* At least $1 billion incremental gains in export expected by 2014

Pharmaceutical sector has capacity to double exports in five yearsPakistan’s pharmaceutical sector has the potential to double its export in next five years provided pricing and contracting challenges are addressed in an efficient way, according to a draft of an official study.

The study is part of Business Development Plan of the government to develop the various sectors of the economy and government is seeking the input from the relevant departments and stakeholders to have in-depth and accurate view of the issues of various sectors.

Study related to the pharmaceutical sector indicated that addressing pricing and contract manufacturing would help Pakistan in capturing opportunities along with value-chain. “Target markets for Pakistan represent at least $ 1 billion incremental gains in export by 2014 if the abovementioned issues are tackled properly”, it suggested.

About the development of the sector, study recommended that the objective should be to create the right conditions for competition instead of an absolute price control and by referring to India, it noted that many drugs in India are below the price decided by the price control regime because of the open competition.

Moreover, the freeing up pricing would have the added advantage of helping the government in achieving both its social and economical goals, it added.

“Policy mindset should shift sharply if the sector is to capture potential”, it asserted and it recommended that the right thing to do would be to create a win-win solution with significant social impact combined with strong industry growth. Study also noted that as a consequence of low investment in export capacity, the trade position has had a deteriorating position on balance of trade in this sector coupled with low profitability, which has dampened investment in export-capacity and this is one reason why Pakistan lacks FDA certified plants.

As Pakistan has no consolidated data of profitability in this sector, various pharmaceutical industries profitability are below the average global industry profitability of 30 percent, thus making Pakistan a less attractive destination for foreign investment.

Report also pointes out another area that is concerned with the availability of drugs and mentioned that availability of drugs is low in both public and private sectors.

If the corrective measures were undertaken, study mentioned, it would have a substantial social impact and important effect on the Pakistani economy as a whole.

There would a net effect of $190 million with regard to government resources for social impact as government would be allocating $350-450 million if the size grows up to $4 billion against the current size of pharma industry at $ 1.5 billion when government set asides $210 million. Also, the direct employment would rise to 150,000-200,000 in pharma industry from current 95,000 and indirect employment would also have a net effect on 225,000 jobs.

Pharma sector’s contribution in national GDP would also increase to $ 2 billion over $ 700 million presently and export would move up to $1 billion compared to $111 million at present.