Price cap cripples pharma industry

KARACHI - Pakistan's pharmaceutical industry has choice either to shut down their businesses or pass on the extra burden of taxes to consumer end for its survival. Chairman Pakistan Pharmaceutical Association (PPMA) Kashif Sajjad Shaikh said this at a Press conference held at a local hotel on Thursday. Chairman PPMA said that the price cap on medicines during the last eight years has almost crippled the pharmaceutical industry. "We don't want to pass on the burden of taxes in shape of increase in sales tax, duty on raw materials and every day cost increase to the consumer end but if the government will keep on pushing us to the wall, we do same as other industrial sectors had done before the budget and still doing by increasing prices of their products," Kashif said. He warned that the industry, which is earning $100 million foreign exchange through exports and providing around 0.5 millions jobs, could face closure if the govt will not allow them to increase prices by 15 to 20pc because industry has lost the power of buying raw materials. Shaikh pointed out that local pharmaceutical industry is fulfilling 70 per cent of medicine requirements of the country, consisting of 375 local and 25 multinationals companies, imports more than 90 percent of the raw material and over 60 percent of the packaging material. On the light of this local pharmaceutical industry can be called as "Imported Raw Material Industry" irony is that even current government had assured us to consider our proposals and give relief in some areas despite of giving relief to us current government has not only continued 3 to 4pc duty on raw materials but they had also increased the sales tax as well, Shaikh added. He said that pharmaceutical industry is in a dilemma. On the one hand, the cost of imported raw material has risen manifold due to depreciation of Pakistani rupees in the past several years and appreciation in foreign currencies like euro and yuan and rise in oil prices, while on the other the prices of medicines are fixed in Pakistan. Kashif Shaikh said that pharma companies cannot compromise on quality and the simple solution is the stop production of those medicines which are costly to avoid losses. "We will be forced to close down our business and the country will face shortage of essential and life saving drugs", he noted. He agreed that some of the medicines were not being produced due to costly imported raw materials, but said that such interruptions were occasional. PPMA chairman urged the government to restore SRO 471 of June 12, 1993 to again allow level playing field and end price discrimination which was also hurting the industry. To a question, he said that three multinational companies including Merck Sharp % Dhom (MSD), Squib have sold out their operations in Pakistan and others will follow if price cap was not removed. "Pharmaceutical manufacturers were expecting some relief in the budget as promised by the government, but the budget has also disappointed us", he added. He said the rise in sales tax has also affected pharmaceutical manufacturers as it is subjected on the purchase of the industry. "It's our social responsibility to make it sure the availability of medicine in the market and not compromising in the quality of medicines but under the critical situation that the local industry is facing there may be shortage of medicines in the market," he said. Shaikh said, "The government will level blame on us if there is shortage of medicines in markets."

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