Pharmaceutical Industry

By Shahzad, Faryal | Economic Review, August 2002 | Go to article overview

Pharmaceutical Industry


Shahzad, Faryal, Economic Review


It is being claimed that the pharmaceutical industry is passing through the worst crisis of its history because the profits of multinationals have fallen down substantially, and that of the local manufacturers completely depleted. The situation, it is said, is reaching a point where 75 pharmaceutical units that produce almost 70 per cent of the drugs may actually close down shortly, many of these units are positioned in Punjab.

Industry experts cite inconsistent policies of successive governments as the biggest reason behind the present exigency "Repeated government change and unstable, lop-sided policies during the last 10 years in particular have prompted many national companies to cut their investment plans, in order to minimize risks", says a PPMA report. "Hence, it is the need of the hour that the government formulates an effective tariff policy in order to encourage the pharmaceutical companies to import plant and machinery, components and raw material, instead of finished products". Presently, almost 53% of the national market share is held by the local companies, in comparison to 47% held by the MNCs. The local pharmaceutical manufacturers have improved their market share over the past 15 years or so by an average of 12% per year, hence adding to the country's pharmaceutical exports. The major bulk of our exports goes to some Asian, African, and European countries, Sri Lanka, Bangladesh, Thailand, Nigeria, South Africa, the Russian Federation, Italy and Greece among the major importers of our pharmaceutical products.

Among the dominant difficulties facing the industry in Punjab are, cumbersome procedure of drug registration, strict price control, substandard drug testing laboratories, and the need to amend the Drug Law Act 1976. Despite the fact that there are too many drugs registered in Pakistan, the registration method is long and lethargic. Most of the manufacturers feel that Ministry of Health should facilitate early registration of research-oriented molecules, if they have achieved the approval of FDA and European countries' registration from regulatory authorities. Unlike India and Bangladesh where only 75 and 125 molecules respectively have been registered as essential, Pakistan has enlisted 450 molecules as essential.

"Strict price control by the government has discouraged research and development, and new business firms from entering the industry, with the result that there is no market competition in the industry, which is the primary mechanism to pull down prices". It is due to this reason that the prices of drugs are relatively high in the country despite government control. In Punjab the level of drug testing laboratories is also not up to the required standard. It needs to be upgraded in order to ensure optimal facilities of testing and approving the samples of pharmaceutical products. "The samples of a drug should be sent to at least three laboratories before it can be approved". Tagging the Drug Act as "extremely punitive", the PPMA proposes formation of two independent inspection teams of distinguished consultants, consisting of eminent professors of medicine and pharmacology. The teams would conduct impartial insection of pharmaceutical factories on the instructions of the registration board, whenever a MoH Insp ector reports irregularity of default in GMP standards. …

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