I&M Exclusive: Discussion with Mohammad Amin Khan Chairman, ZAFA Pharmaceutical Laboratories (Pvt.) Ltd.

 

Mohammad Amin Khan
Chairman
ZAFA Labs

A gentle and a soft-spoken person, Mr. Muhammad Amin Khan, is chairman of one of the most dynamic and successful pharmaceutical companies of Pakistan. ZAFA has one of the largest manufacturing facilities in Pakistan with total covered area of over 500,000 square feet, and is operating nine manufacturing facilities. It is the first and only Pakistan based multinational having its manufacturing unit in Sudan.  As he describes in this interview, this success has been built on simple principles and values:  patriotism, product quality and positive thinking.  He is always passionate about his objective of “ensuring the availability of quality drugs at affordable prices throughout the country and abroad.”  During his exclusive interview, he was joined by his young and energetic son, Mr. Mohammad Jawad Amin Khan, who also shared his views on the present state, issues and problems of the pharmaceutical industry in Pakistan as well as abroad. Under the training and guidance received from his highly

Jawad Amin Khan
Managing Director
ZAFA Labs.

experienced father, Mr. Jawad shoulders major responsibilities of operations and manufacturing of Zafa products as Managing Director of the group. He shared his mission and vision about the pharmaceutical sector of Pakistan with I&M in the following pages.

"No one should suffer from Want of Medication" 

Vision & Mission of ZAFA Pharmaceuticals:

ZAFA firmly believes that "No one should suffer from Want of Medication" and our motto of "Medicines for All" is clearly depicted in our pricing strategy.

For the past 42 years we have always focused only on our business. We do not waste our time worrying about how much money our competitor is making or on how much investment they are doing and just focus our energy in our own developments and excel in our work.

ZAFA’s basic principle is to ensure that every citizen of Pakistan should have access to Quality medication and with my scientific base and my experience in the initial years at a Major Multinational Pharmaceutical company I have ensured that at every level there should be no compromise on Quality. I am sure once you go through our product list you can clearly see that all our medicines are rightly priced without any compromise on our part.

I would also like to clarify that we manufacture Quality Products at economical prices but we do not reach our selling price by calculating at what price my competitors are selling however at ZAFA we have our own understanding of how much profitability should we have and then work upwards after calculating our cost and margins. I can give you two examples whereby we are API manufacturers of products, like Paracetamol and Amoxicillin however our finished products are available at higher prices than the usual ones in the market since we manufacture only Quality Products.

In 1973, I founded ZAFA with a few employees and now we have 5600 employees working in our different units. ZAFA has one of the largest manufacturing facilities in Pakistan with total covered area of over 500,000 square feet.  We are operating with nine manufacturing facilities.  ZAFA is the first Pakistan- based multinational pharmaceutical manufacturing concern with its own manufacturing facility based in Khartoum, Sudan. In addition to this, we have our presence in various African, Asian. Middle Eastern and South & Central American countries.

Products & Sales of ZAFA Pharmaceuticals:

Fortunately, whichever market we have entered, with the Grace of Allah Almighty, we have only seen our volumes go up. In line with our belief of Manufacturing Quality Products only and not compromising on Quality, we are the only company in Pakistan that guarantees that there will be no cross-contamination in our products with the help of our various dedicated facilities. In addition to quality control facilities at each of our units, we have a fully equipped Central Quality Assurance/Control Laboratory to monitor quality operations.

We have dedicated specific plants in various locations for different products, irrespective of their quantity. We have strength and we have weaknesses too. Our major weakness is that we don’t want to show-off. What we have is in front of all. We are focused towards the masses and work differently than the normal pattern in Pakistan. Our pricing policy is focused towards our citizens, citizen of this country, Pakistan, which has given all of us EVERYTHING. The people who are aware and educated choose ZAFA products above multinational’s products since the quality is the same, and the price is less. In Karachi, as per our sales patterns, highest sales are realized in well-to-do-areas Like DHA or PECHS, etc. ZAFA has realistic prices and the educated people, who are aware and know how to judge quality, use ZAFA products. ZAFA is all about my belief in the theory of “medicine for all”. We manufacture some products on no-loss no-profit level which are classified as Orphan Drugs. We have a whole list of products whereby our unit wise sales are much higher than those of multinationals and as a policy we don’t give our unit data to IMS or any other private agency. We have some products whose sales are much greater than the same multinational products.  

ZAFA exports its medicines at much higher prices as we firmly believe that our true responsibility is towards our own people however when we export we follow their market trends and in many countries our prices are much higher than in Pakistan. Likewise, we truly understand the working of the multinationals in Pakistan who are here for profit as we are doing the same in other countries; however we truly appreciate their contributions towards the growth of the national sector. They bring in latest products and latest technology, research and professionalism. They contribute in human resource development. We should appreciate them and should not expect them to make their products available at low prices. We should all understand that they are here to make money and we should let them make money however we should make use of their expertise which they have learnt in their long journey to be where they are today and grow. Major research companies spend huge amounts of funds on R&D and have various patents. We respect their patents and ZAFA has never infringed any patents. We respect all laws which give encouragement to Intellectual property and believe that they should be respected.

Contract Manufacturing in Pakistan:

We firmly believe that it should be between manufacturing companies only, i mean one manufacturing company to another. It has been misused widely.  For example, if I have a dedicated facility for Cephalosporin or for Penicillin, and if another manufacturer wants to have market these products but do not want to invest in a dedicated facility than he should be encouraged to get them manufactured at a dedicated facility. This would overall increase the quality of products in the market. However and any random person from the market should not come to you and hires you for contract manufacturing. This currently needs to be discouraged since the liability of the product is on the manufacturer. I firmly believe that contract manufacturing should be within manufacturing companies only and also for those companies who are currently importing their products and want to now manufacture the product locally. This would firstly ensure betterment of quality of Pharmaceutical products and for imported products, manufactured locally, will bring in new product technology to Pakistan.

 Sub-Standard and Counterfeit Drugs:

Smallest investment in pharmaceutical sector is about Rs. 150 million (15 crores).  I personally do not believe that anybody will invest millions of rupees and then manufacture sub-standard or counterfeit drugs. It is beyond imagination that knowingly a licensed manufacturer will manufacture counterfeit or sub-standard drugs. Errors are possible. They happen around the world. If you go on the US FDA website you can daily see a number of medicines being withdrawn because they have manufacturing errors.

Pakistan and South Asia Region:

Pakistani companies export on better prices than our competitors in the region. In the markets where we compete with India, Pakistani drugs have a better price than many Indian manufacturers, on the basis of quality. This can be seen and verified by data. But we are not showing these positive things to our Masses and to the people of Pakistan. I fail to understand why everyone shows a very negative image about Pakistan.

Regulators in Pharmaceutical Industry of Pakistan:

I think they have done a fantastic job. I'm sure a lot of national companies like mine will owe their growth to the guidance given by our Regulators at every level. If Pakistani Pharmaceutical companies can export its medicines at higher prices on the basis of its quality it clearly depicts the hard work that our regulators have done with us. In the last 20 years we saw a change from strict regulation to partnership and eventually learning. This has helped a lot of us companies in further improving our Quality Operations which reflects on the quality of our products.

Human Resource Development:

We firmly believe that only professional people can run a progressive organization and implement its beliefs and philosophies. Our employees are one of our most important assets and we run carefully tailored training programs are provided around the year for updating their knowledge and skills. In Pakistan, pharmacy education is of international standard and we are proud of it.

I feel that exports are very vital for development of companies. I Am sure that if we pharma companies can form strategic alliances and synchronize our energies we would be able to do a much better job in achieving Pakistan's export targets and raise the standard of Quality medicines in Pakistan.

I&M Exclusive: Discussion with Mr. Haroon Qassim, Managing Director, Pharmevo (Pvt.) Limited

With a rich academic background, Mr. Haroon Qassim has an in-depth knowledge of Pakistan Pharmaceutical Industry, having served as Chairman of PPMA.  Mr. Haroon Qassim is a modern corporate executive who runs his company at the standard and level of a multi-national corporation.  Beyond corporate business success, he is dedicated to Corporate Social Responsibility.  The books, brochures, messages, and calendars of PharmEvo are renowned for PharmEvo’s dedication to national development.  Mr. Haroon Qassim puts national human resource development and education at the center of Pakistan’s national development and enhancing the image of Pakistan and Father of Nation Quaid-e-Azam Mohammad Ali Jinnah.  For this reason, he has taken immense interest in the activities of Memon Professional Forum, Memon Medical Institute, and HeartFile, among other organizations.he has been a speaker on national issues in particularly related to pharmaceutical industry from various platforms. He was in the pivotal role in organizing an international seminar on the subject “Pakistan Pharma Summit” during his tenure as chairman of PPMA.

In this interview with I&M, he talks about the need for the government to formulate and positive and balanced policy for the growth of the pharma industry of Pakistan.

“The basic requirements for surviving and excelling  in this competitive world as survival calls not only for ‘fittest’ but also for finest” - Mr. Haroon Qassim

Pricing Policy: 

The government has to take a decision in consultation with the stakeholders. Price increase is inevitable. There is no option left for us as raw material prices are not declining in global markets.  Energy, food, salaries, everything has gone way up, so why not drug prices? There is no justification for not increasing prices.  In Pakistan, there is a political element in the consideration of medicine prices, which impacts the pharma industry badly. This dismal outlook  greatly hampers any investment or improvement in the industry.  

There should be a market-based pricing.  The government should not prescribe  prices in the industry.  They should talk about quality not prices. I don’t understand why a  government should interfere in pricing. If they want to control the industry, then they should also consider entering production and manufacturing.  Government should not expect the private sector to manufacture and subsidize the healthcare cost.

Withdrawal of Multinational Companies:

If the business environment does not improve, the pullout will increase because multinationals are here to make a profit. Simply put, if things go otherwise ,they will rather prefer to leave.

Pharma Industry in Pakistan and Region:

The regional industry is burgeoning because  governments have supported them. For example,  In India, they have a limited number of products (essential life drugs) under price control.  We can learn from them.  They have regulations for molecules not for drug pricing.  Moreover, they do not control prices for all molecules.

Drugs from Pakistan have been exported to countries like Sri Lanka, Philippines, Vietnam, etc. & none of these have price controls as prices are market-based . We also make our pricing for these countries as per market competition, but unfortunately, we have to refer to government pricing to sell in our own country.

Competition in Export Markets:

We are very competitive against India and China in our regional markets.   Pakistan’s top level companies are exporting to Far East countries and their products are good and competitive. 

Over the past five years, Pakistan’s pharma industry export  has stalled  because industry is badly distracted  by issues they should not be caught up in the first place. Subject of export is begging for the attention of regulators and government.  There are no incentives for investment in Pakistan, so national companies are not making investments for export production.  To compound the problem, even Far East countries are becoming more stringent in regulations and in future we may have a tough time there. In the face of these challenges, the government must respond & take initiatives for growth in bilateral trade.

Cooperation of TDAP and BOI:

TDAP supports pharma industry in exports, but they have their own limits because they also depend on funding from the federal government. They have other industries to look after as well, like textiles. They do listen to us, but their hands are tied as they don’t have extra funds for the pharma industry.

As far as BOI is concerned, I think their work will be difficult unless the government creates better business conditions for the pharma industry.  Our government should encourage the pharma industry, but the problem is that the government is going in one direction and industry is going in another direction.  There is a huge trust deficit and  no long-term vision. Government should play its role responsibly and effectively.  The industry must also adapt to  international regulations to survive and to compete on global standards. 

Subjects of Agreement and Disagreement with Pharma Bureau:

We don’t have a disagreement on price issue with multinationals.  On the subject of patents, we want things to be fair. 

Human resource Development:

Unfortunately,  human resource cannot be quantified in the balance sheet.  At PharmEvo, we work on human resource development. Our education policy & sponsoring our employees for higher education can provide an idea on how serious we are in human capital development. In our corporate philosophy of human development, we emphasize on four things: Competence, Commitment, Consistency and Compassion, the basic requirements for surviving and excelling  in this competitive world as survival calls not only for ‘fittest’ but also for finest. We also never ever permitted politics to pervade in our corporate fabric. People join us and  progress as per their skills and performances & we can gladly say that Alhamdullilah, we have a very dynamic team.   Thus HR development holds the key to national progress.

Counterfeit and Spurious Drugs:

With due respect (to the media), this matter is sensationalized by the media.  Government  ministers give statements at the parliamentary level that attract international media & in turn affects the industry’s export and sales.  It should not be over-sensationalized as this menace is not created by registered pharmaceutical companies in Pakistan. Criminal people do this and it is the duty of government to pursue and prosecute the criminals.  That is the way to play a constructive role, not through price controls.

I&M Exclusive: Interview with Dr. Haroon Siddiqi, Chairman, EPLA Laboratories Pvt. Limited

Dr. Mohammad Haroon Siddiqi may well be called the “treasure of knowledge” for the pharma industry of Pakistan.  He has the honour and distinction of serving as the first President of PPMA from a national company.  His company, EPLA, was one of the founding members of PPMA, and the vision and dedication of Mr. Ehtashamuddin Siddiqui (late), his father, laid the foundation for the growth of the pharma industry of Pakistan.   In those days, Ministry of Health brought foreign delegations to EPLA, located in S.I.T.E., as a model and example of the pharma industry of Pakistan.  Since the time of the first Chairman of EPLA, Mr. Ehtashamuddin Siddiqui (late), EPLA officials have provided vision, leadership, advice, and inspiration for the pharma industry of Pakistan.  Serving as the Honorary Consul General of Uganda in Karachi, Dr. Haroon is in the forefront of building business ties between Pakistan and Africa.

“Prices should be competitive and market based”- Dr. Haroon Siddiqi

I&M:  EPLA is one of the oldest pharmaceutical companies of Pakistan.  Kindly give us a summary of the history of EPLA.

Dr. Haroon Siddiqi with Prof. S. B. Hassan, President 
 and Chief Editor, I&M and Salman Hassan, VP, I&M

Dr. Haroon: EPLA Laboratories (Pvt) Limited, as it is known now, was initially called Eastern Pharmaceutical Laboratories when it was established by my father Mr. Ehtasham Ali Siddiqi in 1952. The company grew well, by the Grace of Allah, and we decided to construct a new factory in SITE Area, Karachi in 1960. In 1962, we registered it as private limited company and in 1976 we changed its name to EPLA Laboratories Private Limited. EPLA is the name we took from our branded products, like Eplazyme. It was our highest selling product. We started from Karachi and now have a distribution network all over Pakistan.

I&M:  What was your initial role and assignment in Epla?

Dr. Haroon: When this company was established, I was studying in medical college. After completing my studies, I joined EPLA in 1967, and was involved in promotional activities, training of medical representatives, and marketing. After the death of my esteemed father, I took over his responsibilities.

I&M:  Were you satisfied with the progress of EPLA’s new factory and did it deliver desired results?

Dr. Haroon: Certainly!!  It was the only Pakistani company worth showing to foreigners or investors at that time. Pakistan’s Ministry of Health appreciated us and whenever any foreign health minister visited Pakistan, the Ministry organized a visit to EPLA Laboratories. Various delegations visited EPLA and it was shown to them as an example of the high-standard of Pakistan’s pharma sector.

I&M:  What was the role of government in the pharma industry in those years?

Dr. Haroon: At that time, health and pharma industry were provincial government subjects.  In the 1960s, Dr. Junejo was there to control the health and pharma sector. You just needed to write an application or proposal to him for drug registration. It was very easy in those years.  There was no drug industry, so there was no drug regulatory authority at the time of partition. After a few years, when two or three companies were established in Karachi as well as in Lahore and started manufacturing drugs, the government formed a small department of drug controllers.  Provinces use to control all the activities till the 1970s.  Production and regulation ran well till the Generic Drugs Scheme launched in 1971.  The government thought this would decrease prices and raise public welfare.  All the brands were abolished at that time and you had to sell drugs with generic names.  For example, Aspro Nicholas changed to Aspirin.

I&M:  Do you think in this period the menace of spurious and sub-standard drugs emerged?

Dr. Haroon: Yes you may say that this was a result of generics scheme.  Many unethical businessmen started making tablets, using cheap and spurious raw material and sold it using the generic name.   Since there were few testing laboratories, there was no control, and it was easy to make and sell sub-standard or spurious drugs. This was the first time when this menace became more prominent in the pharma industry.   The government had to reverse the generics scheme in 1976 in order to control quality, and they shifted back to the selling of products by the brand names.  As far as I remember, it was the PPP government at that time which realized that the Generics Act is badly affecting quality control in drug manufacturing.

I&M:  At that time, was there any research activity in Pakistan’s pharmaceutical sector?

Dr. Haroon: Research is not an easy subject. Research means you create something new, like a new procedure or method. It requires a lot of knowledge as well as money.  In Pakistan, the industry didn’t have that background knowledge, and we didn’t have finances to go into research. What we could do is follow the pattern or procedures given by other research companies through official books. What is manufacturing? We buy raw material (already researched and made) called Active Pharmaceutical Ingredients (API), include few chemicals like binders, anti-fungal or anti-oxidant, etc. and compress the mixture into tablets.  That is manufacturing.

We cannot do basic research. Even if we want to make basic raw material, we have to import chemicals.  The basic raw material is the by-product of the petro-chemical industry. When oil is refined there are some burn-overs called Naptha, which is a by-product.  Naptha is broken down into different chemicals used as raw material in the pharmaceutical industry. We still don’t have any chemical plant in Pakistan which can supply fine chemicals to the pharmaceutical industry. We have to import it and exporters charge us as much as they want.  When we convert it to basic raw material, we incur additional costs.

I&M:  You have the honour of serving as the first President of PPMA from a national pharma company.  What are your memories from the founding years of PPMA?

Dr. Haroon: A few multinationals and few national companies made an organization called PPMA. At that time, there were two wings of PPMA i.e. East and West.  After the separation of East Pakistan, PPMA developed on a regional basis i.e. North & South. I used to attend their meetings at that time. The meetings were really informal, and the officials would sit together, identify their problems and find solutions.  At that time, the Chairman was always from a multinational as they were much stronger in the industry as compared to national companies. After a few years, I thought I should not only attend meetings but serve on a committee as well.  It was not encouraged.  But after a few years, I was the first chairman who came from national company.

I&M:  What was the major issue at the time when you were the chairman of PPMA?

Dr. Haroon: Pricing was an issue at that time also. We made a presentation and invested in a campaign.  We gave advertisements against price control for the government’s attention in newspapers.  Whenever I went to the Secretary of Ministry, he used to show me literature and budget expenses advocate lower prices.  This problem is going on for a long time. Price war started with the Drug Act 1976, when they started to register the products again.

I&M:  What was the procedure to get licenses at that time?

Dr. Haroon: When licensing began, all the existing companies had to go through the license procedure.  Then they had to register all the products manufactured in their companies, for which they had to give all the details like formulation and prices etc.  The procedure for getting licenses included forms which contained questions like date of establishment of company, location, area covered, number of employees, name of the pharmacist and chemist, product range, etc. 

For a new company, the application procedure took 6-12 months.  It involved a lot of investment and risk.  For example, if they allowed you to sell your product but fixed prices less than cost, you could not continue. So these were the problems with licensing in the initial years.

I&M:  In your view, to what extent government should have price control?

Dr. Haroon: Prices should be competitive and market based. We should let market forces decides the prices. Other than that there are three ways. First is that the government allows Cost plus Pricing. It is on one-to one basis and increases the likelihood of corruption. Second is average pricing:  the average of all prices in the market for a product is fixed as the maximum price. But it is not viable here because prices are already controlled. We can see the example of India.  The Average Pricing Policy has been dropped in favour of market-based prices, not controlled by Government.

Third is Regional Pricing, which means we take prices of regional countries and fix a regional average price. 

Most companies are in favor of Regional Pricing Policy, but government is not. Government at this time is saying go back to 2013 prices. Originators should have further 30% reduced prices and the next price increase will be in 2016, according to the inflation and foreign exchange rates. Personally, I think Government should control quality not prices.

I&M:  Does Epla compete for tenders of government hospitals for drugs?

Dr. Haroon: Yes!  We supply to the Government Hospitals as well as to defense. In defense department, registration process is really strict. We have been supplying to them for 25 years but there is much competition now. The process of registration and approval is long in defense department and the recovery of bills take 3-6 months. We have to do special packaging and printing for them also. Likewise, to supply to the government hospitals, we have to do packaging in green color for which we incur extra cost.

I&M:  To which countries do you export your products?

Dr. Haroon: We export different products to Yemen, Kenya, Sudan, Sri Lanka, Uganda, Vietnam and Macao. We are preparing for Tanzania also.

I&M:  What are your views about Human resource in Pharmaceutical Sector of Pakistan?  EPLA runs training or educational programs?

Dr. Haroon: Yes, we run regular training programs in EPLA for our employees.  In the hiring and recruitment procedures, we face difficulty in finding right candidates.  More females are getting pharma education and we cannot employ them for late hours. So we face problems in this regard.

I&M Exclusive: Interview with Senator Haseeb Khan, Chairman, Brookes Pharma Ltd

Elegant pharma industry veteran who is very young at heart.  He is widely admired as a brilliant and imaginative leader with an incredibly wide range of intellectual interests.  He is equally comfortable with the intricacies of Urdu poetry and Japanese Reiki as he is with the complexities of the pharma industry of Pakistan.  Senator Abdul Haseeb Khan has contributed to numerous projects, buildings, non-profits, and charitable causes throughout his life, by the Grace of Allah.  These include Abbasi Shaheed Hospital, Karachi University, Indus Hospital and Reiki Institute to name just a few.  Not content with his industrial and business success, Senator Haseeb Khan entered politics as Senator in 2009 for the national development of Pakistan.  In this role, he has the distinction of envisioning and spear-heading the Drug Regulation Act of Pakistan.

A visionary industrialist and patriotic citizen, Senator Abdul Hasseb Khan talks with I&M about the success of Brookes Pharma and the complexities of Pakistan’s pharma industry.

"Quality is our Priority" - Senator Abdul Haseeb Khan

I&M: Brookes Pharma Ltd. is an example of a Pakistani pharmaceutical company with high standards, international standing, and business success.  What is the secret of this success?

Senator Abdul Haseeb Khan:

The reason for this success is that quality is our priority.  We have steadily gained growth in domestic and international markets.  We encourage opportunities in a modest manner.  We began exports with one destination, which was Sri Lanka.  Now we export to 13 countries.  We are steadily increasing our export destinations by one or two each year.  To manufacture a quality medicine, there are defined expenses.  If you cut these expenses, it will be possible to reduce the price.  In this way, it might be possible to increase domestic sales, but not foreign sales.  Whichever company is exporting from Pakistan, it is a reliable company.  There are 25-30 Pakistani companies operating with international standards.  They are present in the international market.  Brookes is present in the international market and we compete on the basis of quality and price.  In Sri Lanka, one of my products is priced higher than an Indian product. Still, it is successful due to its quality.  In the international market, quality is primary and price is secondary.  In Pakistan, price seems to be primary.  For example, the Ministry of Health always demands that the price should be reduced to make it affordable.  In reality, their principle should be:  "Good quality at affordable price."

I&M:  What is the overall standard and image of the Pakistani pharmaceutical industry and which regions provide markets for Pakistani pharmaceutical products?

Senator Abdul Haseeb Khan:

There is no FDA certified Pakistani pharma company, although there are 4 FDA certified pharm companies in Bangladesh!  Therefore, France, Germany, UK, USA, Japan are not export destinations for pharma products from Pakistan.    If you leave these 5 countries, there is an open market in the world.  There are plentiful opportunities in African countries, Central Asian countries, Far East region, like Vietnam.

In medicine, there are WHO guidelines.  The companies that follow these rules and guidelines are quality manufacturers. Those companies which deviate from these rules and guidelines produce inferior and harmful drugs.  There are 650 companies in the Pakistani pharmaceutical industry.  From these, 100 companies have 95% of the market.  These 100 companies are quality manufacturers.

I&M:  The pharmaceutical industry is often divided into three groups:  Multinationals, Reputed Nationals, and Low-standard Nationals.  What is your opinion?

Senator Abdul Haseeb Khan:

We should divide the industry into two groups:  One group follows CGMP and the other does not.   So, the first group includes all 22 multinationals in Pakistan and 88 national companies which abide by CGMP.  The companies that are not following CGMP are 550 and they have 5% of the market.  These non-CGMP companies survive by producing low-quality drugs which are often delivered at low-price to low-standard government and private hospitals.   The patients die from these drugs.  Brooks Pharma does not quote to government hospitals.  For example, if government wants to purchase an injection for Rs. 1.50, but we pay Rs.3.50 for a clean and empty ampule, it is not possible for us to respond to the tender.  I wash the empty ampule with distilled water and the net cost to me Rs. 5.00. 

For many of the hospitals, the purchase principle is:  Lowest Price.  By comparison, I may say that national defence forces are a very big customer.  They have a very high standard, which includes a pre-inspection process, after which they short-list 10 companies.  When they float a tender, only those 10 companies may apply.   The competition is tough.  Sometimes one company wins and sometimes another.  Again I say, in the pharmaceutical sector, price and quality should both be priorities.  Many private hospitals also have a high-standard.

I&M:  How do you prevent or combat counterfeit drugs?

Senator Abdul Haseeb Khan:

We inform our distributor.  They reply that we should identify the perpetrator.  Unfortunately,  if the criminals are identified, they will still not be arrested due to corruption.  The business of fake and counterfeit drugs happens in wholesale market.  Our main precaution is that our drugs are sold directly to the chemist.  They are sold with a warranty.

I&M:  What is the degree of research and development in the pharmaceutical sector of Pakistan?

Senator Abdul Haseeb Khan:

Well, the commonly used term is “research and development”.    In fact, in Pakistan, research is not done.  Product development is done, in the sense that features like pricing and packaging are modified and adjusted.  The concept of research is missing both at private and government levels.   This is unfortunate, since today research and development are necessary to enter even small foreign markets. 

I&M:  What are some examples of unethical practices by some pharma companies to market or promote their products?

Senator Abdul Haseeb Khan:

Many pharma concerns offer informal transactions in cash or kind to enhance sales of their particular product.  Many doctors are provided free leisure trips to foreign countries.  Some of them get such expensive ‘gifts’ like power generators, UPS, computers for their kids, laptops and trendy mobile phones for their own use.  Pharma companies are offering huge discounts to chemists to replace the doctor prescriptions  .  Some pharma companies are making look-alike packaging of fast-running brands to manipulate the patients.  Medicine distributors easily find room to manipulate the prices of medicines and use palm-greasing and other unprofessional methods to boost sales.   All these are examples of highly unethical practices that should be identified, condemned and prevented.

I&M:  As a Senator, you were in the forefront of the Drug Regulation Act of Pakistan.  What was the motivation?

Senator Abdul Haseeb Khan:

I created it in response to the challenge posed by the devolution of powers to provincial authorities.  After health and education were devolved to the provinces, there was a need for a central body.  Health and education are international subjects.  Who will WHO talk with?  For two years, Cabinet Division was looking after national health and the pharmaceutical sector.  I said enough is enough.  Things have to change. 

I&M:  In your efforts to formulate the Drug Regulation Act of Pakistan, what support and encouragement did you get?

Senator Abdul Haseeb Khan:

Well, there was no support and I faced much opposition from many sides including PPMA, Pharma Bureau, government, and bureaucracy.  I created it with the benefit of national and international advisors, like Canadian Ministry of Health, and I must say with the help of God Almighty.   DRAP has been functioning well for 3 years now. 

I&M:  We attended the inauguration of a pharmacy education building on the campus of Karachi University some years ago.  It was inaugurated by Lt General Moinuddin Haider as the Chief Guest.  It was your gift to the pharmacy department of Karachi University in an effort to improve human resource for the pharma industry.   What is the progress?

Senator Abdul Haseeb Khan:

The Karachi University pharmacy department was producing pharmacists.   I said it is not enough.  There is a need for MPhil and PhD graduates.    My expectation was that 15-20 students should graduate with PhD each year.  They should enter the industry here or go overseas.  That is not the result as yet, so I would say the result is not up to my expectations as yet.

I&M:  A major disagreement between the regulators and industry lies in the subject of drug prices.  What is your perspective on this controversial subject?

Senator Abdul Haseeb Khan:

Pricing has not been increased in 12 years.  However, some people go to the government and gain price increase every two or three months for their products.  This is well-known and not a secret.    It has been named hardship cases.  Sometimes it is justified.  When there no policy, then these things happen, since the manufacturers bear increase in price of raw materials.  How can they bring the product to market?  Inflation of 6 – 8% should be factored by the government.  After all, inflation impacts the price of items like cigarettes, petrol, cement, food etc.    I think that as a result of the current government pricing policy, low quality production is encouraged, unfortunately.

I&M:  What are the essential features of a good National Health Policy?

Senator Abdul Haseeb Khan:

National health policy is built on many building blocks.   You have to consider your national lifestyle, regional lifestyles and illnesses.  It needs to be population based.  There are different diseases and ailments in Thar, FATA, Punjab, Sindh, for example.  You need to make basic health units.  Presently, we have a administrative policy but not a health policy.  Presently, a building is made in a rural area, but there is no doctor or medication.   If the patient is not able to reach the BHU, then it is not a good health policy. 

If a country wants to investigate the health policy of another country, the process is simple.  They will need to only send one person to each province.   That is all.   If he will note the satisfactory functioning of BHU, he leaves with a good report.  If the basic health unit is running well, then the National Health Policy is correct.  How can it be that BHU is seen running well and the policy structure is not correct?  So, that is all that has to be seen.  The responsibility for BHU is with province.  Has the Chief Minister visited BHUs in Sindh?  In places like Mirpur Chachro, Sujawal, Badin?   

As I see it, the government does not announce a National Health Policy, to avoid the obligation of providing the basic structure.

I&M:  We admire you as a successful industrialist and patriotic citizen with vast experience and national contribution.  In your opinion, what is needed to direct Pakistan toward success and development?

Senator Abdul Haseeb Khan:

We must establish rule of law for everyone.  In Islamic culture, status and position has no bearing in the eyes of the law.  In Pakistan, we need to punish violators of law, according to law.  It is not necessary for governments to claim they have restored rule of law.  When the rule of law of established, then you will see law being upheld.  It will be visible.

I&M Exclusive: Discussion with Mr. Saeed Allawala, Chairman, PPMA

A visionary businessman and philanthropist, Mr. Saeed Allawala, has been recently elected as a Chairman of Pakistan Pharmaceutical Manufacturers Association (PPMA) for 2014-15. His election as Chairman of PPMA signifies recognition of his consensus-building skills.  A leader and team-builder by nature, he is the ideal Chairman PPMA at this critical time, when there is a need to build harmonious relations between the private sector and the policy makers in the government. Mr. Saeed Allawala is the forefront of The Health Foundation; a non-profit organization dedicated for national health improvement, in particular the fight against hepatitis.  He is a source of support and inspiration for HeartFile.   In this interview, he talks the road ahead for the pharma industry of Pakistan.

Mr. Saeed Allawala, Chairman PPMA with Prof. S.B. Hassan, President and Chief Editor, I&M

“PPMA played its role very well, by interacting with industry and regulators” -Saeed Allawala 

History of PPMA:

Pakistan Pharmaceutical Manufacturers Association (PPMA) was established in 1960-61. At that time there were a small number of companies in Pakistan. Most of them were th

e multinationals and they had an important role in the development of the pharmaceutical industry of this country.  Gradually, with the development of human resources and the need for a national industry, national pharmaceutical companies started to develop.

Among the first few members were Epla, Opal, and Albert Davis. In PPMA, there were 12-15 members, and this increased with the passage of time.  There were mostly multinationals but nationals were also started to come in. There were strict rules at that time for any company to become a member. They had to pass through the inspection by a panel formed by the association.  Then they determined if a candidate company implements GMP requirements or not.  If it did, then they were approved as a member of PPMA.  So, in this way, an association was formed from a relatively small pool of pharma companies.   It played its role very well, by interacting with industry and regulators.

Then we saw the introduction of the Drugs Act 1972 (Generic Names).  In our view, it was a wrong decision the government of that time.  The government itself had to reverse it and promulgate the Drug Ordinance of 1976. Generic Act perhaps remained for around two and a half years. There was a lot of menace in that period like mushroom growth of the industry, companies setting up in small houses, etc. I think in that period the role of the association diminished but after the drug act was repealed, it resumed.   So briefly talking about the history, I can say at this moment of time, there are 282 members from a total of 514 licensed factories in the country.  So, less than half are the members but I think it’s a good number.

Formation of Pharma Bureau:

I think this is a story of 18-19 years ago. The membership of the PPMA started to grow in favor of the national companies, so more and more national companies executives were coming in the central executive committee. Largely, there was agreement on most industry issues.  One point where there were difference in opinion and disposition was the price issue. Multinationals always wanted to have high prices but some of the members of PPMA were not so enthusiastic and this was a time when there was a split and multinationals realized that they should have their own body so they formed Pharma Bureau.  It is not an independent body but a part of Overseas Chamber of Commerce and Industry. The share of multinational companies is about 46% and share of national companies is 54% in the total pharma market of Pakistan today.   Over the last ten years, there is approximately a 1% reduction in the share of multinational companies annually.

Cooperation between National and Multinationals:

Let me touch on the really sensitive issue which is the pricing issue. As you see, there are about 50 big companies, including national and multinational, that have about 85% share of the market. Now with this type of spectrum, you can imagine that about 400 companies are least bothered about price of the product. Whatever price has been given, they are selling at less than that price.  Within PPMA, there is a group of companies who are leaders.  They are concerned about prices and all multinationals are concerned about prices. So there is agreement on this subject between leaders of national companies and leaders of multinationals.  They speak the same language.

The only difference between PPMA and Pharma Bureau is that we talk about patents on international principles and Pharma Bureau talks of patents to be handled on their own rules. We don’t want to violate the rules. They have their own ways.  The subject of new molecule is entirely a different ball game. When we talk of multinational companies, even they are not all research-based.

Withdrawal of Multinationals from Pakistan:

Some have decided to leave because of economic reasons. Let me give you an example of company which went to court to take a stay because the government was not entertaining their request for price increase,. Later on, the case was dismissed. They find their prices so low that they cannot continue. The prices in other countries are good so they had to shut down here. There is another company which produces good products and they claim that they are in loss. There are rumors that it is closing down. The reason is that their cost is high and prices are too low. So every multinational company might have its own specific reasons for exiting Pakistan.  Sometimes, it is a strategic reason. For example, they might wish to concentrate manufacturing at one place in a region. They may not want too many manufacturing units. So, their decision making is not always based on cost.  After the WTO regime, where things are more open, taxation has come down.  It has become easier to have one factory in Thailand, for example, and supply all over the region.

Transfer Pricing:

I think this is a subject which deserves attention.  For a certain time period, transfer pricing could be acceptable, beyond that it should be stopped. It is again a subject where regulator’s role comes in but they are not taking up this matter seriously. Personally, I am not against it till certain time period.

Developments in Regulations:

The devolution of powers to provinces after 18^th Amendment was made a basis for DRAP.  The industry needs a centralized system so PPMA took this matter to the upper level and Drug Regulatory Authority of Pakistan was established in 2012.   Unfortunately, there is a governance issue in every regulatory body. It is also in DRAP and the Ministry of National Health Services, Regulations and Coordination.  It is a pity that it is not performing well. There are so many legal violations. For example, the DRAP rules say that no Acting Chief Executive will be there for more than three months.  However, the first gentleman served for almost nine months and the second gentleman was already there for more than a year.

Sub-standard and Counterfeit Drugs:

PPMA is totally against it. Like any country and any society, we have bad people here. They are doing this for their financial gains. Our government should try to control it. The substandard drugs are not produced by licensed manufacturers.  This is mostly been done by people who do not have any manufacturing concerns. We also have to differentiate between sub-standard and spurious drugs. Spurious drugs, in my opinion, are in very small quantity in market.  I think this problem is not too big in Pakistan, but there is a perception due to the statements given by some officials that Pakistan has a large amount of spurious drugs.  But that is not true. The biggest production of such items is in China, then India.  Pakistan has very small quantity. Sub-standard drug do not exist only in Pakistan.  It is phenomenon present everywhere in the world. I remember last year there were 25,000 recall notices in America.

FDA:

Developed countries have their rules and regulations and they want to make sure that products are manufactured according to their standards.  None of the companies in Pakistan have attained that standard. There are a few Pakistani companies that are preparing to reach this standard, but presently there is none.  I think that in another two or three years there will be a FDA certified company in Pakistan.  Reaching this standard takes time, and it is really expensive to go for an accreditation by FDA, MHRA or EU, etc.  It takes time and money.

Human Resources:

At the country level, there is very little effort in human resource development in Pakistan. Overall, Pakistan has come down in human resource development in every sector of the economy.  Pakistani pharmaceutical companies make their own human resource development policies and programs, but on a national level it is still very weak. This is the reason for shortage of man-power. So if you ask me what is the current situation?, I will say it is bad, because when we go out and search for skilled people, capable and competent people, we cannot find them.   We have to differentiate between human development that is done post-education and human development done during education. We have lots of universities in Pakistan with pharmacy departments and the education level is going up. But post-education human resource development is weak. At the end of the day, when pharmaceutical industry officials go out to hire, they get some people but not too many.  Almost 90% of students are girls and they go for teaching not for field work. There are two kinds of jobs in the pharmaceutical industry. One kind is in the factory, and the second kind is in the field. Every company has its own policy.  But a smaller number of pharmacy graduates select the field job.  Another human resource factor is that pharmacy graduates have lots of demand abroad. So, the good ones go abroad.