KARACHI: The pharmaceutical sector in Pakistan is facing significant challenges, with only four foreign companies now left maintaining manufacturing facilities in the country.
Ayesha T. Haq, Executive Director of Pharma Bureau, highlighted the issues hindering the growth of foreign pharmaceutical companies in Pakistan.
“The regulatory environment in Pakistan is a major obstacle to the growth of foreign pharmaceutical companies,” Haq said. “The DRAP Act 2012, Drugs Act 1976, and Drug Pricing Policy 2018 contain numerous anomalies, including overlapping powers, unclear standard operating procedures, and irrational pricing of essential drugs. These issues have led to a lack of confidence among foreign investors.”
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Haq cited that over 30 multinational companies (MNCs) have come to Pakistan market over the course of history but in recent decades, they have been reduced to just four, which is evidence of the sector’s struggles.
“The primary reasons for their disinvestment include an onerous tax regime, regulatory challenges, economic instability, pricing controls, and counterfeit medicines,” she explained. “Price controls have made it economically unviable for MNCs to continue operations in Pakistan, leading to reduced margins and losses.”
Haq emphasised that the current pricing policy is unsustainable and has resulted in companies making losses on many low-priced drugs.
“No company can afford to run at a loss,” she said. “This also destroys investors’ confidence, and companies are not inclined to incur further losses and introduce new therapies into the Pakistani market.”
Many experts see the lack of investment as not only leading to lower dollar inflow crucial for the debt-ridden economy — but also hindering the growth of research and development in the pharmaceutical sector that employs skilled labour and pours back into career development of Pakistani nationals.
The exit of MNCs also carries a negative perception, hindering the potential of other sectors when seen in the light of Pakistan being a potential market for foreign companies.
The Pharma Bureau is advocating for policy changes, including rational and independent pricing of essential drugs, elimination of taxation anomalies, and removal of anti-investment policies. Haq also stressed the need for regulatory reforms, including empowering DRAP to achieve international certifications and eradicate counterfeit medicines.
“The government needs to create a conducive business environment to attract and retain foreign investment,” Haq said.
“We need to learn from other countries in the region, such as Bangladesh, which has implemented more flexible pricing policies and attracted foreign investment in the pharmaceutical sector.”
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Haq noted that Pakistan imposes price controls on all 494 essential drugs, whereas India, Bangladesh, and Sri Lanka have more flexible structures. “We need to adopt a more nuanced approach to pricing — one that balances affordability with sustainability,” she said.
The current situation has negatively affected the availability and accessibility of innovative medicines for Pakistani patients, with limited choices, increased costs, and potential impact on quality.
Haq estimated that the potential loss due to MNCs exiting Pakistan is difficult to quantify but highlighted the potential for $5 billion in pharmaceutical exports and $1.5 billion in foreign direct investment if policies are adjusted.
“The future of foreign investment in Pakistan’s pharmaceutical sector is uncertain,” Haq said. “However, with the right policy reforms, we can create a more attractive business environment and attract foreign investment. We owe it to the people of Pakistan to ensure access to quality medicines and healthcare.”
Copyright Business Recorder, 2024