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Pharma sector attracts meagre $26m FDI

Updated October 28, 2018

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The sector sales as a percentage of GDP have consistently ranged at a meagre 1-2 per cent despite growth in volumes. — Reuters/ File
The sector sales as a percentage of GDP have consistently ranged at a meagre 1-2 per cent despite growth in volumes. — Reuters/ File

KARACHI: Foreign investment in the pharmaceutical sector remains lacklustre mainly due to government regulations and counterfeit drug production despite expectations of pharma-related expenditure to double in next 10 years.

The sector attracted a paltry sum of $26.4 million in foreign direct investment during the first quarter of 2018-19. The sector sales as a percentage of GDP have consistently ranged at a meagre 1-2 per cent despite growth in volumes.

According to the Fitch Solutions’ projections, at the ongoing pace, pharma’s contribution to GDP will remain dormant at 1pc till 2027.

On the other hand, medicine and drug exports have gone up during the last three years but at slower pace and remain appallingly low at $293m during FY18. Indian pharmaceutical sector, which is valued at $33 billion, exports reached $17.27bn during 2017-18.

According to Fitch report, Pakistan’s pharma sector remains riddled with numerous problems including ‘poor governance, lack of access and unequal resources, corruption in the health system, lack of monitoring and planning, and a lack of trained staff’.

The report highlights that ‘despite increasing political will to develop the health sector, given the government’s poor record of implementing planned healthcare sector reforms, there is a possibility that the implementation of such improvements will be delayed’.

The country’s pharmaceutical market was valued at Rs301bn last year. According to forecasts, expenditure in the sector is expected to increase to Rs973bn by 2027, however, opportunities for multinational organisations will continue to be marred by underlying issues in the healthcare system.

In addition to that, “insufficient government funding and limited access to healthcare services will prevent any significant improvements to healthcare-related outcomes”. The report also adds that “multinational activity is to remain limited”.

The previous government, in April, after consulting provincial departments, developed the human resource for Health Vision to tackle the problem of staff shortage in the sector. The vision, under the National Health Services Regulation Ministry, seeks to create one million jobs by 2030. It also set a target to increase the number of female health workers from the current 93,000 to more than 180,000 within the next five years.

‘Fake medicines causing havoc’

Citing lack of oversight causing perpetual rise in the fake drugs in the market, Pharma Bureau Executive Director Ayesha Tammy Haq said “The government must intervene and take immediate action as these smuggled drugs are not only a major health-risk but they continue to cause losses to national exchequer.”

She said there was no effective framework in place to check the quality of imported and locally produced drugs and the only government intervention can be seen in the strict regulation of prices, which in turn limits the sector’s ability to innovate and expand.

Low-quality and cheap smuggled drugs have put the lives of poorest groups of the population at risk. Penetration of fake drugs in the market has reached to unprecedented levels as health officials continue to look the other way. Customers purchasing a Paracetamol from pharmacies in rural areas are blatantly asked whether they want to purchase Rs2 or the Rs4 version of the medicine with former being the fake variant and latter genuine.

“Smuggled medicines and locally produced fake medicines are being sold unchecked at pharmacies as authorities are ill-equipped and lack state-of-the-art laboratories to conduct required quality checks,” lamented Haq.

The government’s inability to act has pushed the sector into oblivion which during 1960s was touted to become the regional hub for pharmaceutical development. She said, “The government has collected huge funds by mandating contribution of 1pc of pre-tax profits from all pharmaceutical companies in the ‘Central Research Fund’”. However, despite availability of these funds, health authorities are not equipped with testing laboratories.

Published in Dawn, October 28th, 2018

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