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Continued from Previous……
In continuation with the economic impact, we talk next about stimulus packages.
What was mentioned in Part I was about providing relief. Providing relief is not the same as stimulating or triggering the commercial activity.
Our focus shall remain Pharma and we see what kind of stimulus packages may be considered.
There is a general perception that Pharma Industry suffered less as compared to most other businesses, but this statement does not hold true when we look deeper. Pharmaceutical products may be broadly divided into three heads; long-term or Chronic Care such as Diabetes, Heart diseases, Psychiatric disorders, Neurological problems etc. which require continuous treatment over a life time; short-term or Acute Care such as infections, painful conditions, trauma etc. which require treatment over few days or weeks; and wellbeing drugs such as nutritional supplements, vitamins etc. which may be given to boost energy and quality of life. During COVID19, chronic care drugs had been selling more or less smoothly because the patients could not afford to miss treatment, but acute care and wellbeing drugs got a hit. There were episodes of binge buying of drugs considered to beneficial for COVID; it was hydroxychloroquine, azithromycin, ivermectin and so on. More specific drugs such as Dexamethasone also got a boost; Tocilizumab and Remdesivir were sold at exorbitant prices. All in all, Pharma industry also got a blow, albeit of lower intensity. The individual companies had variable problems; companies strong in chronic care segment might have seen less drop in revenue as compared to those who were stronger in acute care.
R & D – Entrepreneurs are quite averse to investing in Research & Development because it takes time to give return. For this reason, most pharma companies are contented with making regular drugs in regular ways. Due to this deliberate neglect, the expertise in Pharma R&D has not really developed. It is a make-shift situation where someone from production is assigned to do R&D work. The poor guy has no inkling of what R&D is, and so keeps repeating rather than innovating. Government shall not be able to force the Pharma companies to establish R&D; it should do it on its own. In any case, DRAP forcefully receives CRF (Clinical Research Fund) calculated as percentage of turnover. It has already accumulated several hundred million rupees and not known to have conducted any clinical research so far. That money should be put to good use now.
Reduction in Markup – the revenues have seen decline across the board, serious or mild. The expenses have stayed at the same level, however. The companies have to deal with the shortfall and invest in the production and business activities. It is a well-known fact that the greatest majority work through running finances provided by banks. The markup in Pakistan has been generally higher than many other countries. The first step should be to reduce markup significantly so that the finances could be recycled more easily.
Soft Loans – running finance is also a loan, but of running kind, and it cannot be used for developmental work. Soft loans may be considered so that the companies could invest into new ventures, increase their reach at home and abroad, and diversify their portfolio. Pakistan home market fortunately is quite large and still not fully tapped, and it can be opened easily and quickly. International market is also lucrative though the cycle time is longer. Investment in both segments shall bring desirable fruits.
Consultancy Services – Government should offer consultancy services to companies at no-cost or low-cost to make it viable for them to diversify. Consultancy to open new international markets is another key area to work. When age-old Export Promotion Bureau (EPB) was converted to Trade Development Authority Pakistan (TDAP) about 15 years back, Tariq Ikram was appointed as the first Chief Executive. He was from Pharma Industry and he focused specially in this area. Information about pharma markets of other countries was gathered and compiled; trade delegations were organized, some of which he led himself; and commercial councilors in Pakistan embassies were tied in to support. I traveled with several such delegations and I must say they were very well organized. Export targets were set, and several new initiatives were announced to help reach that target. Pharma exports reached the peak at that time. After his tenure, the TDAP fell back in the hands of civil servants who did what they are good at; doing nothing. Consultancy cells were also established in TDAP which later disappeared.
Embassies’ Support – Pakistan has diplomatic presence in most countries. Commercial section is also a part which is occupied by a commercial councilor whose task is to find ways and means to increase export from Pakistan to that country. In my experience, I have seen huge variation in this area. It is largely dependent on the person, not on any system. Embassies generally have a rather shabby record of providing support in any form to Pakistani citizens visiting there. I have certainly seen some glorious examples also, but these are a tiny minority. Commercial Councilors can contribute significantly to stimulate export business.
Shall Continue InshaAllah……