Pharamaceutical Industry Analysis of Pakistan

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Group Members:Abrar Ashraf, MBA (Banking & Finance), GIFT University, Gujranwala, Pakistan. M. Awais Rafique , MBA (Banking & Finance), GIFT University, Gujranwala, Pakistan. Salma Mehmood, MBA (Banking & Finance), GIFT University, Gujranwala, Pakistan. Sitara Arif, MBA (Banking & Finance), GIFT University, Gujranwala, Pakistan.

EXECTIVE SUMMARYThis project is prepared to analyze the factors influencing pharmaceutical industry of Pakistan and impacts of this industry on the economy of Pakistan. We have chosen Highnoon Laboratories Ltd with a view to evaluate strategy making practices in this industry. Industrial data was collected from Chamber of Commerce and Ministry of health .This project is a part of our course Business Strategy & Policy. We visited Highnoon Laboratory Ltd with a view to launch an internal audit of this company. We conducted unstructured interviews of the different departmental heads after a little bit discussion we presented our questionnaire to respondents and allowed them to complete it by themselves. The purpose of this structured questionnaire was to gather information about environment and behavior of employees.

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We have completed this project successfully. Main thing that we learn from this project is experience of different strategy making practices involved in pharmaceutical industry of Pakistan. We have been familiar with working environment as well as security and control system of Highnoon laboratories. Their internal control system is not up to that esteem which is required for such a big organization. They have safe guarded their profit margins by diversified portfolio of their products and operational efficiency. We have taken information from the website of ministry of health and chamber of commerce as well. The visit of Highnoon Laboratory was also fruitful for getting information in this perspective. This project will open a new horizon for further researches in this area. This report will be useful for Highnoon Laboratories for the betterment in decisions regarding the road map in order to achieve the quantified goals resulting in progressive march towards its strategic intent. This project report indicates an insight of strategy making practices related to pharmaceutical industry of Pakistan and also gives an informative view of strategy making practices involved in Highnoon Laboratories Ltd.

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PHARMACUETICAL INDUSTRYOF PAKISTANPharmaceuticals are the substances that are aimed to treat, cure, prevent or recognize diseases and relieve pains through their applications. Research and discovery are the essence of pharmaceutical industry, and its success has played a vital role in maintaining pre-eminent position of the pharmaceutical industry in the world today. Such activities demand a sustain rate of huge investment over a long period. Pharmaceutical Industry devotes huge resources to R&D more than any industry.

HISTORICAL BACKGROUNDAt the time of independence there were only two small units which were enabled to meet the local demand. The rest of the medicines were imported. The decision taken in 1972 to abolish brand names, restrict availability of essential drugs to 850, fix maximum retail prices across the board and freely allow local manufacturer of all the essential drugs was in fact the life line for the national segment of the industry. Due to several reasons, especially inaccessibility of new researched medications this policy was ultimately reversed in 1976. Since 1999 the Govt. has invested US$ 133 million in the pharmaceutical industry. The last 10 years was eventful for the Pakistan Pharmaceutical Industry because they have developed a large number of domestic manufacturers. In 2006 there were 400 licensed pharmaceutical companies in Pakistan, including 30 multinationals who had over 53% of market share. Today the industry has developed technology, production and an infrastructure of imports. It is a well regulated industry. It has domestic companies which are quite confident of doing good business.

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PAKISTAN PHARMACUETICAL INDUSTRYAlthough Pakistans pharmaceutical and healthcare sectors are expanding and evolving rapidly, about half the population has no access to modern medicines. Clearly this presents an opportunity, but much more work needs to be done by the government and industry's stakeholders. The value of pharmaceuticals sold in 2007 exceeded US$1.4bn, which equates to per capita consumption of less than US$ 10 per year and value of medicines sold is expected to exceed US$2.3 B by 2012. Pakistan is a developing pharmaceutical market, with a large population and economic progress evident, but per capita drug spending was rather low at around US$9.30 in 2007. Private spending accounts for 65% of total healthcare expenditure sourced through out-of pocket payments, international aid and religious or charitable institutions. Pharmaceutical spending accounts for less than 1% of the country's GDP, comparable to levels in some neighboring countries but above that in some of the South Asian countries.



MARKET SHARE 11.6% 7.9% 6.3% 3.9% 3.8% 3.1%

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COUNTRY DEMANDPakistan meets 80% of its domestic demand of medicines from local production and 20% through imports. The pharmaceuticals market size is Rs. 70 Billion (US $ 1.2 Billion), approximately. The market for pharmaceuticals in Pakistan has been expanding at a rate of around 10 to15% since last few years.

EXPORTS AND IMPORTSPakistan is also exporting its surplus drugs to a large number of countries particularly to the Asian and African regions with an expanding trade in the newly emerged Central Asian States. About a hundred million strong populations of the Central Asian States, with almost no local manufacture of medicines, offers an attractive market for industries located in Pakistan. The share of pharmaceutical industry in exports has been reached to 4.04% that was 3.28% in 2008. So far as imports are concerned Pakistan imports nearly 95%of the basic raw-material used for manufacturing from countries such as China, India, Japan, U.K, Germany, and others and major importers are in Islamabad, Karachi, Lahore, Peshawar and Quetta.

BMI'S BUSINESS ENVIRONMENT RATINGSPakistan slipped from 13th to 15th and last place, out of the key markets assessed in the Asia Pacific region. In addition to the challenging economic environment, the country's pharmaceutical expenditure will also be shaped by the volatile political and security situation. Overall, it is expected that pharmaceutical market value to increase at a compound annual growth rate (CAGR) of 9.39% in local currency terms, reaching PKR206.9bn (US$2.3bn) in

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2014. Growth over our longer, 10-year, forecast is likely to be somewhat more subdued, at a CAGR of 8.75% in local currency, as the operating environment stabilizes.

MAJOR SUPPLIERSMajor suppliers include United States, U.K., Germany, Switzerland, Japan, Holland and France.

BASIC MANUFACTURESThere are five units operating in Pakistan for the Semi Basic Manufacturing of pharmaceutical raw material and still Pakistan has the capacity to absorb the significant investment in this field.

MULTI NATIONAL MANUFACTURERSAt present 30 multinational pharmaceutical organizations are producing their products in Pakistan.

LOCAL MANUFACTURERS411 units are involved in local pharmaceutical manufacturing.

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47000 1100 1% of the profit 11% 45%



DRUG ACT 1976The Pharmaceutical manufacture and trade in Pakistan is regulated through the Drug Act 1976, And the rules framed there under. This is a fairly comprehensive law. Pakistan was the first amongst the developing countries in the world to have introduced Good Manufacturing Practices as a mandatory requirement. Registrations are granted by the Central Licensing and Registration Boards. The Quality Control system at the federal and provincial levels is supported by the professionally competent drug inspectorates and laboratory services.

OPPORTUNITIES FOR INVESTMENTPharmaceutical industry in Pakistan is producing all the major pharmaceutical dosage forms. Similarly, there are some special products e.g. immunological, anti-cancer drugs, certain anti-

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diabetics, antidotes and products manufactured from biotechnology, which are still being imported, in the finished form. These specific areas provide excellent opportunities for investment. Only few bulk pharmaceutical raw materials are being manufactured locally and most of the pharmaceutical raw materials are being imported in large quantities from different countries of the world. This sector also gives challenge to explore and avail the opportunities. The Pakistan Pharmaceutical Industry is a success story, providing high quality essential drugs at affordable prices to Millions. Technologically, strong and self reliant National Pharmaceutical Industry is not only playing a key role in promoting and sustaining development in the vital field of medicine within the country, but is also well set to take on the international markets.