KARACHI: Pakistan’s domestic pharmaceutical companies have shown cumulative average growth rate (CAGR) of 13.1 percent in the last four years, outperforming multinational companies (MNCs), which observed a CAGR of 9.34 percent, a report prepared by IQVIA noted.
Emerging faster than the MNCs, the local pharmaceutical companies’ quarterly revenues surged to Rs320 billion till March 31, 2020 compared with Rs195.75 billion as of March 31, 2016. Similarly, MNCs increased their quarterly market size to Rs143.2 billion by the end of the first quarter of 2020 as against Rs100.2 billion in Q12016.
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Due to high rupee depreciation, overall industry growth in dollar terms in the first quarter of 2020 remained negative. In dollar terms, national companies witnessed CAGR of 2.41 percent in last four years compared with MNCs, which grew at a CAGR of negative 1.01 percent in the same period, the report said. The pharmaceuticals have remained functional during the Covid-19 pandemic and in fact registered growth.
Pakistan Economic Survey 2019-20 disclosed that the pace of contraction diminished in the pharmaceutical sector, as it registered 5.38 percent decline during July to March in FY2020 as compared to 8.66 percent decline in the corresponding period the previous year. Also, the pharmaceutical sector recorded the highest sales in March, while it fetched $1.3 million foreign direct investment (FDI) in April 2020. Analysts believe at the present growth rate the market size for pharmaceuticals would double in the next 10 years in Pakistan.
But the impact of the pandemic would be severe in the coming months, as the International Monetary Fund (IMF) has revised down its world GDP projections and now expects a contraction of 4.9 percent in 2020.
“Apart from the last three months, the next twelve months will also be very tough for the Pakistan economy,” said Taha Khan Javed, Head of Equities at Al Meezan Investment. “The outlook for Pakistan GDP is also precarious with growth for next fiscal year expected to be only 1-2 percent, much below the normal growth 3-5 percent we have seen in the past.”
Javed said few industries including the pharmaceuticals of the country could play a vital role in their capacity to help the national economy. He suggested the pharmaceutical industry to ramp up production capacity, and collaborate with international pharmaceutical companies to bring critical medicines in the country and eventually aim for joint venture investment of production facilities.
“The government should ensure that timely price increases are given to companies so that they have incentive to increase their investment instead of relying on only imported medicines,” he added.