GSKCH declares force majeure to produce Panadol range

In a major development hitting the country’s pharmaceutical sector, GlaxoSmithKline Consumer Healthcare (GSKCH) has declared force majeure regarding the production of Panadol Tablets, Panadol Extra Tablets and Children’s Panadol Liquid Range, the company said in a filing to the Pakistan Stock Exchange (PSX) on Friday.

Force majeure is a clause that is included in contracts to remove liability for unforeseeable and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling obligations.

The development comes after the company sent “several letters to various government stakeholders regarding the critical issue of extraordinary and rapid increase in paracetamol (raw material) prices in Pakistan."

GKSCH “appeals to the federal government to accord approvals for the adjustments to the selling price(s) of the captioned Panadol range of products, all of which are Paracetamol based,” read the notice.

GSKCH, a member of the Haleon group, said that it had obtained approval in the 50th Drug Pricing Committee (DPC) of the Drug Regulatory Authority of Pakistan (DRAP), held on 12 January 2022 which was recommended by the DPC for the approval of the Cabinet.

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“But, according to media reports, the same has been rejected after a prolonged delay by the latter without any intimation of reason(s) given to the company.

“Also, although the company has received a routine Consumer Price Inflation (CPI) adjustment for the year 2022 from DRAP on 25 August 2022, the same is not commensurate with the debilitating increase in the prices of the raw material of Paracetamol,” it said.

GSKCH said that it produced nearly 5,400 million tablets of Panadol 500mg and Panadol Extra in the last twelve months, to serve its customers, consumers and patients in need.

The company said that it played a “responsible role during the COVID-19 pandemic, dengue fever crisis and floods across Pakistan, by ensuring continuous supplies of the Panadol range; this despite incurring heavy financial losses on the production of the said Panadol range due to an increase in the price of Paracetamol raw ingredients and in the absence of due approval by the federal government of the recommendation of the DPC / DRAP.

“However, due to the challenges stated above, manufacturing of the Panadol range on negative margins is unsustainable, and despite exhaustive efforts of the company to mitigate this matter through dialogue, the situation is now beyond our control.

“We are thus forced to declare force majeure regarding the production of Panadol Tablets, Panadol Extra Tablets and Children’s Panadol Liquid Range,” it said.

GSKCH urged the government to take urgent action to rationalise the prices of the impacted Panadol range commensurate with the increase in the price of the impacted raw material and as recommended by the Drug Pricing Committee of the DRAP.

Last month, GSKCH rejected claims related to hoarding Panadol intentionally to create a shortage.

In June, Pakistan Pharmaceutical Manufacturers’ Association (PPMA) had stated that around 40 to 50 medicines are in short supply, and the number would soon cross 100.

At the time, over 40 life-saving drugs were not available after the pharma industry decided not to import raw materials because of GST imposition.