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February 2022 marks 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 Pharma Industry.
SWOT – THREATS……
- Political & Social Unrest – We are quite familiar with the political and social unrest that keeps erupting every now and then. There are ‘dharnas’ and ‘roadblocks’ and strikes and waves of crime which disrupt smooth operations, business activities, and supply chain. Successive governments have become more and more unable to counter these things because the street power gets stronger, and the governments become more compromising and weaker. When a party goes into opposition after ruling for a tenure, it tries to make the government dysfunctional, but expects that it would not be dealt with harshly because they did not deal the now ruling party harshly when it was in opposition. So, it is scratching one another’s back and playing with rhetoric only, no action. Karachi has seen so many days of lost work, it is difficult to count the loss properly. The order would come any time, any day to close the plant, close the market, close the transport. It was one pressure group at one time which wielded the greatest power, then other groups also emerged, and now it is too many of them. Punjab has also had its share of unrest when it would be one Allama after another disrupting public life severely. Our public also has lots of free time and energy to participate in such activities, which also give vent to their frustrations about many other problems.
Political and social unrest is a threat for all businesses, and Pharma is no exception. It is even more vulnerable because it is indirect selling through the third party, the doctor’s prescription.
- Law and Order Situation – it is an important threat that should be taken separately, and not clubbed with political, social unrest. Law and Order situation in Pakistan has deteriorated consistently and inexorably. The reasons are deeply embedded in long years of disparity, inequality, injustice, and oppression. No government had had enough political will, legitimacy, authenticity, and support to address the underlying issues. Criminal activities are known to be sponsored by influential people who sit in the government. Obviously, they would not make any policy to undermine their power and income. Kidnapping for ransom, blind murders, staged accidents, robberies, and thefts’ graphs may keep fluctuating between high and low but they are always there.
Law and Order situation erodes the confidence of investors, discourages entrepreneurs and damages business activities. The owners of few large Pharma companies have already chosen to immigrate to Europe or North America. They are either running their businesses from remote, if they can, or they have further chosen to sell these to other local investors.
- Corruption – The one thing that has consistently flourished in Pakistan is corruption. It has become integral part of everyday work and life. All of us, without exception, are immersed in it. Corruption has taken various forms according to need and it is well nigh impossible to stem its tide, much less to wish that it would be rooted out. In the government, from the highest office to the lowest employee, corruption runs freely. It is interesting to see that it has been rationalized in several ways and its runs side by side with religion also. Most of the well-known big people in any discipline are involved in corruption. Corruption, at its heart, is always financial; other forms are invented to get ultimately to financial gain. Pharma companies, also without exception, pay under the table to get legitimate things done. No wonder that in this environment, some illegitimate things also get approval. The known cases of few Islamabad-based companies are a clear story of corruption of all concerned. Speed money, as it is usually referred to, is demanded as a matter of right and offered as a matter of rules of business. It is also interesting to note that if an officer somehow refuses to accept speed money for doing a favor, he/she is despised, and all forces join hands to remove this irritant out of the way.
Corruption is inside the organizations also. People buying goods and services routinely ask for and receive kickbacks and cuts, promotional budgets are misused and misappropriated at all levels, promotional tools are misused, sold on the market, and not put to the intended use. Sales figures are propped up by misreporting and assigned work is falsified to look better than what it is. Market information says that most sales staff is indulged in corrupt practices. Jobs are secured through presenting fake degrees, work is not done in the prescribed manner, entitlements are stretched to the limit, and resources are converted to personal income. Market reports also show that a fair percentage of sales staff are working simultaneously for two companies; they divide the work area into two portions and represent two companies in two sub-territories so that conflict does not arrive. Some of them are running their own franchising business along with the job. In the interior areas, it is common practice to get a government job through ‘sifarish’, and then take up a private job also. They only do the ‘attendance’ in government job themselves or through proxy and do the private job almost full time. How will the corporates fight with the corruption which has become woven into its basic fabric? It is an uphill task, if not impossible.
Corruption at the customers is also part of business. Distributors, retailers, wholesalers, all are involved in some form of corruption. Company policies are flouted, prescriptions are switched, patients are misled into buying those drugs which give higher margin to pharmacy, and dubious healthcare products are promoted. In the more suburban areas, some pharmacies are indulged in more nefarious activities.
The senior management of the company manipulates to receive more advantages for themselves and their chosen ones. It is now customary to build a personal pool of loyal customers by using investment from one or successive companies. These customers provide immediate support to the person wherever he goes. It does bring business, but it is not long term, and it goes away when the person goes away.
The forms of corruption mentioned above, and those not mentioned here threaten the very existence of many Local Pharma. The threat is imminent and increasing with time. so far, the Pharma Industry is not paying heed to these issues, they are happy with fast growing market and quick returns. As we usually do, we do not care much about the long term, particularly, about the organization’s future. The entrepreneurs have already secured their and their next generations’ future. It is one of the self-defeating behaviors among many we display.
To be Continued……
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