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February 2022 shall mark my completing 47 years of working in Pharma Industry. Allah be praised. I am still working. The first half of my working career was spent in Multinational companies, and the latter half in the Local Pharma, making me well-versed with both innovators and generics markets. I also had the opportunity to work in business as well as operations.
My journey of near half century is also the journey of Pharma Industry in Pakistan. Great changes have occurred in this time and a lot could be written about it. In my blogs, which were started about four and a half years ago, I have covered several topics related to Pakistan Pharma Industry. This multi-part series shall do and review the SWOT – Strengths, Weaknesses, Opportunities, Threats – of the industry as a whole.
Stakeholder 1 – Regulators – DRAP, Ministry of NHSR&C, Government Policies
DRAP woes did not end up with the end of the first CEO’s tenure. Sheikh Akhtar Hussain was appointed as the next CEO in December 2018 after due process of interviewing and selection. Barely a few months later, his appointment was challenged in the court on the premise that his PhD degree was fake. He was suspended and the case of degree verification was referred to the Higher Education Commission – HEC. HEC returned with the answer that the university from which he did PhD was not a recognized institution, and therefore, they could not verify his degree. He was suspended by the Ministry and Additional Director Asim Rauf was given adhoc charge of CEO.
Sheikh Akhtar moved Islamabad High Court – IHC, which stayed his removal, and asked the Ministry to hold inquiry. The case was again referred to HEC who repeated the same reply. Upon submission of inquiry report, the IHC vacated the stay and thus Sheikh Akhtar Hussain was again removed from the position of CEO. Finally, the federal government approved his dismissal from service in March 2021. Asim Rauf had been working as Acting CEO on adhoc, look-after basis since the first removal of permanent CEO in 2019. His tenure gets a new lease after every three months. Other Additional Directors also get adhoc, look-after-basis charge for three months at a time. DRAP has not been able to find a permanent CEO till now.
This is the situation of the top dog, the central drug regulatory body of the country. It is a compliment to all concerned that the system is running at all. Proper, long-term policy making is simply impossible under the circumstances.
DRAP, after its inception, increased the fees exponentially, thereby increasing the cost of doing business. The process continues. Pharma Industry is suffering because work is piling up at DRAP. Too few people have too many assignments, and the pace and quality are seriously affected.
Similar situation prevails in the parent ministry of DRAP, the Ministry of NHSR&C. Amir Mehmood Kiani was appointed as the first Federal Minister for NHSR&C. He served from August 2018 to April 2019 and was then removed without assigning any public reason. The position has since not been filled with a permanent minister.
Dr. Faisal Sultan, an infectious diseases specialist, who was serving as CEO of Shaukat Khanum Memorial Cancer Hospital and Research Center since 2003 was appointed as Special Assistant to the Prime Minister on National Health Services in August 2020. Dr. Faisal Sultan is an accomplished, upright, thoroughly professional gentleman while DRAP and the Pharma Industry are very complex areas. And his position is only that of an Assistant, which may not help him in contributing what he possibly can. It is a classic case of putting right people in not-so-right slots and expecting great results.
Pakistan stands among the countries who spend the least amount on healthcare as percentage of GDP; presently it stands at a mere 3.2%. This puts us among the poorest of the poor nations. WHO reports that while government spending on health has been rising, the personal spending was rising faster in low and middle-income countries.
Pakistan has seen a sharp rise in the number of medical colleges, doctors, and private hospitals. Government hospitals have not increased significantly in number but have seen status upgrades. The result is that people must pay more and more from their own pockets. We hear the stories of people being fleeced by private hospitals across the country. It is the job of government and the relevant ministry to formulate policies for regulating health services on an overall basis. This is a big task and cannot be accomplished with the present adhoc working. COVID vaccination was a great job done with the coordination of various stakeholders, but other areas are still being neglected.
The recent imposition of 17% GST on all imported materials of Pharma Industry has raised huge concern. Though it is said that it will be refunded, but the refund mechanism and timelines are still being debated.
The sum up of Stakeholder 1- Regulators – is that the healthcare regulatory system is not healthy itself. It has serious implications for public and the Pharma Industry.
Stakeholder 2 – Suppliers
Pharma industry is dependent on two major categories of suppliers: raw materials and packaging materials. Pakistan indigenously produces handful of raw materials, and even their output is insufficient to fulfill local demand. Virtually, all materials are imported, mainly from China and India, both of whom now supply to the entire world. There are still a few raw material suppliers located in various parts of Europe, but they probably cater to less than 5% demand. The whole world is now dependent on China and India for sustained supply chain.
Reliability level had always been good with both countries, prices had been stable and moving predictably, that is until the COVID hit. COVID19 disrupted the supply chain in a shocking manner. Material shortages and unstable prices became the norm. To add insult to injury, shipping lines and airlines increased freights and increased handling time. An air shipment which took three days now takes seven days; the sea shipments from China to Pakistan now take 30 days as compared to previous 14 days. Freights have increased by a factor of ten; a 40 feet container from China to Pakistan used to cost 800 US$, it is now costing over 8,000 US$. Supply chain managers had been dealing with rising costs, scarce availability, and delayed shipping.
Local suppliers of raw materials have also increased prices several times in the last two years. The first major, modern manufacturer of Pharmaceutical raw material was Pharmagen in Lahore. They started in early 1980s, acquired the government facility of producing basic penicillin located in Daud Khel and put up a unit for producing semi-synthetic penicillin at Lahore. They convinced the federal government to levy tariff protection duty on import of materials which were produced by Pharmagen, although they had no way of filling the local demand entirely. The government obliged them, and later other basic manufacturers. The industry is suffering unnecessarily. Not many, but few other basic manufacturers have come into business, but local manufacturers are as expensive as foreign suppliers, if not more. The industry is forced to import and pay extra duty, which if not paid, would make the material cheaper.
Pakistan is a ‘sellers’ market’ in many trades, and the suppliers determine the terms of business, not the buyer. Pharmaceutical raw materials are also in this category. Knowing that the Pakistan industry is small, Indian, Chinese, and local manufacturers dictate their terms.
Basic packaging materials such as boards, paper, PVC film, aluminum foil, injection glass vials, rubber stoppers, flip-off aluminum seals etc. are also imported mainly from China. There is some local production of paper and board, PVC film, and one type of injection vials, but the quality and quantity are neither adequate nor sufficient.
To be Continued……
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