Govt urged to reform contract manufacturing policy

KARACHI: Pakistan has potential to attract huge investment and earn foreign exchange with prudent policies and reforms in the existing contract manufacturing policy in pharmaceutical sector, an industry official said on Tuesday.

“The existing regulatory mechanism governing the use of contract manufacturing organisations (CMOs) does not take into account the vast opportunities available to local manufacturers and is in fact constraining the local industry from benefiting from partnerships with global players,” the official said. The current legislation in Pakistan governing contract manufacturing, SRO 152(I)/2014 dated March 5, 2014, restricts contract manufacturing for export purposes only, thereby limiting multinational companies (MNCs) from providing access to the same medicines to the local population.

In addition, it also limits the number of products a CMO could manufacture. There are different sections, such as cardiology, gynaecology, diabetes, etc, and a company could manufacture up to five in each section, and a total of 30 products maximum. Contract manufacturing for sales in the domestic market was also limited to a maximum of two years.

Shahab Rizvi, former chairman of Pharma Bureau, said the objective of the regulator to enforce such restrictions was based on the assumption of assuring traceability of drugs to the manufacturer and forcing MNCs to set up own local manufacturing operations. It was based on the erroneous belief that this would generate employment.

“Such restrictions have unfortunately proved counterproductive and have not helped in building scale in the local manufacturing sector. While selling prices remain under a draconian regulatory ceiling, restricting manufacturers from gaining production efficiencies has only reduced productivity of the local manufacturing sector and driven out or deterred major global MNCs from investing in Pakistan,” Rizvi added.

According to a report, this phenomenon is increasing reliance on imported newer medicines rather than fostering import substitution as well as increasing the export potential of the local pharmaceutical sector. In the absence of such unviable restrictions, the industry in India as well as Bangladesh continue to surge ahead building on the scale of the local CMO’s and benefiting from partnerships with MNCs to access global markets.