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Pakistan Pharma Industry had a tough year in 2022, given the market situation, economy, and political turmoil. Economic conditions deteriorated further due to massive flooding in several parts of the country, particularly Sindh, which is still suffering due to willful neglect, corruption, and embezzlement at all levels of management. Exchange rate fluctuations have been a constant factor affecting the cost of manufacturing. Despite such serious challenges, Pakistan Pharma Industry was able to post a robust growth of over 14% in 2022 and crossing the mark of 700 billion rupees retail market sales. This had been possible due to hard efforts by the industry, with least support from the government.

Since we entered 2023, the challenges have increased and some of these are posing a serious threat. We do raise objections to the recent surges in prices of drugs, along with the older concerns about quality, authenticity, and marketing tactics. We can keep those but must look at some of the grave concerns which are not just for Pharma, but many other industries also.

Import of Materials – Cost, Availability, Exchange Rate, Foreign Currency Shortage

Pakistan Pharma Industry is entirely dependent on import for the active, inactive, and packaging materials used to produce pharmaceutical products.

APIs – Active Pharmaceutical Ingredients

A primary challenge is that of local production of APIs. We do have few, less than 10 units producing less than 20 APIs – Active Pharmaceutical Ingredients, such as paracetamol, few antibiotics etc. However, what is less known is that we do not produce these from scratch. The starting materials, basic molecules, and chemicals for processing are all imported. Our API manufacturers run the processes after that, refine the final product and make it available to the industry. There is nothing wrong with it. For example, India, which is now the major supplier of APIs to the world, gets most intermediates from China. In fact, for most of the conventional pharmaceuticals, China is the supplier for basic molecules, intermediates, and processing ingredients. Our APIs manufacturers are also dependent on China to run their plants.

Secondly, our API manufacturers produce too few APIs in insufficient quantities which does not enable them to achieve economies of scale. It is hard for them to offer better prices and probably they do not strive for that either. They get tariff protection which adds additional duties on import of APIs manufactured locally, which keeps them afloat. The investment in this sector has been negligible and the government has never focused on it. During 2022, Drug Regulatory Authority Pakistan – DRAP issued an API manufacturing policy, ostensibly to encourage API manufacturing in Pakistan. It offered certain incentives to entrepreneurs so that they would be enticed to invest in this sector. However, due to other challenges, nothing has happened yet practically.

API manufacturing is much more elaborate and lengthy process as compared to pharmaceutical finished products manufacturing. The R&D equipment is almost as costly as the commercial production equipment. Processes are longer and must be run continuously which would mean 24 hours operations, manpower availability, and uninterrupted supply of power and other utilities. Loadshedding of electricity and gas is a permanent feature which necessitates the use of generators, which are now much more expensive to run due to high of diesel. So, it is not just one or two factors, it is a plethora of issues which looks at the industry in the face. It is easy to say that we must be self-sufficient in API production to eliminate dependence on India and China. It is a mirage that does not need to be pursued. The whole world abandoned this pursuit long ago and entrusted China and India with the task of bulk manufacturing of APIs. Europe used to produce several APIs, but no more. The US is also dependent on import from China for conventional APIs, and on India for import of generic medicines.

Couple of pharma companies have gone into further processing of APIs. Surge Pharma was the first to do it; Vision Pharma came up fast later. These companies import APIs and do additional processes such as taste-masking, pellet formation to control release time, and so on. These are important services and become essential for certain APIs.

Having said that, there is still a need for increasing local production of APIs. However, following are the major hurdles.

Lack of Skilled Staff – As mentioned earlier, API manufacturing is way more complex than finished goods manufacturing. Due to small API industry size, trained andskilled staff is in very short supply. In fact, whatever little numbers are available, have learnt it hands on, after shifting from finished goods manufacturing. Acquisition of technology and skilled labor are two different things; machines can be imported but skilled operators are hard to come by. The industry did not import skilled personnel on contract for a few years to train their local staff. Even now, skilled people specialized in API manufacturing are few. People do not opt for it because the API industry is small and growth opportunities are few.

Cost of R&D and Manufacturing – Equipment for manufacturing of APIs is available from Europe, India, and China. It is not however, a set of few machines running independently. API manufacturing is a continuous process and needs an integrated line which is quite costly. The R&D also needs a minimum bulk of materials which will be discarded after running the processes. The whole cost is prohibitive and must be done before the commercial production could be done to get business. For finished goods manufacturing, many of the machines are now manufactured locally, though they are relatively imprecise, but can do the job fairly well.

To be Concluded……

Disclaimer: Most pictures in these blogs are taken from Google Images and Pexels. Credit is given where known; some do not show copyright ownership. However, if a claim is lodged at any stage, we shall either mention the ownership clearly, or remove the picture with suitable regrets.

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