Industry Trend Analysis - Multinational Drugmaker Activity To Remain Limited Despite Progressive Reforms - OCT 2017

BMI View: Opportunities for pharmaceutical firms in Pakistan will remain limited for high-value medicines. Rising chronic diseases and developments in the healthcare system will support market expansion; however the unattractive policy environment will continue to prevent significant levels of investment by foreign pharmaceutical firms.

The business environment in Pakistan will remain decidedly difficult, limiting the incentive for multinational drugmakers to invest into the country. Over the past few years, several leading pharmaceutical firms have chosen to exit the country, including Merck Sharp & Dohme, AstraZeneca, Johnson & Johnson and Bristol-Myers Squibb. We highlight that this trend of multinational companies reducing their presence in Pakistan will weigh on the patented drug market, partially offsetting the impact of positive fundamentals such as rising income and an increasing chronic disease burden, particularly in the more affluent provinces of Punjab and Sindh. In 2016, Pakistan's pharmaceutical market was valued at PKR275.8bn (USD2.6bn), experiencing a 9.2% increase from the previous year and the patented drug spending amounted to PKR25.9bn (USD250mn).

The limited drugmaker activity in the country will result in a corresponding shortage of innovative medicines which will go on to create a greater demand for counterfeit and substandard drugs. Moreover, an uncertain medicine pricing regime has resulted in the withdrawal of many essential drugs from the market paving way for adulterated drugs. For example, the Drug Regulatory Authority of Pakistan (DRAP) imprisoned 534 people and imposed fines worth PKR 107mn (USD 1.02mn) in 2016 for the manufacturing and sale of spurious drugs.

Patented Drug Market To Underperform
Pakistan: Patented Drug Market (PKRbn)
Source: National Sources, BMI

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