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Pakistan Pharmaceuticals and Healthcare Report Q4 2009
In BMI’s Business Environment Rankings (BER) matrix for Q409, Pakistan slightly improved its position, now ranking joint 13th out of the 15 markets assessed in the Asia Pacific region. While Pakistan offers more positives than some smaller markets that are not included in the BMI’s matrix, its fundamentals are clearly far from optimal. Despite the massive potential provided by the population of over 160mn (and rapidly growing), key drawbacks to involvement in the Pakistan’s drug market include deficient pricing and regulatory environments and low per capita spend on pharmaceuticals. Out-ofpocket spending represents the largest source of drug expenditure, making the whole market vulnerable to the current economic climate. Nevertheless, while somewhat downgraded, our forecasts stipulate that the market will experience a compound annual growth rate (CAGR) of 12.37% in local currency terms, taking the value from PKR126.8bn (US$2.02bn) in 2008 to PKR227.1bn (US$2.52bn) in 2013.
While the government remains reluctant to fulfil its international regulatory and patent obligations, a recent development has seen drugs registered in two major advanced markets (with the list including the US, the UK, and Japan) processed through a fast-track mechanism in Pakistan. This system avoids the need for expert review and can therefore significantly improve registration times, which are currently as long as two years. Still, Pakistan remains on the 2009 Priority Watch List of the Special 301 report published by the United States Trade Representative (USTR) following input by the Pharmaceutical Research and Manufacturers of America (PhRMA) – evidence of the considerable difficulties facing foreign companies operating in the market.
In the meantime, the domestic drug industry – which is largely dependent on foreign-sourced raw materials – has welcomed the July 2009 news that the government had slashed rates of duty on imports of some chemicals and active pharmaceutical ingredients (APIs). Custom duties have been reduced from 25 and 10% to 5%, covering APIs such as aspirin, amlodipine and loratadine, with the potential of boosting producer margins as well as exports. Additionally, customs duty on four types of diagnostic kits (including those for detection of breast and blood cancers) has also been lowered from 20 to 5%, while duties on import of stents and a number of other items has been removed completely.
In the same month, local experts warned that more effort is needed to educate the public about hepatitis, given that type C and B, respectively, affect some 4.7% and 2.6% of the population. Annual cost of hepatitis treatment is estimated at over PKR250bn (US$4bn). However, public healthcare funding is limited, making Pakistan vulnerable to outbreaks of various infectious diseases, especially in the face of frequent flooding and other natural disasters. The role of international aid agencies in providing healthcare to the population during such times is significant, although the existence of parallel healthcare systems exist makes their operations more difficult.
Pakistan Pharmaceuticals and Healthcare Report Q4 2009: http://www.companiesandmarkets.com/r.ashx?id=4KXOX6S27155530
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