Price control

Local pharmaceutical companies are winding up their businesses in the country as the sky rocketing fuel prices and the rupee devaluation have made it difficult for these companies to continue their operations. The same goes for multinational companies which are finding it quite challenging to keep running their businesses in the country. If statistics are to be believed, only 500 local companies out of the 800 license-holders are operating in the country. Within less than a decade, some 12 MNCs in the sector have entirely ceased their operations and exited Pakistan, while the remaining 24 MNCs have reduced their manufacturing operations to a considerable level owing to inefficient capacity utilisation.

When a government adopts a draconian price control, it defines the market price of a product and forces all, or a large percentage, of transactions to take place at that price instead of the equilibrium price set through the interaction between supply and demand. As a result, the government price will be either too high or too low, leading patients to resort to fake or substandard medicines. The authorities concerned need to look into the matter and take steps to tackle the issue in an orderly manner.

Kiran Farooq

Karachi