A multitude of medi-sins

LAHORE: Pakistani pharmaceuticals are competing head on with their multinational rivals and the fact is that six of the top ten are homegrown, still consumers, in terms of quality, generally take their products with a grain of salt, for there’s also a shady multitude, operating apparently unregulated with impunity.

A study carried out by Institute of Chartered Accountants of Pakistan revealed that out of 30 multinationals only four are among top ten in sales, rest are Pakistani pharmaceuticals, mainly because local concerns are either marketing generic drugs or even if they give the drug a brand name the price charged is lower than that of multinational brands.

Those competing with foreign drugmakers are at par with their rivals in quality and efficacy. In last 12 months 512 new products worth Rs3.58 billion were introduced in the market. Out of these, 20 were introduced by multinationals and 492 by local companies.

According to a study by an international pharmaceutical research body, the total size of Pakistan’s pharmaceutical market is $3.1 billion, equivalent to Rs472.5 billion. Pakistani pharmaceuticals have negligible share in total annual global pharmaceutical share of $1.11 trillion.

It was also found that there are more than 750 registered pharmaceutical companies in Pakistan. Of these, 50 enjoy a market share of 89.2 percent; however only 100 (both local and foreign) command 97 percent of the market share.

The rest of the 650 are operating only in a band of 3 percent market share. This means that the market share of top 100 companies is Rs458.3 billion. Top 13 companies, mainly local, have sales of Rs10 billion or above annually.

The remaining 650 command a cumulative market share of Rs14 billion only. This low share raises the question of the commercial viability of these companies as well as their credentials as quality producers.

If we assume all these companies have equal share in sales then the annual sales of each of these bottom 650 companies would average Rs2.1 million (Rs175,000 per month). It is inconceivable that a pharmaceutical firm could survive at such a low monthly turnover. This amount would not even cover the power and energy cost plus the salaries of the staff.

Operations of these small-scale companies, some of which as small as one room with no prerequisites required for a pharmaceutical unit, are dubious and it is almost impossible to believe they can exist while sharing only 3 percent of the market.

Quality control is the essence of pharmaceutical operations. An industry official requesting anonymity explained that an authentic quality-focused operation of a pharmaceutical company must have a facility with a reasonable lab which should cost around Rs10 to Rs20 million initially and around Rs2 to 3 million recurring cost in a smooth operation, based on minimum production level.

This cost is much higher than total sales of each of these companies. Plant and machinery should also be adequate if not state-of-the art and must cost in millions if not billions -the running cost associated with operations defined as to how much a company is willing to spend to produce quality drugs.

The question then is: how are these companies surviving and why the regulators are neglecting the obvious shortfalls in their operations? This raises serious concerns over the role of Drug Regulatory Authority of Pakistan (DRAP), which has the basic mandate to check quality of production but this sad fact clearly shows the authorities are either unaware of these companies or showing leniency to them.

The quality of medicines produced / marketed by these companies must be checked and tested carefully to avoid substandard drugs penetrating into the market. Substandard drugs produced by unethical local companies tarnish the image of high performing local companies as many practitioners still prefer the multinationals over domestic companies.

The doctors cannot be blamed because the substandard drugs are produced by many local companies that lack the credentials to operate a pharmaceutical manufacturing unit.

If these 650 companies start producing drugs as per DRAP quality checks and guidelines, not only there will be an abundant supply of original and quality drugs, but Pakistan would also be able to explore untapped export opportunities. We have paid a heavy price for neglecting the real job of ensuring drug quality and availability in the shape of tragic incidents like Efroze and Tyno syrup.