The Raw Facts

By Ayaz Khan | September 2020

Is it merely the coronavirus that is said to have first emerged from a market in Wuhan in China in 2019? It has since hit the entire world, crippling giant economies including America and other European countries. Many factors can be traced which have equally impacted the economic, social and political order in the world. The post-pandemic world has found itself in a quandary, as the pre-pandemic world remained chained by an interdependent pharmaceutical environment. Dependence on global pharmaceutical exporters for raw material — China and India being the giant exporters — along with the pandemic, has deepened the crisis faced by healthcare facilities across the world.

For instance, during the current pandemic, India and China curtailed the export of raw materials, scientifically called active pharmaceutical ingredients (APIs). To get relief from body ache and fever, it is Paracetamol (API for Corcin) that relieves us. Ironically, APIs are the most relied upon taw materials, given the non-availability of medicines to treat COVID-19 efficaciously!

Ripple Effect
With relations between China and India flaring up and China’s decision to stop export of APIs to cope with the growing crisis caused by the pandemic, India has started to indentify 38 basic APIs which will be manufactured locally in the face of growing cases of COVID-19 in the country. However, in the triangular pharmaceutical relationship between India, Pakistan and China, reliance of Pakistan’s pharmaceutical industry for raw materials has been solely on export of APIs from both China and India. Of total imports of raw materials (95%), India retains 50%. China, on the other hand, exports a bigger chunk of APIs to Pakistan.

In contrast to its imports, Pakistan exports medicines to Jordan (80%) and to African countries. Currently, the pharmaceutical industry in Pakistan comprises almost 700 licensed pharmaceutical units. Unfortunately, none of these units is approved by the American Food and Drug Administration (FDA,) except one pharmaceutical manufacturer which holds a Good Manufacturing Practice (GMP) certificate. This creates a big dent and there is a debate about Pakistan’s own capacity to manufacture raw materials, given the fact that the industry cannot rely merely on the local market. The current annual sales of Pakistan’s pharmaceutical industry stand at USD 3.1 Billion, which is comparatively much lower than India exports pharmaceuticals worth USD 18 billion.

Talking to SouthAsia magazine, Mohammad Zaka, Chairman Pakistan Pharmaceuticals Manufacturing Association says: “It’s a matter of economies of scale. Naphtha cracker plants worth billions are needed for manufacturing raw materials and we lack such plants. If we have plants that manufacture raw materials and we believe that our products can be sold locally, in case there is an embargo on imports, this will not work. We have to make a place in the global market for our manufactures. This needs a long-term policy. Even if we start this process, we need to import intermediates initially. Then we can step back from importing intermediates and start manufacturing APIs.”

According to Mr. Zaka, this is only feasible in a stable regulatory environment. The industry needs tax relaxation and a decrease in electricity tariff. The industry has been neglected for years. Pakistan imports material worth USD 700 to 800 million. First, if the country starts manufacturing raw materials, it will have to make sure sales are not made at a double price. Second, the quality of manufactured material should be of international standard. If these two important factors are taken care of, the project can be feasible, Mr Zaka further elaborates.

CPEC and Pharmaceuticals Industry
The China-Pakistan Economic Corridor is a much cherished multi-billion project which is seen as a panacea for the economic ills of the country once it is completed. Considered a harbinger of economic prosperity, CPEC should boost the pharmaceuticals industry too. How will this industry reap the benefits? In 2017, through its annual report, PPMA brought the issue before the government and presented some recommendations. The pharmaceuticals industry can benefit from the project in two ways. Firstly, with the establishment of new health facilities, local sales of finished medicines will simultaneously increase. Secondly, a naphtha cracker plant for chemical processing — organic chemicals constitute the larger part of pharmaceutical manufacturing - can be established with assistance of China. A single naphtha cracker plant costs billion of dollars and can only be feasible with Chinese investment.

However, raw material manufacturing might not be an environment-friendly step. The primarily hurdle in such manufacturing in Pakistan can be attributed to the poor quality of drugs. So far, two separate incidents have exposed the weak regulation of quality drugs. The ‘Fake Drug Crisis’, as it is widely known, led to the death of more than 230 people. These deaths were caused by contaminated cardiovascular drugs. As a result, the Drug Regulatory Authority of Pakistan (DRAP) was established. But DRAP too failed to thwart another similar crisis in November 2012, when hundreds of people lost their lives while ingesting cough syrup! This doesn’t bode well for the industry if Pakistan aims to be a global competitor in the export market.

To cope with a crisis caused by another pandemic in future, most countries will turn to end their dependence on import of raw materials for manufacturing medicines. This will also force countries to find more reliable exporters in the global market besides China and India. Pakistan can emerge as a competitor in the world market if its pharmaceuticals industry develops the capacity to manufacture raw materials and to shed its dependence on imports.

Karachi

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