includes 10-year forecasts to 2019 -...
TRANSCRIPT
Q3 2010www.businessmonitor.com
pharmaceuticals & healthcare report
issN 1748-2089published by Business monitor international ltd.
paKistaNINCLUDES 10-YEAR FORECASTS TO 2019
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PAKISTAN PHARMACEUTICALS & HEALTHCARE REPORT Q3 2010 INCLUDING 5-YEAR AND 10-YEAR INDUSTRY FORECASTS BY BMI
Part of BMI’s Industry Survey & Forecasts Series
Published by: Business Monitor International
Copy deadline: May 2010
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
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Pakistan Pharmaceuticals & Healthcare Report Q3 2010
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CONTENTS
Executive Summary ......................................................................................................................................... 5
SWOT Analysis ................................................................................................................................................. 6
Pakistan Pharmaceutical Industry SWOT .............................................................................................................................................................. 6 Pakistan Political SWOT ....................................................................................................................................................................................... 7 Pakistan Economic SWOT ..................................................................................................................................................................................... 8 Pakistan Business Environment SWOT .................................................................................................................................................................. 8
Pharmaceutical Business Environment Ratings .......................................................................................... 9
Table: Asia Pacific Pharmaceutical Business Environment Ratings, Q310 ........................................................................................................... 9 Limits Of Potential Returns.................................................................................................................................................................................. 10 Risks To Realisation Of Returns .......................................................................................................................................................................... 10
Pakistan – Market Summary ......................................................................................................................... 12
Regulatory Regime ......................................................................................................................................... 14
Recent Regulatory Developments ........................................................................................................................................................................ 15 Intellectual Property Regime ............................................................................................................................................................................... 16 Shortcomings Of The Intellectual Property Environment .................................................................................................................................... 16 Counterfeit Drugs ................................................................................................................................................................................................ 17 Pricing And Reimbursement Regime .................................................................................................................................................................... 18 Table: The Formulae For Pharmaceutical Pricing In Pakistan ........................................................................................................................... 21
Industry Trends And Developments ............................................................................................................ 22
Epidemiology ....................................................................................................................................................................................................... 22 Non-Communicable Diseases .............................................................................................................................................................................. 22 Communicable Diseases ...................................................................................................................................................................................... 23 Recent Public Health Developments .................................................................................................................................................................... 24 Healthcare System ............................................................................................................................................................................................... 25 Table: Pakistan – Key Healthcare Statistics, 2007 (‘000 people, unless otherwise stated) .................................................................................. 26 Healthcare Insurance .......................................................................................................................................................................................... 27 Medical Tourism .................................................................................................................................................................................................. 27 Traditional Medicine ........................................................................................................................................................................................... 28 Retail Sector ........................................................................................................................................................................................................ 29 Research And Development ................................................................................................................................................................................. 29 International Cooperation ................................................................................................................................................................................... 30 Medical Devices................................................................................................................................................................................................... 31
Industry Forecast Scenario ........................................................................................................................... 33
Pharmaceutical Market Forecast ........................................................................................................................................................................ 33 Key Growth Factors – Industry............................................................................................................................................................................ 35 Key Growth Factors – Industry............................................................................................................................................................................ 35 Key Growth Factors – Macroeconomic ............................................................................................................................................................... 36 Pakistan – Economic Activity .............................................................................................................................................................................. 38 Prescription Drug Market Forecast ..................................................................................................................................................................... 39 Patented Drug Market Forecast .......................................................................................................................................................................... 41 Generic Drug Market Forecast ............................................................................................................................................................................ 42 OTC Medicine Market Forecast .......................................................................................................................................................................... 43 Pharmaceutical Trade Forecast .......................................................................................................................................................................... 44 Other Healthcare Data Forecasts ........................................................................................................................................................................ 46 Key Risks To BMI’s Forecast Scenario ................................................................................................................................................................ 47
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Competitive Landscape ................................................................................................................................. 48
Pharmaceutical Sector ......................................................................................................................................................................................... 48 2008 Financial Snapshot Of Pakistani Drugmakers Listed On The Karachi Stock Exchange (US$mn) .............................................................. 48 Domestic Pharmaceutical Industry ...................................................................................................................................................................... 49 Foreign Pharmaceutical Industry ........................................................................................................................................................................ 49 Recent Pharmaceutical Sector Developments ...................................................................................................................................................... 50
Company Monitor ........................................................................................................................................... 52
Indigenous Manufacturers ........................................................................................................................................................................................ 52 Searle Pakistan .................................................................................................................................................................................................... 52 Hilton Pharma ..................................................................................................................................................................................................... 54 Efroze Chemical Industries .................................................................................................................................................................................. 55 Ferozsons Laboratories ....................................................................................................................................................................................... 56 Getz Pharma ........................................................................................................................................................................................................ 58 Pacific Pharmaceuticals ...................................................................................................................................................................................... 60
Leading Multinational Manufacturers ...................................................................................................................................................................... 62 GlaxoSmithKline (GSK) ....................................................................................................................................................................................... 62 Pfizer ................................................................................................................................................................................................................... 65 Abbott Laboratories ............................................................................................................................................................................................. 66 Novartis ............................................................................................................................................................................................................... 68 Sanofi-Aventis ...................................................................................................................................................................................................... 70 Wyeth ................................................................................................................................................................................................................... 72
Country Snapshot: Pakistan Demographic Data ........................................................................................ 74
Section 1: Population ........................................................................................................................................................................................... 74 Table: Demographic Indicators, 2005-2030 ........................................................................................................................................................ 74 Table: Rural/Urban Breakdown, 2005-2030 ....................................................................................................................................................... 74 Section 2: Education and Healthcare .................................................................................................................................................................. 75 Table: Education, 2002-2005 .............................................................................................................................................................................. 75 Table: Vital Statistics, 2005-2030 ........................................................................................................................................................................ 75 Table: Employment Indicators, 2001-2006 .......................................................................................................................................................... 76 Section 3: Labour Market And Spending Power .................................................................................................................................................. 77 Table: Consumer Expenditure, 2000-2012 (US$) ................................................................................................................................................ 77 Table: Average Annual Manufacturing Wages, 2000-2012 ................................................................................................................................. 77
BMI Methodology ........................................................................................................................................... 78
How We Generate Our Pharmaceutical Industry Forecasts ..................................................................................................................................... 78 Pharmaceutical Business Environment Ratings Methodology .................................................................................................................................. 79
Ratings Overview ................................................................................................................................................................................................. 79 Table: Pharmaceutical Business Environment Indicators ................................................................................................................................... 80 Weighting ............................................................................................................................................................................................................. 81 Table: Weighting Of Components ........................................................................................................................................................................ 81
Sources ..................................................................................................................................................................................................................... 81
Forecast Tables .............................................................................................................................................. 82
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Executive Summary
Pakistan's US$1.62bn pharmaceutical market is the 10th largest in Asia Pacific, behind the Philippines
(US$2.58bn) and ahead of Vietnam (US$1.53bn). Annual per-capita spending on medicine is US$10,
which is far below the regional average of US$142. Market access is challenging and operational risks are
high.
A key feature of Pakistan’s pharmaceutical market is the low price of medicine. In April 2010, Khawaja
Shahzeb Akram, the vice chairman of Pakistan Industrial and Traders Association Front (PIAF) and
convener of LCCI Standing Committee on Pharmaceuticals, ruled out any increase in medicine prices. He
said the health ministry, rather than the Pakistan Pharmaceutical Manufacturers Association (PPMA), is
authorised to increase prices. He added that, while the Ministry of Health has frequently considered price
increases, they have remained the same for the last 8-10 years.
Healthcare is not a priority in Pakistan, as demonstrated by the country’s low expenditure as a percentage
of GDP. However, recent legislation suggests to BMI a change in attitude towards the benefits of medical
services on society. In April 2010, members of the National Assembly in Pakistan introduced three
healthcare bills on Private Members Day (March 30). The new bills are ‘The Pakistan Private Hospitals,
Clinics and Other Private Healthcare Units Regulatory Authority Bill 2010’, the ‘Foreigners
(Amendment) Bill 2010’ and the ‘Constitution (Amendment) Bill 2010’.
As seen in most developing countries, counterfeit medicines are major problem in Pakistan. In January
2010, Pakistan's Interior Minister, Rehman Malik, announced at the National Assembly that 50% of the
total medicines available in the country are considered either fake or of unacceptable quality. Malik added
that the government requires effective legislation to punish the offenders and control the threat that
counterfeiting and sub-standard manufacturing poses. The house approved two resolutions that
necessitate the government undertaking action against the sale of these drugs in the country.
BMI does not expect many foreign firms to enter Pakistan's pharmaceutical market over the medium-
term. Aside from the precarious political situation, the rupee is projected to weaken further over the next
five years. Our Country Risk team expects the US$:PKR exchange rate to deteriorate from 1:88 in 2010
to 1:110 in 2014.
This means prospects for local players are much more promising than those for companies that repatriate
revenues. BMI's pharmaceutical expenditure forecast model reveals that medicine sales will increase
from PKR132bn (US$1.62bn) in 2009 to PKR196bn (US$1.78bn) in 2014. This equates to compound
annual growth rates (CAGRs) of 8.25% in local currency terms and 1.96% in US dollar terms. By 2019,
we expect the pharmaceutical market to reach a value of PKR290bn (US$2.12bn).
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SWOT Analysis
Pakistan Pharmaceutical Industry SWOT
Strengths Significant local pharmaceutical manufacturing industry with capacity to supply much of the domestic market.
The recent reduction of import duty on raw materials for a number of pharmaceuticals to encourage imports as well as to boost domestic production.
The WTO’s decision to facilitate the import of low-cost generics to poorer countries.
Macroeconomic stability gradually being restored in the country through a series of structural reforms.
Domestic industry restricted by limits on contract manufacturing and certain tax and similar concessions designed to encourage FDI.
Weaknesses Domestic patent law notably below international standards, with illegal copying, counterfeiting and law enforcement continuing to present significant problems for the international pharmaceutical industry.
Complex drug-pricing policy, biased towards local producers and acts to suppress prices.
Local manufacturers dependent on imported raw materials.
Counterfeits accounting for a large proportion of the market.
Healthcare spending predominantly funded out of pocket.
Slow registration times hampering access to modern medicines.
Foreign investment discouraged by a corporate income tax rate of 35% and a 15% tax on sales.
Lack of a comprehensive health insurance system.
Opportunities As healthcare becomes modernised, demand is increasing for low-cost treatment.
Improvement of government-run scheme to dispense essential medicines free of charge from counters in government hospitals, which had previously been abused.
Gradual improvement of patient purchasing power and the overall economic climate.
Government efforts to encourage biotechnology initiatives and foreign collaboration in this area.
Slashing of import duties to stimulate foreign involvement.
New regulatory body should improve registration process for pharmaceuticals and ensure the quality of all medicines.
Threats Government resistance to aligning domestic patent law with international standards.
Volatile political and economic climate continuing to pose risks in terms of local investment.
Uncertainty over the availability of energy and the absence of adequate and efficient transport facilities.
Lack of concerted efforts to promote indigenous research and development (R&D) programmes.
Recent decision to ban pharmaceutical imports continues to show bias towards the local industry.
Questionable quality of some of Pakistan-made medicines will continue to negatively impact on the image of the industry as a whole.
The new essential drugs list will not contain any patented drugs, thus negatively impacting on the patented drugs sales.
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Pakistan Political SWOT
Strengths Pakistan has been labelled a 'major non-NATO ally' by the US, thanks to its leading role in the US-led ‘war on terror’. Pakistan's strategic importance ensures that the West maintains an active interest in safeguarding its stability, as reflected in continued pledges of financial support from the 'Friends of Pakistan' group of countries.
Pakistan's strong relationship with China gives it an alternative geopolitical and economic anchor to the Western world.
Weaknesses Civilian institutions are weak. Former president Pervez Musharraf curbed the powers of parliament during his reign (1999-2008), and these changes have as yet not been revoked by President Asif Ali Zardari.
Political parties tend to be dominated by personalities, families, or patronage groups rather than being defined by policies.
Relations with India are still tense. The border dispute between the two nuclear-armed neighbours, which have gone to war three times since they were 'partitioned' after independence, still looks intractable with the November 2008 attacks in Mumbai – which are thought to have been orchestrated by Pakistani militant groups – having complicated relations further.
Opportunities Pakistan could build stronger civilian institutions through meaningful democratic reform under new president Asif Ali Zardari. There have so far been positive indications from new army chief Ashfaq Parvez Kayani that the military will become less involved in politics, but recent sabre rattling with India could once again strengthen the hand of the army.
Regular peace talks with India, although these have been put on hold on the back of the November 2008 Mumbai attacks, provide Pakistan's leaders with an opportunity to ease tensions in one of the world's most dangerous nuclear flashpoints.
Threats Escalating violence by militants opposed to Pakistan's participation in the US-led ‘war on terror’ poses a key risk to stability. Zardari will have to balance the government's dependence on financial and military aid from Washington against the risk of rousing the wrath of the population if he appears too accommodating to US demands.
Militants from neighbouring Afghanistan tend to use Pakistan as a safe haven. This has led the US to targeting militants on Pakistani soil – through airstrikes by pilotless drones – and talk of more aggressive action in future.
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Pakistan Economic SWOT
Strengths Continuing structural reforms have strengthened Pakistan's economy, as have fairly buoyant foreign investment inflows. Real GDP expanded by an average of 7.0% for FY2003/04-2007/08, although this brisk pace of expansion is unlikely to be attained over the next few years.
Pakistan's vast population (over 160mn people) means that once the purchasing power of people starts to improve there could potentially be a sizeable market for consumer-orientated businesses.
Weaknesses Pakistan suffers from chronic trade and fiscal deficits, and has a low level of foreign currency reserves. This leaves the economy vulnerable to external shocks and dependent on aid and loans from multilateral institutions and bilateral partners.
Despite rapid economic growth in recent years, Pakistan's population remains poor. The IMF estimates per capita income at US$995 in 2008, or US$2,754 in purchasing power parity terms.
Opportunities Rising rates of urbanisation – with the UN forecasting the proportion of city dwellers climbing from 34.9% of the population in 2005 to more than 50% by 2035 – should continue to serve as a key driver of economic growth.
Pakistan's close geopolitical ties with China should ensure that it benefits from the latter's rise through growing trade and investment.
Threats Public discontent with the government lingers, posing a threat to the position of new president Asif Ali Zardari. This could jeopardise the economic reform process under way.
Pakistan's balance of payments remains vulnerable to a spike in oil prices, as vividly illustrated by the ballooning import bill in 2008. Pakistan imports more than 50mn barrels of oil a year to satisfy local demand for fuel products and record-high prices in 2008 led to a widening of the trade deficit.
Pakistan Business Environment SWOT
Strengths Pakistan has one of the most liberal foreign investment regimes in South Asia. One-hundred percent foreign equity is permitted in the manufacturing and infrastructure sectors.
Continuing reform of Pakistan's trade regime is reducing tariff barriers. Duty on capital goods, plant and machinery not manufactured locally is now just 5%, having earlier been in a range of 5-25%.
Weaknesses Failing infrastructure, bureaucratic delays and widespread corruption are key concerns for investors looking to do business.
Intellectual property rights are poorly enforced. Pakistan, a leading producer of counterfeit goods, remains on the Office of the US Trade Representative's Priority 301 Watch List.
Opportunities A pro-privatisation climate has been engendered, making further sell-offs of state firms possible, although we expect the rate of privatisations to be slow and inconsistent.
Pakistan is seeking to attract more investment from the Gulf region, by benefiting from the latter’s surging oil wealth and by tapping into the burgeoning Islamic finance market.
Threats Anti-Western militants have been known to target foreign workers and businesses, with recent reports suggesting that extortion of multinational companies could be on the rise.
Pakistan's uncertain security environment makes it a high-risk destination in the eyes of investors.
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Pharmaceutical Business Environment Ratings
Table: Asia Pacific Pharmaceutical Business Environment Ratings, Q310
Limits of potential returns Risks to realisation of
returns
Pharmaceutical
market Country
structure Limits Market
risk Country
risk Risks Pharma
rating Regional
ranking
South Korea 67 60 65 70 69 70 66.9 1=
Australia 57 73 61 72 82 76 66.9 1=
Japan 60 70 63 73 72 73 66.7 3
China 67 43 61 67 55 62 61.3 4
Singapore 37 67 44 80 88 83 59.8 5
Taiwan 50 53 51 70 64 68 57.6 6
Hong Kong 40 70 48 67 78 71 57.0 7
India 60 40 55 60 53 57 55.9 8
Malaysia 40 57 44 70 68 69 54.2 9
Thailand 60 43 56 37 61 47 52.1 10
Philippines 50 57 52 43 48 45 49.1 11
Indonesia 53 47 52 40 41 40 47.2 12
Vietnam 47 40 45 40 49 43 44.4 13
Bangladesh 43 30 40 43 35 40 40.0 14
Pakistan 27 47 32 33 44 37 34.0 15
Cambodia 33 20 30 30 37 33 31.2 16
Regional Average 49 51 50 56 59 57 52.8
Scores out of 100, with 100 the best. Source: BMI
In BMI’s Asia Pacific Pharmaceutical Business Environment Ratings (BER) for Q310, Pakistan has
dropped one place compared with the previous quarter. The South Asian country is now the 15th most
attractive pharmaceutical market in the region, behind Bangladesh and ahead of Cambodia. A negative re-
assessment of the value and growth of the pharmaceutical market caused Pakistan’s BER downgrade. The
country scores poorly for all indicators and this situation is not likely to change soon.
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Limits Of Potential Returns
Pharmaceutical Market and Country
Structure scores are weighed and
combined to form Limits to Potential
Returns. Pakistan’s score of 32 is the
second lowest in the table in this quarter.
Pharmaceutical Market
The small size of the country’s total
market (at around US$1.6bn in 2009) and
low per-capita spending – just under
US$10 a year – represents major
disincentives to foreign participation,
especially in terms of direct investment.
However, this does not tell the complete story. Pakistan has a sizeable elite and growing middle class,
both of which can afford innovative medicine. Per-capita spending is low due to the vast population
(161mn), including a significant number of rural poor, which pulls down average spending.
Country Structure
Pakistan has the world’s sixth largest population, placing it ahead of Russia and just behind Brazil.
Urbanisation is a major trend, with city dwellers making up over a third of its population. Given the
significant rise in birth rates since 1980, the pensionable population is comparatively low. Consequently,
Pakistan scores a respectable 47 (out of the possible 100) for this category, which is higher than in some
other regional markets surveyed by BMI – including the much higher-placed China.
Risks To Realisation Of Returns
Market and Country Risk are weighed and combined to form the score for Risks to Realisation of
Returns. Pakistan’s score of 37 remains the lowest in the table, indicating major risks facing
multinationals operating or wishing to operate in the country.
Market Risks
Counterfeit medicines are endemic due to the low purchasing power of consumers and campaigns against
the illegal trade are commonplace. The government’s pricing mechanisms are not transparent and the
approval process is biased towards domestic manufacturers. As a result, Pakistan’s score for this category
is only 33. Once again, this is the lowest score in the table.
Country Risk
Despite the recent political turmoil, the country scores relatively highly for policy continuity. Officially a
federal republic, Pakistan has long had alternating periods of electoral democracy and authoritarian
Business Environment Ratings By Sub-Sector Score
0
100
PharmaceuticalM arket
Country Structure
M arket Risk
Country Risk
Pakistan Scores Regional Scores
Scores out of 100. Source: BMI
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military government. In terms of economic structure and bureaucracy, plenty of work needs to be done,
especially in the tribal border regions with Afghanistan, where access to medicine can be a problem.
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Pakistan – Market Summary
Pakistan's US$1.62bn pharmaceutical
market is the 10th largest in Asia Pacific,
behind the Philippines (US$2.58bn) and
ahead of Vietnam (US$1.53bn). Annual
per-capita spending on medicines is
US$10, which is far below the regional
average of US$142. Market access is
challenging and operational risks are
high.
The pharmaceutical regulatory regime in
Pakistan is typical of an emerging market
and far below international standards. In
the public sector, medicines are procured
through large-scale tenders and prices are
set very low to facilitate access to healthcare. Free medicines are available for the treatment of
thalassaemia, hepatitis, HIV/AIDS and certain cancers. However, in practice, limited volumes of zero-
cost pharmaceuticals are distributed in the country.
Generic drugs account for nearly two-thirds of Pakistan's pharmaceutical market. Within this sub-sector,
the majority of sales are posted by branded generics, mainly due to the high prevalence of counterfeit
medicines in the country. Sales of patented drugs reached US$231mn in 2009 and were mostly consumed
by people on high incomes, leading members of the military and senior civil servants.
While the majority of the 169mn population have access to some form of healthcare, the standard of care
is low, outcomes are poor and reliance on donations from non-government organisations (NGOs) is high.
According to the World Health Organization (WHO), Pakistan spent just 2.9% of GDP on healthcare
during 2008. This figure compares poorly with the regional (5.1%) and global averages (6.7%).
Multinational firms dominate Pakistan's pharmaceutical market, both directly and indirectly. Of the nine
drugmakers listed on the Karachi Stock Exchange (KSE), only three – Ferozsons Laboratories,
Highnoon Laboratories and Searle Pakistan – are locally owned. In terms of sales, UK-based
GlaxoSmithKline is the largest drugmaker operating in Pakistan. Combined sales of the listed companies
were just below US$400mn in fiscal year 2008.
Like most developing countries, Pakistan has negative pharmaceutical trade balance. According to UN
Comtrade, the country imported finished medicines with a value of US$252mn in 2008.The leading
Pharmaceutical Market By Sub-Sector (US$bn)
2009
OTC medicines,
0.319
Patented products,
0.231
Generic drugs, 1.067
Source: IMS Health Asia, Pakistan Pharmaceutical Manufacturers Association (PPMA), BMI
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countries of origin were Switzerland (US$54.7mn), China (US$29.5mn), Germany (US$27.6mn), the UK
(US$17.6mn) and France (US$16.1mn).
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Regulatory Regime
The main regulatory authority in Pakistan is the Ministry of Health (MoH). All products available on the
domestic market or those to be exported must receive authorisation from it. The basis for market
regulation is the 1976 Drugs Act, which provides for the strict pharmaceutical pricing system.
Additionally, product registration is permitted only if local manufacturing requirements are met, with the
MoH also introducing strict criteria for contract manufacturing. Such a system has often resulted in the
denial of registration applications for new chemical entities.
A new autonomous drug authority, announced in June 2008, is to be created shortly, assuming much of
the responsibility of the existing Drug Registration Board. With start-up funds of PKR4.3bn (US$55mn),
the body will issue production licences and monitor the quality of medicines. The Drug Regulatory
Authority will be tasked with streamlining the registration process for pharmaceuticals and ensuring the
quality of all medicines. The move has been accelerated following a recent high-profile case in the
Supreme Court concerning counterfeit drugs.
The new authority is expected to benefit from superior communications, as well as improved funding.
Responsibilities will also include promoting the rational use of drugs, dealing with drug imports and
exports and overseeing pharmacovigilance. This should help improve overall regulatory standards in the
country, which has little in the way of cohesive infrastructure.
To date, the Drug Registration Board of the Federal Ministry of Health has registered more than 40,000
brand names, comprising more than 1,400 molecules. Not all of those drugs are on the market, for various
reasons, including promotional illegalities. The latter are currently being investigated by a special
commission which aims to make industry-wide recommendations and guidelines on ethical drug
advertising.
Launches of patented drugs are hampered by the fact that registration times can be as long as two years.
Nevertheless, a recent development has seen drugs registered in two major advanced markets
(specifically, the US, the UK, EU, Japan and Switzerland) are processed through a fast-track mechanism
in Pakistan, which skips the expert review and therefore improves registration times.
Since the introduction of the Drugs Act, Pakistan has attempted to introduce GMP and at present is
focusing on the implementation of Good Laboratory Practice (GLP). The measures are designed to
strengthen Pakistan’s exports in overseas markets (which presently number over 70), as well as improving
competitiveness in export tenders against countries such as India and China.
At best, the regulatory environment in Pakistan can be described as difficult, with little in the way of a
cohesive infrastructure. As such, conditions for foreign companies are tough, with strict government
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pricing controls being a major barrier to market entry. Illegal copies of branded drugs and other
counterfeit products have a significant market in Pakistan, acting as a further deterrent.
Pharmaceutical Research and Manufacturers of America (PhRMA)’s key issues of concern as listed in its
Special 301 submission for 2010:
No implementation of data protection as required under TRIPS Article 39.3.
The Ministry of Health continues to disregard process patents at the time of registration and the
majority of mailbox applications have not been granted or finally acted upon. Copies of
molecules filed under mailbox applications continue to be permitted to be marketed, as the
original products do not have patent protection in Pakistan.
The Ministry of Health maintains a local manufacturing requirement as a pre-requisite for
product registration.
The Ministry of Health has placed restrictions on toll manufacturing, where they have given June
30, 2010 as its cut off date.
The current government pricing system is non-transparent, and government prices of innovative products
are set at extremely low and arbitrary levels. Government prices have not been revised since 2001 despite
the rapid increase in the inflation rate.
Recent Regulatory Developments
In October 2009, Pakistan’s Federal Health Ministry cancelled the registration of 4,000 imported
medicines, after local industrialists objected to the sale of the medicines in the country. The decision,
taken during a meeting of the Registration Board, chaired by Health Minister Mir Ijaz Hussian Jakhrani,
was made on the basis of the facts that the medicines in question were sold without a guarantee from the
manufacturers and that they were also produced locally. The local industrialists are of the opinion that the
government must ensure the sale of local medicines in the country.
Earlier in 2009, Pakistan’s Health Ministry had authorised the importing of life-saving drugs from China
and India under the free trade agreement, despite the inherent dangers of such a decision in terms of
hampering the development of the domestic drug market. The ministry also ordered the continuation of
imports of finished goods, including anticancer vaccines and thalassaemia drugs, which are not
manufactured in the country. However, there is no set standard in Pakistan to check the quality of these
finished products.
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Intellectual Property Regime
Pakistan is a member of the Berne Convention, the Universal Copyright Convention and the World
Intellectual Property Organisation (WIPO), but the country is not a member of the Paris Convention for
the Protection of Industrial Property. As a WTO member, Pakistan is subject to the terms of the Trade-
Related Aspects of Intellectual Property Rights (TRIPS) accord. The US has taken various steps to ensure
that Pakistan complies with its TRIPS commitments, particularly with respect to fulfilling its obligation to
establish a ‘mailbox’ for agricultural, chemical, and pharmaceutical product patent applications.
According to its TRIPS obligations, Pakistan was due to bring its patent law in line with WTO
requirements by the end of 2005, but implementation remains patchy. The government has been criticised
for being unwilling to enforce the regulations fully, owing to the Pakistani population’s dependence on
cheap copy drugs. Furthermore, the costs involved in further aligning domestic processes with
international norms are prohibitive to the government because reorganisation has to take place on a
massive scale. The eradication of the significant trade in counterfeit drugs presents a major task.
Patent protection is a new concept in Pakistan, with legislation introduced only as recently as December
2000 in the Patent Ordinance, amended in October 2002. The changes limited filings of patent to single
chemical entities, restricted patent protection sought for derivates and salts as well as biotechnology-
based inventions, and also abolished use patents.
Although a patent office has recently been established, activity is still at a very early stage. Intellectual
property (IP) remains a cause of disagreement between the government and the industry – in particular
the multinational sector. Specific concerns over the 2002 amendment also include the parallel importation
of molecules patented by originator companies and very lax provisions on compulsory licensing – which
insist that patents be worked in order to ‘transfer…technology’.
However, in recent months, pharmaceutical industry groups in Pakistan have once again renewed their
criticism of the 2002 Patents Amendment Ordinance, claiming that the act dilutes the effectiveness of
patent protection terms in the country’s 2000 Patents Ordinance. Since Pakistan’s adoption of the TRIPS
agreement, the government has issued five IP laws that include the 2000 legislation. Although the low-
cost domestic manufacturing sector has welcomed the greater flexibility afforded by the 2002
amendment, multinational criticism has focused on its ambiguities and the poor enforcement of regulatory
standards.
Shortcomings Of The Intellectual Property Environment
In 2006, the Office of the US Trade Representative (USTR) moved Pakistan from its Priority Watch List
of countries to its lower echelon Watch List, in relation to its compliance with IP standards. Focusing on
pharmaceuticals, it highlights notable deficiencies in the areas of data protection, counterfeiting and
enforcement. In 2007, Pakistan remained on the Watch List, mainly due to the lack of effective protection
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against unfair commercial use of data generated to obtain marketing approval. Another main factor was
the failure to prevent the granting of marketing approvals for those drugs infringing patented products.
In 2008, Pakistan was reinstated on the Priority Watch List, alongside eight other countries, as the country
had made little progress in providing effective protection against unfair commercial use of undisclosed
test data. Pakistan remained on the Priority Watch List in 2009, although the USTR acknowledges that
the government is making steps in the right direction, having established an Intellectual Property Office
(IPO) in the country.
Previously, however, in a positive move, the government told the American Business Council (ABC) that
pharmaceutical patents in Pakistan would be respected to a strict degree. During a meeting between the
ABC and the health minister, the main topic of conversation was the pharmaceutical industry – which the
government hopes will become a mainstay of its ambitious economic growth plan. The minister assured
the ABC delegation – which represents the interests of several major pharmaceutical companies,
including Pfizer, Wyeth and Eli Lilly – that Pakistan will fully observe medicine patents. Furthermore,
the minister highlighted the investor-friendly operating climate in the country, particularly the incentives
on offer.
According to local newspaper The Nation, Pakistani drug-makers criticised the proposed change because
it only benefited the ‘big crocodiles’. By automatically giving five years of IP protection to every new
molecule or formulation, competition will be reduced. Moreover, as no challenges are allowed or
application reviews permitted during that period, there is the possibility that counterfeit compounds may
be allowed onto the market after passing just one evaluation.
Pakistan is unique in the South Asian Association for Regional Co-operation (SAARC) for trying to
implement an IP regimen that meets Western standards. Critics say that the updated legislation – coupled
with high commodity prices – will punish the average citizen, as medicine prices will inevitably rise. The
SAARC trade bloc was formed in 1985 by India, Pakistan, Bangladesh, Sri Lanka, Nepal, the Maldives
and Bhutan. In April 2007, Afghanistan became its eighth member.
Counterfeit Drugs
Current patent legislation has permitted the widespread copying of patent-protected, branded products and
also the proliferation of counterfeit products, much to the frustration of research and development (R&D)
based multinationals. Pakistan continues to have severe problems with counterfeit drugs, with the WHO
estimating that 40-50% of drugs in the market are fake or substandard. The country has been ranked 13th
in the world for the production and sale of counterfeits. According to the US drug association PhRMA,
damages caused by IP violations account for around 10.5% of total drug sales to member companies in
Pakistan.
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One of the major problems is that Pakistan does not have a comprehensive drug monitoring system. This
is especially damaging, as 60% of the population live in rural areas. Many retail chemists – attracted by
the possibility of huge profits – knowingly supply fake products, while the public does not have sufficient
education to identify which drugs are counterfeit and which are genuine.
An unfortunate consequence of the above situation is the rapidly emerging issue of drug resistance. This
is especially pronounced for malarial treatments. Fake versions of artemisinin often do not have enough
of the active ingredient to kill the malaria parasite, falciparum. However, they provide sufficient exposure
for the pathogen to develop resistance to treatment.
In a positive development, the authorities have recently increased the number of courts dealing with the
production and distribution of counterfeit medicines from nine to 20. Enforcement operations against
manufacturers of counterfeit pharmaceuticals are also being expanded. The MoH has recently deployed
an extra 12 drug inspectors at the federal level, 97 more in the Pakistani Punjab region and eight in Sindh.
However, market-watchers argue that this is still insufficient to fight the illicit trade effectively. Other
measures being discussed are public education initiatives and the creation of more quality testing
laboratories.
Meanwhile, in a move that should help prevent counterfeit drugs from entering the supply chain, the MoH
has announced that it is to procure medicines in federal hospitals through a centralised mechanism. Under
this scheme, large local purchases of medicines will be discouraged, reducing opportunities for
malpractice. The scheme, implemented in FY07, aims to ensure the availability of essential drugs for the
public. Additionally, the MoH has ordered an enquiry into reports that dangerous expired medicines are
regularly being sold. The health minister said that raids on pharmacies will be conducted and ‘elements’
involved in the selling of these products will be brought to justice.
During January 2009, the government of the Punjab in Pakistan was planning to put into effect ‘Drug
Rules 2009’ in order to curtail counterfeit drugs. As per the Drug Act of 1976, wholesalers were not given
any place in the drug supply chain. However, in ‘Drug Rules 2009’, wholesalers are given a place with
the condition that they will be held accountable if counterfeit drugs are found with the retailers they
supply.
Pricing And Reimbursement Regime
The pharmaceutical pricing regime in Pakistan is typical of an emerging market and far below
international standards. Both generic drugs and patented products are subject to price controls. The
maximum retail price (MRP) of a medicine is determined using a formula that incorporates
manufacturing costs and retail markups. When pricing imported medicines, the cost of freight is also
included.
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Medicine prices are then referenced against equivalents in South Asian Association for Regional Co-
operation (SAARC) countries. If there is no counterpart in these countries, international prices –
especially those in Australia and New Zealand – are evaluated. Manufacturers can negotiate MRPs with
the Pricing Committee of the Drug Control Organisation, Ministry of Health (DCOMOH). Locally-
manufactured products for export or WHO distribution are exempt from price controls. Generic drugs are
priced at no more than 70% of the innovator brand.
Drugmakers occasionally increase prices unilaterally due to the poor enforcement of regulations. Critics
say this punishes those on low incomes and impairs healthcare outcomes. Manufacturers say they are
responding to hikes in the cost of raw materials, fuel, electricity and depreciation of the rupee.
In Pakistan’s public sector, medicines are procured through large-scale tenders and prices are set very low
to facilitate access to healthcare. Centralised and decentralised tenders are run by the government. Free
medicines are available for the treatment of thalassaemia, hepatitis, HIV/AIDS and certain cancers.
However, in practice, limited volumes of zero-cost pharmaceuticals are distributed in the country.
Government employees receive free medicines under public sector healthcare plans.
New pricing regime legislation was unveiled in late December 2009. The draft drug pricing policy seeks
to increase access to medicines for the aforementioned chronic diseases by imposing more price controls
and a degree of free pricing, which BMI believes will be welcomed by pharmaceutical companies.
Those medicines with an MRP below threshold levels will be entitled to a 10% price rise each year.
Threshold limits will be re-examined when government employees receive pay reviews. The most recent
review, in June 2009, saw the state increase wages by 20%. However, the rise was deemed insufficient in
the wake of high inflation.
The cost of medical care in Pakistan has increased over the past two years; however, in relative terms, it
has become more affordable during that period. Using a baseline of 2000/01 = 100, the Statistics Division
of the Government of Pakistan reveals that the consumer price index (CPI) for ‘medicare’ has risen from
130.05 in December 2007 to 153.91 in November 2009 – a jump of 18.3%. Meanwhile, the ‘general
goods’ CPI rose from 154.77 to 212.02 – an increase of 40.0%. It is BMI’s view that moderate growth of
the ‘medicare’ CPI is most likely due to price controls, despite their poor enforcement.
Pakistan has an Essential Drugs List (NEDL), but it includes patented products that are too expensive for
the vast majority of the 181mn population. It is mandated that all government and semi-government
health institutions conduct bulk procurement in accordance with the NEDL. However, there is poor
adherence to this list in actual provincial or district procurement practices.
An essential drugs list that contains only generic drugs was first proposed by the government of Zulfikar
Ali Bhutto in the late 1970s. However, following the July 1977 coup d’état led by General Muhammad
Zia-ul-Haq, the plan was shelved. Benazir Bhutto, assassinated in December 2007, was a strong supporter
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of the policy and would have implemented it had she won the general election scheduled for early 2008.
Approximately 150 countries around the world have essential drugs lists, most of which are modelled on
a catalogue published by the WHO. The WHO list contains a core list (basic medicines) and a
complementary list (specialty pharmaceuticals).
In May 2008, due to an erosion of margins, pharmaceutical companies called on Pakistan’s government to
allow them to increase the price of medicines by 10%. The firms complained that the price of drugs had
remained stable for the previous five years, while the cost of production had risen by one fifth over the
same period, resulting in drugmakers posting ever-decreasing margins on sales.
However, the price controls are expected to remain in place for the medium term, primarily because of the
widespread problem of expired medicines being sold. This will put pressure on all stakeholders, but local
firms are likely to suffer more than the multinationals. Nevertheless, any gaps that may appear in the
market are expected to be filled in by operators from a lower cost base country, such as neighbouring
India.
Around the same time, the authorities announced the creation of a new scheme for dispensing essential
medicines free of charge from government hospitals. The drugs had previously been distributed by the
humanitarian Bait-Ul-Maal scheme but allegations of a misappropriation of funds have led to stricter
controls. BMI welcomed the move but pointed out that only a very small percentage of the country’s vast
population will benefit.
Bait-Ul-Maal seeks to provide medical treatment, educational resources and rehabilitation to the most
marginalised members of the population, such as orphans, the disabled, widows, students and the very
poor. Funds are provided by the state and then allocated by non-governmental organisations (NGOs). It
had been known that the system lacked transparency but it was not until a case of gross nepotism – when
20 members of an extended family had received Bait-Ul-Maal funds – that the Ministry of Health
demanded a revision of the system.
Under the new plan, special medicine counters have been placed in state-run hospitals. Those eligible can
then receive their prescribed pharmaceuticals without the involvement of NGOs, which frequently have
agendas in addition to helping those in need (such as the promotion of religious beliefs). However, since
1993, only US$20mn has been dispersed by Bait-Ul-Maal for medical treatment, which does not bode
particularly well for the success of the new scheme.
The very poor – termed ‘hardcore poor’ – also benefited from a plan introduced in March 2008 that
provided health insurance free of charge. Under the scheme, a policy holder’s family would receive
PKR15,000 (US$216) if the insured died in an accident, or PKR7,500 (US$108) for other causes of death.
PKR1,000 (US$14) would also be provided for funeral costs.
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During January 2009, Pakistani pharmaceutical firms were afraid of losing their domestic market share to
international companies after a law fixing the same prices for identical medicines was abolished.
Previously, prices of medicines manufactured by multinationals were set much higher than identical drugs
produced by domestic companies. Now the rates of lifesaving drugs are linked to the CPI.
It was revealed in February 2009 that medicines manufacturers in Pakistan had increased some prices by
up to 200%, which was highly criticised by many stakeholders. The government had approved increasing
the prices of nearly 350 molecules by 10-40% in January 2009, following lobbying by both domestic and
foreign pharmaceutical industry.
For example, GlaxoSmithKline (GSK)’s Augmentin (amoxicillin + clavulanate potassium) tablets was
priced at PRK74 (US$0.90), up by some 18% on the previous price. However, a number of drugs had
already been withdrawn from the market, such as GSK’s Ventolin (salbutamol) inhaler, due to their lack
of financial viability.
Table: The Formulae For Pharmaceutical Pricing In Pakistan
Imported medicines All formulations Maximum retail price = manufacturing costs + freight expenses
+ 40% markup
Locally-manufactured drugs Non-sterile products Maximum retail price = manufacturing costs + 75% markup
Sterile products Maximum retail price = manufacturing costs + 90% markup
Source: Drug Control Organisation, Ministry of Health (DCOMOH)
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Industry Trends And Developments
Epidemiology
BMI’s BoDD reveals that number of
DALYs lost to communicable diseases –
such as tuberculosis and measles – in
Pakistan during 2009 was 19,369,492.
This is significantly more than the
number of DALYs lost to non-
communicable diseases (15,255,144).
However, as the country’s economy
grows and life expectancy increase, this
situation will reverse.
Pakistan’s health indicators are generally
poor, particularly in rural areas. About a
fifth of the population is malnourished –
a higher rate than the 17% average for developing countries – and 30% of children under the age of five
are malnourished. About 30,000 women die from pregnancy-related causes each year, as 80% of births
take place at home with unskilled or no birth attendants. However, demonstrating the commitment to
improving rural conditions, the minister for industries, production and special initiatives revealed in June
2007 that Basic Health Units (BHUs) – the first tier of health service delivery – were being revamped.
Leading causes of sickness and death include gastroenteritis, respiratory infections, congenital
abnormalities, tuberculosis (the incidence of which is 181 per 100,000), malaria and typhoid fever. Poor
air quality has led to a 5% annual increase in the number of asthma cases, with some 12% of all adults in
the country already affected. Additionally, polio has not yet been eradicated in the country, with the
government presently trying to resume vaccinations after they signed a 2008 peace deal with the militants
in the Swat Valley.
In terms of other leading causes of morbidity, thalassaemia is through to affect some 80,000 already. By
2019, Pakistan is likely to register around 200,000 patients, which will require PKR4bn in treatment
costs. Diabetes is also a rising problem, especially as 8% of diabetics develop additional complications,
namely foot ulcers. Currently, there are between seven and eight million diabetics in Pakistan, with the
number expected to double by 2025.
Non-Communicable Diseases
It is estimated that 18% of the Pakistani population older than 15, or approximately 12mn people, are
suffering from hypertension. Around 5% of children also suffer from this lethal disease, due to the
Burden Of Disease Projection
2005-2030
0
5
1015
20
25
30
35
40
2005
2010
f
2015
f
2020
f
2025
f
2030
f
Mill
ion
sDALYs lost to communicable diseasesDALYs lost to non-communicable diseases
f = forecast. DALYs = disability-adjusted life years. Source: BMI’s Burden of Disease Database (BoDD).
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consumption of poor-quality food. Mortality due to hypertension-related diseases is on the rise in
developing countries like Pakistan and around 65-70% of the global cardiovascular and cerebrovascular
mortality takes place in the developing world. Similarly, an official from Dow University of Health
Sciences (DUHS) recently expressed concern over the lack of awareness and knowledge about heart
disease and means of preventing it in Pakistan. It was pointed that cardiovascular disorders caused over
50% of adult deaths and 30% of all deaths in Pakistan.
The main reasons for the above situation are a lack of diagnosis and a shortage of effective treatments
such as lipid-lowering treatments. However, with the patents on a number of best-selling statins set to
expire in the coming years, this situation may be improved by the emergence of generic equivalents. The
Pakistan Hypertension League is planning to hold a number of screenings throughout the country to help
identify high blood pressure and cholesterol.
Less than half of the 1mn patients with Parkinson’s disease in Pakistan are being treated presently,
according to the Pakistan Parkinson’s Society. While this may seem a huge sales opportunity, the
potential upside is likely to be minimal, as most sufferers cannot afford the necessary drugs or
occupational therapy. BMI’s BoDD reveals that Parkinson’s disease is a growing problem in Pakistan.
The disease accounted for the loss of 19,579 DALYs in 2007, or 0.05% of the country’s total disease
burden. By 2030, the number of DALYs lost to Parkinson’s disease is forecast to reach 27,537, or 0.067%
of the total disease burden.
Similarly, according to PakTribune, about 1mn people in Pakistan are suffering from Alzheimer’s
disease. The prevalence of the disease is progressing primarily in low- and middle-income countries, with
Pakistan experiencing an exceptional high rate. The disease can be controlled by spreading awareness and
appropriate government allocation of resources for the development of caring systems and other
measures.
Pakistan has one of the highest rates of depression/anxiety in the world, placing a huge strain on its
people. Causes include political insecurity, economic uncertainty and social disparities. Unfortunately, a
lack of trained psychiatrists and poor access to medication means that sufferers are not being treated
effectively. This is resulting in a stunted economy and a considerable human cost. Around 54mn
individuals are classified as depressed or anxious in Pakistan, according to meta-analysis of several
epidemiological studies. This equates to a prevalence of 34%, which is significantly higher that the global
average of 7-18%. As with other countries, many more women than men are affected.
Communicable Diseases
Pakistan is experiencing a growing rate of HIV/AIDS infection. The country is presently classified as low
prevalence but high-risk. The PPMA has repeatedly accused the government of allocating an insufficient
budget to the health sector. The US Agency for International Development (USAID) has launched a
US$2.7mn programme to support the government of Pakistan in its fight against HIV/AIDS. The new
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scheme will focus on educating 27,000 high-risk individuals about HIV/AIDS and will provide care and
support for infected individuals. However, efforts to increase HIV/AIDS awareness among the population
are hampered by low literacy levels. Pakistan had nearly 6,000 registered cases of HIV/AIDS in 2009,
with 97,400 estimated cases. This represented a considerable increase compared with the previous year,
when there were 5,000 registered cases and 80,000 estimated cases of the disease.
In order to combat meningitis and pneumonia, Pakistan launched a Hib (pentavalent) vaccine scheme in
July 2008. The preventative agent will be administered free of charge to every newborn child as part of
the Expanded Program on Immunisation – which saw vaccination drives against polio, measles,
diphtheria, pertussis and tetanus in 2007.
Pakistan started the next phase of its national measles vaccination campaign in July 2007, with the aim of
immunising more than 63mn children by March 2008. Each year around 21,000 children die of measles
and associated complications in Pakistan. Moreover, the WHO, in partnership with UNICEF and the
government, completed a three-day vaccination drive against polio in May 2007. More than 34mn
children under the age of five were immunised against the disease (a 97.7% coverage).
The National Tuberculosis Control Programme (NTCP) manager recently stated that the Pakistani
government, under a public-private partnership programme titled ‘Stop TB’ is providing free treatment to
90% of the 0.3mn TB patients recorded in the country. He added that 7,000 TB care centres are being
established for the implementation of the programme.
According to a survey published by the Pakistan Medical Research Council (PMRC) in January 2010, the
prevalence of hepatitis B stands at 2.5% while that of hepatitis C is 4.9%. Huma Qureshi, executive
director at PMRC, stated that re-use of syringes and administration of unnecessary injections are the two
principal causes for the spread of hepatitis B and C.
Recent Public Health Developments
Pakistan is committed to making its population healthier, as evidenced by the continuing strong support
for the Social Action Programme (SAP) and by the new vision for health, nutrition and population
outlined in the government’s National Health Policy Guidelines (up to 2010). An example of a promising
recent initiative is the Lady Health Worker (LHW) community-based programme, which is bringing
health information, some basic healthcare and family planning services to women’s doorsteps. At
presently, some 3,000 women are serving as LHWs in their home villages. In March 2009, the
government also announced that Pakistan is aiming to eradicate tuberculosis from the country by 2015,
with the help of some 5,000 active TB centres.
In an attempt to increase access to healthcare among the rural poor, the country’s first ever mobile
mammogram clinic was launched in February 2009. The clinic is a joint venture between the Pink Ribbon
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National Breast Cancer Awareness Campaign (Pakistan) and the Institute of Nuclear Medicine and
Oncology (INMOL) from the Pakistan Atomic Energy Commission.
As Pakistan has the highest rate of breast cancer in Asia. In October 2009, Pakistan’s Ministry of Health
was considering restarting the National Breast Cancer Screening Project, as part of a breast cancer
awareness campaign in the country. The project, which started in 2006, was stopped due to a lack of
political will, despite the availability of funds. Previously, the ministry failed to implement the project
due to the absence of an experienced programme manager to run the campaign.
Pakistan is also due to install its first disease monitoring system. The sophisticated software allows
disparate incidences of disease outbreaks to be collated centrally, enabling appropriate action to be taken.
The monitoring system was developed by US firm DiagnosisONE and will initially focus on hepatitis,
which holds eighth place on the top 10 list of priority diseases in Pakistan. Incidences of the liver disease
will be recorded at source and then aggregated by the national authorities, in order to use evidence-based
decisions for determining the best treatment options.
Healthcare System
The healthcare system mostly comprises public providers, with hospitals being the key point of access to
healthcare services, although out-of-pocket payments are widespread. Wealthier urban areas boast a
number of private clinics, although these are out of reach for the majority of the low-income population
due to their prohibitively high costs.
Infections are rife in government hospitals, with up to 70% of all deaths in such institutions thought to be
caused by unnecessary infections. The rate is estimated at 15% in private hospitals, which is still
excessive. Some of the infections are caused by the use of unsafe injections. In order to control the
administration of unsafe injections, the country needs to restrict the relatively common practice of
patients receiving unnecessary injections. In Pakistan, the average injection rate stands at 8.5 injections
per person per year.
Civil conflict and natural disasters have resulted in the displacement of a vast number of people, pushing
the country’s healthcare system to its limits. At present, around 423,000 people in Pakistan need urgent
healthcare, according to the WHO. While the government plans a 56% increase in its healthcare budget
for 2010, it stands at under US$150mn at present, which is considered vastly inadequate. The WHO has
therefore announced a package of US$5.50mn as part of the Pakistan Humanitarian Response Plan, while
its health partners need a combined US$4.26mn for vital activities.
Nevertheless, the government has been making efforts to improve primary care, although the vast rural
areas of the country are making the progress more difficult. Among other international agencies, the
United States Agency for International Development (USAID) has been working with local authorities to
strengthen the Pakistani healthcare provision. Additionally, the government has confirmed its
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commitment to necessary action against the lack of appropriate preventive treatments in the country. The
flourishing ‘quackery’ system includes treatment with used syringes, un-screened blood transfusions and
contaminated medical equipment, all of which are contributing to exacerbating the spread of hepatitis in
the country.
However, efforts to improve healthcare are likely to be derailed by the rapid population increase. The
present situation where women have 3.8 children on average is putting a strain on healthcare facilities,
basic infrastructure and agricultural land. The government, international organisations and BMI all agree
that more education – specifically regarding family planning – is the solution. However, in a country
where religious leaders denounce contraception as a sin and custom encourages large families, lowering
the birth rate will be a challenge.
Table: Pakistan – Key Healthcare Statistics, 2007 (‘000 people, unless otherwise stated)
Population per total beds 1,458.57
Population per hospital 157.51
Population per dispensary 30.89
Rural Population per rural health centre 176.27
Population per TB clinic 525.22
Female Population per M. C. H. Centre 78.08
Population per doctor, total 1,484.29
Population per dentist 30.91
Female population per lady health visitor 11.74
Female population per midwife 3.02
Population per nurse, total 3,561.35
Source: Efroze Pharma, Federal Bureau of Statistics
Pakistan’s prime minister, Yusuf Raza Gilani, is astute enough to realise that two children per woman is
an overly ambitious goal. To mark World Population Day on July 11 2008, he unveiled a plan to reduce
annual population growth from 1.8% to 1.55% over the next five years. Welfare schemes will receive the
necessary budgetary support and an emphasis will be placed on education.
Some foreign agencies are recognising the longer-term potential of the Pakistani healthcare and
pharmaceutical market. In July 2008, Singapore Health Services visited Pakistan to seek partnerships
within the healthcare sector. The visit was aimed at increasing the sharing of knowledge and expertise
between doctors in Pakistan and Singapore Health Services, which operates three public hospitals, five
specialist centres and eight polyclinics in the city state. The Singapore Health Services’ attempt to enter
Pakistan comes against the steady growth of the country’s healthcare market.
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Healthcare Insurance
Healthcare is mostly financed by private, out-of-pocket payments. The introduction of a social insurance
programme has been discussed, but no progress has been made to date. Private insurance currently covers
some 800,000 individuals and their dependents, while social security covers 5.65mn.
In October 2009, however, Pakistan was considering implementing a health insurance scheme similar to
India’s insurance scheme for the poor. Islamabad is keen on studying the Rashtriya Swasthya Bima
Yojana, which provides insurance cover for below poverty line (BPL) families. The scheme has been
implemented by the Centre, state and insurance companies in 18 states across India.
Further evolution of the healthcare insurance sector was seen in November 2009, when the Aga Khan
Agency for Microfinance (AKAM) established a healthcare insurance service in Pakistan. The First
Microinsurance Agency (FMiA) offers three products in conjunction with an education programme. Due
to improved access to healthcare, there will be some commercial upside for private hospitals and
manufacturers of affordable generic drugs.
FMiA is targeting poor families that struggle to pay for medical services. Because this target market is
generally uneducated, the agency intends to spend a significant amount of time explaining its products –
hospitalisation insurance, savings completion and credit life.
Hospitalisation insurance provides cashless coverage for medical expenses in private healthcare facilities,
with a focus on chronic diseases, obstetric care and accidents. Savings completion guarantees that a
family’s savings objectives are met even in the event of the death or injury of the main wage earner.
Meanwhile, credit life helps to protect the family of a loan borrower from debt in case of death or serious
disability.
Medical Tourism
Pakistan is looking to become a medical tourism hub. The government wants to attract foreign patients to
the country, encourage the private sector to administer advanced treatments and ensure relaxing
surroundings for recovery. It is hoped that people seeking healthcare in Pakistan will drive the overall
tourism market, resulting in increased national wealth.
However, BMI believes the probability of Pakistan achieving this goal is extremely low. Despite recent
setbacks to Islamist militancy in the country, such as the death of the leader of the Taliban in Pakistan in
August 2009, the spectre of terrorism looms large. At this time, Pakistan cannot compete with relatively
low-risk destinations. In the Asia Pacific region, the leading medical tourism sites are Thailand, India,
Singapore and South Korea.
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Affordability is perhaps the one feature of Pakistan’s healthcare system that lends itself to medical
tourism. Many surgical procedures can be performed for a tenth of the price found in Western countries.
Luxury and mid-range hotels are relatively cheap, although these have been terrorist targets in the past. In
June 2009, suicide attackers killed at least 11 and injured as many as 70 people at the Peshawar Pearl
Continental Hotel.
Pakistan’s quest to become a medical tourism destination will also be restricted by questionable ethics. In
mid-2009, the country’s Supreme Court expressed concern that the sale of human organs for
transplantation was still taking place despite a 2007 law prohibiting the practice. Prior to the legislation, it
was estimated that as many 1,500 foreigners were visiting Pakistan annually to receive kidneys from live
donors.
Traditional Medicine
Limited access to healthcare facilities, conservative and low-income populations, and social barriers are
among some of the factors that have traditionally promoted the use of non-Western medicines. In
addition, the private sector is generally under-regulated. It consists of few accredited outlets and hospitals,
and has a number of healers, homeopaths and other practitioners. In particular, the Greco-Arab system of
medicine (Unani) has been especially important in rural and tribal areas of the country, leading to its
official integration into the national health system.
Currently, estimates indicate that there are some 45,000 traditional healers in Pakistan, around 75% of
which work in rural areas. An additional 52,600 unregistered Unani medical practitioners are also
practicing in the country. A number of unregistered pharmacies are supplying various herbal and other
medicines to the population.
In terms of herbal medicines, Pakistan is ranked among the top eight global exporters. Some 300
pharmacies in the country are engaged in the manufacture of homeopathic medicines, while the export of
such goods (mostly to Bangladesh, Malaysia, Singapore and some African countries) is estimated at
around PKR10mn. However, the sector has been underutilised, due to the misallocation of resources and
the lack of communication between departments.
One of the more prominent players in the herbal medicines field is Herbion. The company, incorporated
in 1983, is engaged in the development of herbal products and their clinical testing. Its plant complies
with GMP standards, with products presently exclusively marketed in the Commonwealth of Independent
States (CIS). The company is reportedly planning to target the US and Western European countries in the
future.
The situation is likely to improve over the coming years as Pakistan recognises the potential of the sector.
Moreover, China’s Herbal Medicines Research Institute has agreed to assist Pakistan in research in the
development of traditional medicines. To this end, the two countries are considering setting up a joint
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research institute. In the meantime, the government is also considering a traditional medicine bill to
regulate the sale, storage, import and export of such products.
Retail Sector
As with many developing countries, Pakistan’s retail sector is still evolving. A significant recent
development was the introduction of the Punjab Drug Sale Rules 2007. The Pakistan Pharmacists
Association endorsed the changes, which discriminated between pharmacies and ‘medical stores’.
However, owners of medical stores were against the development.
Under the recently announced scheme, special medicine counters in government hospitals will be in
charge of dispensing essential medicines free of charge. The drugs had previously been distributed by the
humanitarian Bait-Ul-Maal scheme, which has been disgraced by allegations of misappropriation.
The Pakistan Chemists Retailers Association (PCRA) categorically opposed pharmaceutical companies’
demand to raise drug prices in November 2008, calling it ‘ruthless cruelty to be meted out to the poor
patients’. It also demanded the establishment of a commission to review all previous rises in drug prices
allowed by the government.
Research And Development
Local companies are mostly engaged in the manufacture of generics, with few operating their own R&D
facilities of any note. However, India and Pakistan are increasing their efforts to promote biotechnology
as part of the wider efforts of the newly created Federation of Asian Biotech Associations (FABA). The
association was launched in 2005 by member countries including India, Pakistan, Malaysia, Thailand,
Singapore, Philippines and Sri Lanka. Israel, Iran and Saudi Arabia have since joined the group, and
Japan, Korea, Taiwan, and Bangladesh are also likely candidates for membership.
The clinical trials situation is undesirable from a multinational perspective, as most studies (largely phase
IV) are more promotional than evaluative. The majority of trials are uncontrolled and open label, and
mostly designed with a view to improving market shares rather than truly testing a product. Other
limitations of the clinical trials environment include poor healthcare facilities and the lack of private
insurance, as well as patchy government coverage.
In February 2009, local drugmaker Ferozsons Laboratories announced that work had started on its new
US$10mn biotech facility, which is being developed in partnership with the Argentine drugmaker
Laboratorios Bagó, which will produce drugs to treat hepatitis and cancer. The new factory, which will
meet US FDA regulatory standards, should help Ferozsons to establish a significant export base in the
coming years and provide products for Pakistani patients. Meanwhile, the company is planning a number
of launches in the coming months in the areas of gastroenterology, oncology and transplantation, and is
calling for the government to overhaul the regulatory system – in order to promote accelerated drug
registrations for local companies. Ferozsons, like many local manufacturers, would also like prices to be
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deregulated in therapeutic areas where there is a sufficient diversity of products to ensure free-market
competition.
International Cooperation
Pakistan has been instrumental in establishing closer ties with neighbours as its macroeconomic climate
improves. Growth has been impressive, inflation has been kept in check and the country has a viable
balance of payments. Market mechanisms are much more transparent and confidence in the private sector
is the highest for years. Expatriate Pakistanis are bringing capital back home and the country’s credit
rating in international capital markets has improved. Moreover, foreign exchange reserves, which were
only US$2bn at the turn of the century, have now exceeded US$11bn. This places Pakistan as an
emerging economic player in the region.
In March 2005, Pakistani officials put forward the possibility of greater cooperation with the Bangladeshi
sector, in light of India’s adoption of a new WTO-compliant patent regime. The two countries are set to
sign a memorandum of understanding (MoU) on the issue, thereby committing to maximising
opportunities ahead of Bangladesh’s scheduled implementation of TRIPS patent legislation in 2016. Any
new arrangements may also benefit Pakistani drug exporters, as production in the country is understood to
be significantly cheaper than in Bangladesh.
Pakistani pharmaceutical companies have recently demanded a level playing field with regard to trade
with Bangladesh. Pakistan has allowed dozens of Bangladeshi drugs onto the market, while Bangladesh –
despite repeated promises – has yet to register a single Pakistani drug. As a result, Pakistan has now
stopped registering Bangladeshi drugs with the Federal Health Ministry.
Demand for Bangladeshi drugs is rising in Pakistan because of their low cost. The Bangladeshi
pharmaceutical sector is booming, with output expanding by 15-20% over the last couple of years due to
the recent patent waiver by the WTO for less developed countries. Unfortunately, Pakistan – which is
already concerned about competition from Indian, Chinese and South Korean imports – is suffering as
Bangladesh dumps its low-cost products on the market.
In March 2007, Uzbekistan and Pakistan agreed to establish private sector joint ventures in
pharmaceuticals, medical devices and healthcare technology, as well as partnerships in other industries.
BMI welcomes this development as both countries have different strengths and a pooling of resources
will ultimately result in better healthcare outcomes for both sets of citizens. To facilitate joint healthcare
projects, Pakistan is tendering engineering goods, sporting equipment and textiles. Uzbekistan,
meanwhile, is offering cotton fibre, silk, mineral fertilisers, cables, construction materials, agriculture
machinery, chemicals and aircraft.
During November 2007, a delegation of Pakistani pharmaceutical manufacturers travelled to Rwanda to
investigate investment possibilities. Initially medicines will be exported directly but in the mid-term,
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 31
technology will be transferred and production facilities will be built. This is important because according
to Common Market for Eastern and Southern Africa (COMESA) rules, if the products are not composed
of 35% raw materials, they will not benefit from free movement within the trade bloc.
As part of a plan to increase bilateral trade, Pakistan called upon Indian pharmaceutical companies in
September 2007 to use its country as a conduit to the populous but frequently impoverished Islamic
markets. While the offer represented another sign of improving relations between the neighbouring
countries, BMI believes it will not amount to much, as India – with an equivalent-sized Muslim
population – is in a similar, if not better position to export medicines to countries like Saudi Arabia and
Nigeria (which both rely heavily on imports).
In September 2008, according to Kashmir Media Service, Indian and multinational pharmaceutical
companies were warned that action will be taken by the Pharma Associates of Jammu if companies are
found to be supplying medicines directly to the valley of occupied Kashmir. The secretary of Pharma
Associates of Jammu issued a memo to all pharmaceutical companies stating that there will be no
cooperation from his organisation as well as the rest of India if companies attempt to disturb the existing
distribution system in the occupied territory.
Following a breakdown in relations during 2007, there were growing signs in early 2008 that Pakistan and
China were patching up their once close ties. Two Chinese drugmakers are looking to establish joint
ventures in the South Asian country, while Pakistan has invited China to participate in a gas pipeline
originating in Iran. BMI believes that Sino-Pakistani trade should boom as a result, from the current
estimated US$7.5bn a year to US$15bn by 2012. Chinese Shetang Zhong Industry and China Liu
Enterprises wish to sell their products in Pakistan in partnership with local firms. Their intentions are
being welcomed because the Pakistani pharmaceutical market is characterised by multinational
drugmakers and their expensive patented products. The Chinese companies are confident that they can
offer generic medicines at much lower prices than anyone else, even low-cost India.
Medical Devices
The medical devices industry and market in Pakistan are indicative of the wider state of the country’s
development. While the demand for new and modern equipment exists, it is not supported by healthcare
financing and logistics. Consequently, the medical devices market is negligible in global terms, hampered
by ill-equipped public hospitals and an underdeveloped primary care network. While the private sector
exists in more affluent urban areas, it is very small.
Medical devices are regulated by the MoH, which imposes no restrictions on imports. There are no
specific registration requirements, provided the goods are properly authorised in their country of origin.
In 1997, duties for medical devices were reduced, encouraging imports. Duties on items that can be
locally produced (such as bandages), however, are much higher. This is in order to provide some
protection to the local industry.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 32
In the future, the prevalence of communicable diseases will continue to drive demand for sterilisation and
similar equipment, although the lack of finances for rural services – where such diseases are most
widespread – will hamper sector development. In the meantime, most hi-tech devices will continue to be
imported, although a small and fragmented domestic industry (centred on the Punjabi town of Sialkot)
will remain responsible for the manufacture of a range of quality devices – which are increasingly
exported. Some of the local companies active in the medical devices market include distributors, such as
Electromed Corporation, Hospital Supply Corporation and Fazael Din and Sons.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 33
Industry Forecast Scenario
Pharmaceutical Market Forecast
Combined sales of prescription drugs and
over-the-counter (OTC) medicines in
Pakistan are forecast to increase from
PKR132bn (US$1.62bn) in 2009 to
PKR144bn (US$1.64bn) in 2010. Due to
the weakening rupee, this equates to
growth of 9.1% in local currency terms
and 1.2% in US dollar terms.
A key driver of medicine consumption is
economic development. According to
BMI's Country Risk team, Pakistan's
GDP is forecast to post real growth of
2.4% in 2010. Although this figure is
above the 2.0% recorded in 2009, it is well below the 2003-08 average of 6.3%.
Inflation is major problem in Pakistan. The consumer price index (CPI) – which BMI uses as a proxy for
inflation – increased from 7.8% in 2007 to 11.7% in 2008, and then to 21.0% in 2009. Due to ongoing
and anticipated government controls, the CPI is forecast to average 12.6% in 2010, 11.0% in 2011 and
8.4% in 2012.
Pakistan's large, growing and ageing population is an obvious enticement to pharmaceutical companies.
According to the UN Population Division, the number of people living in the country will increase from
148mn in 2000 to 226mn in 2020 – a rise of 53%. The percentage of the population aged 65 and over will
increase from 3.7% to 4.6% over the same period. However, we caution that per-capita spending on
medicine in Pakistan is, and will remain, relatively low (US$9 in 2009, US$10 in 2014 and US$11 in
2019).
BMI does not expect many foreign firms to enter Pakistan's pharmaceutical market over the medium
term. Aside from the precarious political situation, the rupee is projected to weaken further over the next
five years. Our Country Risk team expects the US$:PKR exchange rate to deteriorate from 1:88 in 2010
to 1:110 in 2014.
This means prospects for local players are much more promising than those for companies that repatriate
revenues. BMI's pharmaceutical expenditure forecast model reveals that medicine sales will increase
from PKR132bn (US$1.62bn) in 2009 to PKR196bn (US$1.78bn) in 2014. This equates to compound
Pharmaceutical Market Forecast
2005-2019
0.0
0.5
1.0
1.5
2.0
2.5
2005
2006
2007
2008
2009
2010
f
2011
f
2012
f
2013
f
2014
f
2015
f
2016
f
2017
f
2018
f
2019
f
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Drug expenditure (US$bn), LHS
Drug expenditure as % of GDP, RHS
f = forecast. Source: IMS Health Asia, Pakistan Pharmaceutical Manufacturers Association (PPMA), BMI. For data, see Forecast Tables section below.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 34
annual growth rates (CAGRs) of 8.25% in local currency terms and 1.96% in US dollar terms. By 2019,
we expect the pharmaceutical market to reach a value of PKR290bn (US$2.12bn).
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 35
Key Growth Factors – Industry
Healthcare spending in Pakistan is
expected to increase from PKR226.5bn
(US$2.77bn) in 2009 to PKR257bn
(US$2.92bn) in 2010. Due to
depreciation of the rupee, this equates to
growth of 5.2% in US dollar terms and
13.4% in local currency. Spending on
healthcare as a percentage of GDP is
1.73%, well below both the regional
(5.12%) and global (7.14%) averages.
Because such a low percentage of
national wealth is directed towards
medical services, healthcare outcomes are
very poor. The burden of both
communicable and non-communicable disease is high. Many children die from preventable conditions.
There is a chronic shortage of healthcare professionals, especially nurses and doctors. Worryingly, this
situation is not expected to improve significantly over the medium term. By 2014, BMI forecasts
healthcare spending as a percent of GDP to reach 2.01%.
Per-capita healthcare spending was a paltry US$17 in 2009. The majority was out-of-pocket expenditure
because there is no comprehensive health insurance scheme and the government has minimal involvement
in the sector. In 2009, public sector healthcare spending reached US$440mn, which equated to 15.9% of
the total market. The regional and global averages for this indicator are 47.5% and 59.5% respectively.
The low average spend on healthcare is not completely representative of reality. According to the WHO,
per-capita healthcare spending in Pakistan reached US$50 during 2007. This expenditure was expressed
at the international dollar rate, which is a hypothetical unit of currency that has the same purchasing
power of the US dollar in the US at a given point in time.
The prospects for Pakistan’s healthcare sector are bleak. Due to political instability, foreign stakeholders
are reluctant to invest in Pakistan. The traditional medicine sector is popular, especially in rural areas.
Private clinics are limited to those on high incomes in urban areas. A rapidly expanding population is also
disguising high mortality rates in all age groups. Through to 2014, we are projecting a CAGR of 13.65%
for healthcare spending in Pakistan.
Healthcare Expenditure Forecast
2005-2014
f = forecast. Source: World Health Organization (WHO), BMI. For data, see Forecast Tables section below.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 36
Key Growth Factors – Macroeconomic
Insurgency to Hold Back Economy
While Pakistan managed to come through the global financial crisis and its own currency collapse to
register 2.0% growth in FY2008/09 (July-June), we do not see much to smile about. Indeed, the economy
is performing well below potential – a situation we expect to continue as the country continues to be
plagued by a woeful security environment, political instability, low investment spending and relatively
tight monetary and fiscal conditions. We forecast real GDP growth to come in at a disappointing 2.4% in
FY2009/10 and 2.2% in FY2010/11.
Pakistan’s economy has experienced severe turbulence during 2008 and 2009 owing to its ongoing
internal political strife in conjunction with the global financial crisis. While Pakistan’s militant
insurgency has depressed economic activity and deterred investment spending (which contributed -1.2
percentage points [pp] to real GDP growth in FY2008/09), the external financial crisis catalysed a balance
of payments crisis, in turn requiring an IMF bailout and countercyclical monetary and fiscal tightening.
Although real GDP growth did still come in positive at 2.0% in FY2008/09, Pakistan is effectively in a
zero growth environment since population growth is ticking along at around 1.8%.
Considering recent data releases from the State Bank of Pakistan (SBP), we do not see much to suggest
this situation will change anytime soon. Industrial activity within Pakistan remains relatively depressed.
Pakistan's index of large scale manufacturing industries rose 5.0% y-o-y in October, or 7.1% m-o-m,
sharply below the expansionary rates seen in the years prior to 2007. More concerning for Pakistan's
economic outlook is the overall length of time it has taken for Pakistan to register a significant gain in this
index. While it is understandable that production may have taken a hit in late 2008/early 2009 as the
global economy tanked, the fact that large-scale industrial output struggled to turn positive for so long,
while many other emerging market economies (especially in Asia) were powering back, is clearly
disappointing. Over the coming months we expect Pakistan's large scale manufacturing index to remain in
positive territory but believe that a return to the brisk rate of output growth seen in previous years is
extremely unlikely.
Indeed, Pakistan’s economy will continue to struggle while facing a militant insurgency. Added to this we
see external factors once again conspiring against the Pakistani economy. Throughout the financial crisis,
Pakistan's economy has enjoyed some level of support from a surge (up 62.7% y-o-y in October) in
remittance payments from Pakistanis working abroad. Remittances, which account for around 5% of
Pakistan's GDP, will come under pressure in coming months. Over half of Pakistan's remittances come
from the US, the UK, Saudi Arabia and the UAE. We expect all four of these economies to perform
relatively poorly in 2010, thereby limiting the scope for further upside in remittance flows. Indeed, with
the UAE contributing around 25% of total remittances, Pakistan has a considerable exposure to the slump
in Dubai's property market and construction industry – a major employer of Pakistani nationals.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 37
Given our expectations that the surge in remittances seen in FY2008/09 cannot be sustained and the dire
domestic security situation, we believe that private consumption will contribute less to real GDP growth
over the next few years. While private consumption contributed 3.7pp to real GDP growth in FY2008/09,
we forecast a contribution of only 1.1pp and 1.4pp in FY2009/10 and FY2010/11 respectively.
Added to a relatively weak consumption outlook we also expect investment spending to remain
depressed, primarily thanks to Pakistan’s poor security situation and shaky political outlook. With
President Asif Ali Zardari facing calls to stand down and terrorist attacks showing no sign of abating,
Pakistan provides a far from conducive investment climate. Indeed, as previously mentioned, falling
investment has already acted as a major drag on economic growth. We see no reason for a sharp
turnaround in investment sentiment in the coming months. Indicative of continued depressed investment
spending is the stalling of private sector loan advances by Pakistani banks in 2009, which grew by a
meagre 0.4%, from PKR3,141,028mn to PKR3,154,737mn, in January-October. We therefore forecast
that investment will contribute only 0.2pp to real GDP growth in both FY2009/10 and FY2010/11 – a
situation far from ideal in a country plagued by weak infrastructure and regular power shortages.
At the same time, with government spending restrained by IMF loan provisions, economic growth will
not be driven by increased fiscal expenditure. Instead we forecast government spending to contribute
0.0pp and -0.3pp to real GDP growth in FY2009/10 and FY2010/11. Therefore, economic growth will
almost entirely rest on increased private consumption and a pick up in external demand in line with the
global economic recovery (we forecast net exports to contribute 0.9pp to real GDP growth in both
FY2009/10 and FY2010/11). With Pakistan's population growing at around 1.8% per annum, the paltry
2.4% and 2.2% growth in real GDP that we forecast in FY2009/10 and FY2010/11 respectively is far
from ideal. Indeed, we expect US dollar incomes in Pakistan to remain fairly flat over the next few years,
increasing from US$973 per capita at end FY2008/09 to US$1,083 by end FY2013/14. Compared with its
Asian peers, such economic performance is extremely weak and, in our view, could serve to perpetuate
the militant insurgency with which Pakistan is currently grappling.
Risks to Outlook
While our outlook for the Pakistani economy is largely pessimistic, we nevertheless see risks skewed to
the downside. Indeed, with Pakistan’s energy bill comprising almost half of all imports in FY2008/09, the
country is vulnerable to any sharp energy price rises. A rapidly increasing import bill could further
depress headline growth and could once again spell danger for the Pakistani rupee.
Furthermore, growth could be curtailed if Pakistan's militant insurgency were to escalate and increasingly
spread into core regions such as the Punjab. While Pakistan's military has gained ground from the
Pakistani Taliban in both the Swat Valley and South Waziristan, December 28's suicide bombing in
Karachi, which killed 43 and resulted in rioting, showed that militants possess the ability to reach beyond
their core provinces and into Pakistan's commercial heart. Also, the sectarian nature of the attack (made
on minority Shiites) does not bode well for Pakistan, politically or economically. While our forecasts
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 38
account for a volatile political situation, any significant escalation would put downward pressure on our
low growth forecasts.
Pakistan – Economic Activity
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Nominal GDP, PKRbn 1,2 6,499.8 7,623.2 8,673.0 10,284.4 13,095.0 14,880.2 16,321.8 17,754.1 19,440.9 21,520.2
Nominal GDP, US$bn 1,2 109.1 126.6 141.8 146.2 159.6 165.3 171.8 176.7 184.3 195.2
Real GDP growth, % change y-o-y 1,2 9.0 5.8 6.8 4.1 2.0 2.4 2.2 2.7 3.6 3.7
GDP per capita, US$ 1,2 715 814 897 909 973 989 1,009 1,018 1,042 1,083
Population, mn 3 152.5 155.4 158.2 160.9 163.7 166.6 169.6 172.7 175.8 178.9
e/f = estimate/forecast. Notes: 1 Fiscal years ending June 30 (2008=2007/08); Sources: 2 Ministry of Finance/BMI. 3 Federal Bureau of Statistics
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 39
Prescription Drug Market Forecast
The boundary between prescription and
non-prescription segments is blurred by
the fact that many prescription medicines
are dispensed freely over the counter.
Nevertheless, the prescription drugs
market will remain the dominant part of
the overall market over the coming years.
In 2009, the prescription market was
worth PKR106bn (US$1.29bn),
accounting for 80.3% of the total. The
segment is forecast to reach PKR157.7bn
(US$1.43bn) in 2014, growing at a
CAGR of 8.25% in local currency terms,
just above that for the overall market.
Drugs for the treatment of infectious disease require much attention, given the country’s level of
development. However, authorities are seeking to reduce over-prescribing and overuse of prescription
drugs in general and antibiotics specifically. On the other hand, for example, Pakistan also has around
1mn Alzheimer’s patients, indicating a significant potential for the use of chronic and long-term
therapies.
Strength of prescription drug sales should continue, as hospitals and doctors continue to be the primary
access point to healthcare and as access to medical services and pharmaceuticals improves over time.
However, counterfeit drugs are likely to continue to have a damaging impact on sales. Industry observers
are calling for much stronger government action in this area, including closer monitoring of the supply
chain and greater investment in educating consumers.
A major factor affecting value growth is also the government’s continuing control over pharmaceutical
prices. Such intransigence has been especially damaging to local firms in the light of fluctuations in the
price of raw materials in recent years, although this is mostly applicable to generic products.
Liberalisation of the pricing regime would boost profits and allow greater investment in areas such as
manufacturing and R&D. With Pakistan’s large low-income population already struggling to afford most
medicines, there is unlikely to be any dramatic change in policy in the near future.
Another major problem involves the misuse of prescription pharmaceuticals. Internationally there are
strict rules in place for prescription drugs, with doctors expected to use triplicate prescription forms and
follow stringent procedures that restrict supply after a month. However, such practices are not required in
Pakistan. This has led to abuse of prescription drugs and has caused some serious health problems as a
consequence. Tranquillisers and anti-anxiety drugs are the most targeted drugs and are often purchased
Prescription Drug Market Forecast
2005-2019
0.0
0.5
1.0
1.5
2.0
2005
2006
2007
2008
2009
2010
f
2011
f
2012
f
2013
f
2014
f
2015
f
2016
f
2017
f
2018
f
2019
f
0102030405060708090
Prescription drug market (US$bn), LHS
Prescription drug sales as % of total market, RHS
f = forecast. Source: IMS Health Asia, Pakistan Pharmaceutical Manufacturers Association (PPMA), BMI. For data, see Forecast Tables section below.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 40
without a prescription. The lack of correct protocols when prescribing drugs has also made it difficult to
track consumption and demand.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 41
Patented Drug Market Forecast
Despite the strict pricing regime and the
lack of universal reimbursement, the
patented market, which was worth about
PRK37.80bn (US$231mn) in 2009 – at
just under 15% of the total market – is
forecast to reach PRK49.45bn
(US$276mn) at consumer prices in 2014.
The segment will post a CAGR of 6.52%
in local currency terms, stimulated by the
recently introduced fast-track registration
system for drugs on sale in at least two
advanced markets, as well as by the
general improvement in incomes and
healthcare financing.
During Q407, a prominent professor from the Dow University of Health Sciences (DUHS) in Karachi
said that doctors were ‘succumbing to pressures’ from drug-makers – in the form of substantial gifts - to
give out more expensive therapeutics when cheaper alternatives were available. This criticism was backed
up by the Pakistan Medical Association (PMA), which pointed out that the popular painkiller Ponstan
(mefenamic acid) was being sold by a foreign drugmaker for PKR1 (US$0.02) per tablet, while local
firms sell generic versions for a third of that price.
In the meantime, launches of novel drugs by multinationals will remain restricted by the IP regime. Patent
violations are encouraged by the long period (up to two years) it takes to register a drug in Pakistan. The
delay in the introduction of a new essential drugs list will provide a breathing space for many companies
with patented medicines. However, the list will not contain any patented products, with the result being
boosted generics sales.
On the other hand, generic products are not widely prescribed. Medical practitioners are inadequately
aware of the efficacy of generics compared to patented products, largely due to their justly deserved poor
reputation in Pakistan. This is likely to require significant enhancements in product quality in the future,
which may be beyond the financial means of many local companies.
Patented Product Market Forecast
2005-2019
0.0
0.1
0.2
0.3
0.4
0.5
2005
2006
2007
2008
2009
2010
f
2011
f20
12f
2013
f
2014
f20
15f
2016
f20
17f
2018
f20
19f
0
5
10
15
20
Patented product market (US$bn), LHS
Patented product sales as % of total market, RHS
f = forecast. Source: IMS Health Asia, Pakistan Pharmaceutical Manufacturers Association (PPMA), BMI. For data, see Forecast Tables section below.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 42
Generic Drug Market Forecast
Generic drugs – or at least copied
products in general – will continue to
play a dominant role in the market,
largely as a result of their low cost and
government support for the sector.
Current rules encourage the registration
of non-bioequivalent copies of original
drugs in Pakistan and packaging rules
require chemical names to be
prominently stated on drug packets. This
implies equivalence despite the limited
grounds for being able to establish it.
The new essential drugs list, which was
due to be published in the course of 2009, and likely to be significantly delayed in the light of the security
priorities, will only contain generic products, eventually boosting the sector’s values and volumes. We
believe that the list will be one of the key drivers of generics market growth through to 2014. Spending on
‘legitimate’ generics was some PKR174.7bn (US$1.07bn) in 2009 and can be expected to rise to
PKR208.4bn (US$1.15bn) at consumer prices by 2014, which translates into a CAGR of 3.39% in local
currency terms. Due to IP improvements to the status of patented drugs and the strong competition in the
generic sectors negatively impacting pricing levels, the share of generic drugs is expected to decline
slightly in the same period, from 66.0% to 63.6%.
The government also requires that the international non-proprietary name of the substance be printed on
pharmaceutical packaging with at least the same prominence as the brand name. Multinational drug
companies claim that this provision undermines trademark rights and gives an unfair advantage to the
local generics sector by encouraging substitution. It also implies complete inter-changeability between the
two different products. This is not always the case, as Pakistan does not demand that generics submit
effective bioequivalence data. As a result, industry association PhRMA claims that this law actually
constitutes a risk to public health, although the Pakistan government maintains that it is essential to
increase access to low-cost drugs.
The monopoly status once held by multinationals over the generics market has been removed by the
emergence of strong domestic manufacturers. The shift in market dynamics has led to a voluntary
reduction in prices, with all institutions of the federal and provincial governments (at primary, secondary
and tertiary levels) now purchasing their drugs in the form of generics.
Generic Drug Market Forecast
2005-2019
0.00.20.40.60.81.01.21.41.6
2005
2006
2007
2008
2009
2010
f
2011
f
2012
f
2013
f
2014
f
2015
f
2016
f
2017
f
2018
f
2019
f
01020304050607080
Generic drug market (US$bn), LHS
Generic drug sales as % of total market, RHS
f = forecast. Source: IMS Health Asia, Pakistan Pharmaceutical Manufacturers Association (PPMA), BMI. For data, see Forecast Tables section below.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 43
OTC Medicine Market Forecast
Given that most medicines are freely
available over the counter and that illegal
copies of branded products are widely
available, the growth of the OTC sector
will continue to be stimulated over the
forecast period. The market is expected to
remain buoyed by the fact that a large
proportion of pharmaceutical spending
continues to be financed out-of-pocket
and those that are unable to access
healthcare remain reliant on readily
available over-the-counter remedies.
The OTC healthcare market in Pakistan
was worth PKR26.05bn (US$319mn) in 2009, accounting for 19.7% of the total market. OTC sales are
forecast to increase in the near future to PKR38.72bn (US$363mn) by 2014, posting a CAGR of 8.25% in
local currency terms. Despite losing some share of the total market, the low cost of OTCs and a growing
preference for self-medication and preventative care – supported by a rising number of distribution
channels – will provide the main drivers of future growth.
Efforts to harness the potential of traditional medicines could have a beneficial impact on the OTC
market. According to estimates, more than half the population live in rural areas, with limited or restricted
access to healthcare. Pakistan has a rich tradition in using medicinal plants to treat ailments, with around
70-80% of the population using traditional medicines. The government is keen to exploit this area,
especially in terms of exports, while increased use of herbal supplements could be a key driver of growth
for OTCs. In a related development, the Supreme Court has demanded the introduction of regulations
covering Ayurdevic, Unani and homeopathic treatment systems. However, the MoH is reported not to
have acted on this issue to date.
For the most part, sales of OTCs will be sluggish, restricted by weak consumer spending power,
especially in rural areas. In urban areas, OTCs will witness increased sales, as changing lifestyle patterns
and longer working hours result in more people self-medicating. Sales of paediatric OTC drugs are likely
to grow faster than adult counterparts, as the country’s birth rate remains high.
Regulations covering OTCs can be lax, as evidenced by the availability of more than 60 brands of
different benzodiazepines without a prescription. The problem is that all benzodiazepines have an
addictive potential. Use of benzodiazepines should commence only after medical consultation and should
be prescribed in the smallest dosage possible to provide an acceptable level of symptom relief.
OTC Medicine Market Forecast
2005-2019
0.0
0.1
0.2
0.3
0.4
0.5
2005
2006
2007
2008
2009
2010
f
2011
f
2012
f
2013
f
2014
f
2015
f
2016
f
2017
f
2018
f
2019
f
0
5
10
15
20
25
OTC medic ine market (US$bn), LHS
OTC medic ine sales as % of total market, RHS
f = forecast. Source: IMS Health Asia, Pakistan Pharmaceutical Manufacturers Association (PPMA), BMI. For data, see Forecast Tables section below.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 44
Pharmaceutical Trade Forecast
Despite intense competition from
neighbouring India, Pakistan is looking to
increase pharmaceutical exports to other
emerging markets. Initially, the country
hopes to target the promising regions of
Central Asia and Africa, but it is BMI’s
view that Pakistan is ultimately hoping to
sell its medicines in the high margin
markets of Western Europe and the US,
although ensuring high quality will be
key to such efforts. Presently, main
export destinations are Central and
South-East Asia and Africa.
According to the Islamabad Chamber of
Commerce and Industry (ICCI), exports can only be increased significantly once the majority of Pakistani
manufacturers upgrade their facilities so that they meet international standards (such as GMP).
Nevertheless, in 2008, Pakistan’s export rose by 10% y-o-y, as reported by the Pakistan Pharmaceutical
Manufacturers Association (PPMA). The Association singled out better quality and improved marketing
as key reasons for this increase.
In order to achieve the expensive GMP criterion, the trade groups, also including the Pakistan Industrial
and Traders Associations Front (PIAF), have been urging the government to lower tariffs on the import of
pharmaceutical equipment to zero and to establish better support system for pharmaceutical exporters.
Moreover, the ICCI wants greater investment in R&D, which will increase the quality and scope of
product offerings. Indeed, some tariffs – such as import duties on raw materials – have been reduced
recently.
In 2009, BMI calculated that pharmaceutical exports from Pakistan totalled just US$84.6mn. However,
the potential for the sector is immense. The PPMA believes that medicines with a value exceeding
US$600mn could be exported by 2010. We are much more cautious, forecasting US$168.6mn in
pharmaceutical exports in 2014.
Pakistan is vociferous in proclaiming its potential as a mass medicine manufacturer. For over 10 years, it
has sought to increase its capabilities in this area by encouraging foreign investment, fostering local firms
and touting its products to neighbouring states. For example, in March 2007, Uzbekistan and Pakistan
agreed to establish private sector joint ventures in pharmaceuticals, medical devices and healthcare
technology, as well as partnerships in other industries. BMI welcomed the development as both countries
Pharmaceutical Trade Forecast (US$mn)
2005-2014
-700-600-500-400-300-200-1000100200300
2005
2006
2007
2008
2009
f
2010
f
2011
f
2012
f
2013
f
2014
f
Exports Imports Balance
f = forecast. Source: United Nations Comtrade Database, DESA/UNSD, BMI. Note: HS2002 - 3004 classification. For data, see Forecast Tables section below.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 45
have different strengths and we knew a pooling of resources would ultimately result in better healthcare
outcomes for both sets of citizens.
To upgrade medicine production lines, Pakistan has imported blister units, tablets and capsule machinery
from South Korea, China and Germany. This equipment will allow drugs to be formulated to international
standards, thereby boosting the sales of drugs to overseas markets. Moreover, the government is looking
to provide incentives to exporters by sharing the cost of registering drugs in foreign markets.
Imports can be expected to climb gradually, as the local industry remains dependent on imported raw
materials and as the results of modernisation slowly take effect. The government’s recent approval of
duty-free imported drugs from India – with the aim of providing a cheaper alternative to the soaring cost
of pharmaceutical products in Pakistan – should also serve to increase the level of imports in the short
term. However, under pressure from the local industry, in July 2008 the government banned imports of
400 drugs from India, illustrating its strong bias towards domestic producers. Import licences of a further
4,000 products were revoked in October 2009, under pressure from the local industry.
During early 2008, rotating energy blackouts were limiting pharmaceutical production to domestic
consumption and the ongoing political turmoil was putting off global buyers. Hydroelectricity represents
one third of Pakistan’s energy supply and droughts during Q108 severely impaired output. This forced the
authorities to introduce ‘load shedding’ or periodic blackouts. The phenomenon is part of daily life in
many African countries, due to a combination of aging electricity generation infrastructures and the
inadequacy of electricity supply in meeting ever-expanding demand. However, in Pakistan it is usually
restricted to summer months and even then only occurring frequently in rural areas.
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Other Healthcare Data Forecasts
Following partition in 1947, Pakistan’s population of approximately 35mn was the 14th largest in the
world. Having surpassed Japan, Bangladesh and Russia (among others) it is now the sixth largest – after
China, India, the US, Indonesia and Brazil. Meanwhile, Pakistan is only the 34th largest country in terms
of land area, while the country holds 136th place on the Human Development Index. The UN’s Economic
and Social Development agency estimates that Pakistan’s population will reach a staggering 292mn by
2050.
Public healthcare resources are generally inadequate in Pakistan. Successive governments have attempted
to introduce private elements into the provision of healthcare – a process that has benefited a wealthy
minority. Given its largely rural population, the distribution of resources is patchy, with the country
suffering from a lack of trained medical personnel, as illustrated by the low and stagnating number of
doctors.
The country has an average of only one doctor per 1,310 people, below the recommended ratio of
1:1,000. The nurse-to-patient ratio is an even poorer, at 1:4,636. Dentistry is also very under-subscribed at
only 1:25,297 and the profession has been accused of perpetuating the HIV/AIDS epidemic through the
use of unsanitary tools. Around 80% of all babies born in the country are delivered at home, with the
country suffering around 100 deaths per 1,000 live births. Pakistan is one of the few countries where
people are asked to pay a post-mortem fee.
Nevertheless, Pakistan is committed to the goal of making its population healthier, as evidenced by the
continuing strong support for the SAP and by the new vision for health, nutrition and population outlined
in the government’s National Health Policy Guidelines up to 2010. An example of a promising recent
initiative is the LHW community-based programme, which is bringing health information, some basic
healthcare and family planning services to women’s doorsteps.
The role of non-governmental organisations (NGOs) cannot be underestimated, especially for the work
they do in impoverished communities. Numerous parallel healthcare systems exist, including those run by
the army, the provincial, federal and local governments, the Water and Power Development Authority
(WAPDA), Pakistan International Airways (PIA), the Atomic Energy Commission, social security
organisations, and the private sector.
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Key Risks To BMI’s Forecast Scenario
Although current prospects for the Pakistani pharmaceutical sector are not overly optimistic, any
acceleration in the process of modernisation of the healthcare sector could alter this outlook markedly.
The implementation of real reform cannot be totally ruled out, given the current impetus behind regional
harmonisation in Asia and the government’s improving attitude to its international obligations. Any
success in bringing the domestic sector into line with international norms could bring greater external
investment; in turn quickening the pace of modernisation and increasing spending levels.
Corruption and red tape will continue to hamper improvements in the overall business climate in the
country. Politically speaking, as well, Pakistan remains a risk in terms of investment. The health system
in the northern tribal regions close to Afghanistan has suffered from underinvestment, which is related to
difficulties the government is experiencing in maintaining control. For example, in early 2009, the WTO
reported that Taliban militants were preventing 300,000 children from getting polio vaccinations in
Northern Pakistan, which they link to infertility.
Pharmaceutical products in Pakistan are relatively costly, but retailing is among the most profitable
businesses in the country. Pharmaceuticals are vital commodities for middle-class households. However,
given that patients remain responsible for the full cost of pharmaceuticals dispensed in the public sector,
economic fluctuations and variations in consumer purchasing power will have a direct impact on drug
market revenues and volumes – as will the government’s focus on necessary cost containment. In
addition, exports could be harmed by high inflation, which would lead to an appreciation of the real
exchange rate, resulting in exports becoming less competitive and imports becoming relatively cheaper.
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Competitive Landscape
Pharmaceutical Sector
According to market research firm IMS Health, the top 50 companies (30 multinationals and 20
domestic) enjoyed an 83.5% market share in mid-2000s, while the top 100 had 94% of the Pakistani
pharmaceutical market. Despite the significant presence of multinationals in Pakistan as well as the
country’s market potential, the leading international firms’ local activity remains minimal, largely
because of unfavourable operating conditions.
As of Q108, there were a total of 664 pharmaceutical concerns in Pakistan, of which 405 are registered
manufacturing units, including 31 multinationals. A year later, the number of registered pharmaceutical
concerns topped 4,400, which the government is hoping will lead to price competition, to the benefit of
consumers. Retail sales account for more than 80% of the market, with healthcare institutions responsible
for the remainder. Only 5% of local production is exported, although regional trade development is likely
to boost this figure in the coming years.
Data from the Karachi Stock Exchange reveals that there are eight listed pharmaceutical companies in
Pakistan. The majority are subsidiaries of foreign multinationals, with local representatives Ferozsons
Laboratories and Highnoon Laboratories. In the 2008 financial year, combined sales and profits after
tax reached US$393mn and US$35mn respectively. The total of the assets of the eight firms was
US$309mn.
2008 Financial Snapshot Of Pakistani Drugmakers Listed On The Karachi Stock Exchange (US$mn)
Financial year end
Total assets Sales
Profit before tax
Profit after tax
Abbott Laboratories Pakistan Ltd November 59.2 83.7 6.4 4.1
Sanofi-Aventis Pakistan Ltd December 35.2 51.3 1.0 0.5
Ferozsons Laboratories Ltd June 17.5 11.0 3.5 2.6
GlaxoSmithKline Pakistan Ltd December 125.5 158.2 35.4 23.1
Highnoon Laboratories Ltd December 17.4 22.8 0.9 0.7
Otsuka Pakistan Ltd June 9.7 12.5 1.2 0.8
Searle Pakistan Ltd June 27.1 24.6 2.5 1.7
Wyeth Pakistan Ltd December 17.8 28.1 2.7 1.7
Totals 309.4 392.3 53.6 35.1
Source: Karachi Stock Exchange
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Domestic Pharmaceutical Industry
Local manufacturers are able to compete to a large degree with the strongly positioned multinational
sector, due to their ability to market copies of branded, patent-protected drugs. Although the cause of
much frustration for the multinational sector, the situation is likely to persist for some time as the
government aims to protect the local industry. Despite being on the agenda for the past few years, the
modernisation of the regulatory system in Pakistan – particularly patent legislation – remains slow. Based
on the reform programmes of other emerging markets, patent legislation is likely to be one of the last
areas to be reformed.
Additionally, problems persist regarding the quality of some production units and their adherence to
legislation. For example, reports in December 2008 revealed that only a fifth of drug-makers in Lahore
were destroying their waste – such as expired medicines and toxic raw materials – in incinerators, thus
infringing the Hospital Waste Management Rules (HWMR).
Nevertheless, the government has highlighted the pharmaceuticals sector as a key growth opportunity in
the wake of India’s new patent laws and other regional modernisation initiatives. However, strict
government pricing controls have resulted in many uneconomic drugs being available only on the black
market at inflated prices, or disappearing completely.
Pakistan’s pharmaceutical sector is fairly evenly divided between domestically-produced generic drugs
and imported branded prescription pharmaceuticals. According to the PPMA’s figures, the domestic
industry is responsible for an estimated 70-85% of the total market in terms of volume and some 55% in
terms of value – although the 2006 figures have since shifted further in favour of domestic production.
More than 100 local companies are represented by the umbrella Pakistan Pharmaceutical Manufacturers
Association (PPMA), with multinationals organised by the Pharma Bureau. In March 2009, the president
of the PPMA, Zahid Saeed, claimed that the local pharmaceutical industry spent PKR107bn (US$1.3bn)
on manufacturing facilities, which he equated to a saving of about US$3bn in foreign exchange on the
import of medicines.
The local industry remains vulnerable to imports, due to its relatively poor technical capacity, the lack of
financial resources and the reliance on raw materials sourced from abroad. Multinationals and foreign
companies dominate the market in terms of value, but suffer patchy and difficult market penetration. This
is due to the exclusive use of generics in the public sector, low patient purchasing power and restrictive
pricing and IP policies.
Foreign Pharmaceutical Industry
The leading 10 suppliers of finished drugs in Pakistan are multinationals. Some operating conditions are
more advantageous to foreign firms than similar conditions offered in Pakistan’s regional peers. For
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example, drugmakers can establish operations that are 100% backed by foreign funds and profits can be
repatriated without permission.
Nevertheless, the foreign drug industry continues to blame slow sector development on strict government
pricing controls and the poor state of the regulatory infrastructure. However, a number of recent
regulatory improvements – such as allowing foreign patent holders to pursue legal action against local
infringements – have led to better treatment for multinationals. In 2002, Merck & Co and GSK were
successful in the defence of patents for Fosamax (alendronate) and Seroxat (paroxetine) respectively.
However, inconsistencies remain, with GSK losing its case against Werrick Pharmaceuticals regarding
Avandia (rosiglitazone) in the same year. This example illustrates that proper enforcement is still lacking.
Nevertheless, the US drug manufacturer Schering-Plough opened commercial operations in Pakistan in
July 2005. The move forms part of the firm’s long-term strategy to expand its business in the Asia Pacific
region. The new company, Schering-Plough Pakistan, has its headquarters in Islamabad. The company
will assume responsibility for Peg-Intron (peginterferon alfa 2b) and Clarinase (loratadine +
pseudoephedrine), which were previously handled by local distributor ICI Pakistan (an affiliate of the
British company).
Recent Pharmaceutical Sector Developments
Given the contemporary political and economic difficulties, in October 2008, the former President of the
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) called on the government to ban
imports of goods that are not deemed necessary for survival, which would improve the balance of
payment. In July 2008, the government blocked the proposal to import around 400 drugs from India.
Local drugmakers protested against the proposal by the commerce ministry, saying that over 1mn jobs
would be affected by the plan and over US$120mn worth of annual exports threatened. More recently,
Pakistan’s Federal Health Ministry cancelled the registration of 4,000 imported medicines, for the same
reason.
The July 2008 development follows the recent criticism of the country’s wholesalers and distributors by
Pakistani retailers, which objected to the alleged blocking of imports of cheap drugs from India. This
supported their claim with the fact that no new import licences for Indian-sourced pharmaceuticals were
granted in 2005. Distributors and wholesalers had disputed the assertion by stating that many Indian drugs
reach Pakistan via third countries, although the trend has had little downward impact on prices. In the
meantime, Indian drugs are failing to penetrate Pakistan through legal routes, despite the introduction of
zero tariffs on such imports in June 2005 – implemented as a response to distributors’ refusal to reduce
margins.
In June 2009, the government allowed the local pharmaceutical industry to import raw materials and APIs
at concessionary rates of duty. Custom duties have been slashed from 25 and 10% to 5%, which covers
imports of 19 types of APIs (including aspirin, amlodipine, loratadine and lamivudine), chemicals and
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raw materials. The industry has welcomed the move, as it will now be able to import the goods at reduced
prices. Customs duty on four types of diagnostic kits (breast cancer, blood cancer, cervical cancer and
vitrol) has also been lowered from 20 to 5%, with duty on import of stents and a number of other items
removed completely.
The current government hopes to build on previous reforms targeting increased foreign investment and
has attempted to reassure investors of its intention to maintain a consistent pro-investment policy.
However, a series of investment promotion agencies – most recently the Pakistan Investment Board and
its successor, the Board of Investment (BOI) – have lacked the necessary authority and continuity of
leadership. Additionally, risks to foreign direct investment (FDI) exist, most prominent being the weak IP
and increasing inflationary trends without consequent increases in the prices of drugs.
In September 2009, Pakistan’s ambition to become a significant exporter of pharmaceuticals came under
threat, after a Ugandan drugmaker sued a Pakistani pharmaceutical manufacturer for supplying
substandard goods. Mavid Pharmaceuticals had filed a lawsuit against Royal Group for breach of
contract, following the purchase of raw materials for a therapeutic ointment, Samodex. However, after
testing by the National Drug Authority (NDA), these goods turned out to be ‘fake’. Mavid
Pharmaceuticals initially sought to recoup its US$68,000 outlay, but Royal Group ‘just ignored the
demand’. In the course of 2008, the NDA already withdrew from the market sub-standard tetracycline and
indomethacin capsules made by Royal Group. In December 2009, Sulaiman Bukenya, director of Mavid,
stated that his company was ready to seek an out-of-court settlement as Royal Group intended to liquidate
its business.
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Company Monitor
Indigenous Manufacturers
Searle Pakistan
Strengths Partnerships with several multinational drugmakers.
Manufacturing plants have GMP accreditation.
Exports to under-penetrated frontier markets
Weaknesses A limited product portfolio.
No presence in high-value biologicals.
Domestic sales underperforming compared with export revenue.
Opportunities Leveraging the well-known Searle brand.
Exporting more products to unregulated markets.
Producing vaccines or biosimilars
Threats Strong competition from Indian generic drug firms.
Larger domestic rivals.
A worsening operating environment.
Company Overview Searle Pakistan was incorporated in 1965 as a subsidiary of US-based G.D. Searle & Co, which
is best known as the developer of Enovid (mestranol + norethynodrel) – the first oral
contraceptive pill. In 1993, the parent company divested its interests in Searle Pakistan as part
of its global downsizing policy. Later that year, Searle Pakistan was made a public limited
company and shares of the firm began trading on the Karachi Stock Exchange (KSE).
Searle Pakistan has modern manufacturing plants in Karachi and Lahore, both following Good
Manufacturing Practice (GMP) regulations. The company has partnerships with several foreign
drugmakers, including Grunenthal, Forest Laboratories, 3M, Orion Pharma, Lisapharma, Sanofi-
Aventis and Menarini.
According to primary market research firm IMS Health, Searle Pakistan is the 11th largest
drugmaker in Pakistan based on sales and held a 2.4% market share at the end of 2008. The
company exports to Vietnam, Myanmar, Bangladesh, Sri Lanka, Afghanistan, Kyrgyzstan,
Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, Azerbaijan, Kenya and Uganda.
Financial Performance For the 12 months to June 20 2009, Searle Pakistan recorded sales of PKR2.71bn
(US$32.3mn), a 30% increase compared with the period a year earlier. Meanwhile, profits after
tax almost doubled to PKR258mn (US$3.5mn). The company described the financial results as
'very strong' despite the global downturn, high prices of active pharmaceutical ingredients
(APIs), increased cost of fuel and utilities, domestic inflation and devaluation of the rupee.
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In the first six months of fiscal 2009/10, Searle Pakistan recorded sales of PKR1.67bn
(US$19.9mn) compared with PKR1.25bn (US$14.9mn) in the period of the previous financial
year. Domestic revenue increased by 30.3%, from PKR1.15bn (US$13.7mn) to PKR1.50bn
(US$17.9mn). Meanwhile, foreign sales rose by 34.9% to PKR128,000 (US$1.5mn).
Company Address Searle Pakistan Limited, 1st Floor N.I.C. Building,
Abbasi Shaheed Road , Karachi, Pakistan
Phone: +92 21 3567-4321
Fax: +92 21 3568-7693
Email: [email protected]
Website: http://www.searlepak.com
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Hilton Pharma
Strengths A leading local drug manufacturer.
Internationally standardised production facilities.
Affiliation with a number of foreign companies.
Weaknesses Reliance on foreign-sourced raw materials.
Strong competition from multinationals in the branded sector.
Existence of substantial counterfeit trade.
Opportunities Positive economic performance and rising patient purchasing power.
Government and international encouragement for drug exports.
Regional harmonisation and trade agreements.
New essential drugs list to only include generics.
Import duties on a number of APIs and raw materials recently slashed.
Threats Need to align local regulatory and IP with international standards.
Negative impact of high inflation and rising production costs on the company’s bottom
line, given the government’s resistance to increase drug prices.
Volatile political and economic climate.
Strong regional competition in the field of generics.
Depreciation of local currency making imports of raw materials more difficult.
Company Overview Hilton Pharma, the leading pharmaceutical manufacturer in Pakistan, is based in Karachi’s
Korangi Industrial Area. The company’s facilities, which comply with international production
standards, are responsible for the manufacture of human and veterinary medicines.
The company is affiliated to a variety of international firms, including Alpharma, Serono,
Kunming Pharmaceutical Corp, Daiichi, Elan, Fresenius Kabi Austria GmbH, Novartis, and
Takeda.
Recent Developments It was revealed in October 2008 that Hilton would merge with Sami Pharmaceuticals. The deal is
significant because it is the first time that two local companies ranked in the top ten have
merged. Reliable information on Sami Pharmaceuticals is difficult to obtain but the firm
generated annual revenues exceeding PKR2bn (US$25mn).
Company Address Hilton Pharma Pvt Ltd
8th & 9th Floor Progressive Plaza Beaumont Road
Karachi , Pakistan
Tel: +92 21 111 123 000
Fax: +92 21 111 124 000
www.hiltonpharma.com
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Efroze Chemical Industries
Strengths One of the leading local drug manufacturers.
Considerable demand for cheap generic medicines in the country.
International certification of production facilities.
Foreign partnerships, especially in relation to R&D activities.
Weaknesses Reliance on foreign-sourced raw materials.
Strong competition from multinationals in the branded sector.
Existence of substantial counterfeit trade.
Opportunities Positive economic performance and rising patient purchasing power.
Government and international encouragement for drug exports.
Regional harmonisation and trade agreements.
New essential drugs list to only include generics.
Import duties on a number of APIs and raw materials slashed recently.
Threats Need to align local regulatory and IP laws with international standards.
Volatile political and economic climate.
Negative impact of high inflation and rising production costs on the company’s bottom line, given the government’s resistance to increase drug prices.
Depreciation of local currency making imports of raw materials more difficult.
Strong regional competition in the field of generics.
Company Overview Efroze Chemical Industries, a leading domestic pharmaceutical manufacturer, was established
in Karachi in 1968. Its second factory was opened in 1999, with both facilities receiving
international certification shortly after. The company’s field staff consists of around 150
personnel, with employees totalling 375 people. Sales are estimated at US$10mn a year.
Efroze is involved in R&D activities (in the field of pharmacokinetics and bioavailability in
cooperation with partners including Aga Khan University, PCSIR, Karachi University and JPMC.
Efroze’s international partners include Boryung, Shin Poong (Korea), Italfarmaco (Italy) and
Maple Pharmaceuticals (Canada) and it operates a JV with Japanese Otsuka.
Product Portfolio The company is involved in the promotion of over 50 branded products belonging to different
therapeutic classes through its own distribution network. Its export operations, which started in
1992, now supply over 20 developing markets in Africa, the Middle East, Asia and the former
USSR (Uzbekistan, Kyrgyzstan, Kazakhstan, the Russian Federation, Ukraine and Belarus).
The company’s therapeutic focuses are cardiac care, diabetology, gastroenterology,
gynaecology and pain management, with Efroze also looking to expand into nutraceuticals.
Since the start of 2009, a number of new products have been launched, including Tramapar – a
combination of paracetamol and tramadol – and Montef (montelukast sodium), a treatment for
allergic rhinobronchitis. The Montef tablet is available in a number of strengths.
Company Address Efroze Chemical Industries Pvt Ltd 12, C Block-6, P.E.C.H.S., Off. Sharah-e-Faisal 75400 Karachi, Pakistan
Tel: +92 21 111 337 337 Fax: +92 21 454 5266
www.efroze.com
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Ferozsons Laboratories
Strengths One of the largest domestic pharmaceutical companies in Pakistan, with annual sales of around US$14mn.
PKR300mn (US$4.98mn) joint venture (JV) with Argentina’s Bagó Group should help boost both domestic and export businesses.
The new facility will specialise in cancer and hepatitis treatments and aims to make Pakistan self-sufficient in hepatitis drugs.
Ferozsons will be able to leverage Bagó’s global marketing network in order to develop sales overseas.
Weaknesses The company faces tough competition from multinational drugmakers, with large resources and strong sales networks.
Strict labour laws and a corporate income tax rate of 35%.
Company is still in need of a freer regulatory environment and greater support for local industry.
Opportunities New essential drugs list to only include generics.
Import duties on a number of APIs and raw materials slashed recently.
Positive economic performance would result in an increase in spending power.
Local firms will benefit if authorities introduce accelerated drug registrations for domestic players and deregulate pricing.
Threats Significant counterfeit drug industry will remain a threat to sales.
Depreciation of local currency making imports of raw materials more difficult.
Negative impact of high inflation and rising production costs on the company’s bottom line, given the government’s resistance to increase drug prices.
Strong regional competition in the field of generics.
Need to align local regulatory and IP laws with international standards.
Company Overview Ferozsons Laboratories was established in 1954 and was the first local pharmaceutical
company to be listed on Pakistan’s stock exchange. The company began as a producer of fine
chemicals and herbal remedies, although it has also signed contract manufacturing agreements
with companies such as the UK’s Boots, and more recently, US major Procter & Gamble.
Ferozsons’ manufacturing facilities are located in Nowshera, Pakistan, and are ISO 9001
certified.
Ferozsons’ collaboration with Bagó Group (Argentina) has been further strengthened by the
establishment of a biotech JV between the two firms – BF Biosciences. Construction of facilities
to house the JV in Lahore was completed by the middle of 2007. The plant, which will specialise
in hepatitis and cancer products, was being designed to meet EU and US FDA regulatory
standards. It should help the company to develop a significant export base in the coming years.
Product Portfolio Ferozsons’ core strengths lie in branded generics with a product portfolio including anti-infective,
gastrointestinal, cardiovascular and dermatological treatments. The company’s marketing team
comprises 230 representatives and managers and covers all of Pakistan. Ferozsons exports its
products to the Middle East, Africa and Central Asia. Packaging for these drugs is available only
in English – or in some instances, Russian.
In the course of FY08/09, the company launched four new products, which are well-supported
by marketing campaigns. The products in question are Aurora (rosuvastatin), for the treatment of
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high cholesterol, Orion (olmesartan), for the treatment of primary hypertension, hepatitis B drug
Centaurus (entecavir), and the functional dyspepsia treatment Dynetic (itopride).
Financial Performance Net sales totalled US$15.2mn for the FY07. The company’s revenue increased by 23% – almost
double overall market growth. In 2006, the company posted US$14.1mn in sales and US$2.9mn
in profit.
For the financial year ending June 2008, net sales were PRK932mn (US$15.4mn), up from
PRK922mn the previous year. Gross profit rose by 6.7% y-o-y to PKR541mn, with profit after tax
up by 8.5% y-o-y.
For nine months to March 2009, net sales rose to PKR790mn, up from for PRK692mn achieved
in the same period of 2008. The depreciation of local currency resulted in higher costs to the
company and therefore lower profits in the first nine months of 2009.
For the financial year ending June 2009, net sales were PRK1.085bn. Gross profit rose by 8%
y-o-y to PKR584mn, with profit after tax was down to PRK183mn, due to the local currency
depreciation and higher marketing costs. Pharmaceutical sales accounted for 67% of the total.
Company Data Sales (2008): PKR1.085bn (US$17.3mn)
Sales (2007): PKR932bn (US$15.2mn)
Leading Products Xavor (cardiovascular)
Omega (proton pump inhibitor)
Xolox (antiviral)
Amezole (anti-amoebic)
Proflox (antibacterial)
Novapressin (haemostatic)
Company Address Ferozsons Laboratories, 197-A the Mall 46000 Rawalpindi,Pakistan
Tel: +92 51 556 2155
Fax: +92 51 558 4195
www.ferozsons-labs.com
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Getz Pharma
Strengths One of the fasted growing pharmaceutical companies in Pakistan.
International presence in other frontier markets.
Major sales and marketing department in Pakistan.
Weaknesses Reliance on foreign-sourced raw materials.
Strong competition from multinationals in the branded sector.
Existence of substantial counterfeit trade.
Opportunities Positive economic performance and rising patient purchasing power.
Considerable demand for cheap generic medicines in the country.
Government and international encouragement for drug exports.
New essential list to only contain generic products.
Import duties on a number of APIs and raw materials slashed recently.
Threats Need to align local regulatory and IP laws with international standards.
Volatile political and economic climate.
Negative impact of high inflation and rising production costs on the company’s bottom line, given the government’s resistance to increasing drug prices.
Depreciation of local currency making imports of raw materials more difficult.
Strong regional competition in the field of generics.
Company Overview Getz Pharma was established in Pakistan in 1995 and has grown rapidly, expanding into
Vietnam (1999), Sri Lanka (2002) and the Philippines (2005). It now employs more than 1,500
people, and is headquartered in Dubai (UAE).
According to IMS Health, Getz was the sixth largest drugmaker in Pakistan in 2006, having
achieved average growth of 70% a year over the last five years. It has set itself the target of
becoming the second largest drugmaker in Pakistan by 2010.
Its GMP and WHO compliant manufacturing plant in Pakistan handles solid and liquid oral
dosage forms (tablets, capsules, syrups, suspensions and dry powder), and injections (sterile
liquid vials, sterile liquid ampoules, sterile dry powders and sterile lyophilized powders).
Getz Pharma is part of Getz Brothers Group of Companies, which distributes consumer
products, pharmaceutical products and medical devices in 23 countries. Getz has links with
Muller & Phipps, the largest distribution company in Pakistan. It also has the capacity to carry
out contract manufacturing for drug development and commercial manufacturing.
Product Portfolio Getz is focused on the branded generics market, with strengths in haepatology,
gastroenterology, diabetology, cardiology and infertility. It currently markets around 60 products,
including the hypertension drug Lopicard (amlodipine besilate), broad spectrum anti-infective
Ribazole (ribavirin) and the anti-coagulant Norplat (clopidogrel). Its portfolio also includes an
ARV Tenofo-B (tenofovir disproxil fumarate), which is prescribed in combination with at least two
other ARVs for the management of HIV-infected adults, but is also used as a hepatitis B
treatment.
Regional Operations In addition to its international operations in Vietnam, Sri Lanka and the Philippines, Getz has
partnered with a number of international companies, including Sicor Biotech in Switzerland,
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
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Lemery in Mexico, Sicor in Lithuania, SciClone Pharma in the USA, Tillotts Pharma AG in
Switzerland, E-Pharma in Italy, Jewim Pharmaceutical in China and Biocon in India.
Company Address Getz Pharma – Plant Operations 29-30/27, Korangi Industrial Area, Karachi 74900, Pakistan
Tel: +9221 111 111 511
Fax: +9221 506 0141
www.getzpharma.com
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Pacific Pharmaceuticals
Strengths One of the leading local drug manufacturers.
Only local producer with EU GMP certification.
Government protection of the local drug manufacturing industry.
Foreign partnerships, especially in relation to R&D activities.
Weaknesses Reliance on foreign-sourced raw materials.
Strong competition from multinationals in the branded sector.
Existence of substantial counterfeit trade.
Opportunities Positive economic performance and rising patient purchasing power.
Epidemiology-driven increased demand for medicines.
Considerable demand for cheap generic medicines in the country.
Government and international encouragement for drug exports.
Regional harmonisation and trade agreements.
New essential drugs list to only include generics.
Import duties on a number of APIs and raw materials slashed recently.
Threats Need to align local regulatory and IP laws with international standards.
Volatile political and economic climate.
Negative impact of high inflation and rising production costs on the company’s bottom line, given the government’s resistance to increasing drug prices.
Depreciation of local currency making imports of raw materials more difficult.
Strong regional competition in the field of generics.
Company Overview Pacific Pharmaceuticals, established in 1990, is the only local producer with EU GMP
certification. The company has manufacturing agreements with six foreign producers, namely
US Marion Merrell Dow (USA), Recordati Industria Chimicae Farmaceutica and Ravizza
Farmaceutici (Italy), Mucos Pharma (Germany), WK Buckley (Canada) and Applied Pharma
Research (Switzerland). Pacific Pharmaceuticals employs over 500 staff. The company is
committed to the development of new and innovative drugs for the treatment of TB and similar
diseases.
Product Portfolio Pacific Pharmaceuticals has 120 registered products, in the form of tablets, capsules, syrups,
and ointments. It is active in a number of therapeutic areas, including antibiotics, antifungals,
cardiovascular, psychotropics, antispasmodics and digestive enzymes. The company also
produces consumer care products, such as mouthwash and cough syrups.
Recently launched products include heart medicine Valvozid (bisoprolol), reflux remedy Plasil
(metoclopramide) and dyspepsia drug Plasenzym (metoclopramide with bromelain, pancreatin
and sodium dehydrochloate) in tablet form, as well as Olbetam (acipimox) capsules for
hyperlipidaemia. The company’s key R&D focus is antivirals, with two advanced compounds
(viramidine and remofovir) already progressing into clinical development.
Regional Operations Pacific Pharma exports to a number of foreign markets, with a focus on emerging Asian and
African countries: Kenya, Tanzania, Uganda, Sudan, Nigeria, Saudi Arabia, UAE, Vietnam, Sri
Lanka, Bangladesh, Hong Kong, Philippines, Uzbekistan, Kazakhstan and Azerbaijan.
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Company Address Pacific Pharmaceuticals, 30th Km, Multan Road Lahore, Pakistan
Tel: +92 42 7540 4913
Fax: + 92 42 754 1354
www.pacificpharmaceuticals.com
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Leading Multinational Manufacturers
GlaxoSmithKline (GSK)
Strengths The largest pharmaceutical company in Pakistan, double the size of its nearest competitor Abbott Laboratories.
Top three pharmaceutical products in terms of sales are GSK medicines.
Hold over 50% of both the public and private vaccines sectors.
Weaknesses Strong competition from low-cost generic equivalents, both legal and counterfeit.
Lack of reforms in government regulatory policy.
Strict labour laws and high corporate income tax rate.
Opportunities Pakistan recognised as one of the fastest growing economies in the world.
Economic growth resulting in an increase in consumer spending power.
Continued need for vaccine supplies benefits GSK, which has a substantial vaccines portfolio.
Sector modernisation initiatives.
Threats Weak intellectual property laws and a lack of their implementation.
Rising numbers of generics, which is a major barrier to multinational investment.
Increasing inflationary trends without consequent increases in the prices of drugs
Significant counterfeit drug industry.
Persistently high inflation in Pakistan negatively impacting financial performance, given the government’s resistance to increase drug prices.
Rising costs of raw and packaging materials having an adverse effect on the company’s bottom line.
New essential drugs list to only include generics.
Company Overview GlaxoSmithKline Pakistan was formed in 2002, as result of the global merger of the two
pharmaceutical giants, GlaxoWellcome and SmithKline Beecham. The local company, a merged
SmithKline and French, Beecham Pakistan and GlaxoWellcome Pakistan, is 79% owned by the
UK drug major.
GSK is the largest pharmaceutical company in Pakistan, with a growing export business to
Afghanistan. GSK Pakistan is headquartered in Karachi and employs 1,800 people. According to
its own 2008 annual report, GSK holds 11.39% of the market by value, 18.33% by volume, and
13.11% of the prescription market.
GSK is looking to increase research investment in diseases that affect the region. This will include
the resolution of challenges such as drug resistance and poor patient compliance. The work
undertaken focuses on malaria, tuberculosis, HIV/AIDS and vaccines, allowing GSK to address
the prevention and treatment of all three of the WHO’s top priority diseases. As a result, GSK is
currently examining conditions with regards to a major investment in R&D facilities in Asia – a
move that could add impetus to sales growth in the short term. In addition, the company has
made clear its interest in maximising its potential within the HIV/AIDS therapeutic segment.
Recent Activities In October 2008, Pakistan’s Daily Times quoted ‘well-informed sources’ within Pakistan’s
pharmaceutical industry that had seen confidential papers circulated by Bristol-Myers Squibb
stating that the company was seeking a buyer for its local operations. It was revealed in
December 2008 that GSK had bought BMS Pakistan for US$36.5mn.
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In December 2005, GSK joined the relief effort in Pakistan by donating 350,000 doses of
paediatric hepatitis A vaccine, Havrix Junior. The drug was used in relief camps in order to help
prevent the spread of disease and was part of a global relief operation undertaken by many
international organisations and companies.
GSK has recently reported promising progress on the development of a bird flu vaccine. In trials,
GSK’s potential vaccine stimulated a protective response in 80% of those who received it.
However, substantial further work is still needed, including testing the efficacy of the product
against mutated strains of the virus.
The biological division of GSK announced in March 2007 that it was spending PKR700mn
(US$11.5mn) on expanding its existing four manufacturing plants in Pakistan. Demonstrating the
significance of GSK’s announcement, the Pakistan Board of Investment estimates that foreign
pharmaceutical firms invested US$42mn in the country during 2006. Vaccines will be produced
for the domestic market, as well as for export to neighbouring countries.
Product Portfolio GSK’s primary activities are the manufacture, import and marketing of research-based
pharmaceutical (prescription drugs) and consumer healthcare products (OTC medicines, oral care
and nutritional care). Principal therapeutic areas include antibiotics and respiratory,
dermatological, gastro-intestinal and metabolic products. They also include analgesics, central
nervous system (CNS) products and vaccines. Leading products include Augmentin and Amoxil,
the sales of which reached PKR2bn (US$23.6mn) and PKR1bn (US$11.8mn) in 2008,
respectively. Betnovate was its leading brand by volume.
In Pakistan, GSK is looking to expand vaccine sales against the major killer diseases such as
hepatitis B, typhoid and rotavirus. GSK is also the preferred partner of Infant Immunisation
Programs worldwide supported by the Global Alliance for Vaccines and Immunization (GAVI),
WHO and the Pan-American Health Organisation (PAHO).
Meanwhile, the company’s performance will be boosted by the introduction of Seretide
(salmeterol + fluticasone propionate), a novel treatment for effective asthma control. In the course
of 2007, GSK Pakistan launched rotavirus vaccine Rotarix, a prostate treatment Avodart
(dutasteride), and Aerolin (salbutamol) for asthma. In 2008, new products included the anti-
thrombotic Arixtra (fondaparinux) and the vaccine Infanrix (diphtheria toxoid).
Financial Performance In 2007, GSK Pakistan posted PKR10.6bn in turnover, with profit reaching some PKR2.7mn. Its
product Augmentin (co-amoxiciclav) was the best-seller in terms of value, while Betnovate topical
steroid cream (betamethasone valerate and clioquinol) was the top-seller in the country with
regards to volume. Its paracetamol, Panadol, was the best-selling prescription medicine.
The abovementioned products continued to perform well into 2008, occupying the same positions.
Overall GSK Pakistan sales for 2008 topped PKR13.4bn (US$158mn), with profit before tax
reaching PKR3bn (US$35.4mn).
Company Data Sales (2008): US$213mn
Sales (2007): US$175mn
Sales (2006): US$167mn
Leading Products Amoxil (amoxicillin)
Ampiclox (ampicillin + cloxacillin)
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Augmentin (amoxicillin clavulanate)
Betnovate (betamethasone valerate)
Calpol (paracetamol)
Panadol (paracetamol)
Septran (sulfamethoxazole)
Seretide (salmeterol + fluticasone propionate)
Ventolin (salbutamol)
Zantac (ranitidine)
Company Address GlaxoSmithKline Pakistan B/63, Estate Avenue S.I.T.E., 75700 Karachi Pakistan
Tel: +92 21 256 1200
Fax: +92 21 256 4797
www.gsk.com.pk
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Pfizer
Strengths The largest pharmaceutical company in the world, with a significant regional presence and expertise.
Global scale to be further enhanced through Pfizer’s acquisition of Wyeth.
Direct manufacturing presence in Pakistan.
Diverse product portfolio.
Weaknesses Strong competition from low-cost generic equivalents, both legal and counterfeit.
Government’s failure to raise drug prices since 2001.
Lack of reforms in government regulatory policy.
Biased treatment in favour of the local industry, which can influence government policy.
Strict labour laws and high corporate income tax rates.
Opportunities Positive economic performance, rising spending power and continuing sector modernisation.
A government freight-subsidy scheme for drug exports and plans to reimburse 100% of consultancy costs on private-sector development of certified/accredited testing facilities.
Threats Government resistance to aligning domestic patent law with international standards.
Significant counterfeit drug industry.
Persistently high inflation – as well as rising costs of raw and packaging materials – in Pakistan negatively impacting financial performance, given the government’s resistance to increase drug prices.
A volatile political and economic climate in Pakistan.
New essential drugs list to only include generics.
Company Overview Pfizer has a long history in the Pakistani pharmaceutical market. Its local presence is comprised
of three separate companies, namely Pfizer Laboratories, Parke Davis & Company and
Pharmacia (Pvt.) Pakistan. Pfizer has two manufacturing facilities in the country in Karachi and
Islamabad. Operated to international manufacturing standards, the plants produce solids, semi-
solids (ointment and creams) and liquid dosage forms (syrups, suspensions and emulsions).
In March 2006, Pfizer filed a lawsuit against the state-run Philippine International Trading
Corporation (PITC) regarding plans for parallel imports of generic versions of the hypertension
drug, Norvasc (amlodipine besylate) manufactured in Pakistan. The Philippine patent on the drug
was set to expire in 2007.
Pfizer acquired Wyeth in early 2009. The smaller US company has manufacturing facilities in
Pakistan.
Product Portfolio Pfizer Pakistan is engaged in the production and distribution of ethical pharmaceuticals
(belonging to a number of leading therapeutic areas) and consumer healthcare products.
Leading Products Celebrex (celecoxib)
Lipitor (atorvastatin)
Diflucan (fluconazole)
Company Address Pfizer Laboratories Pakistan 12 Dockyard Road, West Wharf Karachi, Pakistan
Tel: +92 21 220 0121-5
Fax: +92 21 231 0063
www.pfizer.com.pk
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Abbott Laboratories
Strengths Significant local presence and expertise, second only to GSK.
Direct manufacturing presence in Pakistan.
Diverse product portfolio, including diagnostic goods.
Weaknesses Strong competition from low-cost generic equivalents, both legal and counterfeit.
Government’s failure to raise drug prices since 2001.
Lack of reforms in government regulatory policy.
Strict labour laws and high corporate income tax rates.
Opportunities Positive economic performance, rising spending power and continuing sector modernisation.
A government freight subsidy scheme for drug exports and plans to reimburse 100% of consultancy costs on private-sector development of certified/accredited testing facilities.
Threats Government resistance to aligning domestic patent law with international standards.
Persistently high inflation in Pakistan negatively impacting financial performance, given the government’s resistance to increase drug prices.
Rising costs of raw and packaging materials having an adverse effect on the company’s bottom line.
Significant counterfeit drug industry.
A volatile political and economic climate in Pakistan.
New essential drugs list to only include generics.
Company Overview Abbott Laboratories (Pakistan), based in Karachi, started its operations in 1948 as a subsidiary
and marketing affiliate of Abbott Laboratories, which holds a 79% stake in the company. The
company employs 1,360 staff in Pakistan. Abbott is the second-largest drug company in Pakistan,
after GSK.
The firm has three divisions: pharmaceuticals, nutritional and others. Pharmaceuticals accounts
for 85% of turnover.
Recent Activities Abbott recently disclosed plans to invest US$0.75mn in the expansion of its existing plant in the
Landhi industrial area of Karachi. The expansion will allow the company to have its facility
certified by the US FDA, which will enhance its ability to export to developed countries.
The company is working to expand its export market and currently exports to seven countries,
with the bulk going to Sri Lanka. The company expects a significant increase of exports to African
and Asian countries.
Product Portfolio The company makes, imports and markets branded pharmaceutical, nutritional, diagnostic,
hospital and consumer products. Leading products include Erythrocin, Enoxabid, Epival, Loftyl
and Urixin. Others are Bremax (tulobuterol), Klaricid (clarithromycin), Ensure (meal replacement
shakes), and Flexin.
Financial Performance Abbott reported local sales of PKR6.55bn (US$104mn) in 2007. In Q308, pharmaceutical sales
rose 9%, while the sales of nutritionals and other products rose by 23%. Profit after tax reached
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
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PKR298.8mn, up by 3% y-o-y. Domestic sales for the quarter were PKR1.9bn, with exports rising.
For the year to date, domestic sales were PKR5bn and exports PKR95mn. In full-year 2008,
sales topped PKR7bn (US$111mn), with operating profits falling to PKR548mn, down from
PKR1.75bn in the previous year, due to the depreciation of local currency.
In Q109, overall sales rose by 24% y-o-y, while sales of pharmaceuticals increased by 26% y-o-y.
In H109, domestic sales reached PKR3.722bn, up from PKR3.265bn on H108. In the same
period, exports rose from PRK45.301mn to PKR168.255mn. In Q309, pharmaceutical sales –
which account for 80% of the company’s total business – continued to grow (by 19% y-o-y). At the
same time, sales of nutritionals and other products also posted an increase, of 11% y-o-y.
Company Data Sales (2008): US$111mn
Sales (2007): US$104mn
Leading Products Erythrocin (erythromicyn)
Enoxabid (enoxacin)
Epival (valproic acid)
Loftyl (bulfomedil)
Urixin (pipemidic acid)
Flexin (indomethacin)
Company Address Abbott Laboratories (Pakistan) Ltd POB 7229 Karachi 3, Pakistan
Tel: +92 21 501 5045
Fax: +92 21 501 3245
www.abbott.com.pk
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Novartis
Strengths One of the fastest growing global pharmaceutical companies, ranked fifth largest in the world.
Offers a full spectrum of therapeutic products.
Diverse manufacturing presence, including antibiotics, vitamins, OTCs and consumer healthcare products.
Weaknesses Strong competition from low-cost generic equivalents, both legal and counterfeit.
Government’s failure to raise drug prices since 2001.
Lack of reforms in government regulatory policy.
Biased treatment in favour of the local industry, which can influence government policy.
Strict labour laws and a high corporate income tax rate.
Opportunities Positive economic performance, rising spending power and continuing sector modernisation.
A government freight subsidy scheme for drug exports and plans to reimburse 100% of consultancy costs on private-sector development of certified/accredited testing facilities.
Potential to expand in the generics market.
Threats Government resistance to aligning domestic patent law with international standards.
Significant counterfeit drug industry and the lack of improvement in this field.
A volatile political and economic climate in Pakistan.
New essential drugs list to only include generics.
Persistently high inflation in Pakistan negatively impacting financial performance, given the government’s resistance to increase drug prices.
Rising costs of raw and packaging materials having an adverse effect on the company’s bottom line.
Company Overview Novartis Pakistan is a subsidiary of the Switzerland-based Novartis International AG. Novartis
was established following the merger of Sandoz and Ciba-Geigy in 1997. The firm produces and
distributes speciality pharmaceuticals, consumer healthcare and generic products. The group’s
other activities include the distribution of dyes and chemicals, agrochemicals, additives, plastics
and pigments. The company also acts as an indenting agent for a range of products for its
associates and other companies. Novartis has one fully owned subsidiary, Farm Chemicals
(Private).
Product Portfolio Novartis’ products include medicines in transplantation and immunology, cardiovascular
diseases, diseases of the CNS, Parkinson’s, skin allergies, OTC and ophthalmic medications.
The company has a strong presence in the Pakistan market, with many of the following products
maintaining a leadership position in their respective segments: Lamisil, Clozaril (clozapine),
Diovan, Lescol (fluvastatin), Aredia (pamidronate disodium), Navoban, Sandostatin
(simvastatin), Neoral (cyclosporin), Femara (letrozole), Sandoglobulin (immune globulin),
Miacalcic, Lentaron (formestane).
Leading Products Diovan (valsartan)
Navoban (tropisetron)
Miacalcic (calcitonin)
Lamisil (terbinafine)
Simulect (basiliximab)
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Company Address Novartis Pakistan Ltd 15 West Wharf 74000 Karachi Pakistan
Tel: +92 21 231 3386
Fax: +92 21 231 1009
www.novartis.com
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Sanofi-Aventis
Strengths The third largest drug manufacturer in the world.
Broad portfolio of products, including antibiotics, vitamins and OTCs.
Present in the generics as well as the vaccines segment.
Weaknesses Strong competition from low-cost generic equivalents, both legal and counterfeit.
Government’s failure to raise drug prices since 2001.
Lack of reforms in government regulatory policy.
Strict labour laws and a corporate income tax rate of 35%.
Opportunities Positive economic performance, rising spending power and continuing sector modernisation.
A government freight subsidy scheme for drug exports and plans to reimburse 100% of consultancy costs on private-sector development of certified/accredited testing facilities.
Rising demand for generics.
New essential drugs list to only include generics.
Threats State resistance to aligning domestic patent law with international standards.
Significant counterfeit drug industry and the lack of improvement in this field.
A volatile political and economic climate in Pakistan.
Company’s profit and investment vulnerable to currency fluctuations.
Company Overview As a result of the merger with Aventis in H204, Aventis’ Pakistan operations have become a part
of the Sanofi-Aventis group. The merger has created the third largest drug company in the
world, which gives Sanofi-Aventis a strong position in the Pakistani market. The Pakistani
company is a subsidiary of Aventis Pharma Holding. In 2008, the company employed over 1,200
staff.
Product Portfolio Sanofi-Synthélabo has expertise in four major therapeutic areas: cardiovascular/thrombosis,
CNS, oncology and internal medicine. Its principal products include Haemacell (blood
substitute), Novalgin, Lasix (furosemide), Cidomycin, Tarivid (ofloxacin) tablets, Targocid
(teicoplanin) and Tavanic. Meanwhile, Sanofi-Aventis has developed a cervical cancer vaccine,
Gardasil, which Pakistani doctors hope will soon be available in the country. Cervical cancer
rates are rising in Pakistan, although the current price of a Gardasil injection – around PKR5,000
(US$82.20) – may prove too expensive for many patients.
Financial Performance In 2008, Sanofi Pakistan reported net sales of PKR4.3bn (US$69mn), +11.56% y-o-y. Amaryl
(glimepiride) posted a 10% growth, while Aprovel (irbesartan) sales reached PKR66.9mn. Sales
of Claforan (cefotaxime) were up by 9%, to PKR432.9mn.
In Q109, sales topped PKR1.185bn, compared with PKR874.9mn achieved in Q108, although
profit before taxation was negatively impacted by currency devaluation. In Q109, it fell to
PKR8.6mn, down from PKR20.1mn posted for the same period of 2008.
Company Data Sales (2008): US$69mn
Sales (2007): US$63mn
Sales (2006): US$62mn
Leading Products Novalgin (famotidine)
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Cidomycin (gentamicin sulphate)
Tavanic (levofloxacin)
Company Address Sanofi-Aventis Pakistan Plot 23, Sector 22 Korangi Industrial Area Hoechst House, 74900 Karachi,Pakistan
Tel: +92 21 506 0221-35
Fax: +92 21 506 0358
www.sanofi-aventis.com.pk
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Wyeth
Strengths Diverse presence, including vaccines.
Financial capability, business portfolio and industry experience to take advantage of the potential the Pakistani pharmaceutical market offers.
Global scale to be further enhanced through Pfizer’s acquisition of Wyeth.
Weaknesses Strong competition from low-cost generic equivalents, both legal and counterfeit.
Government’s failure to raise drug prices since 2001.
Lack of reforms in government regulatory policy.
Strict labour laws and a corporate income tax rate of 35%.
Opportunities Positive economic performance, rising spending power and continuing sector modernisation.
A government freight subsidy scheme for drug exports and plans to reimburse 100% of consultancy costs on private-sector development of certified/accredited testing facilities.
Threats Government resistance to aligning domestic patent law with international standards.
Significant counterfeit drug industry.
Volatile political and economic climate in Pakistan.
New essential drugs list to only include generics.
Company Overview Wyeth (Pakistan) – formerly known as Cyanamid Pakistan, Wyeth-Lederle Division – was created
from the merger of Cyanamid and Wyeth-Lederle in 1995. The company, based in Karachi,
manufactures pharmaceuticals and claims to be one of the top 10 producers in the country.
Employing about 900 people, Wyeth generates annual sales of about US$40mn. Pharmaceuticals
comprise about 80% of the company’s net sales. Wyeth’s main product areas are anti-
tuberculosis products, antibiotics, vitamins, antacids, anti-diarrhoeals, CNS treatments, oral
contraceptives, hormone replacement therapy, and cough and cold remedies.
In 2000, the Export Promotion Bureau identified the company as the country’s leading
pharmaceutical exporter. Exports account for about 15% of total production and the main markets
are Russia, South Africa and the Philippines.
Recent Activities In early 2009, it emerged that Pfizer was to acquire Wyeth. In Pakistan, Wyeth’s TB products
manufactured locally came under WHO scrutiny in April 2009, with the organisation stating that it
cannot guarantee their quality, as Wyeth Pakistan changed storing conditions and introduced new
APIs without WHO consultation. Consequently, four products have been suspended. A 2005
WHO inspection of Wyeth Pakistan found irregularities, although it is unclear whether they have
been addressed.
Product Portfolio Wyeth’s product portfolio in Pakistan includes an anti-infective Tygacil (tigecycline) and a
contraceptive Premarin (conjugated oestrogens), both of which were launched in the course of
2008.
Financial Performance During 2006, sales reached PKR1.95bn (US$31mn), up 9.5% on the previous year’s figure. Profit
similarly increased to reach US$6mn. In the following two years, Wyeth Pakistan posted
PKR2.11bn (US$35bn) and PKR2.38bn (US$38) in sales. Profit after tax fell in 2008, due to
unfavourable exchange rate fluctuations.
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For the first three months of 2009 (ending March), net sales topped PKR727.9mn, rising from
PKR557.3mn in Q108. Gross profit rose to around PRK206mn, from PKR175mn, although Q109
profit after taxation was lower than in Q108.
Company Address Wyeth (Pakistan) Ltd, S-33 Hawkes Bay Road, S.I.T.E. 75730 Karachi, Pakistan
Tel: +92 21 256 7411
Fax: +92 21 256 4428
www.wyethpakistan.com
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-15.0 -10.0 -5.0 0.0 5.0 10.0 15.0
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75+
Population by age, 2005
Male Female
-30.0 -20.0 -10.0 0.0 10.0 20.0 30.0
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75+
Population by age, 2005:2030 (total)
2030 2005
Country Snapshot: Pakistan Demographic Data
Section 1: Population
Figures in millions. Source: UN Population Division
Table: Demographic Indicators, 2005-2030
2005 2010f 2020f 2030f
Dependent population, % of total 42.4 40.1 36.3 34.2
Dependent population, total, ‘000 66,107 69,955 75,711 82,256
Active population, % of total 57.5 59.8 63.6 65.7
Active population, total, ‘000 89,663 104,386 132,605 158,020
Youth population*, % of total 39.0 36.6 31.4 27.8
Youth population*, total, ‘000 60,793 63,853 65,567 66,902
Pensionable population, % of total 3.4 3.5 4.8 6.3
Pensionable population, total, ‘000 5,314 6,102 10,144 15,354
f = forecast. * Youth = under 15. Source: UN Population Division
Table: Rural/Urban Breakdown, 2005-2030
2005 2010f 2020f 2030f
Urban population, % of total 34.8 36.9 42.8 49.8
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Rural population, % of total 65.2 63.1 57.2 50.2
Urban population, total, ‘000 54,960 64,711 89070 119652
Rural population, total, ‘000 102,975 110,467 119245 120624
Total population, ‘000 157,935 175,178 208,315 240,276
f = forecast. Source: UN Population Division
Section 2: Education and Healthcare
Table: Education, 2002-2005
2002-2003 2004-2005
Gross enrolment, primary, % 82 86
Gross enrolment, secondary, % 27 26
Gross enrolment, tertiary, % 3 4
Gross enrolment is the number of pupils enrolled in a given level of education regardless of age expressed as a percentage of the population in the theoretical age group for that level of education. Source: UNESCO
Table: Vital Statistics, 2005-2030
2005 2010f 2020f 2030f
Life expectancy at birth, males (years) 62.7 64.6 68.4 70.8
Life expectancy at birth, females (years) 63.1 64.9 69.1 72.0
Life expectancy estimated at 2005. f = forecast. Source: UNESCO
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Table: Employment Indicators, 2001-2006
2001 2002 2003 2004 2005 2006
Economically active population, ‘000 42,388 42,388 na 45,508 na 50,055
– % change y-o-y 6 na -100 na na -100.00
– % of total population 30 29 na 30 na 32
Employment, ‘000 37,481 38,882 39,852 42,009 42,916 46,952
– % change y-o-y 2 4 2 5 5 9
– male 32,233 33,189 34,017 34,903 34,903 37,808
– female 5,248 5,693 5,835 7,106 7,106 9,144
– female, % of total 14 15 15 17 17 19
Total employment, % of labour force 88 92 na 92 92 94
Unemployment, ‘000 3,181 3,506 3,594 3,499 3,499 3,103
– male 2,082 2,381 2,441 2,461 2,461 2,166
– female 1,099 1,125 1,153 1,038 1,038 937
– unemployment rate, % 8 8 8 8 8 6
na = not available. Source: ILO
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Section 3: Labour Market And Spending Power
Table: Average Annual Manufacturing Wages, 2000-2012
2000 2007e 2008f 2009f 2010f 2011f 2012f
Local currency 35,772 79,561 88,113 97,143 106,673 112,996 123,258
Wage growth, % y-o-y 4.0 11.3 10.7 10.2 9.8 5.9 9.0
US$ 653 1,311 1,442 1,567 1,701 1,788 1,941
e/f = BMI estimate/forecast. Source: ILO, BMI
Table: Consumer Expenditure, 2000-2012 (US$)
2000 2007e 2008f 2009f 2010f 2012f
Consumer expenditure per capita 410 684 722 766 809 902
Poorest 20%, expenditure per capita 191 318 336 356 376 420
Richest 20%, expenditure per capita 826 1,377 1,454 1,544 1,630 1,818
Richest 10%, expenditure per capita 1,078 1,798 1,898 2,016 2,127 2,373
Middle 60%, expenditure per capita 344 574 606 644 679 758
Purchasing power parity
Consumer expenditure per capita 1,575 2,217 na na na na
Poorest 20%, expenditure per capita 732 1031 na na na na
Richest 20%, expenditure per capita 3,173 4,467 na na na na
Richest 10%, expenditure per capita 4,141 5,830 na na na na
Middle 60%, expenditure per capita 1,323 1,862 na na na na
e/f = estimate/forecast. na = not available. Source: World Bank, Country data; BMI calculation
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 78
BMI Methodology
How We Generate Our Pharmaceutical Industry Forecasts
Pharmaceutical sub-sector forecasts are generated using a top-down approach from BMI’s Drug
Expenditure Forecast Model. The semi-automated tool incorporates historic trends, macroeconomic
variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market.
The following elements are fed into the model:
BMI’s historic pharmaceutical market data, which has been collected from a range of sources
including:
– regulatory agencies
– pharmaceutical trade associations
– company press releases and annual reports
– subscription information providers
– local news sources
– information from market research firms that is in the public domain.
Data that has been validated by BMI’s pharmaceutical and healthcare analysts using a composite
approach, which scores data sources by reliability in order to ensure accuracy and consistency of
historic data.
Five key macroeconomic and demographic variables, which have been demonstrated, through
regression analysis, to have the greatest influence on the pharmaceutical market. These have been
forecast by BMI’s Country Risk analysts using an in-house econometric model.
The burden of disease in a country. This is forecast in disability-adjusted life years (DALYs) using
BMI’s ‘Burden of Disease Database’, which is based on the World Health Organization’s burden of
disease projections and incorporates World Bank and IMF data.
Subjective input and validation by BMI’s pharmaceutical and healthcare analysts to take into account
key events that have affected the pharmaceutical market in the recent past or that are expected to have
an impact on the country’s pharmaceutical market over the next five years. These may include
policy/reimbursement decisions, new product launches or increased competition from generics.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 79
Pharmaceutical Business Environment Ratings Methodology
Our approach in assessing the Pharmaceutical Business Environment Ratings is threefold. First, we have
defined the risks rated to capture the operational dangers to companies operating in this industry. Second,
we attempt where possible to identify objective indicators that may serve as proxies for issues/trends.
Finally, we use BMI’s proprietary Country Risk Ratings (CRR) to ensure only the aspects most relevant
to the industry are included. Overall, the system, which is integrated with all the industries covered by
BMI, offers an industry-leading insight into the prospects/risks for companies across the globe.
Ratings Overview
Ratings System
Conceptually, the new ratings system divides into two distinct areas:
Limits of Potential Returns: Evaluation of sector’s size and growth potential in each state, and also
broader industry/state characteristics that may inhibit its development.
Risks to Realisation of Returns: Evaluation of industry-specific dangers and those emanating from the
state’s political/economic profile that call into question the likelihood of anticipated returns being realised
over the assessed time period.
Indicators The following indicators have been used. Overall, the rating uses three subjectively measured indicators,
and 41 separate indicators/datasets.
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 80
Table: Pharmaceutical Business Environment Indicators
Indicator Rationale
Limits of Potential Returns
Market Structure
Market expenditure, US$bn Denotes breadth of pharmaceutical market. Large markets score higher than smaller ones
Market expenditure per capita, US$ Denotes depth of pharmaceutical market. High value markets score better than low value ones
Sector value growth, % y-o-y Denotes sector dynamism. Scores based on annual average growth over five-year forecast period
Country Structure
Urban-rural split Urbanisation is used as a proxy for development of medical facilities. Predominantly rural states therefore score lower
Pensionable population, % of total Proportion of the population over 65 years of age. States with aging populations tend to have higher per-capita expenditure
Population growth, 2003-2015 Fast-growing states suggest better long-term trend growth for all industries
Overall score for country structure is also affected by the coverage of the power transmission network across the state
Risks to Realisation of Returns
Market Risks
Intellectual property (IP) laws Markets with fair and enforced IP regulations score higher than those with endemic counterfeiting
Policy/reimbursements Markets with full and equitable access to modern medicines score higher than those with minimal state support for healthcare
Approvals process High scores awarded to markets with a swift appraisal system. Those that are weighted in favour of local industry or are corrupt score lower
Country Risk
Economic structure Rating from CRR evaluates the structural balance of the economy, noting issues such as reliance on single sectors for exports/growth, and past economic volatility
Policy continuity Rating from CRR evaluates the risk of a sharp change in the broad direction of government policy
Bureaucracy Rating from CRR denotes ease of conducting business in the state
Legal framework Rating from CRR denotes the strength of legal institutions in each state. Security of investment can be a key risk in some emerging markets
Corruption Rating from CRR denotes the risk of additional illegal costs/possibility of opacity in tendering/business operations affecting companies’ ability to compete
Source: BMI
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 81
Weighting
Given the number of indicators/datasets used, it would be wholly inappropriate to give all sub-
components equal weight. Consequently, the following weight has been adopted.
Table: Weighting Of Components
Component Weighting
Limits of Potential Returns 60%
– Pharmaceutical Market – 75%
– Country Structure – 25%
Risks to Realisation of Returns 40%
– Market Risks – 60%
– Country Risk – 40%
Source: BMI
Sources
Sources used include national industry associations, government ministries, global health organisations,
officially released pharmaceutical company results and international and national news agencies.
© Business Monitor International Ltd Page 82
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
Tabl
e: P
akis
tan
– D
rug
Expe
nditu
re In
dica
tors
, His
toric
al D
ata
and
Fore
cast
s
2005
2006
2007
2008
2009
2010
f20
11f
2012
f20
13f
2014
f20
15f
2016
f20
17f
2018
f20
19f
Dru
g ex
pend
iture
(US
$bn)
1.4
1 1
.61
1.8
4 1
.80
1.6
2 1
.64
1.6
4 1
.67
1.7
2 1
.78
1.8
5 1
.92
2.0
0 2
.08
2.1
2 D
rug
expe
nditu
re (P
KR
bn)
83.
90
96.
70
112
.30
126
.70
132
.10
144
.33
155
.55
167
.67
181
.13
196
.39
212
.25
230
.04
249
.97
272
.22
290
.08
Dru
g ex
pend
iture
per
cap
ita (U
S$)
9.2
4 1
0.33
1
1.61
1
1.20
9
.88
9.8
3 9
.65
9.6
6 9
.77
9.9
6 1
0.13
1
0.35
1
0.59
1
0.86
1
0.88
D
rug
expe
nditu
re %
GD
P 1
.29
1.2
7 1
.30
1.2
3 1
.01
0.9
7 0
.95
0.9
4 0
.93
0.9
2 0
.90
0.8
8 0
.86
0.8
5 0
.81
f = fo
reca
st. S
ourc
e:IM
S H
ealth
Asi
a, P
akis
tan
Phar
mac
eutic
al M
anuf
actu
rers
Ass
ocia
tion
(PPM
A), B
MI
Tabl
e: P
akis
tan
– H
ealth
Exp
endi
ture
Indi
cato
rs, H
isto
rical
Dat
a an
d Fo
reca
sts
2005
2006
2007
2008
2009
2010
f20
11f
2012
f20
13f
2014
f
Hea
lth e
xpen
ditu
re (U
S$b
n)
2.3
0 2
.56
2.8
8 2
.84
2.7
7 2
.92
3.0
7 3
.30
3.5
8 3
.89
Hea
lth e
xpen
ditu
re (P
KR
bn)
136
.93
154
.21
176
.32
199
.77
226
.52
257
.04
291
.89
331
.72
377
.28
429
.42
Hea
lth e
xpen
ditu
re (%
GD
P)
2.1
1 2
.02
2.0
3 1
.94
1.7
3 1
.74
1.7
9 1
.86
1.9
5 2
.01
Hea
lth e
xpen
ditu
re p
er c
apita
(US
$) 1
5.08
1
6.48
1
8.23
1
7.65
1
6.94
1
7.50
1
8.12
1
9.11
2
0.34
2
1.77
P
ublic
sec
tor h
ealth
exp
endi
ture
(US
$bn)
0
.40
0.4
2 0
.48
0.4
6 0
.44
0.4
6 0
.47
0.5
0 0
.54
0.5
8 P
ublic
sec
tor h
ealth
exp
endi
ture
(%)
17.
51
16.
45
16.
77
16.
31
15.
92
15.
61
15.
36
15.
18
15.
06
15.
00
f = fo
reca
st. S
ourc
e: W
orld
Hea
lth O
rgan
izat
ion
(WH
O),
BMI
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 83 © Business Monitor International Ltd Page xx
Pakistan Pharmaceuticals & Healthcare Report Q2 2010
Tabl
e: P
akis
tan
– Pr
escr
iptio
n M
arke
t Ind
icat
ors,
His
toric
al D
ata
and
Fore
cast
s (U
S$m
n un
less
oth
erw
ise
stat
ed)
2006
2007
2008
2009
2010
f20
11f
2012
f20
13f
2014
f20
15f
2016
f20
17f
2018
f20
19f
Pre
scrip
tion
drug
mar
ket
(US
$bn)
1
.29
1.4
8 1
.45
1.3
0 1
.31
1.3
1 1
.34
1.3
8 1
.43
1.4
8 1
.54
1.6
1 1
.68
1.7
1
Pre
scrip
tion
drug
mar
ket
(PK
Rbn
) 7
7.75
9
0.37
1
01.8
2 1
06.0
5 1
15.7
9 1
24.7
5 1
34.4
7 1
45.3
2 1
57.6
7 1
70.5
8 1
85.1
3 2
01.5
2 2
19.6
8 2
34.3
9
Pre
scrip
tion
drug
mar
ket a
s %
tota
l 8
0.41
8
0.47
8
0.36
8
0.28
8
0.23
8
0.20
8
0.20
8
0.23
8
0.28
8
0.37
8
0.48
8
0.62
8
0.70
8
0.80
Alim
enta
ry tr
act a
nd m
etab
o-lis
m d
rug
sale
s (P
KR
mn)
8,9
87.5
2 10
,446
.19
11,7
69.6
2 12
,258
.73
13,3
84.3
7 14
,420
.63
15,5
43.9
7 16
,798
.14
18,2
25.5
4
Blo
od a
nd b
lood
form
ing
orga
n dr
ug s
ales
(PK
Rm
n) 7
,348
.27
8,5
40.9
0 9
,622
.94
10,0
22.8
4 10
,943
.18
11,7
90.4
3 12
,708
.88
13,7
34.3
0 14
,901
.35
Car
diov
ascu
lar s
yste
m d
rug
sale
s (P
KR
mn)
15,2
34.7
5 17
,707
.34
19,9
50.6
8 20
,779
.77
22,6
87.8
5 24
,444
.41
26,3
48.5
8 28
,474
.52
30,8
94.1
1
Der
mat
olog
ical
dru
g sa
les
(PK
Rm
n) 1
,894
.20
2,2
01.6
2 2
,480
.55
2,5
83.6
3 2
,820
.87
3,0
39.2
7 3
,276
.02
3,5
40.3
5 3
,841
.19
Gen
ito-u
rinar
y sy
stem
and
sex
ho
rmon
e sa
les
(PK
Rm
n) 3
,046
.64
3,5
41.1
1 3
,989
.73
4,1
55.5
3 4
,537
.11
4,8
88.3
8 5
,269
.18
5,6
94.3
2 6
,178
.19
Sys
tem
ic h
orm
onal
pre
para
-tio
n, e
xclu
ding
sex
hor
mon
es
and
insu
lins,
sal
es (P
KR
mn)
2,0
46.6
7 2
,378
.84
2,6
80.2
2 2
,791
.60
3,0
47.9
3 3
,283
.92
3,5
39.7
2 3
,825
.33
4,1
50.3
8
Ant
i-inf
ectiv
e fo
r sys
tem
ic u
se
sale
s (P
KR
mn)
8,3
98.0
8 9
,761
.09
10,9
97.7
2 11
,454
.75
12,5
06.5
7 13
,474
.87
14,5
24.5
3 15
,696
.44
17,0
30.2
3
Ant
ineo
plas
tic a
nd im
mu-
nom
odul
atin
g ag
ent s
ales
(P
KR
mn)
7,4
58.7
6 8
,669
.31
9,7
67.6
3 10
,173
.54
11,1
07.7
1 11
,967
.71
12,8
99.9
6 13
,940
.80
15,1
25.4
0
Mus
culo
skel
etal
sys
tem
dru
g sa
les
(PK
Rm
n) 3
,828
.90
4,4
50.3
3 5
,014
.14
5,2
22.5
2 5
,702
.07
6,1
43.5
4 6
,622
.11
7,1
56.4
1 7
,764
.52
Ner
vous
sys
tem
dru
g sa
les
(PK
Rm
n)
10,8
67.7
2
12,6
31.5
5
14,2
31.8
4
14,8
23.2
7
16,1
84.4
0
17,4
37.4
5
18,7
95.7
8
20,3
12.3
3
22,0
38.3
4
Ant
ipar
asiti
c pr
oduc
t, in
sec-
ticid
e an
d re
pelle
nt s
ales
(P
KR
mn)
94.
86
110
.25
124
.22
129
.38
141
.26
152
.20
164
.06
177
.29
192
.36
Res
pira
tory
sys
tem
dru
g sa
les
(PK
Rm
n) 6
,132
.15
7,1
27.4
0 8
,030
.37
8,3
64.0
8 9
,132
.11
9,8
39.1
5
10,6
05.5
9
11,4
61.3
1
12,4
35.2
2
Sen
sory
org
an d
rug
sale
s (P
KR
mn)
1,2
70.6
3 1
,476
.85
1,6
63.9
5 1
,733
.10
1,8
92.2
4 2
,038
.74
2,1
97.5
5 2
,374
.86
2,5
76.6
6
Oth
er p
resc
riptio
n dr
ug s
ales
(P
KR
mn)
1,1
43.0
3 1
,328
.55
1,4
96.8
6 1
,559
.07
1,7
02.2
3 1
,834
.02
1,9
76.8
8 2
,136
.39
2,3
17.9
3
f = fo
reca
st. S
ourc
e:IM
S H
ealth
Asi
a, P
akis
tan
Phar
mac
eutic
al M
anuf
actu
rers
Ass
ocia
tion
(PPM
A), B
MI
Pakistan Pharmaceuticals & Healthcare Report Q2 2010
© Business Monitor International Ltd Page xx © Business Monitor International Ltd Page 84
Pakistan Pharmaceuticals & Healthcare Report Q2 2010
Tabl
e: P
akis
tan
– O
TC D
rugs
Mar
ket I
ndic
ator
s, H
isto
rical
Dat
a an
d Fo
reca
sts
(US$
mn
unle
ss o
ther
wis
e st
ated
)
2005
2006
2007
2008
2009
2010
f20
11f
2012
f20
13f
2014
f20
15f
2016
f20
17f
2018
f20
19f
OTC
mar
ket (
US
$bn)
0
.30
0.3
3 0
.38
0.4
1 0
.32
0.3
2 0
.32
0.3
3 0
.34
0.3
5 0
.36
0.3
7 0
.39
0.4
0 0
.41
OTC
mar
ket (
PK
Rbn
) 1
7.57
1
9.59
2
2.96
2
9.01
2
6.05
2
8.54
3
0.80
3
3.20
3
5.81
3
8.72
4
1.67
4
4.91
4
8.45
5
2.54
5
5.70
OTC
mar
ket a
s %
tota
l mar
ket
19.
80
19.
59
19.
53
19.
64
19.
72
19.
77
19.
80
19.
80
19.
77
19.
72
19.
63
19.
52
19.
38
19.
30
19.
20
Ana
lges
ics
(PK
Rm
n)4,
344.
56
4,84
4.87
5,
676.
81
7,17
2.68
6,
440.
94
7,05
6.54
7,
615.
75
8,20
8.64
8,
855.
22
9,57
3.97
Cou
gh &
col
d dr
ugs
(PK
Rm
n)3,
279.
61
3,65
7.28
4,
285.
29
5,41
4.49
4,
862.
12
5,32
6.82
5,
748.
95
6,19
6.51
6,
684.
60
7,22
7.16
Dig
estiv
es (P
KR
mn)
3,41
2.82
3,
805.
82
4,45
9.34
5,
634.
40
5,05
9.59
5,
543.
18
5,98
2.45
6,
448.
19
6,95
6.10
7,
520.
70
Ski
n tre
atm
ents
(PK
Rm
n)2,
592.
23
2,89
0.74
3,
387.
13
4,27
9.65
3,
843.
05
4,21
0.36
4,
544.
02
4,89
7.77
5,
283.
56
5,71
2.41
Vita
min
s an
d m
iner
als
(PK
Rm
n)3,
062.
47
3,41
5.13
4,
001.
57
5,05
6.00
4,
540.
20
4,97
4.13
5,
368.
31
5,78
6.25
6,
242.
02
6,74
8.66
Oth
er O
TCs
(PK
Rm
n) 8
78.5
1 9
79.6
8 1,
147.
90
1,45
0.38
1,
302.
42
1,42
6.90
1,
539.
97
1,65
9.86
1,
790.
61
1,93
5.94
f = fo
reca
st. S
ourc
e:IM
S H
ealth
Asi
a, P
akis
tan
Phar
mac
eutic
al M
anuf
actu
rers
Ass
ocia
tion
(PPM
A), B
MI
Tabl
e: P
akis
tan
– Pa
tent
ed D
rugs
Mar
ket I
ndic
ator
s, H
isto
rical
Dat
a an
d Fo
reca
sts
2005
2006
2007
2008
2009
2010
f20
11f
2012
f20
13f
2014
f20
15f
2016
f20
17f
2018
f20
19f
Pat
ente
d m
arke
t (U
S$b
n) 0
.19
0.2
2 0
.26
0.2
5 0
.23
0.2
4 0
.24
0.2
5 0
.26
0.2
8 0
.29
0.3
1 0
.33
0.3
5 0
.37
Pat
ente
d m
arke
t (P
KR
bn)
28.
36
34.
07
40.
60
40.
91
37.
80
39.
48
40.
81
43.
05
45.
93
49.
45
53.
28
57.
54
62.
34
67.
36
71.
29
Pat
ente
d m
arke
t as
% to
tal m
arke
t 1
3.20
1
3.66
1
3.97
1
4.11
1
4.28
1
4.48
1
4.70
1
4.94
1
5.22
1
5.52
1
5.84
1
6.20
1
6.58
1
6.90
1
7.24
f =
fore
cast
. Sou
rce:
IMS
Hea
lth A
sia,
Pak
ista
n Ph
arm
aceu
tical
Man
ufac
ture
rs A
ssoc
iatio
n (P
PMA)
, BM
I
Tabl
e: P
akis
tan
– G
ener
ic D
rugs
Mar
ket I
ndic
ator
s, H
isto
rical
Dat
a an
d Fo
reca
sts
2005
2006
2007
2008
2009
2010
f20
11f
2012
f20
13f
2014
f20
15f
2016
f20
17f
2018
f20
19f
Gen
eric
s m
arke
t (U
S$b
n)
0.9
4 1
.07
1.2
2 1
.19
1.0
7 1
.08
1.0
7 1
.09
1.1
2 1
.15
1.1
9 1
.23
1.2
8 1
.33
1.3
5 G
ener
ics
mar
ket (
PK
Rbn
)14
3.93
16
6.54
19
3.20
19
2.03
17
4.69
17
9.35
18
1.91
18
8.02
19
6.23
20
6.40
21
6.98
22
8.34
24
0.78
25
4.24
26
2.76
G
ener
ics
mar
ket a
s %
tota
l mar
ket
67.
00
66.
75
66.
50
66.
25
66.
00
65.
75
65.
50
65.
26
65.
01
64.
77
64.
52
64.
28
64.
04
63.
80
63.
56
f = fo
reca
st. S
ourc
e:IM
S H
ealth
Asi
a, P
akis
tan
Phar
mac
eutic
al M
anuf
actu
rers
Ass
ocia
tion
(PPM
A), B
MI
Pakistan Pharmaceuticals & Healthcare Report Q3 2010
© Business Monitor International Ltd Page 85
Tabl
e: P
akis
tan
– Ph
arm
aceu
tical
Tra
de In
dica
tors
, His
toric
al D
ata
and
Fore
cast
s (U
S$m
n)
2005
2006
2007
2008
2009
2010
f20
11f
2012
f20
13f
2014
f
Exp
orts
(US
$mn)
49.
20
49.
60
58.
90
75.
50
84.
59
95.
55
108
.81
124
.92
144
.55
168
.61
Impo
rts (U
S$m
n) 1
72.3
0 1
77.5
0 2
14.5
0 2
52.2
0 2
90.2
3 3
34.8
2 3
87.2
0 4
48.8
7 5
21.6
3 6
07.6
6 B
alan
ce (U
S$m
n)-1
23.1
0 -1
27.9
0 -1
55.6
0 -1
76.7
0 -2
05.6
4 -2
39.2
7 -2
78.3
9 -3
23.9
6 -3
77.0
8 -4
39.0
5 f =
fore
cast
. Sou
rce:
UN
Com
trade
, Int
erna
tiona
l Tra
de C
entre
(ITC
), BM
I
Tabl
e: P
akis
tan
– O
ther
Hea
lthca
re In
dica
tors
, His
toric
al D
ata
and
Fore
cast
s
2005
2006
2007
2008
2009
f20
10f
2011
f20
12f
2013
f20
14f
Hos
pita
ls 1
2,63
7.00
1
2,72
6.00
1
2,80
4.00
1
2,86
8.02
1
2,93
2.36
1
2,99
7.02
1
3,06
2.01
1
3,12
7.32
1
3,19
2.95
1
3,25
8.92
B
eds
per 1
,000
pop
ulat
ion
0.6
7 0
.66
0.6
5 0
.65
0.6
5 0
.64
0.6
4 0
.64
0.6
3 0
.63
Doc
tors
per
1,0
00 p
opul
atio
n 0
.64
0.6
6 0
.66
0.6
8 0
.69
0.7
0 0
.71
0.7
3 0
.74
0.7
5 B
irths
per
1,0
00 p
opul
atio
n 2
6.10
2
5.90
2
5.70
2
5.50
2
5.30
2
5.10
2
4.90
2
4.70
2
4.50
2
4.30
D
eath
s pe
r 1,0
00 p
opul
atio
n 7
.10
7.1
5 7
.20
7.2
5 7
.30
7.3
5 7
.40
7.4
5 7
.50
7.5
5 f =
fore
cast
. Sou
rce:
Pak
ista
n Fe
dera
l Bur
eau
of S
tatis
tics,
BM
I
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.