The Pharmaceutical Industry in Pakistan
Amin, Tariq, Economic Review
The Pharmaceutical Industry in Pakistan commenced its business operations a few years after the country came into existence. With the passage of time most of the multinational companies began manufacturing activities to cope with the requirement of quality drugs and medicines for the rapidly increasing population in both wings of the country.
Presently the number of registered or licensed manufacturers in the country is close to 300 units out of which are 32 majority control multinationals and there are many joint ventures with foreign collaboration. According to the IMS (International Market Survey) the total pharmaceutical market in Pakistan in 1996 was valued at US$900 million which grew at the rate of 20 per cent in 1996. The total world market for pharmaceuticals is estimated to be about US$248 billion in 1994 out of which North America had a share of 33.5 per cent followed by Europe at 27 per cent and Japan 21.5 per cent. Pakistan's share was about 0.3 per cent. The per capita consumption of pharmaceuticals is about US$4 in Pakistan whereas the average worldwide annual per capita consumption is estimated at US$30 with Japan the highest at US$ 180.
The multinationals have dominated the pharmaceutical market in the country and at one time their share in the overall sales was over 75 per cent. Presently the MNCs have a share of around 60 per cent of the total pharmaceutical market in the country. The MNCs have a strong research base and are one of Pakistan's most important high technology industry. The innovative contribution of this group has added immeasurably to the quality of life of the people of Pakistan.
No other manufacturing industry devotes more resources to R&D annually than the pharmaceutical industry. This rise reflects not only the long-term commitment of the industry in maintaining a strong and competitive research base worldwide, but also the growing intensity of R&D in the human pharmaceutical sector. Recent figures show that while R&D intensity in every major manufacturing industry has shrunk, those reported in the pharmaceutical and the chemical sectors have risen notably.
Pharmaceutical research is essentially a highly risky business. Out of 5000 or so compounds discovered and investigated, on average only one reaches the prescription market. It is estimated that it takes on average 12 years from patent filing to the launch of a major innovative medicine at a total cost of around US$400 million, as compared with US$ 100 million reported in 1985. Even so there is no guarantee of success in a highly competitive market where novel products are constantly and rapidly made obsolete or entirely replaced by new innovations - New Chemical Entities (NCEs).
The MNCs in the pharmaceutical sector are a steady employer of around 3000 people in Pakistan, 75 per cent of whom are skilled and possess high standard of education. Included are hundreds of pharmacists, doctors, including PHDs and engineers, besides other technicians and specialists. it can be safely said that this group supports some 130,000 family members directly and an additional 200,000 people in the ancillary industries. Apart from being a provider of employment the industry contributes substantially to the government its share of various tax revenues and levies and to the central research funds. Most of the drugs and medicines which are needed for the population are produced locally with the exception of certain products like anti-cancer drugs. Since for the purpose of this article the space available is limited, let us confine ourselves to some of the problems that this industry faces.
The pharmaceutical industry has been under strict price control for almost three decades. …