Contract manufacturing in Pakistan lags far behind its neighbouring countries such as India and Bangladesh. The main reasons are the indifferent attitude of DRAP and the government's lack of interest towards uplifting the industry. The authorities have also been unable to acquire international certifications from the FDA (the US Food and Drug Administration) and EMA (European Medicines Agency). This is a prerequisite for any pharmaceutical company engaged in contract manufacturing.
More than 50 per cent of multinationals have left Pakistan for want of lack of quality production and cost issue, whereas the remaining ones have reduced their local manufacturing activities. The manufacturing facilities at most local pharmaceutical companies are also under-utilised which render them as inefficient and uncompetitive. As a result, most MNCs go to India or Bangladesh for quality production while the plants in Pakistan run below capacity.
The contract manufacturing industry in India and Bangladesh is attractive for the investors. A business-conducive environment, regulated policies, internationally certified machinery and the government's support and facilitation have made these countries a lucrative choice for contract manufacturing. In India, the current market value of contract manufacturing is estimated at 50 per cent of domestic production, translating it to roughly US$5.3 billion. This 40 per cent lower cost has encouraged the multinationals to consider India for their outsourcing needs. Japanese companies are setting up their pharmaceutical plants in India and signing joint ventures with the local industry.
Similarly, Bangladesh is encouraging contract manufacturing to boost its local pharmaceutical industry. Subject to approval of the licencing authority, foreign manufacturers are allowed to formulate any drug with any manufacturer provided it is research-based and registered under the same brand name in these countries.
Restrictions placed on contract manufacturing in Pakistan have resulted in the production of several spurious, sub standard and unlicensed drugs. The manufacturers of these fake drugs are playing havoc with the lives of the people who have nowhere to go and are left at the mercy of the death-mongers. The sale of counterfeit drugs costs the national exchequer a sum of Rs 12 billion per annum and hurts the pharmaceutical sector at large.
It is mandatory that the current legislation as per SRO 152 (I)/2014 of March 5, 2014 unnecessarily restricts contract manufacturing for export purposes revised efficiently and urgently. Pakistan should allow contract manufacturing to help local manufacturing operations reach efficient scales and become competitive in the global market. A restriction on manufacturing not more than 30 products with a licence of two and a half years is an infringement on the free production of drugs for contract manufacturing.
On the other hand, a cap on the increase of life-saving drugs by DRAP has discouraged the multinationals to invest in Pakistan. There is an exigency for reforms in the existing regulatory framework to unearth the potential of scale within the local pharmaceutical sector of Pakistan and gaining access to global markets for products formulated locally.
The economy of the country would increase manifolds if the government facilitated contract manufacturing. Foreign investment of millions of dollars would flow in, resulting in the creation of thousands of jobs for both skilled and semi-skilled workers. Pakistan will then be seen as an ideal location for investment purposes by the multinational companies.
The existing regulatory mechanism governing the contract manufacturing organisations does not take into account the innumerable opportunities available to local manufacturers and restrains the local industry from forming conglomerates with global players. Active partnerships between local and international companies would improve the standards of production, encourage healthy competition, facilitate transfer of technology and enable local manufacturers to gain access to global markets. The government must revisit its policies regarding pharmaceutical manufacturing in Pakistan because this would bring a lot of relief to the suffering masses. It must revisit its contract manufacturing policy as this would lead to production of high quality drugs, bring prices down, revive the confidence of foreign investors and thwart the evil of counterfeit drugs.
Copyright Business Recorder, 2017