Pharma sector defends deregulation

KARACHI:

The Pakistan Pharmaceutical Manufacturers Association (PPMA) has raised serious concerns over the uncertainty surrounding the government's recent move to commission a third-party survey through the Drug Regulatory Authority of Pakistan (DRAP) on Prime Minister Shehbaz Sharif's directives, following public outcry over rising medicine prices after deregulation.

The Special Investment Facilitation Council (SIFC) convened an emergent meeting with PPMA in Islamabad, attended by PPMA Chairman Tauqeerul Haq, vice chairman, and Executive Director Col Nayyar. The SIFC team, led by its director general, was joined by Special Assistant to the Prime Minister on Industries, Haroon Akhtar. Opening the session, the PPMA chairman thanked SIFC for endorsing amendments to the drug law regarding directors' liability. He, however, voiced concern over the uncertainty created by a third-party survey commissioned by DRAP on the prime minister's advice, noting that industry stakeholders had not been included in the exercise.

With medicine prices rising sharply and affordability becoming a national concern, DRAP has launched a countrywide survey to assess the impact of deregulating non-essential medicines on pricing and patient access.

PM Sharif had personally directed the move, stressing the need for a neutral, evidence-based evaluation of the pricing framework. Through a newly issued Expression of Interest (EOI), DRAP invited consultants and research firms to compare the retail prices of the 100 top-selling non-essential medicines — those outside the National Essential Medicines List (NEML) — with their Maximum Retail Prices (MRPs) prior to deregulation.

Data will be collected from pharmacies, hospitals, clinics, and distributors in both urban and rural areas across five to six key cities. The survey aims to capture regional variations, expose market distortions, and evaluate how deregulation has influenced affordability.

Pakistan's listed pharmaceutical sector posted a robust 83% year-on-year increase in net profit to Rs8 billion in 3QFY25, driven by higher net sales, improved gross margins, and reduced finance costs, according to Topline Securities.

Net sales rose 12% YoY to Rs85.5 billion, largely due to higher drug prices following the deregulation of non-essential medicines in February 2024. This pushed gross margins to 39% from 31% a year earlier, with AGPR recording the highest at 58%.

Finance costs fell 41% YoY to Rs1.2 billion on the back of lower benchmark interest rates and reduced borrowings. However, on a sequential basis, earnings declined 14% due to a seasonal demand slowdown, which is expected to improve again owing to the flood-driven diseases.

For the nine months of FY25, sector earnings more than doubled to Rs25.2 billion, up 119% YoY. Analysts expect deregulation and lower raw material costs to further boost profitability in FY25 and FY26.

The PM's directed survey was supposed to be completed within 15 working days of contract award and assessed jointly by DRAP and the World Health Organisation (WHO), which has also been asked to provide technical guidance on broader economic and health impacts.

The deregulation policy, introduced through SRO 228(I)/2024 by the caretaker government in February 2024, was intended to tackle drug shortages and encourage investment. However, it quickly came under fire from patients, healthcare professionals, and cabinet members after reports of uncontrolled price hikes. A senior official admitted that many widely used medicines, though not on the NEML, have doubled or even tripled in cost.

Federal Health Minister Mustafa Kamal and Minister of State Malik Mukhtar Ahmed Bharath recently demanded clarity, with Bharath publicly questioning price jumps from Rs800 to Rs2,500 for the same medicine. Supporting concerns, IQVIA data shows pharmaceutical sales reached Rs1.049 trillion in the year ending March 2025, up 20.62% in rupee terms, but unit sales rose only 3.63%, indicating growth was largely price-driven. Nearly 69% of the increase came from higher prices, with multinationals seeing falling sales volumes but rising revenues. Even basic drugs like paracetamol showed erratic pricing.

Former Secretary General of the Pakistan Medical Association (PMA), Dr Qaisar Sajjad, urged DRAP to regulate medicine prices in consultation with the pharmaceutical industry. Speaking to the Express Tribune, he noted that essential drug prices are rising every 15 to 20 days without prior notice.

He said critical medicines for diabetes, hypertension, psychiatric disorders, sleep deprivation, and pain relief are becoming unaffordable, leaving government hospitals unable to maintain stocks. "When hospitals cannot provide medicines, patients are forced to buy from pharmacies, where they compromise on prescriptions. If a doctor recommends three medicines, patients often buy only one or two cheaper options, ignoring the required combination," he added.

Even basic treatments like ORS for diarrhoea and vomiting have become costly. He stressed prices should not accelerate, except for non-essential cosmetic items, "especially in times of flash flood calamities".

Patients also shared concerns. Diabetes patient Amina Akhtar said her regular medicine rose from Rs520 to Rs600 in five months. "Similarly, Vitamin D3 (200,000 IU) that was Rs220 just over a year ago rose to Rs280 eight months back, and now costs Rs390," she said.

Policy experts, however, argue the DRAP survey and WHO's review could push the government to reconsider deregulation, possibly restoring price controls or adopting a tiered system for access.