Increasing pharmaceutical exports

Boosting pharma exports
By Tahir Ali

(DAWN, Monday, 18 Oct, 2010)

http://news.dawn.com/wps/wcm/connect/dawn-content-library/dawn/in-paper-magazine/economic-and-business/boosting-pharma-exports-800

PAKISTAN’S low exports of pharmaceutical products at about $100 million can be significantly increased provided the local pharma sector is given incentives and relieved of regulatory burdens, industry sources say.

Though pharmaceutical exports have become the seventh largest manufacturing-based export segment, highest infrastructure and operating cost, inconsistent government policies, high duties, lack of research and development facilities, high interest rates, energy shortage and the poor security situation have obstructed efforts to raise exports to their potential.

Khalid Mehmood, chief executive of a national pharmaceutical company says the pharma industry was made to pay one per cent of its profit before tax (PBT) for the central research fund (CRF).

“We have been paying CRF for years without getting a single short or long-term benefit. No such thing is being levied on any other industry. Conversely, they are given support for setting up laboratories and R&D centres. The CRF must be eliminated if the industry has to grow,” he said.

Export insurance policy is required for protecting exporters from payment risks. While governments of the competing countries have devised protection mechanisms for their exporters, Pakistan has not. This should be done immediately,” he added.

Exports of pharmaceuticals are dependent on the capability of the manufacturer to obtain certification from WHO and other regulatory agencies of the importing countries.

“A pharmaceutical facility to qualify for accreditation by these agencies, requires at least Rs3-5 billion of capital expenditures and Rs200-300 million of operating expenses annually. This necessitates huge capital and profitability for the company,” he said.

“To be able to do that, prices of medicines should be deregulated. Ever since the Indian and the Bangladeshi authorities have done that, manufacturing plants in India and Bangladesh have gone up to 90 and four respectively while none has been set up in Pakistan, ” he informed.

Pakistan’s pharmaceutical exports are just around $100 million as against India’s exports of $11 billion which are expected to surge to $40bn by 2012.

To the fear that deregulation will increase the prices of medicines, he said, essential drugs, recommended by the WHO, should be regulated and their prices controlled. “This is being done in India and Bangladesh where only 74 and 109 molecules are on the controlled list of drugs. For all other products, the price is deregulated. Standard pricing should be adopted in the country,” said another expert.

“Some importing countries require a certificate of prices from the exporting country to establish price for imports. It harms exporters who cannot charge the higher prices prevailing in the external markets as the prices of drugs are low here and are mentioned on the registration letter. Higher price certificates should be provided to exporters only for exports,” he suggested.

Sources said exports can be increased if the quality of the products and the country’s regulatory framework are in line with the global and regional practices. “Drug regulatory requirements must be harmonised with those in ASEAN region provided prices of locally manufactured drugs are increased to their level and are deregulated. But how does Pakistan formulate a regulatory policy which is in line with the international best practices and yet it does not penalise the industry? One way is to form a pharmaceutical regulatory authority,” he suggested.

Pharmaceutical exporters need one-window fast-track facility.

“About seven days and sometimes weeks, are required for getting NOC for a consignment. Exporters would greatly benefit if one-window operation for export clearances and to expedite drug registration and clearance process is introduced,” he added.

The pharma industry also complains they have to pay five per cent workers’ profit participation fund (WPPF), and two per cent workers’ welfare fund (WWF). “Though it was meant for benefiting workers, they have least benefited from it. Industries in other countries are not taxed with the WPPF or the WWF. These should be eliminated as the tax slabs for the industry are already the highest in the world- around 35 per cent. On an emergency basis, at least the export revenue should be exempted from the two levies,” he added.

The industry will also benefit if the export freight subsidy (EFS) is introduced for it. “The EFS has been introduced for other industries in the trade policy but pharma industry has been ignored. Export development surcharge at 0.25 per cent should also be withdrawn immediately. Export refinance facility is currently in the ratio of 2:1. Performance requirement should be 1:1 as a number of countries in the region have this facility,” he desired.

As per regulation of State Bank of Pakistan vide circular No15 of August 15,, 2003 and subsequent circular No.9 of August 28, 2008, every exporting pharma company can retain 15 per cent of its sales proceeds in foreign currency account which can subsequently be used for foreign remittances and reimbursement of expenses etc.

“It is impossible to cater to huge international expenses with this amount. This is practically impossible in the initial years when expenses are high as against returns. Hence retention from 30—40 and 25—30 per cent of sales proceeds should be allowed for an exporting company having sales up to $10 million and more than $10 million respectively. This extension will not only help local exporters compete and survive in international market but also boost their exports,” he added.

As per regulation of FBR vide Sec No 152 (2), reimbursement of expenses by an exporting company to its representative office abroad is subjected to withholding tax at the rate of 30 per cent on every payment and in the case of double taxation treaty between Pakistan and exporting country, at 15 per cent of payment.

“Being reimbursement of expenses, these payments should be exempted from withholding tax and an appropriate provision be inserted in relevant section of the income tax ordinance to this effect,” he argued.

Pharmaceutical industry is providing direct and indirect employment to nearly four million people. It fulfills over 90 per cent of the country’s drug requirements. It saves huge foreign exchange as only less than 10 per cent of the medicines need to be imported. And it is fast moving towards 100 per cent self-sufficiency.

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About Tahir Ali Khan
I am an academic, freelance columnist, writer and a social worker.

2 Responses to Increasing pharmaceutical exports

  1. M.AKRAM NIAZI says:

    Analysis of Countries from Where Drugs are mainly imported:
    Finished drugs are mainly imported from neighboring countries China, India and in some extent from Bangladesh. Therefore it is necessary to analyze their own import policies to know that how they are protecting their local Industry and status of compliance of their Industries to GMP and regulatory requirements

    ________________________________________________________________________
    India

    For Protection of Local Manufacturer following measures
    Were taken By Indian Government.
    Industrial licensing for the manufacture of all drugs and pharmaceuticals has been abolished except for bulk drugs produced by the use of recombinant DNA technology, bulk drugs requiring in-vivo use of nucleic acids, and specific cell/tissue targeted formulations.
    For Restricting Imports following measures
    Were taken By Indian Government.
    • Ministry of Health and Family Welfare will enforce strict regulatory processes for import of bulk drugs and formulations.
    • For imported formulations, the margin to cover selling and distribution expenses including interest and importer’s profit shall not exceed fifty percent of the landed cost.
    • Due to Government policies and low cost of domestically produced drugs and the absence of patent rights regulations has made the Indian Market less attractive for foreign companies.
    Quality of Indian Medicines.
    “Counterfeit drugs could be the single biggest problem in India in the next ten years due to the growth of garage-based drug manufacturing outfits, rampant corruption, and weak drug control,” A 2003 Scrip report estimated that 15 to 20% of the medicines sold in the country are counterfeits. A case study reported in a 2001 conference showed the following percentage (out of 125 tracer medicines) that failed quality testing: 6% from the public sector, 12.7% from the private sector; and 0% from NGOs.
    In 2001, Lancet reported that, according to WHO statistics, India produces as much as 35% of the fake and substandard drugs in the world. A powerful group of manufacturers have taken over much of the production during the past three years. It is reported that these Counterfeit drugs are manufactured mostly in the northern states; but these fake drugs are widely available throughout the country. They are available as well in Myanmar (Burma) and Cambodia, and their distribution may even extend as far as the former Soviet states, as evidenced by the arrest of four Uzbek women caught trying to smuggle them to be sold in their country. (Ref: 2004 The United States Pharmacopeial Convention, Inc. A Review of Drug Quality in Asia with Focus on Anti-Infective).
    India was among the six countries that participated in a drug quality study which collected a total of 71 samples of the antituberculosis drugs isoniazid (INH) and rifampicin (RMP) as a single entity or a fixed-dose combination (FDC) (see Multi-country studies). Overall, 10% (4/40) of all samples obtained from all six countries, including 13% (4/30) RMP were substandard, containing < 85% of stated content. More FDCs, 21% (5/24), than single drug samples, 13% (2/16), were deemed substandard.
    Raw materials produced in India such as Metoclopramide do not complies to melting point requirement of Pharmacopeia and similarly Iron Protein succinylate produced by Indian companies do not complies to pH dependent solubility.
    _____________________________________________________________________
    China.
    Quality of Chinese Medicines:
    According to the SDA, a nation-wide survey on the quality of medicines carried out in 1998 found that 13.1% of the 20,000 batches tested were either counterfeit or fell below minimal pharmaceutical standards.
    In 1997, China News Digest reported that the Health Ministry of China inspected 1100 medicines and found 138 products that failed to meet national standards. Of these, 48 were fake medicines with pirated registration numbers.
    At the 2002 Global Forum on Pharmaceutical Anti counterfeiting held in Geneva, Switzerland, a representative from the Glaxo SmithKline (GSK) pharmaceutical company reported on the counterfeiting of two of their products in China. The first was Imuran tablets. The counterfeit Imuran was found to contain the correct amount of azathioprine, the active ingredient; however, the tablets were labeled incorrectly as “azathiopring.” Upon testing, the tablets failed the quality specification for disintegration time. The tablets were still intact after four hours in water at 37 °C, while genuine tablets dissolve in 45 minutes. The other drug was Zinacef tablets. The genuine oral dosage form contains cefuroxime axetil; the counterfeit Zinacef tablets revealed the presence of cefuroxime sodium, the injectable dose form. When taken orally, cefuroxime sodium is absorbed minimally by the digestive system resulting in no therapeutic benefit.
    _______________________________________________________________________
    Bangladesh.
    For Protection of Local Manufacturer following measures
    were taken By Government.
    1. The importing of a drug which is the same or one produced in the country, or a close substitute for it, may not be imported, as a measure of protection for the local industry. However, if local production is far short of need, this condition may be relaxed in some cases.
    2. A basic pharmaceutical raw material, which is locally manufactured, will be given protection by disallowing it or its substitute to be imported if sufficient quantity is available in the country.
    3. No foreign brands may be manufactured under license in any factory in Bangladesh if the same or similar products are available/manufactured in Bangladesh.
    4. No multinational company without their own factory in Bangladesh will be allowed to market their products after manufacturing them in another factory in Bangladesh on a toll basis.
    Restrictions on patent rights discourage foreign investors to come up actively in the pharmaceutical market in Bangladesh. Moreover introduction of new molecules is difficult due to slow registration process and restrictions.
    Quality of Medicines from Bangladesh:
    Among the total 245 pharmaceutical manufacturers only top 20 leading manufacturers are producing good quality medicines in the country and most others are engaged in the production of substandard or fake drugs. Substandard or fake versions of life-saving drugs are alarmingly prevalent in Bangladesh markets. In some cases, it is around 70% to 80%.
    One media report showed that among all the pharmaceutical manufacturers only 20 to 25 companies are producing quality medicines in the country. The situation clearly raises a question about the role of the remainder manufacturers.
    They are mainly involved in the production of fake/substandard or imitating renowned brands of various drugs. At present, spurious drugs have been flooded all over Bangladesh. Another testing conducted by the drug regulating body found 69% paracetamol tablets and 80% ampicillin capsules as substandard from some small manufacturers.
    A recent assay involving 15 brands of ciprofloxacin showed that 47% of the collected samples containing active ingredient less than the required specification.
    In a survey conducted during 1988-91, it was found that 66 of the 198 licensed manufacturers were each producing between 1 and 16 substandard drugs (49% OTC drugs and 6.3% injectables, the remainder being non-injectable prescription drugs). Of the OTC products, about 36% was paracetamol and 41% consisted of antacids. The content of the active ingredients was found to be insufficient.
    In 1992, quality studies were conducted on paracetamol tablets, ampicillin capsules, cotrimoxazole tablets/suspensions, vitamin B-complex tablets/capsules/injectables, and vitamin B-2 tablets. A total of 137 brand samples of these drugs were obtained from retail shops in various parts of the country and analyzed for level of content of the active ingredients as well as the disintegration of tablets. Results showed 37 samples were substandard, all manufactured by small companies. Of the 16 brands of paracetamol tablets and 10 brands of ampicillin capsules that were substandard, 11 and 8 respectively, had previously been considered substandard in an assessment conducted by the regulatory authority. This holds true also for the two brands of cotrimoxazole suspension found to be substandard. All analyzed products for 13 of the top 15 companies in Bangladesh met the required standards.
    A recent case study involving a sample of 15 brands of ciprofloxacin collected for chemical assay by HPLC and bioassay revealed seven brands containing active ingredient less than the USP specification.
    (Ref: 2004 the United States Pharmacopeial Convention, Inc. A Review of Drug Quality in Asia with Focus on Anti-Infectives )

    Conclusion:
    From all above analysis it is clear that importing Drugs from these countries will be not only harmful for the economy but also dangerous for the health and safety of the nation.

    Therefore, it is needed to restrict import of Low Quality Finished products specially from India and China or any other country by levying Protection duties on products which are produced locally and measures should be taken to improve growth of Local Pharmaceuticals as well as to promote exports of Pharmaceuticals.

    M.AKRAM KHAN NIAZI.

  2. saqib anwer says:

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    FUMIGATION:-

    Fumigation is a process of exposing insects or material infested by insects to the fumes of a chemical at a lethal strength in an enclosed space for a given period of time. Fumigant is a chemical, which at a required temperature and pressure can exist in the gaseous state in sufficient concentration to be lethal to a given pest organism. Fumigation is the introduction of the toxic gas in high concentration so that the gas pervades the entire area and kills the insects prevalent and thus preserves the precious cargo of the customer.

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    Fumigation is a Quarantine requirement for countries such as Australia, New Zealand and China before goods are admitted into the country.

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    After treatments we issue Certificates & if require also arrange Govt’s Phytosanicary Certificates verifying are our treatments.

    FUMIGATION OF RAW MATERIALS:
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    ii) By Phosphate Gas Tablet dose require @ 1.1 Tab per M3
    (With Instruction to Exporter for proper cleaning & packing).
    CONTAINER FUMIGATION WITH METHYL BROMIDE:

    After stuffing some time Container goes to container yards terminal, of KPT/QICT (inside port areas) Customs Department to fulfill their custom formalities and to sealed the container.

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    Fumigation is especially with Methyl Bromide carried out in accordance to “AQIS” (Australian Quarantine & Inspection Services) set standards.

    ALUMINUM PHOSPHATE FUMIGATION:

    Aluminum Phosphate is in the form of tablets and are also use worldwide for fumigation of raw and processed commodities including grains, tobacco, nuts seeds, animal feeds, tea, coffee leaf, wheat flour, processed spices, dried fruits. It can also be used for fumigating storage structures like silos warehouses, flour mills ship holds, railcars etc. The period required 3 – 6 days time keeping in view the conditions & temperature, USA and some other countries requires Phosphine gas Fumigation.
    WOOD TREATMENT & WOOD PACKING FUMIGATION:
    ISPM 15 fumigation accredited to carry out phytosanitary treatment. This includes the application of Methyl Bromide Fumigation treatment and IPPC marks defined under the International Standards for Phytosanitary measures (i.e. ISPM 15) for solid wood packaging.

    ISPM:-
    The international ISPM 15 requirements on wood pallets apply to all species of coniferous and non-coniferous packaging materials. The standard does not apply to wood packaging made wholly of products such as plywood, particle board, oriented strand board, medium density fiber board or products created using glue, heat and pressure or a combination of these.
    Most member countries have already partially or fully implemented the standards. The EU, Australia, Canada and South Africa are also implementing bans on coniferous wood packaging and in certain cases non-coniferous hardwood packaging, meaning shipping pallets (skids), crates, and wood used to secure ocean cargo loads.
    Under the ISPM15 requirements, exporters would be required to heat treat wood packaging material to a minimum core temperature of 56AºC for a minimum of 30 minutes. Exporters could also use methyl bromide to fumigate the wood packing.
    The rule requires certification of the packaging with an approved International Plant Protection Convention (IPPC) logo. Unmarked Wooden Packing Materials / Woods.
    Will be considered untreated and (objectionable) non-compliant.

    METHYL BROMIDE FUMIGATION

    Methyl Bromide is most widely used fumigant for Quarantine purposes. It is a
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    aeration can be carried out easily. It is very effective in controlling all stages of
    insects from egg to the adult stage. Quarantine Authorities around the world have
    stipulated that methyl bromide fumigation has to be carried out for all the packing
    materials which are made out of Wood, Straw materials.

    The aim is to prevent pests, other insects and biological material from being transferred unknowingly from one country to another. Goods packed in wood material that does not comply with the ISPM15 standard will be returned to the Exporter at their expense.
    The international ISPM15 requirements on wood pallets apply to all species of coniferous and non-coniferous packaging materials. The standard does not apply to wood packaging made wholly of products such as plywood, particle board, oriented strand board, medium density fiber board or products created using glue, heat and pressure or a combination of these.
    Most member countries have already partially or fully implemented the standards. The EU, Australia, Canada and South Africa are also implementing bans on coniferous wood packaging and in certain cases non-coniferous hardwood packaging, meaning shipping pallets (skids), crates, and wood used to secure ocean cargo loads.
    Under the ISPM15 requirements, exporters would be required to heat treat wood packaging material to a minimum core temperature of 56AºC for a minimum of 30 minutes. Exporters could also use Methyl Bromide to fumigate the wood packing.
    The following information is a complete extract from AQIS Advice Notice No. 2007/09 regarding ISPM15. ISPM15 requires the use of either heat treatment or fumigation using methyl bromide, as the only two approved methods to enable compliance.

    1. Compliant Wood Packaging Material

    Wood packaging is only recognized as ISPM 15 compliant when the following conditions have been met:
    1. It has been treated by an approved treatment; and
    2. It bears an internationally recognized certification mark
    2. Approved Treatments

    Under the ISPM15 standard there are currently only two approved forms of treatment:
    Heat treatment (a core temperature of 56°C must be reached and maintained for a minimum of 30 minutes); and

    Fumigation with methyl bromide (as per the table below)
    Temperature Dosage (g/m3) Minimum concentration (g/m3) at:
    2hrs 4hrs 12hrs 24hrs
    21°C or above 48 36 31 28 24
    16°C or above 56 42 36 32 28
    10°C or above 64 48 42 36 32
    The minimum temperature should not be less than 20°C and the minimum exposure time must be 24 hours. (as per conditions).
    3. The Internationally Recognized Mark

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    The IPPC mark,
    XX – the country code (AU for Australia)
    YY- the treatment code (HT or MB)
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    Exporters should note that countries that are enforcing the ISPM 15 standard will NOT accept fumigation or heat treatment. Certificates in lieu of the internationally recognized mark, even when the packaging has been treated / fumigated.
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    http://www.ppcfum.com
    sa_rehmani@hotmail.com
    92-21-32218113
    921-21-32639899
    Fax: 92-21-32621560
    0300-2237754

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