In an exclusive interview with Profit, All Pakistan Pharmaceutical Manufacturing Association Vice President Shahazab Akram and Vice President of his own company Mass Pharma (Pvt) Ltd. He was another one of the businessmen exhausted by the unprofessional moves of the government toward the business community and the pharmaceutical industry in particular. When asked about how the pharmaceutical business was doing in Pakistan, he replied, “Pharmaceutical companies in Pakistan have developed into a multibillion business venture over the last sixty years and yet there is not a single WHO approved laboratory, neither is there any FDA approved factory operational in Pakistan. Once one of our colleagues tried to get an FDA approval but the vicinity of the factory became an unfavourable factor. Unfortunately, for the industry in Pakistan, the infancy stage has not passed, and our products are still imitated. There is no concept of research and development in our country so far.”
Pharmaceutical industry and the economy of Pakistan
Talking about the mammoth size of the industry that has crossed almost Rs100 billion, Akram was of the opinion that, “A true pharmaceutical industry has developed enormously but it has not progressed in terms of developing indigenous raw material, or patent development due to the insensitivity and unprofessional attitude of the government. It is the third largest industry in Pakistan and employs more than 4 million people directly or indirectly. Nearly 90 per cent of the country’s drug requirements are fulfilled by the industry saving enormous foreign exchange reserves. Though the local pharmaceutical industry is valued at around Rs100 billion, it is only 0.22 per cent of the global pharmaceutical industry which is estimated to have a worth of over $825 billion and is expected to grow to around US$975 billion by 2013. This industry has many stakeholders attached to it, including bottle makers, printers, packaging, cap and mould manufacturers, ink developers, pharmacies, distributors, etc and employs millions of people.”
Pricing a nagging issue
Considering pricing to be as important as the medicine itself, he wished to express his dislike for the government, however he said, “For the last ten years, there has been no price adjustment by the government. Pick any of our rate lists and compare it with older data. You would hardly find any change. The issue with this approach is that we halt the production of a product that does not remain potentially profitable due to high costs of production. It is here that the door to black marketing is pushed open. Only three years ago, the government revised prices of products that were no longer viable to produce under invitation of products facing hardships; that too out of demand pressure.” Talking about the pricing mechanism that seems tilted in favour of large companies he reacted sharply by saying that, “I agree. But I want to get away with this unjust pricing mechanism. My recent argument with the government is focused on this particular issue. The pricing mechanism adopted by the government is grossly immature. A product is priced looking at the face value of the manufacturer. My company’s worth and placement in the industry index decides the price I could fetch. Once a patent has lived through its registered life it becomes open for mimicking. The ‘me-too’ product is priced fifteen per cent less than the cost of the original product by the Ministry of Health and the added value is calculated, as I said, depending on the goodwill of the company. This obviously means different prices for the product using identical raw material, labour expertise, machines and production atmosphere. The range of prices for a similar medicine with a difference of company name, only costs across the range of 500, 250, and 100 and in case of a tender, it could be bought at Rs36. What I am saying is that there is no defined pricing policy. Where is the market mechanism of demand and supply? It is absolutely absurd to price a product on the face value of its company. Top it with the ever volatile business environment of our country. When dollar-rupee parity is altered, causing an upward price shift in raw material or when the cost of manufacturing through a rise in electricity tariff goes up, the onus is passed on to the consumer. So please remember, we do not price the product; a company has no say in it. It is the domain of the Ministry Of Health. This was also one of the reasons why the pharmaceutical industry has been vehemently against the devolution of the Health Ministry under the 18th Amendment. Our grievance has nothing to do with devolution per say of course but we want issues like pricing, licensing, quality control and registration to remain with federal authority. Devolution would otherwise cause market abnormality in terms of price variation between provinces, opening new venues for corruption by means of easy mobility of drugs from one province to another for a better and greater margin.”
Drug Regulatory Authority
“It is for this very reason that I or PPMA is emphasising for the setting up of the Drug Regulatory Authority.” On the utility of DRA he said, “This authority would primarily be engaged in pricing the product besides looking into the issues of licensing, quality control and registration. DRA would be a federal subject. All provinces have agreed to the development of DRA except Punjab.” Sheikh Zayed Hospital is the spoiler. Though it is stipulated in the memorandum of understanding of Sheikh Zayed Hosptial that it would remain a federal subject, Punjab government wants it under its rule. Unless this issue is resolved and the Punjab Government realises the realities of the situation, DRA would perhaps remain in the pipeline stage.
The second big advantage of DRA would be regulating licences. As per today the situation is that anyone is given a license to set up a factory. There are approximately 600 units operational in Pakistan, out of which 450 are registered units, and the almost all of the rest are fake. We know how businesses work in Pakistan. Cronyism and commissions have caused a mushroom growth of many manufacturing units within the pharmaceutical industry. In Attar Rawalpindi, every second factory has a pharmaceutical board on it.” While arguing regarding the right of these small industries to do business, Akram corrected the vision saying, “Why not? But only if these small entities are actually manufacturing something. These so called factories are usually put to work either during the audit period or when some tender is opened. PPMA want these factories closed.” I am completely sure that 99 per cent of spurious drugs are manufactured in these factories. All those attempted raids on the locations of spurious drug production are just an eyewash and they hardly nib the actual offender. It takes almost same kind of machinery to develop a fake medicine as it takes to develop an original one.”
Doctors vs pharmaceutical companies
Talking about how the doctors got the worst out of him, in a fury of condemnation he retorted, “Putting it plainly, it is one of the ruthless communities of all. These doctors are minting money. They are thriving on the back of pharmaceutical industries. And unfortunately there is no way of doing away with this behaviour. Our companies are involved with them. Even if few of us cut them to their size, there would still be many to patronise them. As far as your question regarding their contribution in sales is concerned, it is true they have a big say in it, inflating the demand of a medicine artificially. Unfortunately, the pharmaceutical industry is to be blamed for hiding this black sheep in its covers.”
The industry’s potential
On the potential of industries, his voice was again laced with sorrow, and with a heavy heart he told that, “There is an immense potential, but unfortunately the attitude of the government is eroding it. The industry is not only meeting the local drug requirement, it is also exporting $160 million of drugs annually. Only if we are given the right environment to work in, this industry would increase the economic strength of Pakistan and could produce high quality products at affordable prices. Take a look at the Indian industry. It is one of the largest drug industries in the world, doing a yearly business of $20 billion.” He was of the opinion that the Indian government, its policies and seriousness is at the heart of this magnanimous growth. “Medicine is one area where no lax can be tolerated. “A person starts his journey of life with medicines and continues his reliance on the till he dies. Why is a medicine administered? To save lives and also improve its quality. This reason itself becomes a basis to procure quality, reliability and to provide medicines at competitive prices so that people at large could benefit from them. The world is shifting towards disease-specific treatment and bio-generic products. The government has to rush towards this new avenue, otherwise we could lose this opportunity and our reliance on imports may increase drastically,” he warned.
Mass Pharma (Pvt) Ltd
While talking about Mass Pharma, (Pvt) Ltd, Akram mentioned that “Mass Pharma started its operations in 1998. We are producing antibiotics, NSAIDS, antiulcerants, haemostatics, immunosuppressants, and Dermatological and Third Generation Cephalosporin Parental and Oral Formulations. According to General Manufacturing Practice (GMP), Mass Pharma has tried to develop large-scale production, advanced equipment and a full range of supporting the production workshop resulting in low production cost without any compromise on quality. Our business equity is worth above Rs1 trillion, so you can well imagine the financial support our company is providing to the industry as well as to the economy.”
