FINAL PROJECT

GROUP MEMBERS:
Sara Javed (01-111221-090)
Noor-E-Haram (01-111221-083)
Momina Qadir (01-111221-052)
Muazzam Ahmed (01-111221-055)

Subject: Analysis of Pakistan Industries.

Topic: Pharmaceuticals.
Table of Contents
Pharmaceuticals in Pakistan:________________________________________3
History of pharmaceuticals in Pakistan:_______________________________4
Pakistan’s pharmaceutical exports:_________________________________4
Pakistan’s pharmaceutical imports:_________________________________5
pharmaceuticals production in Pakistan:______________________________7
Pharmaceutical share on exports:____________________________________9
Taxes paid by Pakistan’s pharmaceutical industry:_____________________10
Challenges faced by Pakistan’s pharmaceutical sector:__________________10
SWOT analysis:__________________________________________________12
Recommendations:_______________________________________________14
References:_____________________________________________________15
Pharmaceuticals
Pharmaceuticals in Pakistan:

P akistan’s pharmaceuticals industry has grown during the

past recent decades. At the time of independence in
1947, there were a few production units in the country.
Currently Pakistan has 800 large volume of pharmaceutical
formulation units, including those operated by 25
multinationals present in the country, almost all the raw
materials used in the making of medicine is sourced from
abroad.

Pakistan’s pharmaceuticals industry meets around 90% of the

country’s demand for finished dosage forms & 4% active
ingredients. Specialized finished dosage forms such as soft
gelatin capsules, parental fat emulsions and metered dose
inhalers continue to be imported. There are only a few bulk
drugs active ingredient producers and Pakistan mainly depends
on imports of bulk drugs for its formulation needs resulting in
frequent drug shortages.

The national pharma industry has shown growth over the years,
particularly over the last decade. The industry is trying to
upgrade itself and today the majority industry is following local
good manufacturing practices (GMP) laws, with a few in
accordance with international guidance.

The names of a few pharmaceutical companies operating in

Pakistan are:
 Pakheim international pharmaceuticals, Pvt LTD.
 GlaxoSmithKline Pakistan (GSK).
 Martin Dow.
 Zafa pharmaceuticals.
 Searle companies LTD.
 Abbott Laboratories Pakistan.
 Sami pharma.
 Halton pharma.
 Ferozsons.
 Pfizer.
 Getz pharma.
History of pharmaceuticals in Pakistan:
In Pakistan the pharmaceuticals industry established after
many years. At the time of independence, traders of Pakistan
usually imported medicines from different countries as there
was no pharmaceutical industry in Pakistan, the main reasons
behind that was having no knowledge of the techniques used in
pharmaceutical industry, shortage of material, deficiency of
quality control. After understanding & acknowledging the
importance of this industry Pakistan developed two units under
the instructions of Pakistan industrial development board
(PIDB); namely Khurram chemicals limited near Islamabad &
Antibiotics Private Limited in Mianwali. The pharmaceuticals
industry history comprised of 3 stages.

 The 1st stage was from 1948-1971: The pharmaceutical

industry had made significant progress during that time
period.
 The 2nd stage was from 1972-1991: Because of the
restriction policies, the industry faced a great loss and lost its
position in the market. The drugs and medicines related to
gene were of low quality and less effective, due to all the
inconvenience the industry lost its rank in the market.
 The 3rd stage is from 1991 up until the present: The 3rd
stage is still in play, the command of the multinational
companies in pharmaceutical market of Pakistan was
brought out in 1996 by Mehdi & Kalani. In 1993 the rates
of the drugs increased up to 400% due to deregulation
policy that is under the supervision of the government. In
1990’s the prices were reduced by the federal government.
Prices of the imported medicine was fixed by the
government under a policy. It produces a rapid development
in national companies and they compete the multi- national
companies.
Pakistan’s pharmaceutical exports:
Pakistan’s exports of pharmaceutical products were US $235.75
million during 2020, according to the United Nations
COMTRADE data base on international trade.
Pakistan’s pharmaceutical imports:

M
edicinal and pharmaceutical products were reported
at 507,230.454 USD in Dec 2020. This records a
decrease from the previous number of 544,918.220
USD for Dec 2019. The data on pharmaceutical imports is
updated on yearly basis. Averaging 279,917.508 USD from
Dec 1995- 2020. This data reached an all-time high of
568,548.231 USD in 2018 and a record low of 95,863.192
USD in 2002. Medicinal and pharmaceutical product data
remains active status in CEIC and is reported by the United
Nations conference of trade & development.

In 2020, the worth of the drug area of Pakistan was assessed to

be around USD 3.2 billion, multiplying from USD 1.64 billion
of every 2011. Including institutional deals, industry places that
this area effectively becomes a retail market worth USD 4
billion. Complete products in 2019 remained at USD 218
million, from USD 44.4 million in 2003. However, trades from
the area represented just 0.9 percent of Pakistan's complete
products to the world.

In 2019, failing to measure up to Pakistan's products of

different items in the wellbeing area like; careful instruments
and clinical gear. Industry insiders guarantee that products
from the area could arrive at USD 0.5-1 billion in around 3 to
5 years — subsequent to arriving at this minimum amount,
send out development could become dramatic. This target
depends on normal partner assumptions which calculate touchy
nature of item, high lead times to showcase, meeting
progressively severe commodity necessities per item market,
and current administrative shortcomings in the country. The
progressions expected to accomplish this product target will
put the business on the way to a lot higher portion of worldwide
exchange the medium term. Also, because of ongoing
development of public medical care in the fifth biggest
worldwide market by size, the worth of drugs fabricated in
Pakistan could ascend to USD 5 billion by 2024-25.
Pakistan, with a nearby market of 215 million shoppers and in
excess of 700 drug organizations is ready well to acquire from
amazing open doors gave under these rearranging worldwide
examples of supply and request.

Nonetheless, the ongoing act of just bringing in 95% of the

unrefined substances, compounding active ingredients with
excipients, covering the pills, and bundling the medications
can't keep on being the drawn-out objective of the area. A
bigger vision perceives the increases from becoming driving
worldwide medication formulators of generics and marked
generics, differentiating the item proposing to incorporate
human antibodies, drawing in unfamiliar clients through
agreement producing (re-appropriating) offices as well as
clinical preliminaries or Agreement Exploration and Assembling
Administrations (Packs), and restricted drug discovery.5

Industry partners feel that Pakistan's ongoing products of USD

218 million can undoubtedly cross USD 0.5 billion in merely
three to five years. In any case, the profit from this open door is
dependent upon Pakistan acquainting powerful and ideal
measures with beat holes in the worth chain that could be
useful to them gain significant global piece of the pie. Basic
stockpile side factors that could influence firm capacity to profit
from these worldwide and homegrown development drivers are
talked about inside and out at each stage.

The new sure experience of a neighborhood firm in getting an

authorized innovation move from a main US firm for the
Coronavirus antiviral medication is a confirmation of the
capability of the area. Other late triumphs incorporate drawing
in worldwide accomplices into new roads like clinical
preliminaries by homegrown firms, setting up fabrication
facilities for oncology medications, and WHO pre-capability for
two additional research facilities in the nation (in spite of the
fact that neither have been informed as reference research
facilities). A few more examples of overcoming adversity could
add force to the current force, particularly when Coronavirus
has featured the foremost significance of having a cutting-edge
drug area, a great administrative system, and an essential
government vision.

This potential can be tackled through an earnestly required

sectoral development methodology and comparing activity
plan, redesign of the administrative system, liberation of
medication costs, reinforcing of scholarly property privileges
and a reliable strategy system. These can address, generally,
the extraordinary elements of the market that have hindered
its change to development.

Pharmaceuticals production in Pakistan:

The pharmaceutical market in Pakistan is estimated by IMS
(MAT June 2017) AT RS. 300 Billion, growing at the rate of 12%
(5-year CAGR). The industry is dominated by local /
international companies with account for 2/3 rd of market share
whereas multinational companies enjoy the remaining 1/3 rd.
Top 10 companies constitute approximately 46% of the market
whereas top 50% share approximately 90% of the market.

Name Ranki National/ listed

ng multinati
onal
GlaxoSmithKline (GSX). 1 Multinational Listed.
.
Getz Pharma (Pvt) LTD. 2 National. Unlisted.
Sami Pharmaceuticals (Pvt) LTD. 3 National. Unlisted.

Abbott laboratories Pakistan limited. 4 Multinational Listed.

.
Martin Dow Pharmaceuticals (Pakistan) 5 National. Unlisted.
limited.
The Searle company limited. 6 National. Listed.
Sanofi Aventis Pakistan limited. 7 Multinational Listed.
.
OBS Pakistan (Private) limited. 8 National. Unlisted.
GSK consumer health care Pakistan. 9 multinational Unlisted.
Hilton Pharma 10 National. Unlisted.

Growth in sales of national companies has been higher than the

multinational. It is essentially a low-cost generic market with
large number of new generic medicine launched at higher unit
price.

There are approximately 650 companies operating in the

Pakistani pharmaceutical market, out of which less than 30 are
multinational companies. The pharmaceutical industry
contributes approximately 1% to the GDP of Pakistan annually.

phar m aceuti cal m ar k ey s har e in

Pak is tan
market composition by sales market composition by number of companies

180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
MNC National

There are 9000 actively market drugs in Pakistan sold at

licensed pharmacies on prescription. In addition, there is a
large segment of over the counter (OTC) products e.g., multi-
vitamins; pain, cold, flu, fever relief. The pharmaceutical sector
in Pakistan is strictly regulated by the government. The drug
regulatory authority of Pakistan (DRAP) controls the registration
of new medicines manufacturing sites, it also determines the
maximum retail price (MRP) of all the medicines market in
Pakistan. The Pakistani pharmaceutical market is largely an
out0of-pocket market (health care spending mainly coming
from individual’s personal savings), however government
hospitals and clinics. Although Pakistan does not give a national
health insurance cover, the health insurance industry is
gradually evolving to provide hospitalization coverage for the
citizens.
Pharmaceutical share on exports:
 Pakistan Exports of pharmaceutical products was US$268.64
Million during 2021, according to the United Nations
COMTRADE database on international trade. Pakistan Exports
of pharmaceutical products - data, historical chart and
statistics was last updated on June of 2023.

The data provide below is Pakistan’s pharmaceutical exports

over the period of 10years.

 Exports from Pakistan rose 21.8% from a year earlier to PKR

625.2 billion in May 2023.

The data provided below is from June 2022 to June 2023.

Taxes paid by Pakistan’s pharmaceutical
industry:
Pakistan imposed a 17% tax rate on the import of active
pharmaceutical ingredients in January 2022 and this caused a
nationwide strike in the country’s pharmaceutical industry. The
special tax regime for Pharma Sector has now been introduced
whereby manufacture or import of substances registered as
drugs under the Drugs Act, 1976 shall be subject to 1 per cent
sales tax with the condition that such tax shall be final
discharge of tax in the supply chain and no input tax shall be
allowed to the importer and manufacturer of such goods.

Challenges faced by Pakistan’s

pharmaceutical sector:
The industry is reeling with extreme pressures due to the
devaluation of the Pakistani rupee against the US dollar, the
increase in the cost of utilities, and exponential inflation. Since
July, there has been around a 78% devaluation of the rupee, a
142% increase in the fuel cost per liter, a 177% increase in the
electricity tariff, and an overall increase of 300% in working
capital costs. Considering the sudden and rampant increase in
the cost of doing business, the industry has applied for a 38.5%
inflationary adjustment in the medicine prices but after the
recommendation of the policy board of DRAP and approval of
ECC, it is still in the process of approval and notification of the
cabinet. But this increase alone cannot remedy the industry’s
agony in providing medicines while sustaining operations. With
all these detrimental factors in play, the pharmaceutical
industry is in a nose-dive decline as per the recent report of
Large Scale Manufacturing Industries (LSMI). The worrisome
statistics show that to date, the pharmaceutical industry is
having a -23% decline in sales on a year-to-year basis. If this
trend continues, there will be an acute shortage of medicines in
the country.
The biggest challenge faced by the industry is the complete
freezing of prices of pharmaceutical products. The price
mechanism set by the government since 2001 has not allowed
the pharma industry to increase prices of even those drugs
whose costs have gone up by more than a 100 percent,
whereas the price of inputs such as fuel, electricity, labour
wages and raw materials have increased drastically making the
survival of the industry very difficult. There were 36 MNCs
working in Pakistan in the early 2000s in the sector, that
number is now down to about 22. That is an eye-opening
number of exits. In recent times the situation has become
worse as most of the raw material is imported and any increase
in dollar rates adversely affects the profitability of the local
manufacturers.

On the other hand the growing menace of counterfeit products

has become a serious problem for the established
pharmaceutical companies. The proliferation of fake and
modified goods is not only hurting the industry but the
consumers as well. The menace is adversely affecting the
government revenues and thereby the public sector socio-
economic programs. Counterfeit medicines are estimated to
cost the government over Rs 12 billion a year.

The DRAP should be strengthened and its regulatory capacity

be brought at par with global standards. Though this will take
some time, the regulator, initially, should bring a dug price
equal to its average price in regional economies, like India,
Bangladesh, Sri Lanka and others with the same socio-
economic indicators.
SWOT analysis:
Strengths:
The strength of each pharmaceutical industry based upon
quality goods, providing values, services [Link] are
concerns about the current rules in Pakistan for evaluating the
quality of pharmaceuticals raw materials (APIs).The
pharmaceutical industry strengths could include low operating
overhead, firm fiscal management, low staff turnover, high
return on investment (ROI), state-of-the-art laboratory
equipment and an experienced research staff.

Weaknesses:
majority of developing countries regulate drug prices to
safeguard the interest of the consumers, but their regulations
are transparent. Neighboring India and China liberalized their
drug pricing, which has benefitted domestic consumers and
accelerated their exports. India’s exports are in excess of
US$15 billion per annum while Pakistan’s exports have declined
and are now approximately US$160 million a year. If Pakistan
aims to double its exports to Sri Lanka within a year as stated
recently it will need to review its drug pricing mechanism.
The other issue is delays in approval of new molecules, which
can often take several years, depriving patients of the benefits
of the latest remedy. A cancer patient, for example does not
have the luxury of waiting 3 to 4 years for a drug to come into
the Pakistan market. They need that drug right away. Poor
policy and an inefficient regulatory structure is denying life-
saving breakthrough technologies to patients in Pakistan.
Secondly, it prolongs the price approval process. The pricing
delay also happens when a company wants an adjustment due
to the increase in cost of doing business. Thousands of price
adjustment applications are still pending with the DRAP. At this
speed, the regulator would take years to approve or reject the
requests. Since there is no set criterion, price determination
varies on a case to case basis.
Opportunities:
The National pharma industry has shown growth over the
years, particularly over the last two decades. The industry is
trying to upgrade itself and today majority of industry is
following local Good Manufacturing Practices (GMP) laws, but
lack International Certifications. Currently the industry has
capacity to manufacture a variety of traditional products
ranging from simple pills to capsules, ointments, syrups,
injections, soft gel capsules etc.
Unfortunately, Pakistan is not a country where health insurance
policy is adopted by the Government for the people. But
Pakistan has improved regulations regarding drug selling and
DRAP (Drug Regulatory Authority of Pakistan) strictly monitors
MRP (Maximum Retail Price) to maintain its strict policy in
medicine market of Pakistan. The Pharma Market, in the end, is
a low-cost generic market. All over the country licensed
medical store/pharmacies are selling more than 12,000 active
drugs on prescription. National pharmaceuticals are growing
faster than MNCs.
Threats:
The production of many drugs has been stopped for some
diseases which exist only in Pakistan and few developing
countries. Unfortunately, pharmaceutical companies in Pakistan
have also stopped producing drugs for tuberculosis due to non-
viability. Therefore, the recent very nominal price increase will
not help companies to continue producing anti TB and other life
saving medicines, which DRAP considers essential to cure
infectious diseases.
Pharmaceutical companies were highlighting for years the
hardship they were facing due to the increase in input costs,
pushing almost half the life saving drugs into hardship
category. Interestingly enough, most of these drugs are priced
between Rs 0.5 and Rs 3 a tablet, which DRAP terms
unaffordable to patients. Irony is that imported alternates,
many of which come through grey channels, which are made
available during periods of shortage are priced almost 10 to 15
times higher but DRAP neither try to control the prices of these
drugs nor allow local manufacturers even a marginal price
increase to keep these drugs viable.

Recommendations:

There are a few recommendations that could potentially

improve Pakistan's pharmaceutical industry:

1. Increase investment in research and development:

Investment in research and development can help to develop
new and innovative medicines that can address unmet
medical needs and provide better treatment options for
patients.

2. Strengthen regulatory framework: A strong regulatory

framework is crucial to ensure that medicines are safe,
effective, and of high quality. This can increase consumer
confidence in the industry.

3. Improve infrastructure: Improving infrastructure, such as

manufacturing facilities and distribution networks, can help
to increase the efficiency and quality of pharmaceutical
products.

4. Focus on exports: The Pakistani pharmaceutical industry has

the potential to become a major exporter of pharmaceutical
products. By focusing on exports, the industry can increase
revenue and improve its global standing.

5. Increase collaboration: Collaboration between the

government, industry, and academia can help to drive
innovation and improve the overall competitiveness of the
industry.
India and Bangladesh are on their way to becoming global
leaders in pharmaceuticals, despite having a similar industry
structure. In Bangladesh, there are 150 firms, out of which
the top 20 firms account for about 85 per cent of the market
where local firms, instead of MNCs, dominate the market
with more than 90 per cent market share. All the top 10
firms are local firms.72 Similarly, India which is home to
more than 3,000 pharma companies with a strong network
of over 10,500 manufacturing facilities, also has a
fragmented industrial market structure, where the top 20
companies contribute to 50 per cent of total sales. However,
the Indian industry overall contributes significantly to the
GDP (1.5 per cent directly and another 3 per cent indirectly)
as does Bangladesh (more than 5 per cent) compared to
Pakistan (at just 1 per cent).73 Bangladesh is also the only
least developed country in the world to meet 97 per cent of
its local demand for pharmaceutical products.
References:
1. [Link]
[Link].
2. [Link]
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[Link]
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[Link]