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Home > Healthcare > Pharmaceutical > General Pharmaceutical
Pakistan Pharmaceuticals and Healthcare Report Q3 2008
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In BMI’s Business Environment Rankings for Q308, Pakistan remains last out of the 14 markets assessedin the Asia Pacific region, although the country does offer some investment prospects. However, thefundamentals for Pakistan - including low per capita healthcare and pharmaceutical spending, unsettledpolitical situation and regulatory shortcomings - are clearly far from optimal. On the other hand, thecountry’s rapidly expanding population and developing economy present an opportunity for foreigncompanies willing to operate in a risky environment, where only about half the population has access tomodern medicines and where the government is committed to keeping drug prices low. Similarly, thesituation has a significant potential for improvement, provided the country amends the Drug Act 1976 andgives increased protection for patented pharmaceuticals.
In the meantime, in May 2008, due to erosion of margins, pharmaceutical companies called on Pakistan'sgovernment to allow them to increase the price of medicines by 10%. The firms have been negativelyimpacted by the prices of drugs that have remained stable for the last five years, despite the fact that thecost of production (including wages, petrol and raw materials) has risen by one fifth over the same period.However, the price controls are expected to remain in place for the medium term, although this may meanthat some local companies will cease to be operational. Nevertheless, any gaps that may appear in themarket are expected to be filled by operators from a lower cost base country, such as neighbouring India.
Around the same time, keeping to their commitment to improve access to medicines, the authoritiesannounced the creation of a new scheme to dispense essential medicines free of charge from counters ingovernment hospitals. The drugs had previously been distributed by the humanitarian Bait-Ul-Maalscheme, but allegations of misappropriation of funds have led to stricter controls. BMI welcomes themove, but points out that only a very small percentage of the country's vast population will benefit, giventhat only US$16.2mn has been dispersed by Bait-Ul-Maal in over a decade. It had been known that theBait-Ul-Maal scheme lacked transparency, but it was not until a case of gross nepotism that a revision ofthe system was demanded by the Ministry of Health.
In terms of the country’s medical devices prospects, the industry and the market are indicative of thewider state of Pakistan’s development. While the demand for new and modern equipment exists, it is notsupported by healthcare financing and logistics. Consequently, the medical devices market is negligible inglobal terms, hampered by ill-equipped public hospitals and an underdeveloped primary care network.
While the private sector exists in more affluent urban areas, it is very small. Most hi-tech devices willcontinue to be imported, although a small and fragmented domestic industry will remain responsible forthe manufacture of a range of quality devices, which are increasingly exported.
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