Implications of Pharma MNCs Exit – Asrar Qureshi’s Blog Post #824

Implications of Pharma MNCs Exit – Asrar Qureshi’s Blog Post #824

Dear Colleagues!  This is Asrar Qureshi’s Blog Post #824 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: Anna Tarazevich

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Photo Credit: Tima Miroshnichenko

When I joined Pharma industry in 1975, there were around 50 multinational pharmaceutical companies in the market; the number of local companies would be around 100. The market was dominated by MNCs with over 80% market share. Presently, the number of MNCs has decreased to under 20. Some merged, while others rolled back operations. Most notable exits have been Roche, MSD, Merck Marker, Pfizer, Eli Lilly, Janssen, Fresenius Kabi, Sanofi, and Bayer. 

Pharma MNCs are not the victim they portray they are, however, there are important implications related to their mass exit. Our local industry has blown itself out of proportion with wealth amassed through commercial means but has not done any commendable job in terms of qualitative achievements. This is particularly painful to see when we see what is happening in the region. I shall take up the regional situation in another post.

Having said that, the most serious concern related to the exit of multinational pharma companies is that new research products shall not become available in Pakistan market due to following reasons.

Uncertainty about Patent Protection – We know that our local pharma industry does not do any research; it is focused on maximizing business through generic products. The application of drug patents has been more stringent lately, but it happens when the litigation is started by the aggrieved party. Innovators of several products are not represented here, so their patent rights are not properly protected. The few that are here, do go into litigation which is quite a costly process, and the end result may not be guaranteed. Case in point is that of Januvia® and Janumet® (sitagliptin and sitagliptin metformin), where the innovator and generic manufacturers fought it out in the press by giving large ads every day; the innovator lost and the generic sitagliptin sells in billions. 

Bad History of Licensing – Several local companies licensed lucrative innovative products from those multinational pharma companies who were not operating in Pakistan. Owing to price issues, they started local manufacturing of these products under technology transfer. Most of these deals have ended up badly because the local partner took possession of the brand and started marketing independently. Several years ago, Al-Shifa brand of syringes from Kingdom of Saudi Arabia was imported by their authorized distributor in Pakistan, and it was among the top selling brands. The distributor then started importing components from China and launched its own Al-Shifa syringes. When the import declined drastically, Al-Shifa KSA investigated and found the truth. They went to the court and lost the case and the market. Ferplex of Italpharmaco Italy, licensed and marketed by Himont met the same fate. I talked to an Italpharmaco guy during that time who told me they were in court. It looks like nothing much happened in favor of the innovator. There are plenty of other such cases due to which innovators in Europe and US are unwilling to give out any further licenses. Having handled business development for several years, I know firsthand where do we stand. 

DRAP Registration Process – DRAP depends on its Drug Registration Board for approving new registrations. The DRB comprises of few senior clinicians, few DRAP officers from the center, and pharmacists from DRAP regional offices. The questions on constitution of DRB besides, the process is seriously flawed. The DRB meets for about a day and a half in about three months. The agenda has anywhere between 1000 to 1500 application on it which the DRB is expected to complete in 12 hours. Of course, it is not completed, and the cases linger on. Only regular generic drugs applications are approved in bulk; drugs requiring discussion remain neglected. In all these years, DRAP has not done anything to improve the process. One possibility is that regular generic drug applications should be decided by a small internal committee of DRAP, while real cases should be presented to the DRB.

Pricing – no government controls the prices of food items which are required everyday for survival, but they would like to control drug prices. The pricing section is beyond question or reprimand. Their decision taking time, pricing mechanism, prices, and price increase is disabling and undesirable. 

Few other concerns related to MNCs exit are discussed below.

Management Models – The MNCs work around the globe and collect experience of many markets. They develop management models based on these and the current ideas of management models for optimum productivity. The MNCs therefore become a role model and inspiration for local corporates also. With the mass exodus of major Pharma MNCs, this source of inspiration has almost dried up. Whatever MNCs are left are struggling and trying to offload in as many ways as possible. They have abandoned their own years’ old models and have outsourced more and more things. Even then, there are qualitative differences.

Management Practices – Though the local executives had been resisting but the MNCs did try to incorporate good management practices. While working in an MNC, we were trained for several days on an international management program that the parent company had enforced. On the last day, the worthy Director Marketing came in and asked how it was going. We told him about our excitement and eagerness to implement. He flatly said it was for training only, it should not be implemented because it may come into conflict with existing practices. Not every executive did the same, and some decent management have cascaded from MNCs.

Training and Development – I can say on good authority that the local pharma would have never risen, if the trained people from MNCs had not joined. They came in all departments and made great contribution. Production, Supply Chain, HR, Finance, Marketing, every function improved to a new level. Local Pharma neither had the resources, nor capability to train people, and should give due credit to MNCs training and development.

These are few important concerns, and these will affect pharma industry, patients, physicians, and other stakeholders in tangible ways. A thriving multinational segment is good for the healthcare landscape and should be promoted to be so. 

Concluded.

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