 in Pakistan as incomes increase and the health expenditure as percentage of GDP increases (currently around 1% -govt expenditure} US$7/8 per capita spending). The industry is current struggling due to lack of chemical industry in the country, poor governance, electricity, inconsistence policies of DRAP regulator cheery picking policies from world absence of long-term drug policy.

The local pharmaceutical industry in Pakistan is still predominantly large to medium scale. The reason is that the local industry is mostly financed by equity and none of the bigger groups in Pakistan have ventured into this industry due to the lack of technical knowhow. Pharmaceutical industry in normally classified as a knowledge based industry and Pakistan generally lacks in availability of trained human resource required by such an industry. Moreover, the other industrial sectors, such as textiles, offer too high an incentive in terms of handouts and subsidies that the opportunity cost for entrepreneurs entering into pharmaceutical is too high.

Policy Recommendations:

• Prices should not be regulated for drugs whose markets are competitive or monopolistically competitive. Price regulation should only be there in the case of a monopoly or collusive oligopolistic behavior.

• Allow duty free imports of all APIs (active pharmaceuticals ingredients) and machinery for both domestic and export markets - However, this benefit should be lifted as the domestic industry picks up and protection should be provided for WHO pre-qualified APIs manufactured locally.

• All locally purchased items like packaging material, etc. should be exempted from sales tax.

• The government should share mark-up cost on loans and allow investment adjustment against future taxes for putting up international standard manufacturing facilities targeting the pharmaceutical markets of the US, UK, Australia, Japan and also those in developing countries.

• Provide incentives such as tax breaks for carrying out R&D on molecules and all ancillary activities like setting up CROs (Contract / Clinical Research Organisations) subject to meeting certain targets.

• Incentives should be provided for new start-ups in Bio-technology. One such incentive is to make it attractive for such high technology industry to locate themselves in science parks proposed earlier in the report.

• The government should provide tax breaks for setting-up internationally certified bioequivalence / bioavailability labs, local manufacturing / fabrication of machines and other hardware.

• Allow long-term subcontracting with drug manufacturers as opposed to 2 years as per the current rules.

• Ensure internationally acceptable manufacturing quality standards / (Good Manufacturing Practises) CGMP compliance in both the local and multinational manufacturing companies in the country.

• Ensure continuous power supply to the pharmaceutical manufacturing to ensure international GMP compliance of maintaining the required levels of temperature control. This will not only ensure high quality of the locally produced medicines but will also make the industry competitive internationally.

• The government should introduce technical courses relevant to the pharmaceutical industry in universities or other institutions. Representatives of the industry contended that, for example, it was next to impossible to find trained mechanics to deal with the electronics that are in almost all the machinery used by manufacturing units.


Copyright Business Recorder, 2021


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