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.