http://www.pakistaneconomist.com/database1...er/c2003-18.asp

PHARMA EXPORTS

Developing new markets

By Syed M. Aslam
Apr 07 - 13, 2003

Pakistan houses about 2.4 per cent of the world population but its share in the global pharma market is unproportionately low 0.31 per cent. Despite the low share, the Pakistani pharmaceutical industry, otherwise, is well developed not only to meet local demand but to also exports its products to over 90 countries last year.

Though growth trends in the pharmaceutical industry differs from country to country, the global market of pharmaceutical industry has been on a constant rise — from $ 307 billion in 1998 to $ 339 billion in 1999 and to almost $ 363 billion in 2000. It was projected to grow to $ 408 billion last year. For details please look at the chart.

The US is the single biggest pharmaceutical market of the world. In 2000 it enjoyed a market share of almost 42 per cent while Japan was a distant second with 16 per cent of the market share worldwide. Germany, France and UK were the third, fourth and fifth biggest markets respectively at 4.7, 4.6 and 3 per cent respectively. Pakistan with around $ 918 million worth of sales lags far behind not only to the developed countries but against many developing countries.

The review of Pakistani pharmaceutical show that there are around 450 companies which are registered with the Ministry of Health, some 350 manufacturing units operating in the country including dozen multinationals. Multinational pharmaceutical companies have played a vital role to provide the base for the growth of the pharmaceutical industry since the emergence of Pakistan an independent country on the map of the world almost 56 years ago. They also enjoyed the bulk of the business, and keep enjoying it presently, though their collective market share has dropped significantly during last 18 years. In 1985, the MNCs enjoyed 65 per cent of the market share while the national companies had 35 per cent of it. The national pharmaceutical companies have since improved their market share by an average 1.2 per cent every year to push it to 53 per cent in 2000 and this 18 per cent gain has come at the cost of MNCs whose collective share has dropped by an equal percentage to 47 per cent during the same period. Thus in 2000, the share of national companies stood at 53 per cent, 6 per cent more than that of the MNCs.

Besides improving their market share within the country, the national pharmaceutical companies, about 20 in all, are also actively engaged in exploring new markets for their products overseas. Though pharma exports from Pakistan have been going on for last two decades, it remained negligible just about half a decade ago. It has only picked up in recent years to touch a significant figure of $ 40.6 million in 1999-2000, the highest exports ever. However, trends of pharma exports from Pakistan reeks of inconsistent performance — pharma exports dropped to $ 37.7 million in 2000-01 only to surpass it negligibly to $ 38.7 million a year later in 2001-2002. The inconsistent performance of pharma exports is visible from the Table forming part of this article.

So what could explain the inconsistent performance of pharma exports? Muhammad Younus Batla, the general manager exports of national pharmaceutical, Nabi Qasim, attribute it to a pervasive absence of export-orientation on the part of the pharma industry, particularly the national companies only a small segment of whom are actively engaged in exports. His view is shared by Wahid Raza Shami, manager export of another such company, ATCO Laboratories.

But 'attitude' is just one the reasons discouraging expansion of the base of pharma exports. To better understand the situation it is imperative to look at the major markets of the Pakistani pharmaceutical products. As mentioned earlier, Pakistan exported almost $ 39 million worth of pharmaceutical products in fiscal 2001-2002. Though little, what is significant about this is that Africa emerged as the top destination of Pakistani pharma products absorbing over 44 per cent of total exports to surpass exports to the Asia region which contributed 39 per cent to the total exports. A year earlier in 2000-01 Asia was the top region of the exports absorbing 35.6 per cent closely followed by 34.9 per cent by Africa.

In 2001-02, the top five destinations of pharma exports were Nigeria, Sri Lanka, Singapore, UK and Dubai. These five countries, part of over 7 dozen others, collectively contributed $ 21.6 million or 53 per cent to the total exports last year. What has made the emergence of Africa region, led by Nigeria, significant is that Pakistani pharmaceutical products have been able to make inroads into the most populated markets in the African continent.

Successful penetration of the Nigerian market is a welcome sign indeed for a number of reasons: It is the most populated country in Africa with a GNP of around $ 38 billion and most important of all, its health care spending is around $ 9 per person. Pharmaceutical manufacturing in Nigeria is limited to few multinational companies and it has to import drugs from other countries to meet the local demand.

Making inroads into Nigeria is also important from another perspectives. According to Mr. Batla, Nigeria offers two distinct benefits. Number one, it is an established trading hub for West Africa, particularly the pharmaceuticals to serve as a distribution point for the region. Number two, it itself is the biggest and the most populated country in Africa as mentioned earlier. The opening up of the Nigerian market, irrespective of the problems as we will highlight later, is a significant development indeed.

"This is because African continent offers an immense potential for pharma exports, particularly pharma manufacturing has still to take roots there and countries in the region are dependent on imports to bridge the ever widening gap between the supply and demand. True, that a beginning has been made but Negerian-led African market offers challenges unique to its own.

"Despite low consciousness about health mainly due to poverty, low local manufacturing, limited buying power and presence of expensive multinationals' products (like Pakistan MNCs are also comparatively expensive elsewhere) consumers of pharmaceuticals in Nigeria and the region are reluctant to comprise on quality. By and large they seem to prefer to compromise on price rather than on quality. That explains why Pakistan has been able to successfully make inroads into Nigeria despite stiff competition from India, which has been there all along, as well as from China, whose pharma products are comparatively cheaper than Pakistani counterparts. Pakistani products have also been able to make inroads in other similar markets."

As stated elsewhere, Pakistan exported pharmaceuticals to 92 countries last fiscal, 12 more than in the previous year. While value of exports to most of these markets is small, only thousands of dollars in the majority of cases and as low as just $ 1,000 in the case of Malawi, it added up to a respectable sum of $ 39 million. The very fact that Pakistani pharma exports have been able to find a welcome niche in many of these markets despite presence of cheaper Indian and Chinese counterparts in itself can be seen as an acheivement. That's, however, should not in anyway be allowed to become smug. Rather, it necessitates the need to solidify the position by further developing, nurturing and exploiting these markets to help push the value of pharma exports. The way the comparatively higher priced Pakistani pharmaceuticals have been able to find receptive markets in an otherwise price conscious African and other developing markets offers many challenges as well as opportunities for the local industry.

However, it is also necessary to highlight the problems so as to tackle them more efficiently. As stated above the major hurdle to solidify Pakistani presence in these markets, and more importantly to keep maintaining the fruits of the breakthrough already made, is the absence of export-orientation on the part of the industry. Mr. Shamsi attributed it on lengthy and exhaustive paperwork as well as on the initial investment needed for a relevant presence and exposure in these countries.

Very informative. would you like to give us a broader picture of the local industry in general not the multi national with their quality products.

I have heard from several of my colleagues here at work who are from different countries in Africa that people in Africa has a general impression that Pakistani medicnies are quality medicines. If they can't afford imported western medicines then they'll buy Pakistani because they work.

http://www.dailytimes.com.pk/default.asp?p...6-5-2006_pg11_4


Saturday, May 06, 2006

Medicines worth $61.8 million exported in 2005

ISLAMABAD: Frank Lavin , the US under secretary for International Trade called on Federal Minister Health Muhammad Nasir Khan on Friday to discuss Pakistan’s business friendly environment, owing to its easy access to Middle East, Africa, the Central Asian Republics and SAARC countries.

Nasir Khan informed the US official that last year, pharmaceutical products worth $61.8 million were exported to more than 80 countries worldwide, making Pakistan’s pharmaceutical industry the best market for investment.

Intellectual Property Rights (IPR) issues and measures of drugs and medicines were also discussed. The minister said that necessary legislation with respect to ‘Data Exclusivity’ is under review in consultation with stakeholders and overseas investors.

Lavin appreciated the government’s investment policy and urged foreign investors to invest in Pakistan. app