KARACHI: Former Chairman of the Pakistan Pharmaceutical Manufacturers’ Association (PPMA) Tauqeer Ul Haq said allowing the sector to increase retention of foreign exchange will help Pakistan increase exports, as he shed light on the untapped potential of Pakistan’s pharmaceutical industry in an exclusive interview.
With neighbouring India’s pharmaceutical exports reaching a staggering $28 billion compared to Pakistan’s meagre $300 million, Haq emphasised the enormous opportunity for Pakistan to enhance its global presence in this sector.
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“There is a huge potential for pharmaceutical exports in Pakistan,” Haq told Business Recorder.
“Right now, Pakistan’s exports are at around $300 million. There is a huge opportunity for us to increase our exports.”
Challenges
Haq outlined the various challenges the industry faces when attempting to enter foreign markets. Unlike other industries, exporting pharmaceutical products is a complex and arduous process. It involves multiple layers of regulation, inspection, and approval before a product can even reach the market.
“The biggest challenge is that it is a very tedious process,” Haq explained. “First, you have to apply, then the country’s regulatory team comes to inspect your plant to see whether it is in line with international standards. Then you have to submit a dossier, and the product gets registered. Then a brand has to be established.”
Haq emphasised that simply producing medicines is not enough. The industry must also navigate the complexities of international marketing and brand establishment, which requires significant investment in distribution, payroll, marketing, and consulting services.
“You have to have a distributor abroad, and you a team. A payroll is also needed. A brand has to be established, marketing has to be done, consultants also have to be paid,” he noted.
Currency retention: a major hurdle
One of the most significant hurdles, according to Haq, is the limitation on the retention of foreign exchange proceeds from pharmaceutical exports. Currently, Pakistani pharmaceutical companies are only allowed to retain 15% of their export earnings, making it difficult to cover the costs associated with marketing and salaries abroad.
“Since we cannot retain more than 15% of our export earnings, it becomes very difficult to do marketing and pay salaries abroad,” Haq explained.
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He pointed out that the government has allowed the IT sector to retain 35% of their export receipts and suggested that a similar facility be extended to the pharmaceutical industry.
“If we see our neighboring country India, the pharmaceutical sector can retain around 50% of their export receipts. Due to this, we are unable to increase exports,” Haq said.
“We can immediately increase current exports if the government increases the exchange proceeds by up to at least 35%, just as the IT sector has been allowed to do so.”
A collaborative approach to growth
Haq believes that if this issue is resolved, the pharmaceutical industry could see a tenfold increase in exports within three to four years, potentially reaching $3 billion. However, he emphasised the need for collaboration between the government, industry, and regulatory bodies to achieve this goal.
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“We have spoken with the government, and I believe that the industry and the government have to collaborate and focus on exports. If this happens, we can significantly increase exports,” Haq said.
He also mentioned that despite two years of discussions with the government, no concrete solutions have been implemented. Nevertheless, he remained optimistic and continued to advocate for change.
Haq highlighted the need for a committee similar to India’s Pharmaceutical Export Promotion Council (Pharmexcil), which includes representatives from the industry, ministry of commerce, and regulatory authorities. Such a committee could establish standard operating procedures (SOPs) and address the challenges and opportunities in the sector.
“If we can come together on the same page, then certainly there is a huge opportunity for the pharmaceutical industry to increase exports,” Haq emphasised.
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Targeting new markets
To begin expanding exports, Haq suggested focusing on low-hanging fruit, starting with markets in the Commonwealth of Independent States (CIS), the Far East, and Africa. He mentioned that Pakistani companies are already doing well in countries like Vietnam and the Philippines, and there is significant potential in African nations where market entry is relatively easy.
However, Haq pointed out that the government needs to address issues related to banking channels in these regions to facilitate smoother transactions.
“The issue with CIS and African countries is that we have to improve banking channels. The government, ministry of commerce, and office of foreign affairs should sit with us to solve these issues,” he said.
Haq concluded that by overcoming these challenges and enhancing collaboration between the government and the pharmaceutical industry, Pakistan could unlock significant export potential and move towards a more export-oriented economy.
Copyright Business Recorder, 2024
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