TEXT: In order for Pakistan’s Active Pharmaceutical Ingredient (API) industry to benefit from a competitive advantage, advanced mechanism are highly recommended. The API industry is at its inception phase, so API policies can be implemented to promote expansion. Recently, the value of the pharmaceutical sector of Pakistan has been estimated at USD 3.2billion which has doubled, compared to USD 1.64 billion in 2011.
To understand the export market of Pakistan, it is essential to note that the overall value of APIs in 2022, was an estimate USD 180 billion. This has increased from previous records of USD 44.4 million in 2003. Nevertheless, these values are regarded as 0.9% of the country’s total export, in comparison to other instruments and medical equipment. This is since the industry only possesses 23 manufacturers. These firms are believed to produce approximately 15% of the APIs, whilst 85% are being imported.
APIs industry experts believe that the sector could reach USD 250 billion within 2024 if the possibilities of export growth can enhance. They believe that the target of growth can be exceeded by resolving various factors, such as identifying the reasons for high lead times to the market, consulting the stringent export requirements regarding per product market, and analysing possible regulatory weaknesses within the country. Adjusting to these changes can assist the economy to accomplish export targets that would embed Pakistan to acquire a higher share of global trade during the medium term. By analysing, it's potential and its self-reliance, there is a potential to invest within the sector.
Nevertheless, many investors tend to avoid investing within the industry, due to the complex nature of manufacturing processes, easily imported APIs from international markets and substantial expense of R&D involved. This leads to a substantial increase in the API products being imported rather than increasing export values.
Internationally APIs industry possesses a lucrative nature, therefore various countries are investing in its growth. For instance, the government of China, Bangladesh, and India have comprehended to incentivize their industry for boosting its potential. For Pakistan to create a self-reliance strategy within the economy, the following short-term and long-term incentives could be proposed:
• Reduction in custom duties for intermediate materials, chemicals, and APIs-related machinery items by Tariff Policy Board to encourage local manufacturing.
• Reduction in import prices, of materials that are substituted for local APIs produced in Pakistan, should be supported through a levy of Anti- Dumping duty. The regulations from, M/o, NHS, DRAP, or R&C, after the fulfilment of the criteria, should then forward the items to Tarif Policy Board.
• Provide an allowance for API manufacturers to sustain export earnings of 15% of the FOB value of their export’s process, which is similarly allowed by the Minister of Finance to the pharmaceutical sector.
• Construction of API Mega Parks which could include proper wastage and effluent treatment planning, distillation plants, environmental control along with powerhouses.
• Ministry of Industries & Production could develop policies to incentivize the Napta Cracking plant, to promote the APIs industry.
Syeda Marium Mujtaba, Executive Director for Marketing and Sales
Copyright Business Recorder, 2022
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