IN the course of the history of nations, there comes a time when those who can share the burden of saving the country should rise to the occasion — it is this time for the people of Pakistan. While the solutions to governance incompetence will take decades, there are fixes available that can take care of other maladies more quickly. We are living in an era of the global economy: if we can sell what we make to the world, we can earn more and reduce poverty.
While Pakistan can do better in exporting and selling high-margin products across the globe, one of the most straightforward trades that Pakistan can go into is pharmaceuticals. The global pharma market is about $1.3 trillion, 50pc of which is in North America. The US generic market is around $100 billion; of this about $25bn is imported. India is the second largest source of generic drugs imported in North America: of its $14bn worth of pharmaceutical exports in 2018, approximately $6bn went to that part of the world. India ranks 10th in global pharmaceutical exports, while Pakistan trails at 55 with less than $200 million.
There are several deficiencies in Pakistan’s pharma industry responsible for this lacklustre performance. First, it is the quality of products produced in Pakistan — probably the worse in the world. This allows Pakistan to sell only to the least developed countries, where the markets and margins are tiny. A handful of Indian companies, once they realised that this is a business with a different set of rules, raised their standards and captured the multibillion-dollar market quickly. The stellar rise of Indian pharma exports is further attributed to the efforts of India’s ministry of commerce and industry that established the Pharmaceutical Export Promotion Council in 2004.
The Trade Development Authority of Pakistan (TDAP) provides guidance and assistance to all exporting industries without any industry-specific programmes. We can criticise the government for not being forthcoming, but the real blame rests with the industry. While many Pakistani pharma companies have amassed enormous wealth, not a single company has invested in registering its products in the developed markets. The pharma industry is comfortable making pennies, and has little vision to tap the tremendous opportunities available to it.
The pharma industry is comfortable making pennies, and has little vision to tap the tremendous opportunities available to it.
However, 2019 is an excellent time for the industry and the government to have a rethink: Indian generic sales have begun dwindling in the West mainly because of poor quality standards, exposed in a recent book, Bottle of Lies, by Katherine Eban. The warning letters issued by the FDA to Indian companies, all on public record, reveal widespread greed, deception and little regard for ethical standards. The Indian pharma empire will experience a faster decline if there are alternates available, and I am confident that the Pakistani pharma industry can cash in on this remarkable opportunity if only it is willing to learn from the failures of the Indian companies and create an ethical culture essential to the industry’s success.
For the past five decades, I have helped pharma companies develop new products and secure regulatory approvals all over the world, and taught regulatory agencies to create their practical guidelines, including the first draft of the Drug Regulatory Authority of Pakistan (Drap) that I wrote in 2013. (It did not turn out to be what I had envisioned and proposed.) I have continued to connect with the Pakistani pharma industry and encouraged it to move forward with plans to capture global markets.
The most common misconceptions brought to my attention are: it costs too much to improve quality; the Federal Drug Authority (FDA) and European Medicines Authority (EMA) will never approve us, with some even suggesting a bias, and the fear of having their quality exposed. I have some suggestions for turning the situation around.
While the responsibility for improving quality standards lies with pharma companies, they are always looking for handouts, freebies, and encouragement from the government. The TDAP can create a separate pharma entity as an independent agency to educate, encourage, and expedite the efforts of the industry to expand its global reach. These efforts may include new agency recruiting consultants who can provide audits of companies, plans for improvement, regulatory planning, and address any question that might arise in the process of developing a successful strategy. One misconception that needs immediate clarification is that a WHO audit or even an EU audit does not qualify a company to sell in any market. The FDA does not conduct audits. It is only when a product is filed for registration that an audit becomes necessary for approval. Providing this service that can be funded partly or wholly by the industry will amortise the cost to each company. As an independent agency, it will also be possible to invite leading regulatory agencies like EMA and FDA to provide education.
Company classification with price control benefits by Drap will go a long way in encouraging competition. A company allowed to sell a product in a developed market will be allowed to sell it at a higher price than other similar products. The company will also receive a quality designation displayed on its products.
Industry consortiums have always played a significant role in helping its members, and the Pakistan Pharmaceuticals Manufacturers Association should create separate entities focusing on export planning, technology adoption, and regulatory support.
Companies should be allowed to develop products exclusively for the export market and export them without the need for local registration. Concessions should include duty-free import of chemicals and components used in exported products, without being in export-processing zones.
The government can offer grants and loans to modify facilities, construct new ones, and invest in new technology and declare such investments tax deductible.
In closing, I must emphasise that the plans presented here are practical and well-practised; they will succeed — if only we can let the first domino fall.
The writer is a US-based adviser to many regulatory agencies worldwide.
Published in Dawn, July 28th, 2019