Disruption in the supply chain of essential medicines can threaten national health security in the months ahead. Pakistani drug makers, cognisant of the government’s limitations, have changed their stance. Instead of issuing ultimatums, they are now working on viable solutions to sustain the industry and minimise public health risks.

All drug makers, big and small, have been affected by the ongoing current account crisis. “No one is spared. Everyone I know in the sector is under stress. What do you expect when banks decline to open letters of credit (LCs) and delay retirement documents necessary to release consignments already at the port?

These delays can render chemicals unfit for medicinal purposes. I recently had to endure a loss when the quality control unit in my factory rejected chemicals held at port.

“I believe the time to nurse anxieties or spit venom has passed. Instead, drug firms desperate to survive the harsh phase are forced towards collaboration with peers and engagement with decision-makers to save the industry,” Dr Qaisar Waheed, former head Pakistan pharmaceutical manufacturers association (PPMA), noted during an exclusive discussion on drug business and its future in Pakistan.

As Pakistan doesn’t produce any molecule for medicines, the sector is entirely dependent on raw material imports. With the current account deficit leading to alarming dollar shortages, the industry is pondering over extreme measures, such as asking the government to allow the opening of LCs in the Chinese currency Yuan. About 60 per cent of raw materials for drugs in Pakistan are sourced from China.

Drug manufacturing is a business, not a charity — if the scope of reasonable profit is squeezed, the business will become unviable, opening space for more spurious medicines

Dr M Fakhr e Alam, federal secretary of health, aware of trepidations in the pharma sector, shared a guarded brief response.

“The prime minister has formed a committee which includes key members of the cabinet, officers of the health ministry and representatives of the pharma industry (on the recommendation of the pharma associations) to look at the issue in its entirety.”

Abdul Qadir Patel, the federal health minister, and the spokesperson of the relevant ministry were approached for comments, but their response did not arrive till the filing of the report.

A source in the industry shared the official notification issued last month. The bipartisan committee included the federal finance, economic affairs and health ministers, special assistants on government effectiveness, advisor to the prime minister on establishment and secretary board of investment and health from the government side.

The private sector is to be represented by PPMA and pharma bureau chairpersons, besides heads of leading drug makers — Ferozsons, Pfizer, Indus, PWC, Sante, Searle, Schazoo, SPL and GSK. The secretarial support is to be provided by the Drug Regulation Authority.

Farooq Bukhari, chairman of PPMA, was irked by the unrealistic expectations from the industry. “Drug manufacturing is a business at the end of the day, not a charity. If the scope of reasonable profit is squeezed by suppressing prices, the business will become unviable. To retain local and foreign investors, the government must reassess its policies,” he asserted.

He said that the trade body of local manufacturers is trying to gather information to identify the most urgent actions to ensure a steady supply of essential medicines. “The drug companies replenish their stocks of raw materials quarterly because of the sensitive nature of inputs. As far as I know, stocks of many companies are expiring in December, and to match their local demand and export commitments, they must place orders soon,” he said, explaining the urgency for action.

He suggested some steps to moderate the dollar demand of the drug industry. “We can defer expansion plans to save dollars but can’t compromise on the import of active pharmaceutical ingredients (API). A disruption in API imports will encourage black marketing and leads to an influx of spurious drugs in the market.”

Until dollar flows improve, he suggested the government consider allowing raw material imports only for drugs on the World Health Organisation essential drug list.

“The same situation arose in 2018 when the dollar value shot up from Rs105 to Rs145, and utility rates and inflation spiked. The Supreme Court decided in favour of industry and allowed across-the-board price increases, but drug makers raised 10-15pc less than the permitted price on the government’s request,” said Mr Bukhari.

Citing a hostile business environment and an unbearably high cost of production, many pharma multinationals have wrapped up operations in Pakistan. Last month three major manufacturers, Sanofi, Bayer and Eli Lilly, pulled their shutters down. Locals have also been using a tough tone and issuing warnings to draw attention to their problems compounded by the dollar crunch.

An expert advised the government to start an extensive exercise to collect data on the supply and demand of essential medicines and assessment of landing and processing cost of inputs to arrive at a fair price independently.

“Proper homework is necessary to engage with the private sector for a balanced policy that supports manufacturing, monitor standards, nudge companies towards higher productivity, curb collusion and promote healthy competition for a better deal for ailing Pakistanis and their families.”

The writer can be reached at asubohi@hotmail.com

Published in Dawn, The Business and Finance Weekly, December 12th, 2022