Dear Colleagues! This is Asrar Qureshi’s Blog Post #594 for Pharma Veterans. Pharma Veterans welcome sharing of knowledge and wisdom by Veterans for the benefit of Community at large. Pharma Veterans Blog is published by Asrar Qureshi onWordPress, the top blog site. Please email to asrar@asrarqureshi.com for publishing your contributions here.
Opening Note
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.
Stakeholders 2 – Suppliers & Vendors
Glass bottles, vials for injections, and ampoules for injections are used by Pharma companies in millions of units. Ghani Glass is the only manufacturer of glass bottles and vials. They bought out couple of smaller manufacturers earlier and became a monopoly. Glass ampoules are produced by couple of small companies who import tube and convert it into ampoules, because they do not have furnaces to produce glass. There are few large manufacturers of sheet glass which is used in construction of houses and buildings. Glass tumblers and other household items are made by an old outfit, but Pharma is catered by Ghani Glass only. They have huge business running into billions of rupees, but their practices are small time, and their quality controls are not as robust as these should be. They also enjoy tariff protection and therefore importing glass bottles is not viable. Only those items are imported which are not manufactured by Ghani Glass.
Similar situation may be seen for PET bottles, HDPE bottles, child-proof caps, pilfer-proof caps etc. Pharma grade aluminum foil is not produced in Pakistan. Pharma grade PVC is produced locally in limited quantity, but its quality does not compare with the imported one.
Various types of box boards and bleach boards are also imported for pharmaceutical use. Local boards are too few and the quality is not comparable.
The sum up of Suppliers is that over 90% Active Pharmaceutical Ingredients – APIs, Excipients or Inactive Raw Materials, and most Packaging materials must be imported. Exchange rate variations, import duties, and freight charges affect the price significantly. I may remind here that the drugs prices are fixed by DRAP, and manufacturers cannot increase prices on their own. All excesses in the input cost must be borne by the manufacturers.
Latest twist in the story is that the government has slapped 17% GST on all materials which were previously exempt from it. The importer shall pay GST, consume the material for production, sell the finished products and then apply refund claim for GST. They will not pass the added GST to consumers. It is true that the government shall give refund, but it will be delayed and in parts while it was received fully in one go. This one step shall put significant strain on cashflow management.
Stakeholder 3 – Manufacturers
Pharmaceutical manufacturing has a long history in Pakistan. The MNCs put up their manufacturing units earlier on, and the Local Pharma followed suit. The MNCs produced their original research products; Local Pharma manufacturers produced their own formulations. Most major MNCs came to Pakistan early and captured almost entire market. Local Pharma was relegated to back benches where they were contented with making basic medicines for pain, diarrhea, simple infections, cough syrups and vitamin tonics. During 1980s, the shift started when some more progressive manufacturers ventured into branded generics business and did quite well. The trend caught on and the tables turned. Now, over 80% market is captured by Local Pharma and less than 20% is with the MNCs.
Presently, there are about 750 Local Pharma Manufacturers while MNCs number has drastically reduced due to mergers and divestment to local groups.
Pharmaceutical manufacturing is regulated at every step, which makes Pharmaceutical Manufacturing a complicated process. True that it is done in the interest of patients so that they would get the right quality at reasonable prices. All regulations in this direction must be welcome and enforced, but ground situation is rife with several stories of excesses, undue arm twisting, exploitation, mistreatment, and occasional financial irregularities.
Imported API invoices must be verified by the DRAP offices in various cities, otherwise Customs does not allow clearance. DRAP officers have their moods and eccentricities which must be borne by the manufacturers. Imported packaging components also go through the same drill. There is a new rule called IOCO – Input/Output CO-efficient which is applied during processing of import of large volume glass vials. Simply speaking, it is the consumption record for the previously imported vials. It is a hassle which manufacturers take to save on duty.
Local packaging components’ quality and availability remains inconsistent. Since the beginning of COVID19, i.e., the prices have been steadily rising, and quality and availability have become more variable.
About manufacturing facilities, the construction site is approved first, followed by layout approval. Construction would be allowed after layout approval. After the building is complete, then comes the stage of importing, procuring equipment for Production and Quality. After this in place, then the application is submitted to DRAP – Central Licensing Board for inspection and grant of DML – Drug Manufacturing License, identifying which kind of products shall be produced. Then comes the step to submit dossiers for registration of drugs. For new units, ten molecules for every manufacturing section are granted early, out of queue.
Good Manufacturing Practice – GMP is the governing and guiding document for manufacturing of pharmaceutical products.
To be Continued……
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