23205064 pharma industry pakistan (1)

7/31/2019 23205064 Pharma Industry Pakistan (1)

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Welcome

to

The PharmaDiscussion


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Pharmaceutical Industry Pakistan(A brief Overview)

A discussion with

Mr. Afaq Ali Khan&

Students of Analysis Of Pakistani Industries

PresentersKamran Shahid Bukhari (Sp06-bb-0042)Muhammad Danish Anwer (Sp06-bb-0056)


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Agenda

Pharmaceuticals Historical Background Importance Of Pharmaceutical Industry Current Situation--------------------------------------------------------------------- Category of local production Linkages Pricing Growth Imports/Exports--------------------------------------------------------------------- Role of Government Health Sector Health Policy---------------------------------------------------------------------

Problems Impact of WTO Social Impacts--------------------------------------------------------------------- Recommendations Questions?


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Pharmaceuticals

Pharmaceuticals are substances that areaimed to treat, cure, prevent, or recognize

diseases and relieve pains through theirapplications.

Industry producing pharmaceuticalproducts is called pharma industry.


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Historical Background

At the time of independence there were two small unitswhich were unable to meet the local demand.

The rest of the medicines were imported.

The decision taken in 1972 to abolish brand names,restrict availability of essential drugs to 850, fixmaximum retail prices across the board and freely allowlocal manufacturer of all the essential drugs was in fact alife line for the national segment of the industry.

Due to several reasons, especially inaccessibility of newresearched medications this policy was ultimatelyreversed in 1976.


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Historical Background (Cont) There were only 3636 registered drugs in 1977. The

number, however rose to 6228 in 1981,and almost 9900

were reported in 1999.

In 1993, there were 256 national pharmaceutical unitsand 38 Multinational Companies .

Pakistan pharmaceutical industry was valued at $900million which grew @ 20% in 1996

At the end of 1999 more than 75,000 medicines werebeing sold in the market.

At the end of 1999, according to the Ministry of Health,there were 300 registered units producing medicines andother pharmaceuticals.


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Historical background (Cont)

Since 1999 the government has invested US$ 133 millionin the pharmaceutical industry.

The last 10 years have been eventful for Pakistanpharmaceutical industry as they have developed a large

number of domestic manufacturers.

In 2006 there were over 400 licensed pharmaceuticalcompanies in Pakistan, including 30 multinationals whohad over 53 percent of market share.

Today, the industry has developed technology,production and an infrastructure of imports. It's a wellregulated industry. It has Domestic companies which arequite confident of doing good business.


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Importance Of PharmaceuticalIndustry

Produces medicines and life saving drugs

Contributes towards GDP (0.16%)

Generates employment (70,000 directly and

150,000 indirectly)

Supports Health facilities


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Current Situation

Pharmaceutical industry of Pakistan is aromnd US$ 2billqwn with an annual growth rate of 12.9% per annum.

The 600 firms (over 400 domestic manufacturers

and approximately 200 major importers) togetherproduce 40,000-odd formulations in the country. Despitehigh competition and price wars ,drug prices arecontrolled by a strict regulatory policy.(Thursday, September 13, 2007)


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Current situation The pharmaceutical market comprises of large

Multinational Companies which are producing andmarketing research based products and also other bigand small National companies which pre-dominantlyproduce and market generic products.

Out of total market of US$ 2 billion, 53.3% is capturedby Multinationals and 46.7% is taken up by Nationalcompanies. The top 50 companies enjoy more than 80%market share. There are 20 multinationals in the top 50companies, while the top 100 companies have 94.0%

market share.

Only 2 manufactures are involved in the manufacture ofraw materials.


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Current situation

Having no recourse to a single price increase sinceDecember 2001, the pharmaceutical sector will be underpressure to maintain its profitability in the face ofinflationary pressures and currency devaluation

The total outlay on the health sector is budgeted atRs.38.0 billion, which has increased by 15.8 percent overlast year.

The existing network of medical services consists of

12,260 hospitals, 113,000 doctors practicing, 4582dispensaries, 5301 Basic Health Units (BHU), 552 RuralHealth Centers (RHC), 906 Maternity and Child HealthCenters (MCH) and 289 Tuberculosis Centers (TBC).total expenditure on health has increased from PKR 4.37

billion to PKR 6.04 billion, which is 31.86% higher thanthe last year.( as of 2006)


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Any Questions till now

We have discussed

Pharmaceuticals Historical Background

Importance Of PharmaceuticalIndustry

Current Situation


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Category of local production

Market potential of Pakistan is good for Antibiotics, Vaccines, Analgesics, Tranquilizers

Hormones, Anti-hypertensive, Anti-ulcer ants,

Cardiovascular, Anti-cancer, Psychiatric, Contraceptivesand birth control drugs.

There are close to 125 categories of medicines producedlocally including all kind of vitamins, anti-allergic,

alkaloids, ointments, cough syrups, etc. Many of themanufacturing units are ISO certified adhering to UK andUS Pharmacopoeia, according to a study by Frost &Sullivan


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Linkages

Backward Linkages

Active Pharmaceutical Ingredients (APIs)(Alkaloids, Amino Acids, Antibiotics, Hormones, Peptides, etc)

Forward LinkagesGlass bottles

Plastics

Paper

Printing

Packaging

Engineering


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Pricing

Prices of many pharmaceutical productsare much higher in Pakistan as compared

to India. The main reason behind this isthat most of the basic pharmaceutical rawmaterials are imported.


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Growth

Total population of Pakistan is approximately 161 million(2006 statistics) and the population growth rate is 2%.

Pharmaceutical industry in Pakistan is at PKR 70.89billion and growing at 12.9% per annum ($ 2 billion )and showing a positive trend hence attracting local andforeign investment in Pakistan.

Since 1999 , 2,500 new drugs have been registered


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Growth (cont)

Although it registered a fairly robustgrowth during 2006-07, the totalmarket in Pakistan remains small in

relation to our population size. If theindustry maintains this growth rate, itis projected to reach 2.2 Billion in the

next for years.


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Imports/Exports Nearly 95% ( Approx $ 450 million) of the basic raw

material used for manufacturing is imported fromcountries like China, India, Japan, UK, Germany andothers.

Aided by the conducive policy initiatives, Pak firms have

emerged successful in the export front, as well.According to reports, Pakistan exported drugs worth fiftymillion US dollars during the year 2004. Middle East, FarEast, Africa, Ceylon and Latin American countries areother locations where Pakistani drugs are now beingexported.

I t 2001 2005


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Imports 2001-2005Product group: 542 - Medicaments (including veterinary medicaments)

Product group: 541 - Medicinal and pharmaceutical products, other thanmedicaments of group 542

Value 2001US$ '000

Value 2002US$ '000

Value 2003US$ '000

Value 2004US$ '000

Value 2005US$ '000

24,518 128,259 154,605 151,269 193,174

Value 2001US$ '000

Value 2002US$ '000

Value 2003US$ '000

Value 2004US$ '000

Value 2005US$ '000

106,020 95,863 119,236 120,238 141,359


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Exports 2001-2005

Product group: 542 - Medicaments (including veterinary medicaments)

Product group: 541 - Medicinal and pharmaceutical products, other than medicaments ofgroup 542

Value 2001US$ '000

Value 2002US$ '000

Value 2003US$ '000

Value 2004US$ '000

Value 2005US$ '000

33,815 35,066 41,642 46,691 57,146

Value 2001US$ '000

Value 2002US$ '000

Value 2003US$ '000

Value 2004US$ '000

Value 2005US$ '000

7,350 3,535 8,742 11,082 20,547


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Category of local production

Linkages

Pricing

Growth

Imports/Exports


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Role of Government

The total outlay on the health sector is budgeted atRs.38.0 billion, which increased by 15.8 percent in 2006over last year.

Government of Pakistan had invested Rs.8 billion in thepharmaceutical industry since 1999 to guarantee goodquality drugs at competitive prices.

Pakistan Health Ministry is considering to constitute acommittee comprising of the World Health Organization(WHO), Pakistan Pharmaceutical Manufacturers

Association (PPMA) and Health Ministry to keep check onthe quality of drugs available in the market. According tostatistics by Ministry of Health 41.2% of the Pakistanipopulation cannot afford procuring medicines due tohigh prices in the country.


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Role of Government (cont)

The government has set up an independent Drug Registration andPricing Authority. In Pakistan the Ministry of Industries decidesabout the drug pricing.

In the biotechnology sector, Pakistan has initiated many programs.It is planning to set up biotechnology plant worth Rs.400 million tomeet the growing needs of quality medicines in the country.

The move is being taken in the field of medicine by the privatesector in collaboration with investors The plant would startproduction within the next few years. Several countries haveexpressed keen interest to invest in Pakistan due to the pro-activepolicies of the government.


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While substantial increases in public sector spendinghave been witnessed in recent years.

Some major public sector programs have been initiatedto address the healthcare needs of the population. Theseinclude:

The National Program for Family Planning and Primary HealthCare

The Expanded Immunization Program National Program for Hepatitis Prevention and Control National Tuberculosis Control Program National Malaria control Program National HIV/AIDS Control Program

Women's Health Program.


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The public sector health development expenditureincreased from PKR 4.3 billion in 2003-04 to Rs.6 billionin 2004-2005, and Rs.9.5 billion in 2005-06. While theseincreases are impressive in percentage terms (40% and58% respectively), they remain low when placed in thecontext of the country's population size.

Tariff protection is generally allowed to encourage localmanufacture of APIs.

Federal Government is working on the important subjectof DRA and will make sure that it accommodates theexpectations and objectives of the local pharmaceuticalindustry without compromising on good standards


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The government has also formed a policy recentlyallowing companies to produce raw materials locally.Companies in Pakistan rely heavily on China, India,Germany, UK and Japan for raw material imports.

The Ministry of Commerce has given 50% subsidy topharmaceutical companies for registration of theirexported products in foreign countries for export from1998 to 2003.


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Health Sector The stockiest operates at 4-5% margins while

distributor's margins are around 10%. The margins forretailers are fixed upon industry standards on maximumretail price which can be 10-12%. Retailers enjoy greatermargins on drugs which can be as high as 20%. Therealso exists provision of free samples and cash discountsto channel members by manufactures The margins varyfor different participants in the supply chain.

Only 0.7 percent of the GDP is being allocated to the

healthcare sector in Pakistan


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Health Sector (cont)

Some Major Causes of death in Pakistan

Infectious diseases

Malaria Tuberculosis Accidents, poisoning and violence Heart and circulatory system diseases

Diabetics Tumors


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Health Sector (cont)

Other Issues: Poor quality of available health services in both sectors. High focus on curative, rather than preventive, health and medical care. Most facilities located in the urban areas. Access to health and facilities determined by wealth and income. Huge Private Sector Poor delivery of health services and no accountability.

Pakistan has 0.73 physicians per 1000 population and 0.31 nurses per 1000population.

The annual per capita expenditure on human priority areas of basic education,

primary health care, family planning , safe drinking water, and nutrition programs isjust $3 in Pakistan.

The total health expenditure on per person is approx Rs.4.5.


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Health Policy

Ministry of Health along with Government of The Pakistan is working onhealth policy 2010 for planned enhancements in overall health sector bythe way of promoting and upgrading healthcare facilities.

Features Of The policy are;

1. to improve effective access to healthcare2. Reduction in communicable diseases3. Good governance at both directorate and agency level

Drug Act 1976

Another weakness of the National Medicine Policy is the lack of appropriatehuman base and expertise in the field of health and pharmaceutical policy.


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Role of Government

Health Sector

Health Policy


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I t f WTO


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Impact of WTO

Pakistan, on its part, signed the contract in

1994. At that time, the industry standardsdid not comply with the WTO standards.

The WTO era brings about the law of thejungle where only the fittest shall surviveand IT will be a critical factor in

determining that.


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Impact of WTO (cont) Patents

To comply with WTO standards the product should bepatented

PricesIncreased competition lowers the price which wouldresult in low profitability for local manufactures.

Due to product patents rights new drugs could beunavailable or unaffordable.

CompetitionWhen there would be equal opportunity for othernations to trade their Pharmaceutical products inPakistan. The competition in the local industry would

rise. (India alone can attain 25% of the PakistaniPharmaceutical market).

I t f WTO ( t)


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Impact of WTO (cont) Development of Health Sector

Harmonization of standardsGlobally recognized standards will become thebenchmark of the Pakistani Pharmaceutical Industry,which would require intensive capital expenditure.

TRIPS (Trade-Related Aspects of Intellectual Property Rights) AgreementThe TRIPS agreement will push Pakistani companiesout of the competition in the new high valuegenerating products. Where Pakistani industry which is

a generic manufacturing industry would not be able tobring generic copies of new products for at least tenyears.


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Impact of WTO (cont)

Research & Development

Increase focus on patent rights will

force companies to come up withnewer better products which wouldrequire R&D

Local companies cannot justify the costdue to already high cost structure.

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Social Impacts With increased production of medicines, there are more

chances of aggressive marketing as 70% of patients in

Pakistan are treated with antibiotics, although themajority of them don't need these medicines

Medicine is also wasted due to incorrect dispensingpractices.

There is no mechanism to monitor drug promotionalcampaigns.

Drugs are freely available without prescription and astudy in one of the districts showed that only 19% of thepharmacies meet the licensing requirement.


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Social Impacts (cont) Industry is only interested in producing profitable

medicines and there is a severe shortage of essentialdrugs in the country.

Physicians are known to accept gifts . Only 35% ofgeneral practitioners consider it unethical to accept gifts

from pharmaceutical companies

Irrational prescribing habits and prescriptions for costlydrugs continue unchecked.

Poor consumer protection by the government.

Poor implementation to ethical codes of pharmaceuticalpromotion and poor implementation of Drug Act 1976 andthe National Drug Policy 1999


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Problems

Impact of WTO

Social Impacts


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Recommendations Initiatives for business opportunities:

#. API business#. Research based products#. Generics#. Pharmacists role in community#. Strategic alliances for exports#. Diversification of Pakistan local companies

In all these initiatives, India can take a leading role toassist in developing pharma market of Pakistan.


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Recommendations (cont) Other than just producing more medicines, the government

needs some decisive actions to promote public health andwellness through education and information.

An approach to establish a balance between economicinterests and public health objectives is required. The

government should focus on how the innovative capacity ofthe industry can be increased without compromising onpublic health.

The need is now unavoidable to create awareness among

lawmakers, healthcare professionals, and economicmanagers and among concerned citizens. Without thesesteps the objectives of equity, access, safety andaffordability seem hard to be fulfilled


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Recommendations (cont) Existing evidence indicates a need to equip physicians-

in-training to handle interactions with the industry.

The need to introduce early and ongoing trainings inethical concepts, moral reasoning and development ofskills necessary to address these issues.

Registering and regulating authorities in Pakistan havemust ensure inclusion of the existing Code of Ethics inundergraduate and postgraduate curricula and shouldregulate industry collaboration with teaching institutes;developments that are necessary to raise the standard ofclinical practice and improve patient welfare.

Right to live is the most basic human right


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Thank You

Any Questions

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