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Challenges in boosting drug exports

November 16, 2015

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FEROZSONS Laboratories President Osman Khalid Waheed says “unregulated 
production, price controls and the absence of universal health insurance are helping the counterfeit market flourish. This is at the expense of the people who need to be protected by the government through an institution of quality standards and controls, creation of competition in the market, and provision of universal health insurance”.
FEROZSONS Laboratories President Osman Khalid Waheed says “unregulated production, price controls and the absence of universal health insurance are helping the counterfeit market flourish. This is at the expense of the people who need to be protected by the government through an institution of quality standards and controls, creation of competition in the market, and provision of universal health insurance”.

FEROZSONS Laboratories has grown at a remarkable speed over the last five years, with its consolidated revenue spiking by 3.7 times and after-tax profit almost quadrupling during the period.

But financial year 2015 proved exceptionally good for the ‘low volume, high quality’ firm as its revenues jumped by 49pc to Rs5.706bn and after-tax earnings rose 71pc to Rs944m from a year ago.

The robust surge in revenues and profit is attributable to the strong growth in the company’s portfolio of imported products, particularly through its franchise arrangement with Gilead Sciences, Inc.

“Last year was a landmark year for our firm,” says Osman Khalid Waheed, president of Ferozsons since 1999. “Through our partnership with Gilead, we brought its treatment for Hepatitis C, Sovaldi, to patients in Pakistan at just 1pc of its international price. This really went a long way in pushing our revenues.”

Over 10m people in Pakistan are believed to be infected with Hepatitis C — the highest burden of the disease anywhere in the world. At least 40,000 patients in the country are said to have benefitted from Sovaldi.

The company has also entered into a new licensing agreement with Gilead to locally manufacture an authorized generic of Sovaldi to further reduce the cost of treatment for Hepatitis C as well as to broaden the access for patients.


‘Our government regulations are limited only to controlling drug pricing instead of ensuring the medicines’ quality or encouraging competition. As a consequence, 13 multinationals have already wound up their business and left the country’


Since taking over the over 60-year-old company as president, Osman has successfully transformed it from a low-cost, generic player into a “specialised, niche-based leader in the value-added market segments,” including cardiology, gastroenterology and dermatology, by improving the company’s product mix and launching a series of branded products.

The firm has been ranked among the top 25 companies on the Karachi Stock Exchange for the last six consecutive years.

Besides establishing a partnership with Gilead, Ferozsons has also forged alliances with German, American and Argentinean biotechnology companies to provide treatment for life-threatening diseases.

In collaboration with its Latin American partner, Ferozsons has set up a state-of-the-art biotech pharmaceutical manufacturing facility, BF Biosciences, near Lahore. It owns a four-fifth shareholding in the joint venture, which produces and exports biotech medicines to treat cancer and Hepatitis C. The local manufacturing of treatments for these diseases has cut the cost of these therapies by over 50pc.

“In the next five years, I plan to further expand collaborations with our international partners and take our company’s exports to 40pc of its total revenues from the existing 10pc,” says the Harvard graduate in economics.

Pakistan’s pharmaceutical exports currently stand at a mere $200-240m, compared with India’s $20bn. Increasing the country’s pharmaceutical exports poses a big challenge for the manufacturers, and Osman is well aware of it.

“The perception of Pakistan is a major challenge that we as a manufacturer and exporter of medicines have to face in the global markets,” he says. “But weak regulation and a lack of standards for setting up and producing medicines in the country is an even bigger challenge for the industry than the poor image of the country.”

“The government must set minimum quality standards for any manufacturer that wants to operate here, standardise drug laws according to WHO guidelines and create a highly trained inspection team for enforcing those standards. Only the firms that meet the standards of quality and drug stability should be allowed to operate because human beings are not guinea pigs to experiment on,” he argues.

At present, Pakistan’s domestic market size is estimated to be $2.3bn, with the revenues of 574 domestic drug companies standing at $1.3bn and of the 26 multinationals at $950m.

According to industry sources, Pakistan will become the 11th largest market in the Asia Pacific region by next year and its fast-growing pharmaceutical sector would ideally make it a favoured place for future investment.

Like other industry players, Osman also contends that the government’s control over drug pricing is a major impediment in the way of fresh investment in the pharmaceutical sector.

“Our government regulations are limited only to controlling drug pricing instead of ensuring the medicines’ quality or encouraging competition. As a consequence, 13 multinationals have already wound up their business and left the country.”

Osman believes that the provision of a stable and predictable price regime for the industry will trigger new investment and growth and position the industry for improved exports.

“Unregulated production, price controls and the absence of universal health insurance (for those who cannot afford expensive treatments) are helping the counterfeit market flourish. This is at the expense of the people who need to be protected by the government through an institution of quality standards and controls, creation of competition in the market, and provision of universal health insurance.”

Published in Dawn, Business & Finance weekly, November 16th, 2015