Local pharmaceutical companies take a hit as border with Afghanistan closed and fenced

KARACHI: The pharmaceutical manufacturers are anticipating a significant decline in sales, as the border with Afghanistan was closed stopping informal export of medicine to the neighboring country, newsnreleases.com reported.

“Only our company used to send medicines worth approximately Rs1.0 billion to Afghanistan through informal channels,” an official of a local pharmaceutical manufacturing company said requesting anonymity.

A major border crossing between Pakistan and Afghanistan was closed in October last following clashes between the two countries’ security forces, leaving hundreds of people and vehicles stranded on both sides.

Moreover, Pakistan is building a fence along its volatile border with Afghanistan to improve security.

“Though there are no authentic numbers, but it is estimated that medicine wroth over Rs10 billion were smuggled to Afghanistan a year,” the official said.

Pakistan exported pharmaceutical products worth $211.674 million during July-June 2018-19 as against the export of $194.910 million during July-June 2017-18, showing raise of 8.6 percent, according to the latest data issued by Pakistan Bureau of Statistics (PBS).

In terms of quantity, the export of the pharmaceutical products also increased by 29.27 percent from 10,189 metric ton to 13,171 metric ton.

The legal exports to the neighboring country are continuing, but the quantum is low. Besides, it takes time in the medicines reaching their markets, and it also increases cost for the buyers.

The official said Pakistan’s pharmaceutical products were in high demand in Afghanistan, as these were much better in quality than the goods from Iran and India, the alternates available in the neighboring country. “This informal export of medicines is mentioned as local sales in the books of accounts, but actually these are smuggled abroad,” the official said adding this decline would be reflected on revenues and profits of the company.

In addition to curbs on informal exports, the closing/fencing of border with Afghanistan has also reduced inflow of patients from Afghanistan into Pakistan. “Not long ago, the doctors and physicians in bordering areas of KPK even in Peshawar were quite busy dealing with Afghan patients all day long. But now these doctors close their clinics quite early as there are very few patients,” the industry official said adding these Afghan patients used to buy a lot of medicines from stores in KPK to take with them.

Global pharmaceutical market is valued at $650 billion, with an annual growth rate of 8.0 percent. In terms of monetary value, the size of the pharmaceutical industry in Pakistan is $3.10 billion, which is hardly 0.5 percent of the market.

Given the long lags in innovation of new products, absence of research and development and increasing inflexibility in setting prices, Pakistan pharmaceutical exports are unlikely to make a mark. “There is not a single FDA approved pharmaceutical manufacturing plant in Pakistan,” the official said adding in such a situation, Pakistan could not compete in the world market.

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