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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……
- Geopolitical Situation – Though political and social analysis comes under PEST Analysis, but the current situation is so imminent that it must be taken into account. Russia-Ukraine conflict is certainly not what it is being portrayed by the US and its allies in Europe and elsewhere. I do not intend to go into the politics of the whole thing, but we must consider its economic impact on the whole world. Because this war shall not be fought on the battlefield, but on the economic front. The armies in combat are always expendable men and women who are lured into the fantasy of patriotism. The world is still recovering from the shocks and after-shocks of COVID19. This economic upheaval is going to have serious impact on energy availability and prices thereby increasing the cost of many materials and all shipments. The cost of freight which had just started coming down after an all-time high may go up again. The risk of war threat and security is real in certain regions and shall affect the movement of men and materials.
Ruble is losing its value fast, Euro is precariously stable, and the US dollar is under severe pressure due to extremely high borrowings by the US government. Deflation is the situation in which supplies outnumber demand by a wide margin and therefore the prices go into a downward spiral thus affecting production, layoffs, further deflation due to decreased purchasing power. More can be added to the list, but the bottom line is that all industries, including Pharma industry at great risk.
- Supply Chain Challenges – Supply chain has become highly specialized in the last couple of decades. It is now recognized as a critical function and lot of work is going into concepts of agility and other related topics. Take the example of the number #1 Pharma company, Getz Pharma. Their current turnover is 38 billion rupees, which means that they must close sales of over 3 billion on average every month. It also means they need to arrange materials worth one billion rupees every month. Getz can pull it off due to their financial capability, but many others cannot. Supply chain is expected to arrange all production materials, equipment, and services. Supply chain in Pharma must follow quality guidelines also besides prices and terms.
Supply chain has come under intense pressure since the COVID19 pandemic started. Material availability has been a challenge, and so has been the logistics. Disruptions in supply chain are a serious threat to Pharma industry. Pharma industry operates on a low margin and price increases in the input threatens the profitability. Another peculiarity of Pharma is that it sells millions of units to generate value. The number of materials required are large in number and a challenge for supply chain to manage.
Supply chain is a more recently developed function. It has evolved from purchase function which had not yet developed into procurement. Limited number of truly qualified Supply Chain professionals is a great limitation in the evolution of this function. University of Management & Technology – UMT Lahore were the first to offer Master’s in Supply Chain Management. It was a roaring success, and some other universities also followed suit. However, the big question is that where would be relevant faculty coming from? Apparently, the answer is a silence. Even with this, it is a welcome sign, and we can possibly see some qualified people coming on board in future.
- Talent Shortage – Pakistan has long been a supplier of talent and labor to the world. Our people have done extraordinary work abroad and made name for them and for Pakistan. It seemed we had an endless supply at hand thanks to our population growth and young population. The situation has been changing for many years and talent shortage is now an imminent threat. Reasons for talent shortage may be counted as follows.
- Brain Drain – since 1980s, there has been a massive brain drain from Pakistan, and the majority went to North America, US, and Canada; few opted for Australia and Europe. The immigrants were young, qualified professionals who left the country for better opportunities and future. Many found it, many did not, but they could not return. We are actually facing acute shortage of rightly qualified, experienced professionals.
- Low Preference for Pharma Industry – Pharma industry lost much of its glamour during the last three decades. It used to be a respectable profession which paid quite well, better than many other jobs including doctors and government officers in grade 17. Then the industry failed to adjust to changing needs and preferred to compromise on standards, quality of people, quality of work, quality of education, and quality of compensation. I saw it and shared with my colleagues that the new boys coming to Pharma came more and more from suburban and less developed areas of Lahore. No one came from posh or more affluent areas anymore. It is not in the sense of discriminating against any particular group; it is a statement of fact. It changed the face of Pharma industry over time and became almost irreversible. The negative changes further pushed better people away, and Pharma industry lost its preferred profession status.
- Evolution of new professions – many new jobs were created in brand new industries, and these offered more glamour and more rewards. First it were private banks, then mobile carriers which kept expanding and absorbed hundreds of thousands of young men and women, digital space, call centers, software houses, upwork, work from home, e-commerce, and so much more. The whole new world opened, and Pharma industry was relegated to the far behind corners. It is no more an option in the first place.
- Change in Education – the old-fashioned education of basic subjects changed, and more students opted for a degree like commerce which could offer greater job opportunity, though it did not. Great majority of B-Coms apply and get Pharma sales jobs. It is followed by BAs and others. It is a rarity to see a science graduate applying for med rep job. With this education, these boys are almost impossible to train on technical medical and pharmaceutical knowledge. They do not make a convincing case in front of the customers. The person makes a poor impression, and the company loses face. To compensate it, too many ‘other things’ are offered. Pharma Industry cannot change education landscape, but it can train more effectively.
This brings to end the description of four parameters: Strengths, Weaknesses, Opportunities, and Threats. We shall analyze these and then go on to suggest strategies.
To be Continued……
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