ISLAMABAD, March 19: National Tariff Commission chairman Dr. Faizullah Khilji here on Tuesday advised the local pharmaceutical industry to prepare themselves for the fast-approaching scenario where no tariff protection will be available.
Speaking at a public hearing held at the NTC on the request of Pharmagen Limited for tariff protection for the two inputs used in manufacturing of antibiotics pharmaceuticals, he pointed out that tariffs on raw materials were likely to be further reduced in the next two years. The best option for the industry was, therefore, to maximize efficiency in order to reduce their cost of production.
Earlier, managing director, Pharmagen Ltd, made out a case for increase in customs duty on import of cephradine and cephalexin from present 10 per cent and 20 per cent, respectively, plus 15 per cent sales tax. Currently, he said, there was no tariff protection on production of cephradine, although a “limited” tariff protection was available on production of cephalexin.
It was difficult for the local industry to compete against the much cheaper product imported from India and Europe, especially as the producers of those areas had numerous advantages, including economy of scale provided by larger markets, export incentives, advanced technology, etc. In India, it was argued, the prices of the said products were higher in the domestic market than the price at which these were exported abroad.
At this juncture, the NTC officials suggested that Pharmagen might submit the data so that the commission could investigate whether proceedings under the dumping and counter-valence provisions of the World Trade Organization might be initiated against the exporters of India.
The representative of Ministry of Health did not oppose the request by Pharmagen. Such protection was already provided to about a dozen other products, he remarked.
Nevertheless, the representatives of multi-national pharmaceutical companies said that they would not oppose the protection provided the government allowed the companies to raise the prices of the end-product. This was because as a result of the protection, the expenditure of the companies producing the said materials would certainly go up.
Zafar Mooraj, representing the Pharma Bureau of MNCs, referring to a statement by the commerce minister, who is chairman of the Deregulation Committee, where he had stated that the tariffs on imported pharmaceutical raw materials would be further curtailed from 10 to 5 per cent. At the same time, however, the government had decided to impose 15 per cent sales tax on all pharmaceutical products, thus raising their cost.
Responding to this, the representative of Ministry of Health said that the decision may not with his ministry but with the economic “managers” of the government.
The NTC assured the participants that it would send its recommendations to the government after thorough analysis of the data provided by the companies concerned.