Pakistan has around 759 pharmaceutical manufacturing units, meeting 70% of domestic demand for finished medicines, employs 150,000 individuals directly and 300,000 people indirectly. The pharmaceutical industry also records rising exports that are significant to boost up the wealth of a country.
Market Structure:
At the time of independence, there was no pharma industry in the country. Today Pakistan has 759 pharmaceutical companies, of which 25 are multinationals accounting for a market share of 45 to 50 percent. The industries are dominated by local companies which account for 2/3rd of the market share whereas multinationals enjoy the remaining 1/3rd. The top ten companies constitute approximately 46% of the market whereas the top 50 shares approximately 90% of the market. Many of them were exporting products around the world as Pakistan’s pharmaceutical exports have witnessed an increase of around 23 percent during the first quarter of the Fiscal year 2020-21, which showed its great future prospects. The majority of firms are located in Punjab, Karachi, and Sindh.
The Pharmaceutical industry contributes approximately 1% to the GDP of Pakistan annually. The country has a very competitive and challenging Pharma Industry that is growing at a rapid pace. There is an approximate US$3 billion pharmaceutical market in Pakistan, the top 50 pharma firms have 89% of the market share and the top 100 firms have 97% of the market share.
Current Exports:
According to the Pakistan Bureau of Statistics, pharmaceutical exports were recorded at the US $207.304 million during July-March (2020-21) as against the export of US $166.157 million during July-March (2019-20), showing a growth of 24.76 percent
In terms of quantity, the exports of pharmaceutical products also increased by 55.56 percent by going up from 12,135 metric tons to 18,877 metric tons.
Meanwhile, on yearly basis, the export of pharmaceutical goods increased by 37.38 percent during the month of March 2021 as compared to the same month of last year. The pharmaceutical exports in March 2021 were recorded at the US $22.823 million against the export of $16.613 million in March 2020, the PBS data indicated.
On month- on- month basis, the exports of pharmaceuticals witnessed a nominal increase of 0.05 percent in March 2021 when compared to $22.811 million in February 2021.
Areas Need To Be Improved
Although Pakistan‘s pharmaceutical and healthcare sectors are growing rapidly, about half the population has no access to modern medicines. Clearly, this presents an opportunity, but much more work needs to be done by the government and industry’s stakeholders.
The government should streamline the registration process of medicines and facilitate better growth of the pharma industry by addressing its key issues so that this industry could boost exports and contribute towards strengthening the economy. They emphasized that the government should provide a zero-rated tax on the import of pharma plants and equipment, give relaxation in GST and get it registered with the FDA.
Pakistan can increase pharmaceutical exports by making policies that help these industries acquire export order. To export medicines, a pharmaceutical company needs to have three things; a license to manufacture, a GMP compliance report, and a product Bio Equivalency (BE) research study report. When all these documentations are completed only then will other countries permit registration of the product for import.
Although Pakistani pharma industries fulfill first conditions but fail on BE study report because each BE Study costs $300,000 and our domestic industries do not have many funds for such studies. That’s why Pakistan is not exporting its products to EU countries, Japan, Australia, or Russia. Only two companies in Karachi and Peshawar, offer to BE Research study services in Pakistan. A huge government fund has been added to the Central Research Fund to help the pharma industries to increase their exports. If the federal government allows these firms a loan from the CRF then within a year Pakistan pharma exports will increase and boost the economic growth.
Pakistan is a developing pharmaceutical market, with a large population and economic progress evident, but per capita, drug spending was rather low. Private spending accounts for 65% of total healthcare expenditure sourced through out-of-pocket payments, international aid, and religious or charitable institutions. Pharmaceutical spending accounts for less than 1% of the country’s GDP, comparable to levels in some neighboring countries but above that in some of the South Asian countries. The forecast period is likely to witness the marginal strengthening of the generics sector, albeit more in terms of volumes than values. The share of generics is also likely to increase further as major drugs come off-patent in the near term, to the likely benefit of the generics-dominated local industry.
Despite of significant size of the Pakistan pharma sector, the country didn’t see much dynamic growth as compare to other countries. No backward linkages have been created, 95% of raw material is imported. Further Jordan’s exports worth more than Pakistan despite its 10.1 million population that is much lower as compare to Pakistani 216.6 million population. Moreover, Jordan has 4 plants certified by the United States Food and Drug Authority (USFDA). Indian pharma exports are also higher compare to Pakistan, which has 201 plants certified by the USFDA. This enables them to export to the US, which comprises 60% of the global market. Pakistan’s low exports and the absence of any USFDA-approved firms, which is the international gold standard, illustrate the country’s poor competitiveness and low-quality products.
The pharmaceutical sector of Pakistan should stabilize the prices of life-saving drugs, certain policies, research and infrastructure should upgrade in the sector.
