By Ghulam Haider
The pharmaceutical industry in Pakistan has issued a warning that numerous local companies may soon be compelled to shut down operations as a result of the rupee’s devaluation, import challenges, and escalating inflation, which have all led to unaffordable production costs
The pharmaceutical industry in Pakistan is facing a crisis due to the delay in the release of vital bailout funds worth $1.1 billion (€1.03 billion) from the International Monetary Fund (IMF). In recent months, medicine production in the country has declined by 21.5% due to the commercial banks’ prolonged refusal to facilitate the import of raw materials.
According to Syed Farooq Bukhari, chairman of the Pakistan Pharmaceutical Manufacturers Association, the banks resumed issuing letters of credit (LCs) in January 2021 as a formal guarantee to pay for imports. However, due to the low foreign exchange reserves, only around 50% of LC requests were granted, leading to medicine shortages and hoarding by wholesalers and retailers.
Granting only 50% of LC requests, as Bukhari noted, has exacerbated the issue and resulted in severe consequences for the pharmaceutical industry in Pakistan.
IMF standoff
The shortage of letters of credit (LCs) has been attributed by officials to Pakistan’s critically low foreign exchange reserves and is expected to persist until the International Monetary Fund (IMF) releases the $1.1 billion bailout tranche. In recent discussions between the Pakistani Finance Minister Ishaq Dar and a team of IMF negotiators, no agreement was reached, and the funds remain locked.
Raw materials for most medicines and pharmaceutical products manufactured in Pakistan are imported, and the devaluation of the Pakistani rupee in the past year has driven up their prices. The federal government fixes the retail prices of medicines based on recommendations from the Drug Regulatory Authority of Pakistan (DRAP).
Faltering Economy
Despite the pharmaceutical industry’s request for a 38.5% increase in medicine prices across the board, Prime Minister Shahbaz Sharif’s administration has rejected the proposal to avoid public backlash, given that inflation has already risen to around 31.5%. Although the Drug Regulatory Authority of Pakistan (DRAP) has approved a slight increase in the prices of 19 medicines, the industry has dismissed this as inadequate.
According to Syed Farooq Bukhari, the chairman of the Pakistan Pharmaceutical Manufacturers Association, the production of some pharmaceutical products has become impractical due to the sudden jump in the US dollar’s value from 230 to around 270 Pakistani rupees in a matter of weeks, coupled with rising fuel rates and utility charges. He added that four multinational pharmaceutical companies have already left the country, one has gone for force majeure, and 40 local firms have formally announced their intention to shut down due to unaffordable production costs.
Bukhari noted that the pharmaceutical industry’s relief on medicine pricing has been delayed due to litigation.
Medicine shortage
Pharmaceutical companies in Pakistan have voiced their concerns about several ships and containers carrying raw materials and medical equipment imported from China, Europe, and the United States being stuck at seaports due to payment delays caused by a shortage of dollars on the market.
Although Pakistan’s prime minister established a committee two months ago to investigate the pharmaceutical industry’s issues, he has yet to meet with medicine manufacturers. As a result, the worsening crisis not only threatens patient care but also hundreds of thousands of jobs. Reports of medication and pharmaceutical shortages have surfaced throughout Pakistan.
According to Muhammad Noor Mehar, the chairman of the Pakistan Drug Lawyers’ Forum, approximately 10% of life-saving medications that are imported are in short supply. He also stated that diabetes, heart, renal, and asthma medicines are unavailable in the market, and some imported medicines and raw materials are awaiting clearance at ports.
Surgeries postponed
According to doctors at the Federal Government Polyclinic in Islamabad, there are shortages of various medicines including Ketaconzole for fungal infections, Risek injection for gastroesophageal issues, Vita 6 for tuberculosis, Treviament for diabetes, Neuromet for anemia and nerve damage, and Herparin injection for blood thinning. An anonymous epilepsy patient expressed frustration with the acute shortage of Tegral tablets, which are used to relieve nerve pain. She stated that even if patients have the money, they may not receive the necessary medicines and treatment.
The Centre for Nuclear Medicine and Radiotherapy in Quetta is the only cancer hospital in Balochistan province, and its oncologist and principal medical officer, Jamila Shuja, reported that the prices of almost all chemotherapy medicines have doubled in the past few months. As most cancer patients are very poor, their prognosis and treatment have been severely impacted. Injections Doxorubicin and Kopaque, which are administered to cancer patients, are not available at pharmacies but are being sold on the black market at rates ten times higher than the notified ones.
Muhammad Waheed, a salesman at Najeeb Pharmacy in Islamabad, reported that Arinac for cold and sinusitis and thyroid medicines have been out of stock for an extended period of time. Furthermore, government hospitals have reportedly delayed important surgeries due to the unavailability or shortages of imported oxygenators, coronary stents, transplant kits, and syringes.
Pakistan Rupee Exchange Rate