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Pharmaceutical MNC’s finding difficulty to Survive in Pakistan

After the government put high taxes on active pharmaceutical components and other raw materials, which resulted in an increase in production costs, several international multinational pharmaceutical Companies (MNC’s) are considering to leave Pakistan.

The multinational exodus in Pakistan has accelerated in recent years, according to the Private newspaper.

In the past, pharmaceutical businesses just had to pay tax on their packaging. Active pharmaceutical ingredients (API) and other basic materials were exempt from sales tax.

However, the taxes levied by the government increased the cost of production by 45%. As a result, the market has lost access to some 60 important medications, including those used to prevent suicide.

Due to a lack of certain brands of essential medications on the market, hundreds of people are suffering.

Sanofi Aventis Pakistan has left the country and sold its plants to local companies, and Bayer is closing up shop as well, Pharma Bureau Executive Director Ayesha Tammy Haq of the overseas investors chamber of commerce and industry said:

‘’Sales Tax has not been reduced, sales tax has been imposed’’.

‘’Previously, the pharmaceuticals industry was exempted from sales tax. In January this year, Pakistan Tehreek-e-Insaaf (PTI) imposed 17% sales tax solely for documentation purposed that was to be refunded in its entirety’’ she added.

The administration decreased the 17 percent refundable tax to a 1% nonrefundable tax that is levied at various levels. According to local media, their price increased by 6 to 9 percent as a result.

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The cost could not be passed on to the customers due to limitations set by the Drug Regulatory Authority of Pakistan (DRAP), which establishes the maximum retail price of the drug.

The cost of transportation increased 4-fold, and the Pakistani rupee’s downward trend continues. The cost of APIs and other materials increased as a result.

Pakistan is now perceived by international investors as country with high default risk amid the ongoing economic crisis.

The cost and foreign (C and F) of imported finished medicines is 90% of its total cost.

The pricing formula for finished medicines is C and F plus 40% which gives the MRP of a drig, the report said citing a local manufacture.

The 17% discount to the retailers, transportation cost, warehousing, staff roll, etc is included in the MRP. The margins are only 5%. As a result of the currently fluctuations, the retailers have to increase the prices.

‘‘People weep and cry about shortages but nothing changes’’ Haq said.

Qazi Mansoor Dilawar, the chairman of the Pakistan pharmaceutical manufacturers association (PPMA) said unless the prices of the medicines are increased by 30 to 40% by the government or prices for medicines are deregulated, the unavailability of medicines would continue and feared that more companies could stop manufacturing several more medicines in the days to come.

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2 COMMENTS

  1. Sanofi is a good company but not paying severance as sanofi is leaving Pakistan.We all have demanded but they imposed to work under national company.Whenever a multinational company windup,it pays the compensation BUT sanofi does not pay by all means.which is very disheartening.

  2. Sanofi is a good company but not paying severance as sanofi is leaving Pakistan.We all have demanded but they imposed to work under national company.Whenever a multinational company windup,it pays the compensation BUT sanofi does not pay by all means.which is very disheartening.its not good

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