Challenges for Pakistan Pharma Industry in 2023 – Part 4 – Asrar Qureshi’s Blog Post #774

Challenges for Pakistan Pharma Industry in 2023 – Part 4 – Asrar Qureshi’s Blog Post #774

Dear Colleagues!  This is Asrar Qureshi’s Blog Post #774 for Pharma Veterans. Pharma Veterans welcome sharing of knowledge and wisdom by Veterans for the benefit of Community at large. Pharma Veterans Blog is published by Asrar Qureshi on  WordPress, the top blog site. Please email to asrar@asrarqureshi.com for publishing your contributions here.

Photo Credit: Darina Belonogova

Photo Credit: Karolina Grabowska

Photo Credit: Tara Winstead

Photo Credit: Yaroslav Shuraev

CONCLUSION, and SUGGESTIONS

We have discussed several challenges which are being faced by the Pharma Industry in Pakistan presently. The major reason is that the overall economic situation of the country is dismal with no promise for improvement in the foreseeable future. It seems that the people at the helm of affairs are clueless about what is happening and what to do. The world pharmaceutical industry is moving forward at an astonishing pace, new therapies are being researched, and breakthroughs are happening. Our situation is completely opposite because our industry is struggling to survive.

Pharma industry is crying for price increase, even taking the position that most medicines would go in shortage. The government has its own compulsions, most of which are misplaced. Interestingly, successive governments have shown the same apathy towards pharma industry. For example, the government tries but cannot control the prices of consumer goods which are used every day. Similarly, it increases the prices of electricity, gas, and fuel which are used by everyone every day, but its price sensitivity is never invoked. Whenever the drug prices are discussed, the government and the assemblies start raising objections. 

Drug prices in Pakistan are still the cheapest even among developing countries of our category. It is because fortunately we have a large pharmaceutical manufacturing base which has strengthened itself over time. Yes, there have been some periods when the Ministry of Health officials supported local pharma industry. It was before the pricing section came into being and DRAP was formed. 

Drug pricing mechanism in Pakistan is so complex that DRAP has not been able to formulate a comprehensive drug pricing policy in so many years, and probably it does not want to make one either. Policies formulated on few occasions were violated by DRAP itself without justifiable reasons. Price increase linkage to CPI – Consumer Price Index worked for one year but was amended subsequently. 

Suggestions for Industry Associations

Pharma industry must take united stand on key issues. The members should rally around the leadership and make a joint front. The leadership should be chosen with care in this difficult time. The usual procedure of selection by understanding may be done away with for some time. The executive committees should stand with the central leadership and support them. A larger gathering may be done to develop consensus about core issues. 

New strategies should be considered. PPMA has always proposed measures to maximize or protect their profit. Earning profit is the right of industry owners, however, sometimes backtracking a little to gain more is a better strategy. The entire focus should not be on price increase, but on other possible measures also which would create win-win for patients, industry, and the government. 

Governance is at its worst at this time, but certain areas for cost saving may be discussed and agreed. The industry should explore all avenues of cost and consider saving from all areas, not just one or two.

Suggestion for Business Managers

The business managers would include all who are managing business, the owners, CEOs, Directors, Managers, etc.

The business landscape is rather tough at present. There are several reasons but the main reason is the purchasing power of patients. Due to severe inflation, most people are finding it difficult to make ends meet. The doctors are still pushing with the necessary/unnecessary lab tests and medicines, but the patients are not following entirely. They ask for the price first and then do only what they can afford.

I know that the companies are pumping more money into marketing by way of investing on customers, events, campaigns and whatever else they think of. The balance may be missing, however. It is good to protect and maintain market share and growth pattern, but the cost of doing so needs to be rationalized against the outcomes. Cost of goods is constantly rising due to increase in materials cost, exchange rate variation, cost of operations, and staff costs. This leaves less margin for marketing activities. Large sales teams have a fixed high cost which cannot be changed from month to month. 

It is time to spend judiciously and wisely. Return on Investment – ROI was never more relevant than it has become now. Every rupee spent must have a purpose and outcome. 

Curtailing all unnecessary expenses is another important thing to do. Wastages are part of every system, but it is time to review and eliminate these as far as possible. 

Lately, marketing has become other name for capital investment, which was never its primary premise. Marketing is supposed to generate money, not just spend money. The cost of selling has increased disproportionately and needs urgent review. The calculation is quite simple: cost of goods varies between 20 – 40% of the trade price; cost of selling is between 35 – 45%. It means that in some cases, the margin is very narrow after taking other operational costs and taxes. The firms survive because they have a range of products from low to high cost of goods, and the calculation is done on total. When it is done for every individual product, some go into negative.

The impression that pharmaceutical business has very high margins is no more true. Rising costs coupled with high selling costs have squeezed the margin a great deal. Even now, brand managers and business unit heads vie for getting a bigger budget for promotion; it is not viable anymore.

SUM UP

Pharma industry is in a tight corner right now. The regulators are aware but cannot do much either due to incapability or insensitivity. This is a defining moment, and the industry leaders should rise to the occasion.

Concluded.

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