Delay in price revision impedes investment, say pharma firms

Industry presses on with demand for price increase as per production cost.

KARACHI: Pharmaceutical manufacturers – both national and multinational – have pressed the government to allow an increase in drug prices according to the rise in cost of production, fearing that in case of delay, shortage of medicines will aggravate in coming weeks.

The ongoing dispute between the pharmaceutical industry and the government over drug prices has badly affected consumers, who are facing acute shortage of some medicines. The situation is worrisome, particularly relating to life-saving drugs, as it has provided a room to substandard drug producers to cash in on the shortage in the market.



“We are investors and no investor invests in a business where there is no clear policy,” Novartis Pharma Chief Executive Shahab Rizvi told the media here on Thursday while commenting on the pricing issue. “We want the government to come up with clear policies, especially on the pricing mechanism, so that investors in the pharmaceutical sector can plan for future investments.”

Rizvi said the government needed to listen to the reservations of the pharmaceutical industry to address the shortage of drugs, otherwise the situation could get worse.

Pharmaceutical manufacturers argue that persistent differences between the drug makers and the government are not only creating medicine shortage, but are also discouraging future investment in the industry. According to rough estimates, the size of Pakistan’s pharmaceutical industry is around Rs220 billion.

On the other hand, the government insists that it has to consider both the interests of consumers and concerns of investors.

The drug manufacturers are seeking an increase of at least 18% in prices of all registered drugs whereas the government is said to have agreed to a 15% increase.

The government does not want to annoy consumers by taking an unpopular decision.

Managing Director of local drug producer Indus Pharma Zahid Saeed said the government had been dragging the pricing issue for a long time that had provided a chance to the counterfeit drug producers because of a phenomenal rise in the demand for major drugs.

To give weight to his argument, Saeed said, continuous shrinking of profit margins of the pharmaceutical industry was leading to the closure of national and multinational companies in the country.

The industry argues that Pakistani companies cannot export their products to industrialised countries because of absence of international certifications and for that, they need major investments, which are difficult to make in present conditions.

“The government has its focus on determining the prices of medicines while it is failing to control the quality of medicines, which is a major problem at large,” Ayesha T Haq, Executive Director of Pharma Bureau, a representative association of pharmaceutical manufacturers operating in Pakistan.

Published in The Express Tribune, November 22^nd, 2013.

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