An Emerging Pharma Market

8/3/2019 An Emerging Pharma Market

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Issues & Opportunities

I. ShahUniversal Express

Pharma Division



Pakistan’sDemographic,Economic &

ConsumerTrends



Punjabpop: 56%area: 26%

Sixth most populous countryPopulation estimates ranges between157 - 165 Mill. for 2007.

Population growthPopulation growth rate is 1.9%. Higher than rest of South Asia.

Average life expectancy64 yrs. slightly higher in female (65 vs. 63yrs in male).

Country Demographics

Balochistanpop: 5%area: 44%

Sindhpop: 23%area: 18%

NWFPpop: 13%area: 9%



Rate of urbanizationHigher than the rate of growth. Split betweenurban and rural by 2010 is expected to be45:55. Rising urbanization is more on accountof improving living standards/ infrastructure inrural rather than migration to urban areas.

Average Household sizeRemained 6.75 (6.6 in urban & 6.8 in rural).Growth in human pop & household pop wasremained more or less the same, as reflectedthrough steady HH size over the years.

Literacy LevelCrucial in shaping consumer behavior.Today’s consumer is much more informedbecause of improved literacy and exposure to

electronic media. Males are significantly moreliterate than females. Also, literacy in urbanareas continue to remain better than rural.

Urbanization Rate

25% 28% 33%45%

1972 1981 1998 2010

HH size % of pop.1 - 3 124 - 5 24

6 - 7 298 - 9 2010 + 15

Country Demographics



Changing Trends The Shops they Visit



Shifting Values



City FM 89

Radio One

FM 91

Media Liberalization



Teledensity

Reached to 40.2 growth of 53%, highest inthe region and 2.5 times higher than India.

Increased Socio-economic AwarenessUse of mobile phone is creating socio-economic awareness among users inchanging their lifestyle, saving time andmoney and also help them in achieving their commercial objectives.

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Regular contact

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Help in family

cohesion

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Use of Mobile for SocialActivities

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Find newbusiness

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Communicatewith clients

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Use of Mobile Phones for Business/Work Related Activities

Socio Economic Impact of Cellular Phones



Healthcare inPakistan



(1) WHO Study: "World Medicine Situation"

With its large population and growingeconomy, Pakistan should be regarded as a

significant emerging market for pharmaceutical firms.

Healthcare Status◦ Healthcare system is still in the

developmental stages. Poverty and aweak health system underlie the poorhealth status of the population.

◦ Poor nutrition compounded byPakistan's large and fast growing

population further widens thehealthcare gap.

◦ Pakistanis are spending 77 per centof their healthcare expenditure onbuying medicines (1).

◦ Consumers are still victim of irrational drug use and fakemedicines.



Urban• More affluent more spending power • High literacy rate• Mainly salaried class (monthly income inflow)• Increased awareness of health related issues• Self medication common• Willingness to spend more on healthcare post

diagnosis• More women empowerment

Rural• Main occupation: Farming / Agriculture• Low literacy• No fixed income inflow

• Minimal or no understanding of health related issues• Willingness to spend more on healthcare postdiagnosis

• Punjab rural more accessible/ advanced than other rural areas

Consumer Profile



Total expenditureon health:

◦ Government fundingcontinues to be minimal,equal to around 3% of GDPand achieves little morethan maintaining the statusquo.

◦ Increased from PKR 4.37billion to PKR 6.04 billion,which is 31.86% higherthan the last year

◦ Per capita spending isexpected to be only justover US$10 by 2010.

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Current Status of

Pharma Market



Situation◦ Pakistan meets 77% of its domesticdemand of medicines from local

production and 23% through imports.◦ Nearly 95% of the basic raw material is

imported from China, India, Japan, UK,Germany and others.

◦ Only few bulk pharmaceutical rawmaterials are being manufacturedlocally.

◦ Presently close to 125 categories of medicines are produced locally.

◦ Surplus drugs are exported to a largenumber of countries particularly to the

Asian and African regions with anexpanding trade in the newly emergedCentral Asian States. *

Approximately 13,000 drugsare registered.

10000

3000

Local Manufacture Imported

Frost & Sullivan Study.

*About a hundred million strong population of the Central Asian States, with almost no local manufacture of medicines, offers anattractive market for Pakistan’s pharma industry.



Industry Environment◦ Pharmaceutical industry is considered a high technology, essential

and strategically important industry.◦ Numerically it represents the single largest collective multinational

investment in Pakistan i.e. 28 dedicated and fully committedforeign companies.

◦ Multinational Companies are producing and marketing researchbased products.

◦ National companies produce and market generic products.◦ The 600 firms (over 400 domestic manufacturers and

approximately 200 major importers) together produce 40,000-oddformulations in the country.



Impact of Trade Agreements

WTO Impact on Pharma MarketNational Treatment

◦ Equal opportunity to other partner nations to trade their pharmaceutical productsin Pakistan. This may give rise to more and more insurgence of Indian, Korean andChinese companies, giving touch competition to the local industry.

Harmonization of Standards◦ In the near future the ICH or other globally recognized standard will become the

benchmark of the Pakistani Pharmaceutical Industry, which would invariantlyrequire intensive capital expenditure for the local companies.

TRIPS Impact

Patent Protection◦ Agreement will push Pakistani companies out of the competition in the area of new,

high value generating, research based medicines.◦ Pakistani pharma industry, a generic manufacturing industry will not be able to

bring generic copies of the new patented molecules for at least first ten years.



Commercial Environment

◦

Pharmaceutical industry of Pakistan is estimated at Pak Rs. 70.89 billion(around US$ 2 billion) with an annual growth rate of 12.9% per annum.◦ The total market in Pakistan remains small in relation to the population size.◦ Out of the total market of US$ 2 billion, 53.3% is captured by Multinationals

and 46.7% is taken up by National companies.◦ There are 20 multinationals in the top 50 companies.◦ The top 50 companies enjoy more than 80% market share.◦ The top 100 companies have 94.0% market share.◦ The market has been expanding at a rate of around 10 to15% since last few

years.◦ Competition in Pakistan’s pharma market has become quite fierce for

everyone. Out of 500 companies, the marketing capability goes steeplydown after the number 50.

◦ Year-on-year growth of market through to 2012 is projected at 9%.◦ In spite of a healthy growth of the pharmaceutical market, about half of the

population has so far no access to modern medicines.



Regulatory Environment◦ Higher prices acceptable for Multinationals.◦ Permission to import rather than local manufacturing.◦ Patent protection currently not optimal but improving.◦ Permission for 100% ownership.◦ Permission to transfer profit.◦ Fast track registrations.

Political Environment◦ Political will for pharma market growth particularly in attracting foreign

investments.◦ Access to healthcare is top ranking agenda item for all major political

parties.Payer Environment

◦ Predominantly people pay for healthcare.◦ The emerging trend is health insurance, still in infancy but fast becoming

popular with private sector.◦ Many public sector corporations still pay unlimited amounts for their

employees’ medical expenses.



Pakistani Pharma Companies◦ Predominantly produce and market generic products.◦ Have 47% of pharma market share.◦ Government's Resolve to support National Industry

A cut in Government duties on pharmaceutical raw materials and packing materials.Tax holidays for setting up of new pharmaceutical plants.Setting up new industrial estates specifically for the pharmaceutical industryImport duty on pharmaceutical packaging reduced from 15% to 10%, allowing nationalcompanies to make finished drugs for less money, giving them greater impetus to sellthem overseas .

◦ Cheaper raw material and machinary available from various sources◦ Take full advantage of weak IP law to copy research based medicine◦ New generation of local entrepeneurs better educated and trained is handling

business in a professional manner.



Big PotentialA very large population 152 million people.

Government's ResolveEmphasis on providing health facilities for everyone.A cut in Government duties on pharmaceutical raw materials and packing materials.Tax holidays for setting up of new pharmaceutical plants.Setting up new industrial estates specifically for the pharmaceutical industry

Increase in Per Capita IncomeGreater disposable income for health related expenditures.

General Health AwarenessMedia and internet increasing health consciousness among the population.Increasing Number of MDs

Both general physicians and specialists, whose prescriptions are the main sales drivers forthe industry.

Improved Efficiency

Emphasis on greater field force productivityProduction processes' rationalisation and improvements.

Trained ManpowerEasy availability because of merger related layoffs in MNCs and expansion of local industry.



Pakistan, An Emerging MarketLarge population

◦ More than 160 million people.Political Will

◦ Improvement in healthcare is a major political issue.Improving Economy

◦ Expanding economy including health services.◦ Increase in purchasing power◦ Increasing awareness regarding use of new medications and NCEsGrowth Areas

◦ Huge growth potential in areas such as cardiovascular & metabolic disorders, respiratorydiseases, pain, psychiatric disorders, GI diseases, oncology, hormone deficiencies andVaccines.

Marketing Capability◦ Marketing goes steeply down after the number 50. Any company with good credentials and

professional marketing approach has the possibility of quickly jumping the rankings.Opportunities for Investment◦ Certain specialty products e.g. immunologicals, anti-cancer drugs, some anti-diabetics,

antidotes and biotech products are still being imported in the finished form. These areasprovide excellent investment opportunities.



Regulatory◦ Evolving regulatory system, best described as rudimentary.Pricing

◦ Strict government control over pricing has made many drugsuneconomical resulting in shortage s or availability on the

black market at inflated prices, or total disappearance.Drug Reimbursement

◦ There is virtually no public drug reimbursement.IP Protection

◦ Patent law was officially tightened in December 2000.Further changes later made Pakistan's IP laws even weaker.Lack of resources and bureaucratic complications makeinvestigation of manufacture and sale of 'fake' drugsdisappointing.



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An Emerging Pharma Market

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