EDITORIAL: The government is trying to keep a straight face, but it seems pretty helpless as around 40 pharmaceutical firms threaten to shut down “within a few days” as rising input costs and a collapsing rupee have made their business models simply unsustainable.
It beggars belief that this situation has been allowed to deteriorate to this level. Because this problem has been brewing for more than a year, when authorities were first informed that without an across-the-board price increase, including life-saving medicines, the industry would not be able to continue with business as usual.
At that time the newly-installed PDM (Pakistan Democratic Movement) government was under fierce attack from the ousted PTI (Pakistan Tehreek-e-Insaf), especially because runaway inflation was making people’s lives miserable.
And it decided — quite unwisely as it turned out — that burning any more political capital by effectively greenlighting pharma sector inflation, when the economy was nose-diving, prices were rising and people were losing jobs all over the country, was not a viable option.
Fast forward one year and medicines disappearing from the shelf as people’s suffering mounts now threatens to deliver it a much stronger blow, with nobody willing to buy its usual all-will-be-well line any longer.
Hiding behind the low foreign exchange reserves situation, which the government is trying to do, will also not wash with too many people, especially in the pharma industry.
The pharma bureau executive director, while talking to the press, pointed out that “it is unfortunate that the government has dollars to import vehicles but LCs (letters of credit) are not being opened.”
In a letter to the health ministry, the ministry’s secretary and the Drap (Drug Regulatory Authority of Pakistan) CEO, the industry also pointed out that “factors of production like cost of fuel, electricity, freight charges and packaging material witnessed unprecedented increase” over the last couple of years, especially since the outbreak of the Covid pandemic.
Since all this coincided with a historic, unprecedented collapse of the rupee, it is understandable that the industry’s business model is no longer feasible and it is warning of an imminent “collapse”.
Unfortunately for the government as well as the people, the only way around this mess is to allow “inflationary adjustments in the maximum retail price of medicines”, as the industry has been demanding all this time.
The choice, at the end of the day, is between few or no medicines at affordable prices or more medicines, especially the most urgently needed ones, at higher prices.
Such is the unforgiving calculus of the free market. And in times when authorities have to bend over backwards to revive the IMF (International Monetary Fund) bailout programme, which requires cutting subsidies across all sectors, nobody’s life is going to get any easier in the foreseeable future.
Ironically, it was only a few years ago that the previous PTI government planned to upgrade the pharma industry into one of the country’s leading export earners sometime down the road. Now it is fighting to stay afloat.
Needless to say the government will have to do whatever is needed to keep it from collapsing. Either way the people must brace for more bad news, especially the unfortunate lot that is dependent on a regular, steady supply of crucial medicines to stay alive.
The government did not take proper action when production of Panadol came to a halt last year. And by not stopping the haemorrhaging at that stage, it will now have to make a much bigger effort to avoid a much wider breakdown.
It is, of course, understandable that it is battling on many fronts at the same time. But it must also realise, for the sake of the people as well as its own political future, that the pharma sector needs to be very high on its list of priorities.
Copyright Business Recorder, 2023