MP Pakistan Q1 2016

_
IMS Market Prognosis

2016-2020
Asia/Australia – Pakistan
Published March 2016

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Published: March 2016
Market Prognosis 2016-2020 | Pakistan

ii
Table of Contents
IMS Market Prognosis ........................................................................................................................... 1
Market Overview and Forecasts .......................................................................................................... 2
Market Synopsis............................................................................................................................. 2
Total Market Forecasts 2016-2020 ................................................................................................ 6
Summary of the Prognosis .................................................................................................. 6
Retail Pharmacy/Private Sector Overview ..................................................................................... 8
Retail Pharmacy/Private Sector Forecasts .......................................................................... 9
Event Analysis..............................................................................................................................11
Forecasting Data and Methods ....................................................................................................15
Data Sources .....................................................................................................................15
Baseline Extrapolations .....................................................................................................15
Retail Pharmacy/Private Sector Baseline Extrapolations ..................................................16
Economic Indicators ..........................................................................................................16
Therapeutic Class Forecasts .......................................................................................................17
IMS Market Prognosis Report ............................................................................................................19
Business Environment .......................................................................................................................20
Economic Environment ................................................................................................................20
Economic Growth ..............................................................................................................20
Inflation ..............................................................................................................................20
Population, Employment and Incomes ..............................................................................20
Fiscal Policy .......................................................................................................................21
Monetary Policy .................................................................................................................21
Foreign Trade and Current Account ..................................................................................21
Exchange Rate ..................................................................................................................21
Political Environment ...................................................................................................................23
Political Institutions ............................................................................................................23
Current Government and Opposition ................................................................................23
Domestic Terrorism ...........................................................................................................24
International Relations .......................................................................................................24
Healthcare Environment .....................................................................................................................25
Healthcare Provision ....................................................................................................................25
Healthcare System ............................................................................................................25
Health Status .....................................................................................................................27
Healthcare Financing and Expenditure .............................................................................32
Health Policy ......................................................................................................................35
Provincial Reforms ............................................................................................................37
Health Insurance ...............................................................................................................40
Private Health Insurance ...................................................................................................43
Doctors ..............................................................................................................................45
Primary Care......................................................................................................................46

iii
Secondary Care .................................................................................................................48
Prescribing and Dispensing .........................................................................................................50
Prescribing .........................................................................................................................50
National Essential Drugs List.............................................................................................52
Hospital Purchasing ...........................................................................................................52
Dispensing .........................................................................................................................54
Pricing ..........................................................................................................................................55
Pricing System ...................................................................................................................55
Price Trends ......................................................................................................................57
Discounts and Margins ......................................................................................................59
Regulatory Environment ..............................................................................................................60
Drug Regulatory Authority .................................................................................................60
Drug Registration ...............................................................................................................62
Import Regulations ............................................................................................................64
Quality Standards ..............................................................................................................65
Intellectual Property ...........................................................................................................66
Pharmacy Regulations ......................................................................................................67
Counterfeits .......................................................................................................................68
Pharmaceutical Business Environment .......................................................................................70
Operating Environment ......................................................................................................70
Industry Structure ..............................................................................................................71
Leading Corporations ........................................................................................................73
Leading Products ...............................................................................................................74
Research and Development ..............................................................................................75
Generics Market ................................................................................................................75
Distribution .........................................................................................................................76
Retail Pharmacy ................................................................................................................77
OTC Market .......................................................................................................................79
Sales and Marketing ..........................................................................................................80
Appendix A: Glossary .........................................................................................................................82
Appendix B: Sources and Methods ..................................................................................................84
Coverage ......................................................................................................................................84
Market Forecasts ...............................................................................................................85
Market Segmentation Forecasts .......................................................................................85
Therapeutic Class Forecasts .............................................................................................86
Regional Overviews ...........................................................................................................86
Forecasting Methodology.............................................................................................................87
Total Market Forecasting Process .....................................................................................87
Market Segmentation Forecasting Process ......................................................................88
Therapeutic Class Forecasting Process ............................................................................89
Sources ........................................................................................................................................90
Primary and Secondary Market Research ........................................................................90

iv
Pharmaceutical Market Data .............................................................................................90
Pharmaceutical Market Coverage................................................................................................90
Event Impact Calculation .............................................................................................................91
Demographic Changes ......................................................................................................91
New Product Launches .....................................................................................................93
Calculation of Generic Competition ...................................................................................94
Useful Definitions .........................................................................................................................94
Compound Annual Growth Rate........................................................................................94
Standard Units ...................................................................................................................95
Generic Definition Using The IMS MIDAS Market Segmentation Feature ........................95
Generic Definition Without the Market Segmentation Feature ..........................................97

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IMS Market Prognosis
Market Overview and Forecasts

1
Market Overview and Forecasts
Market Synopsis
• The Pakistani pharmaceutical market is forecast to grow at a compound annual growth rate
(CAGR) of 12.2% (±3.2%) over 2015-2020, reaching PKR532.5 billion by 2020.
Business Environment
• Real gross domestic product (GDP) growth in Pakistan is expected to average 4.8% per year in
2016-2020, compared to 5.5% in 2015, as expansion will be constrained by the volatile
security environment, as well as water and electricity shortages. Growth will be underpinned
by private consumption and investment. Private consumption is expected to grow by an
average of 4.4% a year in 2016-2020. Government consumption will continue to account for
only a small proportion of total GDP, at around 12%, compared with around 73% for private
consumption. Consumer price inflation (CPI) is forecast to grow by 3.7% in 2016, compared
with 2.5% in 2015. Inflation will average 5.7% a year in 2017-2020 as the rupee continues to
weaken against the US dollar, pushing up import prices. The rupee is forecast to depreciate
against the US dollar by an average of 1.5% a year in nominal terms during 2017-2020, to
PKR114.10:US$1 in 2020.
• The ruling Pakistan Muslim League (Nawaz), or PML (N), holds a comfortable majority in the
National Assembly (the lower house of parliament) and is expected to see out its term until
2018, when the next parliamentary elections are likely to be held. In the improbable case of
large-scale public protests, leading to military intervention, elections could be delayed.
Political instability will remain a key feature of Pakistan's political system over 2016-2018, as
opposition parties will expand efforts to undermine the credibility of the government.
Healthcare Provision
• Total healthcare expenditure as a percentage share of GDP remains low, at just 2.8% of GDP
in 2013. Government healthcare expenditure remains insufficient, accounting for just 36% of
total spending. Private spending, predominantly in the form of out-of-pocket payments, is the
major source of healthcare financing, accounting for around 62% of the total healthcare
expenditure.
• Healthcare reforms are underway across all four provinces and healthcare spending has
increased to support this. Immunization has become an important strategy in tackling the
burden of communicable diseases and financial help of international aid agencies will be
critical in expanding existing programs. Meanwhile, non-communicable diseases (NCDs) such
as cancer, diabetes and cardiovascular disease, are increasingly prevalent, and gradual
expansion of health coverage will see more patients diagnosed and treated.
• Health insurance coverage remains low. The Prime Minister’s National Health Program
(PMNHP), launched in 15 districts in the first phase, is slated to expand to a total of 3.2
million families across 23 districts in its second phase (mid-2016). The program aims to
eventually cover 22 million households. At the same time, there is considerable potential for
expansion in the private health insurance market through takaful and customized health
packages to better serve local populations.

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• The distribution of physicians in Pakistan remains uneven. Most doctors practice in urban
areas and regional inequalities persist despite efforts to offer more lucrative packages to
doctors willing to work in more remote areas.
• Provincial governments continue to focus on improving already established facilities and

setting up new ones, but with limited success. The private hospital sector will continue
expanding to meet the increasing demand for healthcare and to fill the gap in public
healthcare provision.
Prescribing and Dispensing

• The prescribing environment lacks regulation in the dominant private sector; over-
prescribing and inappropriate prescribing remain common. The growth in private medical
colleges and teaching hospitals is expected to have a positive impact in elevating standards of
prescribing practice, but the impact will be minor.
• Prescription drugs are freely available in retail pharmacies and it is estimated that the
majority of sales of prescription-only drugs are sold without a prescription. Since qualified
pharmacists are rarely present in community pharmacies, the person dealing with the patient
usually supplies whatever the patient asks for, even if it is a controlled drug.
• In the devolved healthcare system the provinces are setting up their own procurement
procedures and are forming Central Medicine Coordination Committees at the provincial level
to organize central tenders for all districts.
• Inadequate funding, changing criteria for drug procurement and delayed release of funds
leaves government hospitals frequently short of essential medicine supplies, forcing inpatients
to purchase their own medicines in the retail sector.
Pricing
• Pricing remains a critical issue for the pharmaceutical sector with a new policy introduced by
the Drug Regulatory Authority of Pakistan (DRAP) in March 2015. After a decade-long price
freeze, the new policy introduces international reference pricing and inflationary adjustments
for prices of drugs in the schedule starting from July 2016.
• New chemical entities (NCEs) shall be listed in the Schedule of price-controlled drugs for four
years or until the entry of at least three generics in the market, whichever is later. After that,
original brands in the Schedule will be subject to an annual price decrease of 10% for three
consecutive years and then considered non-scheduled. Generic medicines must then be priced
at least 15% below the originator product.
• Manufacturers of scheduled drugs are permitted an annual increase of 50% of the consumer
price index, with an overall cap of 4%, whilst the price of non-scheduled drugs may increase
by 70% of the consumer price index, with an overall cap of 6%. Though the policy stipulates a
marginal price increase with respect to inflation, it gives the basis for further amendments in
the longer term.
• Because of indecisiveness about the pending hardship cases beyond the promised date of 31
December 2015, some Multinational Corporations (MNCs) increased their drug prices by 15%
after seeking stay orders from the Sindh High Court (SHC). In March 2016, the Drug Pricing
Committee (DPC) reviewed the pending applications for hardship cases and approved price
increases up to 8% for two dozen such applications.

3
Regulatory Environment
• The DRAP saw an improvement in its functioning in the past year, with the appointment of Dr
Muhammad Aslam Afghani as the new CEO. Efforts are being made to increase human
resource capabilities and create consistent policies in DRAP. The agency still has a long way to
go in fulfilling its regulatory obligations, particularly with regard to drug pricing and
registration.
• A backlog of around 16,000 regulatory submissions remains to be cleared by the DRAP. The
reduction in the number of new product registrations in recent years is having a negative
impact on the growth of the pharmaceutical market.
• Sub-standard and fake medicines continue to plague the sector, creating an urgent need for
raising quality standards to curb the prevalent infiltration. Local manufacturers and DRAP
are making efforts to comply with international standards such as the Pharmaceutical
Inspection Co-operation Scheme (PIC/S) to improve the quality of drugs manufactured
locally.
• Enforcement of intellectual property rights remains a problem and intellectual property

litigation will continue to be a frustrating process. Pakistan remained on the US Trade
Representative’s ‘priority watch list’ in 2015 for failing to provide adequate protection of
intellectual property rights.
• The Punjab government promulgated the Punjab Drug Ordinance 2015 in an effort to control
counterfeits in the province, but the draft legislation was annulled following intense criticism
from the industry. Federal and provincial governments need to collaborate in formulating and
enforcing strict anti-counterfeit regulations in the country.
Pharmaceutical Business Environment

• The pharmaceutical industry in Pakistan will continue to undergo a major shift, with local
manufacturers growing aggressively in contrast to multinationals, who are re-assessing their
strategy in the region. Due to the unpredictable regulatory environment and pricing
pressures, some leading multinational companies have closed down operations in Pakistan
after operating there for decades.
• There are four local companies in the top ten rankings in Pakistan. The leading local players
are expected to seek international accreditation of manufacturing facilities, opening up the
export market beyond traditional lower value destinations.
• Manufacturers are becoming more conscious about compliance with good distribution
practices. National distributors are increasingly being preferred over regional distributors.
• Small pharmacy chains are emerging in urban centers, offering higher-quality, consumer-
centric services, but the majority of retail outlets will continue to fall short of acceptable
dispensing standards until DRAP enforces higher standards and the current shortage of
pharmacy graduates begins to ease.
• Vitamins and nutraceuticals are seen as offering strong growth potential in the self-
medication market, particularly given the rising socio-economic standards and the relative
youth of the population. DRAP’s introduction of Medicines and Health Products (Enlistment)
Rules in 2014 had a negative impact on this sector in the short term, but proper guidelines
around registration will help in ensuring quality products in the long term.

4
• Sales and marketing activities will continue to rely heavily on traditional detailing activities.
DRAP is notionally attempting to curb unethical practices, but prescriber incentives will
largely prevail unless an ethical code of marketing practice is nationally adopted and enforced.

5
Total Market Forecasts 2016-2020
Summary of the Prognosis
All values shown are in local currency. Sales are reported at the ex-manufacturer
price level based on invoice pricing that does not capture discounts and rebates.
IMS Health captures 85.2% of the total pharmaceutical market. The prognosis incorporates an
estimate of the value of the unaudited sector and, for the purpose of this forecast, assumes that this
will grow in line with the rest of the market and hold a market share of 14.8% throughout the forecast
period.
The total pharmaceutical market is forecast to grow at a CAGR of 12.2% (±3.2%) over the period 2015-
2020.
Key Issues Affecting Market Growth:

 Introduction of new innovative products will drive growth in the market.
 Increasing burden of communicable as well as non-communicable diseases (NCDs) will

continue to drive the demand for medicines.
 The pricing policy introduced by the Drug Regulatory Authority of Pakistan (DRAP) in March
2015 will allow for annual inflation-linked price increases.
 Gaps in public healthcare provision will be addressed by the expanding private and non-profit
hospital sector, contributing to positive growth in the pharmaceutical market.
 Introduction of the Prime Minister's National Health Program (PMNHP) for the poor will
increase the population with access to treatment by providing cashless hospitalizations for a
segment of population that could not afford the same earlier.
 The regulatory environment, unless reformed, will continue to hamper industry growth,
primarily for multinationals.
 The new pricing policy lays down price reductions for scheduled drugs, including originator
brands and NCEs listed for four years or with three or more generics in the market.
Change in the Prognosis:

The prognosis for Pakistan has been adjusted upwards for the forecast period compared to the
previous forecast published in September 2015. This is mainly due to:
 There was an increase in the price and volume baseline projections, following higher than
expected sales growth in the second half of 2015.
 Launch of new innovative products is expected to drive more growth in the forecast period
than earlier anticipated.

6
Table 1: Total Market Sales (2015-2020) PKR (million)
CAGR 2015-
2015 2016 2017 2018 2019 2020
2020 (%)
Retail Pharmacy/
254946 288227 325291 365199 408066 453942 12.2
Private Sector
Annual Growth (%) 13.4 13.1 12.9 12.3 11.7 11.2
Other Outlets 44111 49869 56282 63187 70604 78541 12.2
Annual Growth (%) 13.4 13.1 12.9 12.3 11.7 11.2
Total Market 299057 338096 381573 428386 478670 532483 12.2
Annual Growth (%) 13.4 13.1 12.9 12.3 11.7 11.2

Source: IMS Health
Table 2: Total Market Sales (2015-2020) US$* (million)

CAGR 2015-
2015 2016 2017 2018 2019 2020
2020 (%)
Retail Pharmacy/
2430 2747 3100 3480 3889 4326 12.2
Private Sector
Other Outlets 420 475 536 602 673 748 12.2
Total Market 2850 3222 3636 4082 4562 5074 12.2
Annual Growth (%) 13.4 13.1 12.9 12.3 11.7 11.2

*Constant exchange rate (Q4 2015)
Source: IMS Health

7
Retail Pharmacy/Private Sector Overview
Pakistan’s retail pharmacy and private hospital sector has experienced double-digit growth
throughout the past decade. Volume growth has been helped by a growing economy and rising
incomes, as well as epidemiological trends which mean rapid growth in non-communicable diseases,
while communicable diseases continue to represent a major problem. A price freeze implemented in
2002 restricted price growth until 2008, with only a few irregular ad-hoc price increases implemented
during that period, although the shift towards higher priced products meant a steady increase in the
average price per standard unit. Selected regulated and some unregulated price increases have been
implemented since 2008, but most products have had their prices frozen for over a decade.
Introduction of Sovaldi and weakening rupee contributed to higher sales growth in 2015.
Double-digit growth is forecast to continue, driven by both volume growth and increases in the
average price per standard unit. Demand for medicines will continue to rise due to the increasing
incidence of communicable diseases and NCDs, increased budgetary allocations for health by the
provinces, and introduction of the PMNHP for the poor. The arrival of generic sofosbuvir will allow a
greater number of hepatitis C patients to be treated. The expanding private and non-profit hospital
sector will continue to fill the gap in public healthcare provision, but at higher costs. Launch of
innovative products and implementation of the pricing policy introduced in March 2015 contribute to
the continuing rise in the average price per standard unit.
Table 3: Retail Pharmacy/Private Sector (2005-2015)

Volume Average Price per
Sales
(Standard Units*) Standard Unit
Year
SU Annual Annual PKR Annual
PKR
(million) Growth (%) Growth (%) (million) Growth (%)
2005 32723 - 2.04 - 66597 -
2006 34511 5.5 2.15 5.8 74308 11.6
2007 35584 3.1 2.30 6.9 81886 10.2
2008 38833 9.1 2.48 8.0 96480 17.8
2009 40659 4.7 2.76 11.0 112101 16.2
2010 42922 5.6 2.97 7.8 127594 13.8
2011 47044 9.6 3.24 9.0 152430 19.5
2012 49259 4.7 3.56 10.0 175544 15.2
2013 51720 5.0 3.89 9.2 201332 14.7
2014 54279 4.9 4.14 6.4 224774 11.6
2015** 55575 3.8 4.40 7.6 244262 11.7

* Standard Units equate the number of milliliters of liquid preparations to the standard solid dosage of one tablet, therefore
making solid and liquid preparations comparable.
**MAT Q3
Source: IMS Health

8
Retail Pharmacy/Private Sector Forecasts
Table 4: Forecast Retail Pharmacy/Private Sector (2015-2020)
Sales
Year
SU Annual Annual PKR Annual
PKR
(million) Growth (%) Growth (%) (million) Growth (%)
2015 56615 4.3 4.50 8.7 254946 13.4
2016 59704 5.5 4.83 7.2 288227 13.1
2017 62650 4.9 5.19 7.6 325291 12.9
2018 65671 4.8 5.56 7.1 365199 12.3
2019 68769 4.7 5.93 6.7 408066 11.7
2020 71931 4.6 6.31 6.4 453942 11.2

*Standard Units equate the number of milliliters of liquid preparations to the standard solid dosage of one tablet, therefore
Source: IMS Health
Retail Pharmacy/Private Sector Volume (Standard Units)

80,000 12.0
70,000
Historical/Forecast Growth (%)

10.0
60,000
8.0
SU (million)
50,000
40,000 6.0
30,000
4.0
20,000
2.0
10,000
0 0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Historical/Baseline Forecast Growth

9
Retail Pharmacy/Private Sector Average Price per Standard Unit
7.0 12.0

6.0 10.0
5.0
8.0
4.0
PKR
6.0
3.0
4.0
2.0
1.0 2.0
0.0 0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Retail Pharmacy/Private Sector Sales

500,000 25.0
450,000

400,000 20.0
350,000
PKR (million)
300,000 15.0
250,000
200,000 10.0
150,000
100,000 5.0
50,000
0 0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

10
Event Analysis
Table 5: Events Impacting the Market (2016-2020)
Private Sector Market
Private Sector Market

Retail Pharmacy/
Retail Pharmacy/
Time to impact
Probability (%)
Probability (%)
Probability (%)
(medium term)
(short term)
Start Month
(long term)
Impact (%)
Impact (%)
Start Year
(months)
(volume)
(price)
Event Title
Recent and future product

1 2016 95 95 95 60 0.0 1.7
launches
Epidemiological changes 1 2016 70 80 90 60 1.5 0.0
Introduction of annual price
adjustments with respect to 7 2016 60 70 80 54 0.0 1.5
inflation for all drugs
Expansion of the private and
1 2016 60 70 80 60 0.8 0.3
non-profit hospital sector
Introduction of Prime
Minister's National Health
1 2016 55 65 75 60 1.0 0.0
Insurance Program for the
poor
Increased budgetary
allocation for healthcare and
1 2016 50 60 70 60 1.0 0.0
health-services development
programs in provinces
Anticipated entry of generics
4 2016 50 60 70 57 0.6 0.0
for Sovaldi
Demographic factors 1 2016 90 90 90 60 0.3 0.0
Regulatory hurdles 1 2016 50 60 70 60 -0.3 0.0
Price reductions for
7 2016 60 70 80 54 0.0 -0.8
scheduled drugs
Recent and future product launches: The launch of new products in the market, particularly
innovative hepatitis C antivirals and diabetes treatments, will be a driver of growth in the market. (See
also: Sources and Methods)
Epidemiological changes: With a growing population and lack of basic facilities for water and
sanitation, the burden of infectious diseases is high. Programs for controlling the high burden of
infectious diseases, mainly tuberculosis, malaria and HIV/AIDS, will continue to be implemented.
Post devolution, the provinces started devising their health strategies in line with the national policy
and focused on controlling these diseases in the country. The efforts have been supported well and
financed by international bodies such as the United States Agency for International Development
(USAID), and the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) for more than a
decade.
At the same time, changes in the socio-economic environment and lifestyle choices are adding to the
incidence of NCDs. According to the latest report from the WHO, NCDs accounted for 51% of deaths

11
in 2014, up from 46% in 2010 and 26% in 2008. The first phase of the National Action Plan for
Prevention and Control of NCDs and Health Promotion in Pakistan, the Integrated Population-Based
Surveillance of Non-Communicable Diseases, was completed in 2014. A large proportion of the
population remains undiagnosed and untreated. The efforts offer an opportunity for the healthcare
system to bring a greater share of this segment into the treatment network.
Introduction of annual price adjustments with respect to inflation for all drugs: The new
pricing policy introduced in Pakistan in March 2015 allows for annual price adjustments for all drugs
in the country. From 1 July 2016, manufacturers and importers shall be allowed to increase MRPs
annually up to 50% of CPI (with a cap of 4%) of the previous financial year for all scheduled drugs, up
to 70% of the CPI (with a cap of 6%) for non-scheduled drugs and equal to CPI for low-priced drugs.
The move is welcomed by the industry as it brings a transparent mechanism for adjustments.
Intimation will need to be sent to the DRAP at least 15 days prior to imposing changes, and
manufacturers shall not need fresh approvals for the increases, although they can be reviewed, if
needed.
Drugs priced at non-viable values are classified as hardship cases by the Policy Board, which shall
formulate a transparent mechanism to review their MRPs. The price increase allowed post-review for
a particular drug is no more than 8% per annum of the already approved MRP, except for orphan
drugs, lower priced drugs and intravenous infusions. Pending hardship cases for scheduled molecules
were to be processed on priority and decided by 31 December 2015. Since decisions were not made on
these cases, in February 2016, some MNCs sought stay orders from the Sindh High Court (SHC) and
increased their drug prices by 15%. In order to control significant prices increases, the Drug Pricing
Committee (DPC) reviewed around 500 pending applications in March 2016 and approved two dozen
such applications allowing them to increase the drug prices by 8%. The remaining applications were
asked to be resubmitted with completed files for further review. The increase in prices of hardship
cases will impact the average price per unit marginally, but directs us to improved growth
expectations during the prognosis period.
Expansion of the private and non-profit hospital sector: Health services in Pakistan are
delivered by public and private facilities, but the private sector provides the majority of primary and
outpatient healthcare, and is the preferred choice for secondary care. To fill the vacuum created by the
lack of public healthcare infrastructure, private providers have proliferated, including private clinics,
hospital trusts, non-governmental organizations (NGOs), social enterprises and for-profit health
insurance companies.
The AKU Hospital in Karachi, the Liaquat National Hospital in Karachi and the Shaukat Khanum
Memorial Cancer Hospital in Lahore are regarded as the leading private hospitals in Pakistan. Most
private hospitals are either owned by a sole proprietor or a group of partners, while some of the most
important are not-for-profit charitable institutions, many of which are growing in size. For those who
can afford it, the leading private hospitals are providing high quality care that meets international
standards. The private hospital sector will continue to be a much more attractive and favorable
environment for multinational companies, as purchasing by these hospitals is viewed as more rational
than in the public sector.
Introduction of the Prime Minister’s National Health Program for the poor: On 31
December 2015, the first phase of the Prime Minister’s National Health Program (PMNHP) was
launched in 15 districts of Islamabad, benefitting 1.2 million families with cashless in-hospital
treatment for major diseases such as heart disease, diabetes and related illnesses, cancer, kidney and
liver diseases, complications from infections such as HIV and hepatitis, road accidents, and burn
injuries. Special health insurance cards will be issued to the enrolled families, for them to avail
PKR50,000 worth of general treatment, and PKR300,000 for serious illness at the nominated public
and private hospitals.

12
The program is expected to extend to 23 districts and 3.2 million families in its second phase by mid-
2016. It has received an initial funding of PKR9 billion, reducing the yearly premiums per family to
PKR1,300 borne by the government. This shall increase access to healthcare for underprivileged
sections of society, who are currently unable to afford treatment at the already overburdened hospitals
in the country. Though the government will be providing support at hospitals only, an impact shall be
observed in the retail pharmacies also for prescription refills. A detailed operating plan explaining
drug coverage, hospital coverage, etc is still in an infancy stage and will be under scrutiny during the
prognosis period.
Increased budgetary allocation for healthcare and health-services development
programs in provinces: Following devolution, the provinces now finance 56% of government
healthcare expenditure. The provinces continue to increase their healthcare spending with a growing
focus on improving the healthcare infrastructure and initiatives to improve outcomes for millennium
development goals (MDGs) or the newly formed sustainable development goals. As a result, there is a
cautious expectation that the government expenditure of health as a proportion of GDP will increase
from 0.4% to 1.0–2.0% during the prognosis period.
Punjab government has allocated PKR166.1 billion for improving the health and medical awareness
among its citizens in 2015-2016, an increase of 36.4% compared to previous year. Some important
initiatives include: Introducing health insurance for the poor; Mobile Health Units in Punjab;
Prevention and control of hepatitis in Punjab; Integrated Reproductive Maternal New Born & Child
Health (RMNCH) & Nutrition Program; Strengthening Expanded Program for Immunization (EPI)
and Punjab MDG Program.
For the fiscal year 2015-2016, the Sindh government has allocated PKR57 billion for health initiatives
in the province, 32.6% higher than PKR43 billion in 2014-2015. Major focus is on continuing the
ongoing schemes, for which PKR 10.1 billion has been earmarked. A sum of PKR1 billion is planned to
be invested in programs such as EPI, maternal and child health, hepatitis control, prevention &
control of blindness, and TB and malaria control programs. PKR2.4 billion has been allocated for
foreign funded projects of the health department.
The Khyber Pakhtunkhwa (KP) government has increased its budget for health by 18.7% from
PKR25.2 billion in 2014-2015 to PKR29.9 billion in 2015-2016. Additionally a sum of PKR12.4 billion
is budgeted to be disbursed for development activities. A sum of PKR8.6 billion, out of PKR12.4
billion allocated for development expenditure, is disbursed as grants to various teaching and medical
colleges in the province. A sum of PKR1.6 billion, out of PKR12.4 billion, is planned to be disbursed
for development activities such as: provision of emergency drugs for poor patients, Health Regulatory
Authority, Free Dialysis Services and angiography/angioplasty surgery and grant in aid for Polio
Eradication Program.
Balochistan’s health sector budget for 2015–2016 is PKR15.4 billion, 6.4% of the total provincial
budget and an increase of around 25% over the previous year. Substantial funds were also earmarked
for provision of necessary equipment, machinery and medicines at government-run hospitals across
the province. A sum of PKR1.6 billion has been allocated for provision of free medicines at
government hospitals. Additional funds are also being made available for key development projects in
the health sector.
Anticipated entry of generics for Sovaldi: 2015 saw the introduction of Sovaldi (sofusbuvir),
which recorded very high sales in its first year of launch. Ferozsons Laboratories was the only
company to have the rights to sell and market the product in Pakistan, on behalf of Gilead Sciences.
Sovaldi became the second leading product in its first year on the market and underpinned Ferozsons’
strong year-on-year growth of 139% in the 12 months to September 2015.
Priced at PKR33,000 for 28 tablets, Sovaldi is mostly inaccessible for the majority of the population,
however. With a view to improving access to the drug to a greater share of patients, DRAP has been

13
inspecting manufacturing facilities of 14 additional local companies that plan to launch a generic
version of Sovaldi in Pakistan. It issued registration letters to 11 of these companies in February 2016,
allowing them to launch generic versions of Sovaldi at PKR5,868 for 28 tablets.
Generics for the product are expected to hit the market in early 2016. Approval for local
manufacturing of the raw material for this drug has also been granted, making Pakistan the fifth raw
material producing country of sofosbuvir. There are over ten million hepatitis C patients in the
country, most of them waiting for the introduction of affordable drugs for the disease. Introduction of
sofusbuvir generics will broaden availability of safe, efficacious and quality drugs at more affordable
prices.
Demographic factors: Pakistan’s rapidly growing population shall continue to contribute to market
growth in the forecast period. The population is expected to grow at an average of 2.0% over the 2015-
2020 period, increasing the total population to 208.43 million by 2020. Those aged more than 65
years are expected to grow at the highest rate of 2.9% in the forecast period.
Regulatory hurdles: The DRAP, though established in 2012, has been facing teething issues until
now. With the appointment of Dr. Aslam in 2015, some order has been restored in the working of the
DRAP. As a result, a new pricing policy came into effect in March 2015, which introduces a basis to
determine the prices of original products and generics, however it might not be enough to revive the
faith of manufacturers in Pakistan’s operating environment. Regulatory guidelines for drug
registration, marketing authorizations, and contract manufacturing are outdated and need updates to
foster confidence among manufacturers, both multinational and local.
Prior to the establishment of DRAP, drug registration took 24 months in the case of a NCE, and
approximately six to eight months for generics. Since then, regulatory approval timelines have
extended considerably and a significant backlog of applications has developed, around 16,000
according to news reports. A major issue has been the short supply of qualified personnel at the
authority, as well as a lack of standard operating procedures. Efforts are being made to increase
human resource capabilities, as well as creating consistent policies in DRAP; it still has a long way to
go in fulfilling its regulatory obligations. Additionally, lack of transparency in the registration process
and weak intellectual property laws in the country have pushed multinational companies away from
Pakistan. As a result, the value share of MNCs has been decreasing: declining from 74% in 1992 and
57% in 2002 to 38% in 2015.
Price reductions for scheduled drugs: After more than two years of discussions, the DRAP
introduced the Drug Pricing Policy in March 2015. The policy establishes an international reference
pricing mechanism for scheduled drugs. Over 320 molecules and vaccines have been added to the list
of scheduled drugs. These include biologicals; infusions; drugs used to treat cancer, TB, hepatitis and
HIV; 160 medicines of public health interest from the National Essential Drug List (NEDL); and the
50 top selling medicines by volume. All NCEs will also be added to the schedule.
From 1 July 2016, originator brands of drugs listed in the schedule shall face price cuts of 10% per
annum for three consecutive years, with generics priced at least 15% less than the reduced MRP of
their respective originator. All NCEs listed on the schedule for four years, or having three or more
generics in the market, shall face same reductions and be termed non-scheduled after that. The
schedule will be revised every three years or earlier as deemed appropriate by the Policy Board.
Originator products with fewer than three generic equivalents on the market will be exempt from
annual price reductions even after four years of being on the schedule, as will products priced below
their reference products from India and Bangladesh.

14
Forecasting Data and Methods
Data Sources
The Pakistan Pharmaceutical Index (PKPI) covers sales from distributors to retail pharmacies,
wholesalers, doctor’s pharmacies and private hospital pharmacies. It includes all pharmacy purchases
of pharmaceutical products from wholesalers, distributors and pharmaceutical companies, including
milks and baby foods.
The PKPI accounts for 85.2% of the total pharmaceutical market.
The final prognosis incorporates an estimate of the unaudited sector. The unaudited sector, which
includes sales to government, university and army hospitals and institutions, is estimated to account
for 14.8% of the total market.
For the purpose of the forecast, it is assumed that the unaudited sector (other outlets) will grow in line
with the audited sector and hold a market share of 14.8% during the forecast period.
Market Coverage (2015)
Market Sector Share of the Market (%)
Retail pharmacies 53.3
Wholesalers 26.2
Private hospitals 3.4
Doctors 2.3
Total audited sector 85.2
Other outlets 14.8

Source: IMS Health
Baseline Extrapolations
The IMS Market Prognosis projections are based upon ten years of volume and price quarterly sales
data. Pharmaceutical volume and price data in each audited market sector are independently analyzed
and projected using the Forecast Pro comprehensive forecasting and forecast management system.
Forecast Pro contains a wide range of forecasting models, including exponential smoothing and
ARIMA, and an Expert system that identifies the best fit for each historical data set. Adjustments are
made where necessary to reflect market understanding. Econometric analysis is performed and
econometric impacts are applied to the baseline where relevant. The macroeconomic variables are
provided to IMS Health by a third party, the Economist Intelligence Unit (EIU).
After the baseline projection has been optimized, events are applied to obtain a final forecast for each
audited market sector

15
Retail Pharmacy/Private Sector Baseline Extrapolations
Table 6: Baseline Retail Pharmacy/Private Sector (2015-2020)
Sales
Year Annual
SU Annual Annual PKR
PKR Growth
(million) Growth (%) Growth (%) (million)
(%)
2015 56615 4.3 4.50 8.7 254946 13.4
2016 59488 5.1 4.82 6.9 286461 12.4
2017 62043 4.3 5.16 7.1 319894 11.7
2018 64599 4.1 5.50 6.6 355069 11.0
2019 67154 4.0 5.84 6.2 391984 10.4
2020 69710 3.8 6.18 5.8 430640 9.9

* Standard Units equate the number of milliliters of liquid preparations to the standard solid dosage of one tablet, therefore
Source: IMS Health
Economic Indicators
The following table reports the macroeconomic indicator forecasts.
Table 7: Key Macroeconomic Indicators
2016 2017 2018 2019 2020
Real GDP 2005 PKR (billion) 10683 11198 11725 12282 12873
Annual Growth (%) 5.1 4.8 4.7 4.8 4.8
Nominal GDP PKR (billion) 30509 33749 37583 42277 47642
Annual Growth (%) 11.4 10.6 11.4 12.5 12.7
Consumer Price Index 2005 = 100 265.5 279.5 296.0 313.0 331.9
Annual Growth (%) 3.7 5.3 5.9 5.7 6.0

Real Private Consumption 2005 PKR
7944 8296 8640 9018 9409
(billion)
Annual Growth (%) 4.8 4.4 4.2 4.4 4.3
Real Government Consumption 2005
1271 1348 1430 1523 1602
PKR (billion)
Annual Growth (%) 5.8 6.0 6.1 6.5 5.2
Exchange Rate PKR : US$ 107.40 108.60 110.20 112.80 114.10
Annual Growth (%) 4.5 1.1 1.5 2.4 1.2

Source: Economist Intelligence Unit, Q1 2016

16
Therapeutic Class Forecasts
The following therapeutic class analysis focuses on the ten leading first level categories of the
Anatomical Classification System (ATC1), and is based on audited retail pharmacy/private sector sales
at ex-manufacturer price level. These ten classes accounted for 87.4% of the market in 2015 and are
expected to account for 87.9% in 2020.
Table 8: Therapeutic Class Forecasts to 2020
2010 2015* 2020 CAGR (%)

ATC Class Market Market Market
PKR PKR PKR 2010 - 2015 -
Share Share Share
(million) (million) (million) 2015 2020
(%) (%) (%)
A 27134 21.3 57174 22.4 104429 23.0 16.1 12.8
B 4315 3.4 8504 3.3 14849 3.3 14.5 11.8
C 9169 7.2 18824 7.4 34817 7.7 15.5 13.1
D 4232 3.3 8479 3.3 15834 3.5 14.9 13.3
G 3688 2.9 7508 2.9 13539 3.0 15.3 12.5
J 30848 24.2 60862 23.9 112488 24.8 14.6 13.1
L 2577 2.0 4357 1.7 6967 1.5 11.1 9.8
M 10053 7.9 18873 7.4 31298 6.9 13.4 10.6
N 10908 8.5 21401 8.4 34094 7.5 14.4 9.8
R 8904 7.0 16925 6.6 30757 6.8 13.7 12.7
All others 15766 12.4 32039 12.6 54869 12.1 15.2 11.4
Total
Audited 127594 100.0 254946 100.0 453942 100.0 14.8 12.2
Market
Unaudited
22076 44111 78541 14.8 12.2
market
Total
149671 299057 532483 14.8 12.2
Market
*Forecast Value
Source: IMS Health

17
Sales by ATC
120,000
100,000
PKR (million)
80,000
60,000
40,000
20,000
0
A B C D G J L M N R All others
2010 2015* 2020 *Forecast Value

18
IMS Market Prognosis Report

19
Business Environment
IMS Market Prognosis Economic Environment and Political Environment chapters are provided by
the Economist Intelligence Unit (EIU), the following is from the Pakistan Country Report published
in January 2016.
Economic Environment
Economic Growth
Economic expansion in 2016-2020 will be constrained by the volatile security environment, as well as
water and electricity shortages. Moreover, low investment in human capital and the existence of
barriers preventing women from fully participating productively in the workforce make it unlikely that
Pakistan will benefit wholly during the forecast period from a potential demographic dividend
stemming from the increase in people of working age as a share of the total population. Supported by
Chinese investment under the China-Pakistan Economic Corridor (CPEC), the EIU expects real GDP
to grow by an average rate of 4.8% a year in 2016-2020. These rates will, nevertheless, lag those of
Pakistan’s South Asian neighbors.
Growth will be underpinned by private consumption and investment. In recent years household
consumption has largely been driven by steady output gains in the rural sector and rising inflows of
workers’ remittances. Assuming that both these trends remain in place, private consumption is
expected to grow by an average of 4.4% a year in 2016-2020. If the military's campaign against
violence by Islamic militants in the country's commercial capital, Karachi, succeeds, this city could
experience an economic renaissance.
Inflation
The EIU expects the rate of consumer price inflation to average 3.7% in 2016, up from an estimated
2.5% in 2015. Inflation will average 5.7% a year in the period 2017-2020. Supply-side improvements
are unlikely to be significant, at least in the early half of the forecast period, as efforts to tackle chronic
electricity shortages and expand the transport network will only start to show signs of success in 2018-
2020. Furthermore, a weakening of the value of the Pakistan rupee will push up import prices. The
pass-through to inflation from a weaker currency is relatively high in Pakistan given the country’s
strong reliance on imports of merchandise goods and petroleum products. Producer price inflation
will strengthen in 2017, before easing as supply-side improvements take effect in 2018-2020.
Population, Employment and Incomes

Fifteen million people will be added to Pakistan's population during the five-year period from 2016-
2020, bringing total numbers to 208.43 million by 2020. The majority of the increase, 11.8 million,
will be among the 15-64 years age group, which will expand at a CAGR of 2.3% in 2016-2020
compared with 2.0% for the total population. The country, therefore, needs to create millions of jobs
over the medium term to absorb this increase in the potential labor force. The 15-64 age group will
increase its share of total population from 63.2% in 2016 to 64.1% by 2020. Those aged 65+ years will
grow at a CAGR of 2.9% in 2016-2020 to reach 9.62 million by 2020. They will by then only account
for 4.6% of total numbers, and the old age dependency ratio will have risen only slightly to 7.2%,
compared with 7.0% in 2016.

20
In 2015, the unemployment rate was 6.4%, whence it will roughly stabilize, giving a jobless rate of
6.8% by 2020. This doubtless understates the real level, given the numbers operating in the informal
economy or being under-employed in agriculture. Given the swelling labor force, wage growth will be
constrained and real incomes will remain broadly static, or decline depending on the rate of inflation.
Economic growth will be insufficient to significantly dent the unemployment statistics, or to promote
higher income levels for the majority.
Fiscal Policy
The need to fund investments under the CPEC will stall efforts to reduce the budget deficit in 2016-
2020. Notably, the government will have to fund the roughly US$10 billion of transport infrastructure
projects under CPEC. The current and next government will struggle to widen the tax base
significantly in 2016-2020. However, tax collection will increase as some loopholes and exemptions
are eliminated and the government receives greater proceeds from privatization and indirect taxes.
Monetary Policy
The State Bank of Pakistan (SBP, the central bank) has cut the discount rate by a total of 350 basis
points, to 6.5%, since November 2014. Monetary policy is expected to remain accommodative during
the first half of 2016, as consumer price inflation is likely to undershoot the government's target,
which has been set at 6% for 2015-2016.
The SBP will begin to tighten policy from the second half of 2016 to counteract the acceleration in
consumer and wholesale price inflation. This process will continue until 2019, when the central bank
will switch to a neutral stance. The SBP will use a new benchmark interest rate to signal the direction
of monetary policy. At its monetary policy meeting in May 2015, the SBP introduced a new "target
rate", which lies between the discount rate and the repo rate (the overnight rate that banks receive on
deposits at the central bank). The target rate has been set at 50 basis points below the discount rate
and now stands at 6%.
Foreign Trade and Current Account

The EIU expects the merchandise trade deficit to widen over the forecast period as a result of greater
demand for imported investment goods and recovering global oil prices. Exports will be supported by
steady gains in global trade growth and stronger commercial links with the EU. However, exporters in
Pakistan will struggle to take full advantage of these opportunities owing to persistent power
shortages and poor basic infrastructure. As oil prices recover, the import bill will increase. Meanwhile,
the secondary income surplus will grow steadily, driven largely by rising workers’ remittances.
The EIU forecasts the current-account deficit to widen to the equivalent of 0.9% of GDP in 2020, from
an estimated 0.5% in 2015. Assuming that workers' remittances continue to grow at a steady pace,
along with foreign direct investment, the country's balance-of-payments position is likely to remain
stable, with total international reserves (including gold) providing an average of five months of import
cover in 2016-2020.
Exchange Rate
Increased foreign exchange inflows, partly stemming from rising workers’ remittances, will provide
some support to the Pakistan rupee over the forecast period. However, several factors—including a
persistent trade deficit, the necessity of making debt repayments and the large fiscal deficit—will exert

21
greater downward pressure on the local currency in 2016-2020. The EIU, therefore, expects the
Pakistani rupee to depreciate consistently and gradually against the US dollar over the forecast period.
Key Economic Indicators
2016 2017 2018 2019 2020
Real GDP 2005 PKR (billion) 10683 11198 11725 12282 12873
Annual Growth (%) 5.1 4.8 4.7 4.8 4.8
Nominal GDP PKR (billion) 30509 33749 37583 42277 47642
Annual Growth (%) 11.4 10.6 11.4 12.5 12.7
Consumer Price Index 2005 = 100 265.5 279.5 296.0 313.0 331.9
Annual Growth (%) 3.7 5.3 5.9 5.7 6.0

Real Private Consumption
7944 8296 8640 9018 9409
2005 PKR (billion)
Annual Growth (%) 4.8 4.4 4.2 4.4 4.3
Real Government Consumption
1271 1348 1430 1523 1602
2005 PKR (billion)
Annual Growth (%) 5.8 6.0 6.1 6.5 5.2
Current Account Balance
-1.1 -2.2 -3.0 -3.3 -3.6
US$ (billion)
-113.9 -237.1 -333.5 -377.7 -416.0
PKR (billion)
-0.4 -0.7 -0.9 -0.9 -0.9
(% of GDP)
Exchange Rate PKR : US$ (avg) 107.40 108.60 110.20 112.80 114.10
Annual Growth (%) 4.5 1.1 1.5 2.4 1.2

Population by Age Distribution (million)
2016 2017 2018 2019 2020
0-14 62.46 63.14 63.95 64.68 65.21
Annual Growth (%) 0.7 1.1 1.3 1.1 0.8
15-64 121.80 124.80 127.70 130.60 133.60
Annual Growth (%) 2.7 2.5 2.3 2.3 2.3
65+ 8.58 8.81 9.05 9.31 9.62
Annual Growth (%) 2.9 2.7 2.7 2.9 3.3
Total Population 192.84 196.75 200.70 204.59 208.43
Annual Growth (%) 2.1 2.0 2.0 1.9 1.9


22
Political Environment
Political Institutions
The Islamic Republic of Pakistan was established as a federal state by the constitution in 1973, two
years after the division of West Pakistan and East Pakistan into Pakistan and Bangladesh. The
constitution has been modified many times since 1973, particularly in relation to presidential powers.
In April 2010, the constitution was amended to limit the power of the presidency by restoring a
parliamentary system while strengthening the power of the four provincial governments.
An electoral college made up of the Senate, the National Assembly, and the provincial assemblies
selects the president for a five-year term. The president can only serve two consecutive terms. Since
the constitutional reform of April 2010, the president can only dissolve parliament on the advice of the
prime minister.
Pakistan has a bicameral legislature. The National Assembly (lower house), the more authoritative
house, consists of 342 members and is elected every five years. Of the 342 seats, 10 are reserved for
non-Muslim minorities and 60 for women. The lower house holds responsibility for selecting the
prime minister. The Senate (the upper house) is made up of 100 representatives chosen by the
provincial assemblies, the Federally Administered Tribal Areas and the Federal Capital. Senators serve
for a term of six years, and elections are held every three years for half the body. The role of the Senate
is to enhance Pakistan’s federal system by providing equal representation to the four provinces to
offset the proportional representation of the National Assembly.
The Supreme Court consists of a chief justice and no more than 29 other judges. A judicial
commission makes nominations to the Supreme Court and to the lower courts.
Current Government and Opposition

The ruling Pakistan Muslim League (Nawaz), or PML (N), holds a comfortable majority in the
National Assembly (the lower house of parliament) and the EIU expects it to see out its term until
2018, when the next parliamentary elections are likely to be held. In the improbable case of large-scale
public protests, leading to military intervention, elections could be delayed. Political instability will
remain a key feature of Pakistan's political system over 2016-2018, as opposition parties will expand
efforts to undermine the credibility of the government. One opposition party, the Pakistan Tehreek-e-
Insaf, in particular, will continue to lead calls for protests against the government.
Deep-seated animosities between the provinces will also threaten the ability of the PML (N) to pursue
reforms in 2016-2018 and carry out infrastructure projects effectively. The PML (N) enjoys strong
support within Punjab, the country's most populous and wealthiest province. However, opposition
leaders regularly accuse the PML (N) of favoritism towards Punjab, stoking resentment among voters
in other provinces such as Balochistan and Sindh. The rivalry among Pakistan's four provinces will
persist over 2016-2020, complicating efforts to implement reforms effectively for the current
government and the next.
The military, which is headed by the army chief of staff, General Raheel Sharif, will remain a leading
actor in the country's politics, particularly with regard to domestic and foreign policy (with a strong
emphasis on security). The prime minister and leader of the PML (N), Nawaz Sharif, will find it
difficult to impose his authority over the military in matters relating to national security. The
government's failure to implement the national action plan adequately, which was established in 2015
to combat terrorism, has added an element of friction to civilian-military affairs. General Sharif's
scheduled retirement in November 2016 will further complicate the balance of power between the

23
military and the civilian government, but his term is likely to be extended owing to ongoing security
operations and his broad popularity.
Domestic Terrorism
Tackling the parlous security situation across large parts of the country, including Karachi,
Balochistan and Khyber Pakhtunkhwa, will remain crucial to improving political stability as well as
the security environment. The army will continue to fight insurgents primarily belonging to Tehrik-i-
Taliban Pakistan (TTP, also known as the Pakistani Taliban; an alliance of around 12 groups that aims
to establish an Islamic state) on several fronts. Although the military's efforts have seen some success,
Pakistan's vast borderlands with Afghanistan will offer terrorist groups hideouts, making a complete
victory against terrorist violence unlikely in 2016-2020.
In August 2014 several TTP leaders pledged allegiance to Islamic State (IS), an extreme jihadi group
operating in Syria and Iraq. Over time this could result in Pakistani militants adopting this group’s
even more aggressive tactics. Although groups affiliated with IS are likely to stay small in Pakistan—
never mind take over a significant part of territory—individuals involved with the group could stage
violent attacks. Attacks by TTP and its splinter groups against Christian churches in March 2015 and
on a bus carrying Ismaili Shias in May 2015 suggest that militants are adhering more to the virulent
sectarianism espoused by IS. Further violent incidents could lead to a dangerous rift in social stability
by pitting Shia Muslims against the majority Sunni Muslim population.
Aside from TTP, the government continues to struggle with a separatist movement in Balochistan,
highlighted by the shooting of 22 people by a Baloch separatist group in May 2015. Pakistan's
government and military will probably struggle to resolve this issue in 2016-2020, even as attacks by
the separatist movement could threaten infrastructure such as the roads leading to the warm-water
port in Gwadar.
International Relations
China will become the leading economic partner for Pakistan in 2016-2020 as projects under the
umbrella of the US$46 billion CPEC are executed. The majority of funding will be allocated to energy
projects, which the government hopes will add 10 GW to electricity-generation capacity by 2017-2018.
Approximately US$10 billion will be allocated to transport infrastructure projects, and the
government also hopes to complete these by 2017-2018. However, owing to difficulties in the business
and security environment, it is unlikely that the majority of projects, particularly in the energy sector,
will be completed in that ambitious timeframe. The CPEC will further strengthen relations between
the two countries and help to promote trade links between Pakistan’s Gwadar port and China’s
Xinjiang province.
Closer co-operation with China could complicate Pakistan's relations with the US further. Although
the US will remain an important partner for Pakistan, it will probably lose influence as the CPEC
progresses. The Pakistani military's offensive in the FATA has partly allayed US officials’ doubts
regarding Pakistan’s commitment to combating Islamist terrorism. This could improve cooperation on
security as well as the prospects for continued aid from the US in 2016-2020.
A surprise visit to Pakistan by India's prime minister, Narendra Modi, in late December 2015 suggests
a willingness to commence a dialogue process. The EIU continues to believe that relations between
India and Pakistan are likely to remain broadly stable. However, until the sovereignty issue over
Kashmir is resolved, diplomatic relations will remain prone to setbacks in 2016-2020. The EIU
believes that neither India nor Pakistan will agree to the other country ruling the whole of Kashmir or
to full independence for the territory.
Source: Economist Intelligence Unit, Pakistan Country Report, published January 2016

24
Healthcare Environment
Healthcare Provision
Healthcare System
Pakistan’s highly fragmented healthcare system is inadequate to provide care to the
country’s population of over 180 million. While first class international standard
hospitals and facilities are available in some urban areas, healthcare is virtually non-
existent in more remote regions, and devolution since 2011 has exacerbated the
fragmentation.
Pakistan has a mixed public and private healthcare system that is highly fragmented, with a range of
different healthcare providers compensating for inadequacies in the public system. Healthcare
coverage is determined by income, whilst location and accessibility, affordability and quality of
services are critical issues. Close to half of the population has no access to modern healthcare, public
health financing covers only about a quarter of the population and optimum pharmaceutical provision
is available only in the main cities. About 85% of the country’s physicians practice in urban areas.
Services are weak in rural areas, where approximately 64% of the population live, reflecting the
predominantly agrarian economy. Natural disasters, such as catastrophic flooding and earthquakes, as
well as frequent law and order disruptions, test Pakistan's healthcare system.
Overall, healthcare policy, co-ordination and oversight were previously the remit of the federal
Ministry of Health (MoH), but health responsibility was almost entirely devolved to the four
provinces: Balochistan, Khyber Pakhtunkhwa (KP), Punjab and Sindh, on 30 June 2011 under the
18th Amendment to the national constitution. Provinces are further sub-divided into divisions,
districts and tehsils (administrative units of districts), which also have some healthcare
responsibilities. Many areas for which the MoH was previously responsible, such as disease
surveillance and national health programs, have been devolved to the provinces or transferred to
government departments that were not previously involved in healthcare. Industry executives report
that the provincial authorities are making some attempt to strengthen their capacity to deliver
effective healthcare provision.
“It's a good time that the devolution happened, the healthcare sector brought
down to the province. For the last 30, 40 years the provincial government didn't
have the mandate to control that. They didn't have any idea, they didn't have the
resources, and they didn't have the management skills. Slowly and gradually
now this is their responsibility so they are bringing in the expertise, bringing the
learning and I'm sure probably in the next 5 years, next 10 years, there will be a
drastic grassroot level changes in the healthcare sector.” (Local Pharmaceutical
Company Executive)
Devolution has exacerbated the problem of fragmentation and transition is proving difficult, with
varying degrees of progress having been made. Although healthcare was to a great extent already
decentralized, questions remain over the future of national public health programs and the collection
of public health information for the whole country.
In recognition that the public healthcare sector requires some level of central coordination, the
government established a Ministry of National Health Services Regulation and Coordination
(NHSRC) and appointed a federal minister of state for it, Mrs Saira Afzal Tarar, in June 2013.

25
Health services are delivered by public and private facilities, but the private sector provides the
majority of primary and outpatient healthcare, and is the preferred choice for secondary care.
However, the distinction between the public and private sectors is blurred by the fact that many
doctors practicing in the public sector also practice privately, and by the reliance of the public sector
on patient payments.
To fill the vacuum created by the lack of public healthcare infrastructure, private providers have
proliferated, including private clinics, hospital trusts, Non-Governmental Organizations (NGOs),
social enterprises and for-profit health insurance companies. Absence of regulatory supervision of
private facilities has resulted in lack of standardization of care and uneven quality of care, while
malpractice is common. Nevertheless, for those who can afford it, the leading private hospitals are
providing high quality care that meets international standards.
In addition, cultural heritage and lack of access to organized healthcare have driven a large segment of
the population to rely on traditional medical practitioners, particularly in rural areas. The three main
types of traditional medicine practiced in Pakistan are Unani, Ayurveda and homoeopathy, with
Unani being the most common, having been performed by traditional healers (hakeem or tabeeb) in
Pakistan for centuries.
Key Developments and Trends

• Extending healthcare services to the more remote and rural parts of the country remains
the major challenge in elevating standards of national healthcare provision. Development
in the province of Khyber Pakhtunkhwa, for example, has been hampered by ongoing
conflicts with neighboring Afghanistan and the fact that there are many small
communities living relatively far apart.
• Under the National Program for Primary Healthcare and Family Planning, the number of
Lady Health Workers (LHWs), who deliver basic health services to the least affluent
members of society, is increasing.
• The current government is a strong advocate of the rights of the individual and had
passed the Right to Information Act (2013), to increase transparency into public sector
services. As a consequence, the media has become increasingly proactive in reporting on
matters effecting provision of public services, which has led to increasing awareness
amongst the general population where healthcare issues are concerned.
• The government of Punjab, Pakistan’s largest state, announced in October 2015,

bifurcation of its healthcare network into two departments: Primary & Secondary
Healthcare Department; and Medical Education & Tertiary Care Health Department. The
objective is to lessen the burden of work and ensure more efficient management of
healthcare infrastructure in the province. Depending on the success of the model, similar
systems may be rolled out in other states.

26
Health Status
Communicable diseases remain a substantial burden on the nation’s health status.
Immunization has become an important strategy in tackling the problem and financial
help from international aid agencies will be critical in expanding existing programs.
Meanwhile, non-communicable diseases (cancer, diabetes and cardiovascular
disease) are increasingly prevalent, and gradual expansion of health coverage will
see more patients diagnosed and treated.
The health status of 180 million Pakistanis lags behind global and regional averages. With an ever
growing population base and lack of basic facilities for water and sanitation, the burden of infectious
diseases is on a rise nationally. On the other hand, changes in the socio-economic environment and
lifestyle choices are adding to the incidence of non-communicable diseases. In all the key health
indicators, Pakistan lags behind both the regional average for the World Health Organization (WHO)
Eastern Mediterranean region to which it belongs, and global averages. Rapid population growth,
malnutrition and water-borne diseases are major reasons for the country’s poor performance, while
provision of safe drinking water and sanitation facilities remains a problem in rural and poor urban
areas.
“The problem is, 60% of the diseases which we have, at least in our subcontinent,
are because of the stomach, and they are all waterborne. We are right now not
even focusing on the primary cause which basically takes you to the hospital,
which is hygiene, clean water, sanitation. And they are things that you can really
work on, because they are all interconnected.” (Hospital Administrator)
Basic Statistics
Indicators Statistics (years) Year
Life expectancy at birth (Pakistan) 65 2013
Life expectancy at birth (WHO region) 68 2013
Life expectancy at birth (World Bank Income group) 66 2013

Source: WHO and United Nations
Despite the intentions of successive governments to raise the nation’s health status, progress with
achieving this objective has been notoriously slow, largely hampered by high prevalence of poverty
and limited reach of health care services outside of the urban centers. Individual health centers
undertake screening but this is not linked to a centralized database and the information collected is
not sufficient to be used in future planning.
Reasserting its commitment to improve health outcomes the federal government is forging stronger
links with provincial authorities and will fund a number of key health programs through the Public
Sector Development Program (PSDP), including LHWs, immunization programs, efforts to control
communicable diseases, maternal and child health initiatives and strengthened cancer treatment
provision.
Millennium Development Goals: The Millennium Development Goals (MDGs) – eight
international development goals decided by a consortium of international governments and the
United Nations in 2000 – were to be achieved by 2015. Spanning social and health issues, these goals
have been divided into 60 indicators, of which Pakistan adopted 41. With the target year 2015 ending,

27
Pakistan achieved just 9 out of the 41 indicators, lagging behind mainly on maternal and child health
issues.
Local health experts believe that eroding confidence of people in the government, inactive citizenry,
increasing income disparity, improper planning and natural calamities were major factors behind the
lag in the indicators.
According to the United Nations Development Program (UNDP), Punjab performed better among the
four provinces, mainly because it had a better baseline in 2000 and also the government aligned its
annual development investment with the MDGs. Overall, lack of capacity to plan, implement and
deliver results and lack of awareness among the masses led to underachievement of the targets by all
the provinces.
Millennium Development Goals
Indicators Baseline* Latest**
Under-five mortality rate (per 1000 live births) 52 86
Infant deaths (per 1000 live births) 40 70
Maternal mortality ratio (per 100,000 live births) 140 170
Deaths (per 100,000 live births) 140 260
Deaths due to HIV/AIDS (per 100,000 population) 0.2 2.0
Deaths due to malaria (per 100,000 population) 2.0 1.1

Deaths due to tuberculosis among HIV-negative
69 27
people (per 100,000 population)
Source: WHO and UN
*1990 for under-five mortality and maternal mortality; 2000 for other indicators
**2012 for deaths due to HIV/AIDS and malaria; 2013 for other indicators. 2010 number for deaths per live births
According to estimates published by the UN, the number of under-five deaths was 85.9 per 1,000 live
births (well above the 2015 target of 52), while the number of infant deaths per 1,000 live births has
been placed at 69.3 (again significantly above the MDG target of 40). New-born deaths are strongly
linked with maternal death, which is made prevalent by a range of factors, including high fertility
rates, illiteracy amongst women, frequent births at home, malnutrition and poor access to emergency
obstetric care. The latest national data available are for 2010, which give estimates of 260 deaths per
100,000 live births, compared with an MDG target of 140. Similarly, the country is off track for its
other maternal health goals, which include increasing the proportion of births attended by skilled
birth attendants, reducing the fertility rate, and increasing the number of antenatal consultations.
Immunization: An Expanded Program of Immunization (EPI) was introduced in Pakistan in 1974
and protects children aged 0-11 months from nine vaccine preventable diseases which include
tuberculosis, poliomyelitis, diphtheria, pneumonia, whooping cough, neonatal tetanus, meningitis,
measles and hepatitis B. The program was managed by the MoH until 2011, and was passed to the
provinces post devolution through the 18th Amendment. Immunization programs remain an
important focus area for all the provinces in Pakistan due to frequent outbreaks of vaccine preventable
diseases such as measles. They play a key role in improving the healthcare situation, particularly for
children. Despite introduction of multiple programs, Pakistan was not able to achieve the MDG target
for full immunization of all children aged 12-23 months by 2015 (estimates place the figure at around
80% in 2012).

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Local and international experts conducted an assessment of the program in 2011 and recommended
improvement in program implementation, planning at local level and expediting polio eradication
programs as some important measures to improve program performance. Additionally, Pakistan being
one of the two countries in the world where polio is still not eradicated makes polio vaccination a
government priority. In January 2014, the WHO reported that Peshawar in the province of KP was the
world’s largest poliovirus reservoir, prompting the provincial government to establish a health
program, Sehat Ka Insaf (health for all), replacing the national polio campaigns (see Provincial
Reforms).
The PSDP will fund the EPI alongside financial and practical help from international aid agencies,
such as The United Nations Children's Fund (UNICEF).
Infectious Diseases: Infectious diseases continue to be a prominent health issue for Pakistan,
accounting for nearly two-thirds of years of life lost, according to the WHO. The healthcare
infrastructure in Pakistan continues to plan and implement programs for controlling the high burden
of infectious diseases mainly tuberculosis, malaria and HIV/AIDS. Post devolution, the provinces
began devising their health strategies in line with the national policy and focused on controlling these
diseases in the country. The efforts have been supported well and financed by international bodies
such as the United States Agency for International Development (USAID), the Global Fund to Fight
AIDS, Tuberculosis and Malaria (GFATM), etc. for more than a decade. The Global Alliance for
Vaccines and Immunisation (GAVI) was formed as a public private partnership to improve childhood
immunisation coverage in poor countries with increased access to new medicines at lesser costs.
Pakistan continues to benefit from the support by GAVI. Industry experts point out to ineffective
utilization of these foreign grants in achieving the desired goals.
“So I think that was the lacking part, and that is the lacking part, in the grants
that are given, they sometimes go unutilized and once they see that they are not
interested in utilizing it, so what they do is, in the proceeding years, they just pull
back. There are many programs that are being announced, but they do not
effectively make much of a difference at the grass root level, or they are not
completely utilized.” (Hospital Administrator)
Top Ten Causes of Death

Number of deaths
Diseases Percentage
(000s) 2012
Ischemic heart disease 8.4 111.4
Lower respiratory infections 7.8 104.5
Stroke 6.3 84.6
Preterm birth complications 5.8 77.4
Diarrheal diseases 4.8 63.7
Chronic obstructive pulmonary disease 4.6 61.6
Tuberculosis 4.6 61.5
Birth asphyxia and birth trauma 3.9 52.3
Neonatal sepsis and infections 3.1 41.0
Diabetes mellitus 3 40.3

Source: WHO and UN

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According to the latest numbers from WHO, tuberculosis is one of the top ten leading causes of deaths
in Pakistan. Globally, the country ranks fifth among the 22 high disease-burden countries for
tuberculosis and has the fourth highest prevalence of Multidrug-Resistant TB (MDR-TB). Continuous
efforts have helped in treating more than 3 million TB patients with quality assured medicines free of
cost since 2001; 600,000 suspected cases of TB tested each year; development of HIV/TB co-infection
guidelines; scaling up of treatment capacity for multidrug resistant-TB cases; negotiations with WHO,
Global Fund and Global drug facility to prevent a shortage of drugs by securing all first and second
line drugs needed until 2018. These measures are beginning to have some success.
HIV/AIDS remains a largely hidden problem. The government’s HIV/AIDS program has been in place
since 2003 and is focusing on campaigns to encourage behavioral change among high-risk population
groups, treatment of Sexually Transmitted Infections (STIs), supply of safe blood and building
treatment capacity. Data estimates from UNAID state that there are 91,000 people living with
HIV/AIDS in Pakistan as of 2014, out of which only 10,000-12,000 are registered. The Pakistan
Economic Survey 2013-2014 reported that the national and provincial programs had identified a total
of 4,500 HIV positive cases. The HIV/AIDS Control Program is supported by UN agencies and the
GFATM.
Non-communicable Disease: Economic development and changing lifestyle have led to an
epidemiological transition in the country. The burden of Non-Communicable Diseases (NCDs) is
increasing rapidly, as confirmed by the latest report from WHO which indicates that NCDs accounted
for 51% of the deaths in 2014, up from 46% in 2010 and 26% in 2008. Among the NCDs,
cardiovascular diseases are the leading cause of mortality, accounting for 19% of the total deaths,
followed by cancers that account for 8% and chronic respiratory disorders accounting for another 6%.
The incidence of NCDs is expected to rise, with a prediction of 3•87 million premature deaths from
cardiovascular diseases, cancers, and chronic respiratory diseases in people aged 30–69 years by
2025.
To develop and implement a long-term strategy for prevention and control of NCDs, a tri-partite
alliance was formed between the between the MoH, Government of Pakistan, the WHO Pakistan
office, and the NGO Heartfile. They formulated the National Action Plan for Prevention and Control of
NCDs and Health Promotion in Pakistan in 2004, which promulgated an integrated framework for
action. Under this framework, targeted action plans were devised for grouped NCDs, taking into
consideration the existing public health systems. The idea was to avoid disjointed small scale projects
for individual NCDs and formulate a strategy that list common as well as specific action plans for the
diseases.
According to International Diabetes Foundation (IDA), there were 6.9 million cases of diabetes in
2014 in Pakistan; and a prevalence rate of 6.8% among adults aged 20-79 years. This number is
estimated to reach 12.8 million by 2035, making Pakistan rank eighth among the top 10 countries
having high prevalence of diabetes globally. Urbanization and related factors such as changing diet
and lifestyle shall be the underlying reasons behind the increasing prevalence.
Industry experts believe that there is a significant proportion of the population that remains
undiagnosed and untreated. It offers an opportunity for the healthcare system to bring this segment
under the treatment network.

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• Communicable diseases:
° The MDGs gave way to introduction of Sustainable Development Goals (SDGs) to be

achieved until 2030. The prognosis period shall see partnership between federal and
provincial governments, such as introduction of national development agenda in
January 2016, in education, health and sanitation to achieve the SDGs.
° The rising incidence of hepatitis shall be a major challenge for the healthcare system
in the coming years and shall demand introduction and implementation of national
initiatives against the disease.
° In Pakistan, polio vaccines are rumored to cause sterility and contain anti-Islamic
ingredients. As a result, polio vaccinators have endured persistent physical attacks
from groups intending to halt their work. Consequently, immunization coverage for
polio remains weak in the country when compared to global averages and the disease
remains endemic. An Inactivated Polio Vaccine, launched in Pakistan in August
2015, with the support from GAVI, shall be incorporated into the routine
immunization schedule for children, thereby, accelerating the polio eradication
campaign for intercepting the virus country-wide by 2016.
° The government allocated PKR1.8 billion to the EPI Control of Diarrheal Disease
(CDD) project in its budget for 2015-16. Important programs such as the national TB
and malaria control programs saw a reduction in allocation from PKR124 million to
PKR86 million, which will negatively impact funding from international donor
agencies as well. The ministry asked for an additional allocation of PKR1.950 billion
for EPI, CDD NIH Islamabad.
• Non-communicable diseases:
° Despite the continuing presence of serious infectious diseases, non-communicable

diseases are a growing problem, made worse by lack of prevention and poor health
awareness amongst the population. The first phase of the National Action Plan, the
Integrated Population-Based Surveillance of Non-Communicable Diseases, was
completed in 2014.
° Cancer is a rising problem and breast cancer in particular has been identified as
having poor outcomes for Pakistani women, largely due to lack of awareness. The
incidence of breast carcinoma is reported to be the highest in the whole of Asia, with
percentages as high as 30-40% amongst women in the 40-year age bracket in
Pakistan, as compared to 10% in the same group in the West.
° The Federal Breast Cancer Screening Program was launched in Islamabad in 2013,
but significantly more needs to be done to educate the population about the
importance of early detection. Meanwhile, nine new cancer hospitals are under
construction, three of which are nearing completion in KP province.

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Healthcare Financing and Expenditure
Pakistan’s government healthcare expenditure remains significantly below the level
needed to ensure an adequate level of service provision for the population. Total
government healthcare spending is not expected to exceed much beyond 2% of
GDP in the forecast period. Private spending, predominantly in the form of out-of-
pocket payments, is the major source of healthcare financing, accounting for around
62% of the total healthcare expenditure.
Healthcare fragmentation, inefficiency in spending, population growth and the increasing demand for
healthcare services mean that Pakistan will continue to struggle to provide sufficient funding for
healthcare, particularly whilst other public expenditure needs continue to take priority. Industry
stakeholders acknowledge that federal and provincial governments are taking steps to increase the
allocation of healthcare funding but expenditure remains significantly below the levels needed to meet
the healthcare needs of the population.
Financing: Out-of-pocket expenditure will continue to be the main means of financing healthcare in
Pakistan. There is a perception locally that much of the funding received from international agencies
is mismanaged, with large amounts that could be used to establish national screening programs for
the main diseases affecting the country spent on paying foreign consultants advising on Pakistan’s
healthcare problems.
Sources of Healthcare Funding 2007–2012 (including current and capital expenditure)
Amount (PKR billion)

Source of Funds
2007-08 2009-10 2011-12
Public Funds 86.2 137.5 198.7
Government Funds 79.3 129.2 189.4
Federal Government 28.8 52.5 41.7
Provincial Government 27.2 47.2 105.5
District/Tehsil Bodies 23.3 29.6 42.2
Autonomous Bodies 6.8 8.3 9.3
Private Funds 256.1 305.8 346.2
External sources 4.4 5.1 9.6
TOTAL 346.7 448.4 554.5

Source: Pakistan National Health Accounts 2011-2012, Pakistan Bureau of Statistics
The latest National Health Accounts (NHAs) published by the Pakistan Bureau of Statistics reveal that
the share of public funds in the total health expenditure has increased to 36% in the period 2007-
2012. It is observed that with devolution of the provinces in 2011, the burden of financing healthcare
has shifted from the Federal government to the provincial governments. District/tehsil bodies also
have a share of 22.3% in the public funds. Private funds, on the other hand, account for 62% of total

32
health expenditure, relying primarily on household spending. The NHA for the year 2013-2014 from
the PBS is under preparation but, according to the WHO, the distribution between the government
and private spending in 2013 remains the same.
Expenditure: Ongoing expansion of Pakistan’s population will see healthcare expenditure continue
to increase, but it will remain insufficient to meet the needs of the country. In 2013, total healthcare
expenditure was estimated by the WHO at just 2.8% of GDP.
Provincial Health Budgets: Following devolution, the provinces now finance 56% of government
healthcare expenditure. The provinces continue to increase their healthcare spending and although
much of the expenditure will still focus on hospitals, greater efforts are being made to meet the
millennium development goals, which should see some progress with improved primary care
provision. As a result, there is a cautious expectation that the overall proportion of GDP spent by the
government sector will increase from 0.4% to 1.0–2.0% during the prognosis period.
Whilst Punjab and KP are considered to be making good progress with managing healthcare services,
the provinces of Sindh and Balochistan, which have more sparsely populated rural communities, are
said to be falling behind.
Provincial plans for expenditure in the current financial year include:
• Punjab: For 2015-2016, the Punjab government has allocated PKR166.1 billion for improving
the health and medical awareness among its citizens. Some of the important initiatives
announced include:
° Establishment of the Pakistan Kidney and Liver Institute in Lahore
° Introducing health insurance for the poor
° Expansion of Tayyib Erdogan Hospital, Muzaffargarh
° Mobile Health Units in Punjab
° Prevention and control of hepatitis in Punjab
° Provision of missing specialties for upgradation of District Headquarter (DHQ) hospital

to Teaching Hospital, D.G. Khan
° Provision of missing equipment in Tehsil headquarter (THQ) and DHQ hospitals in

Punjab
° Integrated Reproductive Maternal New Born & Child Health (RMNCH) & Nutrition
Program
° Strengthening Expanded Program of Immunization (EPI)
° Punjab MDG Program
In the previous cycle, PKR73.2 billion was budgeted for delivery of health services in
financial year 2014-2015, according to the Citizen’s Budget report. Overall, PKR121.8
billion was allocated for health.
• Sindh: For the current fiscal year, 2015-2016, the government has allocated PKR57 billion
for health initiatives in the province, 32.6% higher than PKR43 billion in 2014-2015.
° An amount of PKR13 billion is pitched for development programs, which includes

PKR10.1 billion for ongoing schemes and PKR2.9 billion for new schemes.
° An additional PKR3.9 billion is being allocated for medical education in this fiscal.

33
° Additionally, a sum of PKR1 billion is planned to be invested in programs such as EPI,
maternal and child health, hepatitis control, prevention & control of blindness, TB and
malaria control programs.
° A sum of PKR2.4 billion has been allocated for foreign funded projects of health
department, which are Nutrition Support Program (PKR1.4 billion; IDA) and
establishment of Child Health Care Institute at Sukkur (PKR1 billion; Korea)
• Khyber Pakhtunkhwa: KP government has increased its budget for health by 18.7% from
PKR25.2 billion in 2014-2015 to PKR29.9 billion in 2015-2016. Additionally a sum of PKR12.4
billion is budgeted to be disbursed for development activities. A sum of PKR8.6 billion, out of
PKR12.4 billion allocated for development expenditure, is disbursed as grants to various
teaching and medical colleges in the province. Major ones such as Lady Reading Hospital,
Postgraduate Medical Institute, Khyber Teaching Hospital and Hayatabad Medical Complex
in Peshawar account for 68% of the grant aids. Additionally, a sum of PKR1.6 billion, out of
PKR12.4 billion, is planned to be disbursed for development activities such as:
° Provision of emergency drugs for poor patients
° Creation of posts in the project/schemes due for completion during the year
° Setting up a Cardiology Unit LRH and a Paraplegic center in Peshawar
° Health Regulatory Authority
° Free Dialysis Services and angiography/angioplasty surgery
° Grant in aid for Polio Eradication Program
In the Annual Development Plan 2015-2016, an allocation of PKR8.3 billion has been
made for total of 98 projects out of which 75 are ongoing with allocation of PKR7.2 billion
and 23 are new with allocation of PKR1.1 billion.
• Balochistan’s health sector budget for 2015–2016 is PKR15.4 billion, 6.4% of the total
provincial budget and an increase of around 25% over the previous year.
° Substantial funds were also earmarked for provision of necessary equipments, machinery
and medicines at government-run hospitals across the province
° A sum of PKR1.6 billion has been allocated for provision of free medicines at government
hospitals.
° Additional funds are also being made available for key development projects in the health
sector. A significant focus for the provincial government is the establishment of basic
health camps across the province to increase access to free basic healthcare services.
Pharmaceutical Expenditure: Medicines represent only a small share of overall healthcare costs.
Although some hospitals and patient groups are supposed to provide free medicines, few hospitals can
afford to provide this service. Patients or their relatives usually purchase drugs outside the hospital at
retail pharmacies and bring them into the hospital when they are receiving treatment. Private health
insurance reimbursement of drugs is also limited, since most private health plans provide only
restricted coverage due to expenditure caps. Some low-income patients who qualify for benefits
provided by the Zakat system (see Health Insurance) are provided with free drugs, whilst free
medication is sometimes distributed through national programs to control major diseases such as
HIV/AIDS and hepatitis. Some pharmaceutical companies also provide drug access programs.

34
• Although government healthcare financing has been decentralized, the federal
government continues to provide funding for national health programs and initiatives.
Provincial government funding is increasing substantially in accordance with their new
responsibilities.
• A system for redistributing funds more equitably is under consideration, but some
industry stakeholders point to the fact that the issue is less on of lack of financing and
more the result of financial mismanagement and corruption.
• The health budget for Punjab increased from PKR121.8 billion to PKR166.1 billion by
36.4% in the current fiscal, but its share in total government budget remains constant at
12%. Punjab is the only provincial government that is currently making good progress
with ensuring patients have free access to key medicines, disposables and dialysis
facilities in public sector hospitals.
• Sindh Health budget has increased from PKR43 billion to PKR57 billion. Sindh is
increasing its healthcare budget by 20%, and the drug budget by 35%. Overall focus will
be on completion of ongoing schemes and improvement of existing health infrastructure.
Government of Sindh follows a health strategy focused on improving service delivery,
infrastructure, governance and accountability.
• Several initiatives have been undertaken in KP that include health insurance care for
critical illnesses, Insulin for Life, Mother and Child Health Special Initiative for
enhancing immunization coverage. It has been planned to set up a Widows and Orphans
Welfare Foundation, with the objective of implementing measures for wellbeing,
assistance and rehabilitation of deserving widows and special persons in the Province.
• All the provincial governments have set a target to achieve the millennium development
goals concerning child mortality, maternal health and combating HIV/AIDS, malaria
and other diseases and thus initiatives to meet these targets will be high on the agenda.
Increasing access to essential healthcare services for the poor, distributing insulin kits
free of charge and introduction of a screening program for hepatitis B and C are also high
priorities.
Health Policy
Establishment and enforcement of health policies at the national level comes under
the purview of the Ministry of National Health Services Regulation and Coordination
(NHSRC), created in 2013. While the government has announced some ambitious
objectives for the health sector, successive governments have failed to make
significant progress, and there is widespread skepticism as to the extent of progress
that will be made by the current administration.
Following the implementation of the 18th Amendment to the national constitution the federal MoH
was abolished and healthcare was devolved to the provincial governments in June 2011. Devolution
had been demanded for a long time by the provinces, as the MoH struggled to be both a healthcare
provider and policy-maker, but ultimately the decision was driven by cost cutting and attempts to

35
reduce the fiscal deficit. Certain health responsibilities were retained at federal level and it was
decided that the federal government should continue to fund national health programs at least in the
medium term.
The need for some level of national coordination regarding healthcare prompted the then prime
minister, Mir Hazar Khan Khoso, to reinstate the NHSRC in 2013. As well as having control over the
Drug Regulatory Authority of Pakistan (DRAP), the ministry’s predominant remit is to establish
health policies and enforce them at national level. The ministry also retains some responsibility for
provision of healthcare services, but most is devolved to the provinces.
Health is reported to be a corrupt sector in Pakistan, according to various news websites and industry
experts. Successive governments have failed to address the underlying issues that continue to plague
the sector.
Frequent changes in government in the past have resulted in a lack of a coherent and consistent long-
term health strategy, as successive new prime ministers bring in new staff and advisors. Industry
executives therefore remain somewhat skeptical with regard to the extent to which the government
will fulfill healthcare objectives.
The consensus is that national spending on healthcare needs to increase substantially in order to
boost the healthcare sector sufficiently to meet the nation’s needs). Above all, what is needed is a
consistent long-term healthcare strategy, but industry stakeholders are not optimistic in this regard.
Pharmaceutical Policy
Devolution has had a serious impact on the pharmaceutical industry, not least because Pakistan was
left for a period without a regulatory agency after the MoH was dissolved on 30 June 2011. This
resulted in paralysis in pharmaceutical policy, a lack of new product introductions (see Regulatory
Environment, Drug Registration) and significant uncertainty surrounding the future of
pharmaceutical pricing (see Pricing, Pricing System).The National Assembly finally passed a bill to
establish the DRAP, which was signed into law on 12 November 2012.
There has been some progress with establishing pricing regulation (see Pricing, Pricing System),
whilst thousands of product approvals remain outstanding (see Regulatory Environment, Product
Registration). Meanwhile, supply and quality issues in government hospitals must be addressed, after
a succession of scandals involving the supply of medicines.

• In December 2015, Mr Nawaz Sharif launched the national Health insurance scheme for
the poor (see Healthcare insurance) in Islamabad, entitling free healthcare services to 1.2
million citizens in the first phase.
• The new drug pricing policy (see Pricing) introduced in March 2015 brought some basis
to regulation of drug prices in the country.
• The DRAP still faces the challenge of ensuring regulations are enforced at provincial level
in the new decentralized environment.
• In the absence of functional and definitive regulation of the sector, the pharmaceutical
industry is beginning to buckle and multinationals, who continue to claim that the
current situation is unviable, are increasingly opting to withdraw from the market (see
Pharmaceutical Business Environment, Operating Environment).

36
Provincial Reforms
In the devolved healthcare structure, the provinces are largely responsible for any
material gains in healthcare provision. Health care reforms are underway across all
four provinces and healthcare spending has increased to support this. The provinces
of Punjab and KP are reportedly making reasonable progress with regard to
healthcare responsibilities but Sindh and Balochistan are falling behind, prompting
discussions about a method for more equitable distribution of funding.
The 18th Amendment paved the way for substantial reform in the healthcare sector, with the
provinces now almost entirely responsible for healthcare provision to their citizens. The change in
legislation provides provincial authorities with an opportunity to tailor healthcare delivery to meet the
needs of local populations. Industry executives acknowledge that there is still some considerable way
to go before the devolved healthcare service is functioning smoothly.
Punjab: In spite of being the most populated province, with over half the country’s population,
Punjab is considered to be the most advanced in fulfilling its healthcare obligations. The Punjab
Healthcare Commission (PHCC) was established as an autonomous body in 2011, with the objective of
improving health facilities and accrediting and licensing healthcare providers, as well as investigating
cases of suspected maladministration and malpractice. The PHCC has adopted a set of Minimum
Service Delivery Standards in both public and private sector healthcare establishments and has also
developed a set of licensing protocols and a governance mechanism.
The province’s Medium-Term Development Framework for 2012–2015 had called for partnerships
with the private sector to achieve a medical care system that is effective, efficient and responsive to the
needs of low-income segments, particularly women in the reproductive age group. The framework’s
objectives included greater focus on preventive healthcare and achievement of millennium
development goals; focus on rural health centers and renewed focus on secondary healthcare; need-
based and result-orientated allocation for tertiary healthcare. While some headway was made with
achieving these objectives, the Chief Minister, Shahbaz Sharif, announced a revised Health Reform
Roadmap 2018 to ensure further progress. The new roadmap prioritizes the following:
• Increase immunization coverage
• Increase safe deliveries
• Improve primary healthcare
• Improve district awareness
• Improve access to family planning
The health strategy for the province also listed efforts to be made to achieve the MDGs by 2015 but not
later than 2018. Though the MDGs gave way to the SDGs in early 2016, ongoing programs for
immunization, HIV/AIDS and Integrated RMNCH & Nutrition Program shall continue till 2018.
Sindh: Sindh launched its eight-year plan for healthcare, the Sindh Health Sector Strategy (2012–
2020) in October 2012. The strategy focuses on seven main areas, including the district health system,
human resources, and regulation and financing. One of the major aims was to reduce out-of-pocket
health expenditure by the poor, to be achieved by gaining additional funding from the private sector
and international organizations. Special emphasis is being placed on improving healthcare in under-
developed districts and on urban primary healthcare. Under-developed districts are being given
minimum delivery service packages, while remote and disadvantaged tehsils gain access to support
and outreach measures via the Benazir Income Support Programme (BISP) (see Health Insurance).

37
According to industry experts, because of bureaucracy, corruption and lack of capacity for service
delivery, this well-thought out strategy does not seem to be working as efficiently as visualized earlier.
The Sindh government is actively planning to establish kidney treatment and transplantation centers
in Hyderabad, Nawabshah, Gambat and Sukkur. In addition, Sindh has expressed an interest in
establishing a similar program to KP’s Sehat Ka Insaf initiative. Sindh also has plans to upgrade all its
DHQs in Karachi to teaching hospitals.
The Sindh Healthcare Commission was established in November 2015 to register, regulate and
monitor public and private hospitals and investigate cases of maladministration, malpractice and
failures in the provision of healthcare services. The objective of setting up the commission is to
improve healthcare provision in the province, as a result of which, members of the commission shall
supervise the facilities periodically and take action against defaulters.
Khyber Pakhtunkhwa: The provincial government had issued a seven-year plan; the Khyber
Pakhtunkhwa Health Sector Strategy 2010–2017. This identifies six key objectives to be achieved by
2017:
• At least 70% of the population will have access to the Minimum Health Service Package for
primary and secondary healthcare services.
• Increase the contraceptive prevalence rate to 55%.
• Each Division of KP will have a functional category-A hospital (tertiary-care hospital).
• 60% of the population will have access to accident and emergency services that meet optimum
standards within 45 minutes of their residence.
• 40% of the population living below the poverty line will have a form of social protection
against catastrophic health expenditures.
• 40% of people with non-communicable diseases will receive quality care and have access to
preventive education.
The stated goal of the Department of Health is to improve the health status of the population in the
province through ensuring access to a high quality, responsive healthcare delivery system that
provides acceptable and affordable services in an equitable manner.
The priority areas for health have been formulated into five health outcomes, budgeted in the
province’s Medium Term Development Framework, with key objectives specified for each outcome.
These include enhancing coverage and access to essential health services especially for the poor and
vulnerable; a measurable reduction in morbidity and mortality caused by common diseases; improved
human resource management; improved governance and accountability; and improved regulation and
quality assurance.
In 2014, the government launched Sehat Ka Insaf, initially in Peshawar, and later to the entire
province in a few months. The program included free vaccination against nine vaccine preventable
diseases, including tuberculosis, polio, diphtheria, pertussis, tetanus, hepatitis B, haemophilus
influenzae, pneumonia and measles besides distribution of public health messages on prevention of
diseases such dengue fever, bird flu, and hepatitis. The program was a success in Peshawar, where it
vaccinated 700,000 children against these diseases over a period of three months. UNICEF and WHO
committed PKR124 million to the province in support of this program. Regular polio programs
continue on a priority basis in the province.
KP government introduced a Sehat sahulat program in four cities in December 2015, under which
Sehat cards will be issued to eligible families according to BISP survey results, providing seven

38
members of the family to avail free access to healthcare facilities, worth PKR25,000 each year, at
nominated hospitals.
Balochistan: Balochistan is the largest province in Pakistan in terms of area, but the smallest in
terms of population. All policies to be formulated here need to consider the geological, environmental
and demographic uniqueness of the region. With the 18th amendment coming into effect in 2011, the
responsibility of health related matters has moved to the provincial government. Devolution caused
many international donors to stop funding health programs in the province, resulting in the closure of
18 HIV testing centers and many other ongoing health projects. Reforms in the health sector,
announced in November 2013, envisage powers being devolved from the provincial health secretariat
to lower levels in order to improve healthcare delivery. Progress with implementing devolution to
district level is slow and without further investment in personnel, equipment and facilities will have
only limited success in elevating the quality and reach of healthcare provision.
The provincial government, with assistance from Technical Resource Facility, has formulated a draft
for the health policy and strategy in 2015. The main priorities of the draft policy are:
• To improve governance and accountability through a systemic approach
• To harness the private sector through regulation and capacity building for a joint effort
towards achieving the MDGs and beyond
• To rationalize the health workforce with appropriate staff mix and skill mix
• To expand and strengthen lifeline preventive programs including NCD
• To rationalize allocation and utilization of resources by improving financial management and

mitigating risk
The draft for health policy emphasizes establishment of public-private partnerships as a means of
strengthening private sector participation in the province. A continuing medical education program
shall also be introduced for all medical, nursing and paramedical staff.

• All four provinces have embarked on ambitious healthcare plans, but their ability to
deliver, in the near term at least, remains to be seen.
• Introduction of health insurance to the poor has been a top priority for all four provinces.
The first phase of the National Health Insurance Scheme for the poor (see Health
Insurance below) has been introduced by Mr. Nawaz Sharif (December 2015) and was
long awaited as a measure to improve healthcare access to the poor.
• The KP government decided to opt out of the National Health Insurance Scheme for the
poor and launched Sehat sahulat (see Khyber Pakhtunkhwa above), as an independent
program on the similar lines.
• Benchmarking the success of PHCC, Sindh has established its own Healthcare
Commission body and KPK is following the two with the introduction of the Khyber
Pakhtunkhwa Health Care Commission Act, 2015.

39
Health Insurance
The health insurance sector continues to be in an infancy stage as compared to
other insurance sectors, primarily because of religious sentiments. Introduction of the
PM’s National Health Program in 2016, along with other measures, shall expand the
coverage to millions of households during the prognosis period.
Until recently, government health insurance schemes used to provide coverage for the armed forces,
government employees and state functionaries in the judiciary and legislature, as well as employees of
state-owned enterprises. The Employees Social Security Scheme, organized within the provinces
through the Social Security Ordinance of 1965, is theoretically mandatory for private sector employees
in enterprises with more than ten employees. Employers are obliged to pay 6% of the minimum wage,
for workers earning less than PKR10,000 per month. The scheme is designed to help mostly unskilled
workers, and provides a range of healthcare services provided by a network of hospitals and
dispensaries.
Where the poor are concerned, federal government health insurance involvement to-date has focused
on providing catastrophic benefits through schemes such as Zakat, Bait-ul-Mal, the Workers Welfare
Fund, Employees Old Age Benefit and the Workers Participation Fund, which provide limited
assistance to cover medical treatment costs. The government also supports organizations like the BISP
that also provide a healthcare safety net for the poorest citizens.
National Health Insurance Scheme for the Poor: In June 2014, Mr Nawaz Sharif approved
plans to introduce the National Health Insurance Scheme for the poor, which shall benefit around 100
million people; approximately 60% of Pakistanis who are estimated by the World Bank to be living on
less than US$2 per day. A National Steering Committee was established to progress implementation
of the national health insurance scheme. The committee is led by Mrs. Sarai Afzal Tarar. Health
secretaries from the four provinces also form part of the committee.
“I know for a fact that a very strong will of the government is there to introduce
this universal health insurance. I hope and I pray that this universal health
insurance comes into existence because I think this will help the patients, the
masses of the country. In return I think it will also help the industry because
there will be a demand of the product in the masses for this industry to fulfill. For
industry, for the general population, it's a win-win situation.” (Local
Pharmaceutical Company Executive)
The current government started the year 2016 by introducing the first phase of the Prime Minister’s
National Health Program (PMNHP) in 15 districts of Islamabad benefitting 1.2 million families with
free healthcare services for major diseases like heart disease, diabetes and related illnesses, cancer,
kidney and liver diseases, complications from infections like HIV and hepatitis, road accidents, and
burn injuries. Free primary healthcare services (including preventative health checks), free secondary
healthcare through insurance funded by the provinces, and free tertiary and specialized services
through insurance funded by the federal government, would be available to beneficiaries.
The State Life Insurance Corporation of Pakistan (SLIC), selected for the implementation of the
program after a tendering process, will be responsible for enrolling beneficiaries, empanelling
hospitals and providing insurance to the enrolled families. Special health insurance cards will be
issued to the enrolled families, for them to avail PKR50,000 worth of general treatment, and
PKR300,000 for serious illness at the nominated public and private hospitals. This program received
an initial funding of PKR9 billion, reducing the yearly premiums per family to PKR1,300 borne by the
government. The detailed operating plan explaining drug coverage, hospital coverage, etc is still in
infancy stage and will be under scrutiny during the prognosis period.

40
Attempts have been made in the past to introduce a similar initiative in the 1990’s failed because of
issues surrounding standardization and regulation of medical services and charges, which was
strongly opposed by hospital administrators as well as the pharmaceutical industry. Industry experts
believe that factors such as government bureaucracy, frequent changes of policy and potential for
corruption need to be kept in check to ensure the success of this program.
“The idea of national health insurance has been there, if I'm not mistaken, since
1999... But the insurance companies were asking for some controls and some
legislation on a state level, which will compel the private sector hospitals to
follow the government set protocols and the cost of healthcare and the
pharmaceutical industry will also be regulated by the government. This was the
breaking point where the meeting broke up and there was no consensus
developed.” (Local Pharmaceutical Company Executive)
Benazir Income Support Programme: BISP was established in 2008 in memory of the late
former prime minister Benazir Bhutto and is funded by the government and international assistance,
including the World Bank, the German development organization, Gesellschaft für Internationale
Zusammenarbeit, and since 2012, the Asian Development Bank. BISP is involved in providing social
welfare benefits, education projects and youth employment schemes, and in 2012, health benefits.
BISP had signed an agreement in 2012, with SLIC to provide health insurance and SLIC counters were
to be opened in participating hospitals to deduct medical charges from beneficiaries’ health cards. The
ultimate aim is for all government hospitals to participate in the scheme. BISP was renamed as
National Income Support Program in 2013 and the PML-N government increased the allocation for
the program to PKR97 billion in 2015. Even monthly allowance to enrolled families was increased to
PKR1,500. As of 31 December 2014, 4.7 million households have benefitted from BISP since 2008.
The federal government has decided to conduct a fresh survey across the country to have an updated
estimate on the number of families eligible for support under this program.
Zakat: Zakat, the Muslim obligation to make charitable contributions to assist the poor, also plays an
important role in providing emergency healthcare funding. Pakistan is one of only a few countries
where this donation is compulsory and according to Shari’ah law, 2.5% of salary must be paid. Zakat
operates like a wealth tax, with donations deducted on cash deposits by financial institutions: in 2015,
savings account holders with PKR33,641 or more had 2.5% of the total removed from their accounts.
The payments are made annually at the time of the celebration of Eid Al-Fitr at the end of Ramadan
and it is estimated that the Pakistan population pays around PKR70 billion in Zakat every year.
Because Karachi is the centre of the business community, hospitals in Karachi tend to be major
recipients of Zakat funding.
The system has been criticized for not having been sufficiently successful in eliminating poverty, with
corruption in the distribution system and politicization of distributing funds blamed for undermining
the smooth running of collection and distribution. A central fund maintained by the SBP collects
contributions and distributes finance to provincial Zakat councils and district Zakat committees on
the basis of population size. A Zakat certificate endorsed by the relevant local government office
should entitle the poorest to free healthcare services, but user charges are still involved.
Charities running hospitals, clinics and dispensaries are particularly reliant on funding from Zakat.
For instance, Zakat funding is the main source of income for the Indus Hospital in eastern Karachi.
Similarly, the Al-Khidmat Foundation is a Muslim charity which runs over 100 hospitals, clinics,
laboratories and dispensaries across Pakistan where the poorest patients receive treatment at no, or
nominal, charge. Imran Khan’s Shaukat Khanum Memorial Cancer Hospital, one of only a few
specialized cancer treatment hospitals in Pakistan with headquarters in Lahore and branches in
Karachi, Peshawar and Quetta, also depends on Zakat for its income.
Bait-ul-Mal: Bait-ul-Mal is another government scheme that aims to help the most socially
disadvantaged, by providing medical and educational assistance to the poor, as well as

41
accommodation. Higher cost diagnostic and invasive procedures not funded through Zakat are
supposed to be financed by Bait-ul-Mal. The help is available only for major ailments and in
government hospitals. Usually hospitals will refer a potentially eligible person to Bait-ul-Mal and, if
agreed, the payment will be made directly to the hospital. The maximum amount that can be paid is
PKR300,000. The scheme remains under-financed and has not made much impact on the healthcare
system. Financing comes from the federal government budget and it is managed by NGOs. The funds
allocated for the scheme have remained constant at PKR2 billion annually since 2012.
Micro Insurance Providers

• Aga Khan Health Services (AKHS): Public healthcare provision is also supplemented by
health services provided by a range of non-profit agencies run by the Aga Khan Foundation.
Since 2009, the Aga Khan Agency for Microfinance has had an inpatient health insurance
plan to encourage families to save for future healthcare needs. It also provides savings
schemes to help meet the cost of catastrophic events requiring immediate hospitalization. As
the largest non-profit private healthcare provider in the country, AKHS delivers
comprehensive healthcare services, including primary care, diagnostic services and hospital
care. In northern Pakistan it has been focusing on ways to deliver healthcare to remote
mountain regions and providing employment and training for local community health
workers. About 74% of patients treated at the Aga Khan University (AKU) Hospital are from
low to middle income groups and AKU has been active in developing community health
services and supporting needy patients through its patient welfare program.
• Naya Jeevan, or ‘new life’, is a Karachi based micro insurance provider. Set up in 2008, it is a
non-profit organization and its health insurance programs are underwritten by private health
insurers, including Allianz-EFU, IGI Insurance and AsiaCare. It offers a health insurance
program to corporate clients at subsidized rates, using a national group health insurance
model and is particularly targeted at middle to low income earners and contractual workers,
as well as employees’ domestic helpers. Funding is predominantly from premiums and from
financial sponsors, which have included the International Labour Organization, USAID, the
Asia Foundation, Google/Tides Foundation and J P Morgan Chase. Over 80 companies,
covering 25,190 beneficiaries, are now affiliated with Naya Jeevan.
Naya Jeevan purchases insurance products in bulk at discounted rates and it costs a company
around US$2.00 per month to enroll low income workers and for an additional US$1.50
employees can enroll their families. If claims exceed the amount covered by an individual
plan, the balance of the cost is paid by the beneficiary’s employer. Beneficiaries have access to
a list of 190 hospital providers in the major urban centers, with affordable access to coverage
for catastrophic events, such as heart attack, trauma, stroke and pediatric emergencies. Other
sponsored programs exist for children at NGO schools and students at academic institutions.
Beneficiaries also have access to value-added service, such as a 24-hour telehealth line,
targeted preventative health education sessions and, crucially, an initial health assessment,
which often leads to detection of previously undiagnosed conditions, most of which are
covered by the scheme.

42
• PMNHP, launched in 15 districts in the first phase, will expand to a total of 3.2 million
families across 23 districts by its second phase (mid-2016). The program aims to
eventually cover 22 million households. The provinces of Sindh and KP have refused to
join this program, and shall introduce separate initiatives locally.
• To motivate affiliation of private institutions with the PMNHP, the government shall
offer easy terms on loans to these institutions for upgrading their facilities.
• With the survey for BISP forming the basis of the eligibility criteria for implementation
of PMNHP and SLIC leading the implementation of both programs, successful execution
of health insurance under both, in spite of the overlap, shall be an interesting element in
the prognosis period.
• In addition to improving access to health care facilities to the poor and vulnerable
sections of society, the PMNHP will also help in development and maintenance of the
healthcare infrastructure across the country.
• While there is some optimism that the government will make good progress with the
PMNHP there is some skepticism regarding the impact it will have in the near to
medium term, as the coverage will continue to fall short of what is required to meet the
needs of the whole population.
• Under the Zakat and Usher Bill 2011, the Sindh government had formulated a Zakat
council and is expected to collect and distribute zakat independently starting from 2016.
The Council is yet to formulate and finalize a mechanism for collection and
disbursement.
• Ambitious plans are underway to expand the range of services and coverage of the Naya
Jeevan scheme. Plans include extending the scheme into the province of Punjab,
creating a network of primary care clinics, and implementing a Pharmacy Smart Card for
beneficiaries that will provide access to discounted medicines (with Naya Jeevan
securing volume discounts directly from manufacturers).
Private Health Insurance

While private health insurance coverage is low, there is considerable potential for
expansion in the private health insurance market through takaful and customized
health packages to better serve local populations.
Private health insurance, in spite of growing in the last five years from 0.6% in 2008, still remains at a
very low level in Pakistan, accounting for just 0.9% of private healthcare expenditure according to the
WHO in 2013. This low base perpetuates higher premiums than could be lowered if volume coverage
was expanded.
The vast majority of beneficiaries covered by private health insurance schemes are affiliated through
corporate programs. Attracted by the success of micro insurance schemes, other players are beginning
to explore ways of strengthening their presence in the health insurance market. Key players include
Allianz EFU, Adamjee and AsiaCare, which are affiliated with 230 hospitals across the country

43
respectively. The majority of insurance firms in Pakistan are either life insurance companies or
general insurance companies that also offer health coverage schemes. Only a very small number of
companies solely specialize in health insurance. Realizing the potential for market growth will require
careful management of the product portfolio and more aggressive marketing strategies than the sector
has accomplished to-date.
The pharmaceutical sector has largely ignored the private insurance market, but industry executives
note that manufacturers are beginning to recognize the potential for boosting product sales.
Takaful: Takaful is an Islamic version of insurance, which follows the rules and regulations of
Islamic law, primarily the concept of of Ta’awun (mutual assistance) and Tabarru (voluntary
contribution). The principles of Takaful are as follows:
• Cooperation among policyholders for their common good
• Subscription to be paid by all policyholders to help those that need assistance.
• Division of losses and liabilities across the community pool.
• Elimination of uncertainty in terms of subscription and compensation.
• It does not derive advantage at the cost of others.
Takaful operations began in Pakistan in 2005, when the first rules were introduced. The rules were
amended in 2012 by the Securities and Exchange Commission of Pakistan (SECP), allowing
conventional insurance providers to offer sharia-compliant as well as conventional products side by
side through takaful windows. Conventional companies with a bigger branch network, more outreach
and resources will be able to attract the masses towards the Islamic alternative of insurance and drive
growth during the prognosis period.
“So [takaful] is one of the budding trends in the last 12 months. All conventional
insurance companies which have been in the market for the last so many years,
more than 50 years, and they have the controlling interest of almost 45% of
market share, all of them have realized the importance of the takaful operation,
and they've started their Islamic alternate model. This is a very good initiative by
the SECP, which is going to encourage the old players in market to enter this
segment and with their entrance, the whole market and the whole size of the
buyers will increase for all the players which were already struggling in this
segment.” (Private Health Insurance Company Executive)

• A developing model for corporate insurance is the micro insurance model, targeted at
lower income earners and effectively bridging the gap between social insurance and
wholly private insurance (see Health Insurance).
• Whilst most of the health insurance players offer individual health coverage plans, uptake
of these schemes is relatively weak and thus the corporate sector is likely to offer the most
significant growth potential, at least in the medium term.
• The Islamic alternative of insurance, takaful, is expected to grow and account for 50% of
the market share in the private health insurance segment in the long term.
• To-date there are no affiliations between insurance companies and pharmaceutical

manufacturers, but the expected growth in takaful products during the prognosis period,
could drive an emerging trend in this direction, with obvious implications for prescribing
patterns.

44
Doctors
Provincial governments continue to make efforts to attract registered practitioners to
practice locally, but emigration opportunities continue to lure them, creating a
shortage of health personnel in primarily rural areas.
According to the latest report of the Pakistan Economic Survey 2014-15, the number of registered
medical practitioners is increasing every year. The government has recruited 3,500 new doctors, 350
dentists and 3300 nurses in the year 2014-2015. The total number of registered doctors in Pakistan
stood at 175,223 in 2014.
General practitioners are regarded as performing poorly in the management of common non-
communicable diseases, such as hypertension, diabetes and high lipid levels. There is a particular
shortage of psychiatrists, with just 250 to cover the whole population and fewer than half of these have
a postgraduate qualification in psychiatry, according to a 2011 World Bank report on non-
communicable diseases in South Asia.
Registered Health Personnel 2009–2014

Registered
2009 2010 2011 2012 2013 2014
Personnel
Doctors 139,555 144,901 152,188 160,289 167,759 175,223
Dentists 9,822 10,508 11,584 12,544 13,716 15,106
Nurses 69,313 73,244 77,683 82,119 86,183 90,276
Population per doctor 1,183 1,222 1,164 1,127 1,099 1,073
Population per dentist 16,814 16,854 15,288 14,406 13,441 1,593

Source: Pakistan Economic Survey 2014-2015
The number of physicians, at one per 1,073 people, is only slightly short of the WHO’s recommended
ratio of one per 1,000. However, the number of practicing doctors may be significantly lower, as a
result of qualified and registered physicians that are not currently practicing. Once they have
graduated, doctors tend to settle in larger cities, where living standards are higher; few are interested
in working in government Basic Health Units (BHUs) or Rural Health Centers (RHCs).

• There is a significant problem with the distribution of physicians in Pakistan. Most
doctors, practice in urban areas and regional inequalities persist despite efforts to offer
more lucrative packages to doctors willing to work in more remote areas. For example, KP
government has announced its willingness to double or triple the salaries of doctors
willing to work in remote areas of the province.
• About 50 per cent of female doctors do not work after graduating due to filial
responsibilities, while most of the males prefer migrating to foreign countries because of
better pay structures and living standards. Emigration of doctors continues to be a serious
problem, with many graduates attracted by better salaries and employment packages in
the Middle East, Europe or North America.

45
• A study conducted in Karachi in 2015 reports numerous cases of violence (verbal and
physical) against healthcare providers in public sector hospitals and ambulance services.
These were perpetrated by attendants and unknown people primarily due to
unreasonable expectations, communication failure and human error. As a result,
practitioners also cite security issues as a motivation to leave the country.
• Ghost employees are present in the majority of these hospitals; however, the introduction
of biometric attendance is slowly reducing this tendency. Amidst the shortage of doctors
in public hospitals, Sindh government has imposed a ban on foreign holidays for doctors.
• A handful of new privately managed medical facilities have opened, whilst more than a
dozen existing facilities have expanded capacity. These institutions are required by the
Pakistan Medical and Dental Council (PMDC) to operate as teaching colleges for medical
students. This is expected to have a positive impact on the quality of training medical
undergraduates receive.
Primary Care
Primary care provision is inadequate, although gradual improvement is anticipated,
most noticeably in the private sector. Pakistan does not have a referral system and
this is unlikely to be established in the foreseeable future.
With inadequate government provision of primary healthcare services for both impoverished urban
dwellers and the rural poor, it is estimated that close to half of the population has no access to
conventional primary care treatment, with many of these people relying on traditional healers. Those
who can afford to will continue to turn to the private sector for primary care.
Public Sector: Government primary care provision is delivered through an ill-functioning network
of poorly equipped dispensaries, BHUs, and RHCs. Only a limited number of them can offer pharmacy
services. BHUs in the urban centers are supposed to serve populations of 5,000–10,000, and their
rural counterparts, the RHCs, cover a wider catchment area of 25,000–50,000 people, with additional
responsibility for even more basic sub-health centers. Dispensaries are usually operated as branches
of BHUs or RHCs. In total there are now 5,438 BHUs and 669 RHUs, along with 5,499 dispensaries.
The BHU system is organized by union councils within districts, which represent populations of
18,000–25,000. Each BHU is supposed to have around ten healthcare workers, including a male
medical officer, a LHW, medical technician and/or a pharmacist, a sanitary inspector, vaccinator and
other support staff, but there have been no recent attempts to address shortages of qualified staff.
Many RHCs are open for only a few hours per day and some lack basic facilities, such as electricity and
essential drugs. They tend to be far away from the main cities and it is difficult to recruit healthcare
professionals to work there.
In addition, there were 671 maternal and child health centers in 2014, a fall from 687 in 2013, which
are managed by LHWs, and provide normal delivery, post-natal and family planning services. LHWs
are trained for over two years in community health, nursing and midwifery but have little training in
the treatment of non-communicable diseases.
Punjab achieved one of its policy objectives by launching mobile health units to visit remote areas to
treat local patients and refer serious cases to hospitals. They are equipped with medicines, X-ray and
laboratory facilities and are staffed by a male and a female doctor, and also have a small operating

46
theater where procedures can be carried out. So far six mobile units have been provided in southern
districts and are monitored by a satellite system.
Primary Care Health Establishments in Pakistan 2008–2014
Facility 2008 2009 2010 2011 2012 2013 2014*
Dispensaries 4,794 48,13 4,842 5,039 5176 5,413 5,499
Basic health units 5,310 5345 5,344 5,449 5,478 5571 5,438
Maternity/child health
908 906 909 851 628 687 671
centers
Rural health centers 561 572 577 579 640 667 669
Tuberculosis centers 293 293 304 345 326 329 334

*Provisional data
Source: Pakistan Economic Survey 2014–2015
Private Sector: Most primary care is delivered by the private sector, which is orientated towards
providing individual treatment and preventive care services. Private services are delivered alongside
public services and there have been no steps to introduce formal integration, contractual
arrangements or referrals between the two systems. The system is unregulated and patients frequently
visit multiple doctors for treatment for the same condition.
There are no recent statistics to indicate the number of private primary healthcare facilities, but the
WHO’s Health Systems Profile for 2007 estimated that there were more than 20,000 clinics, 300
maternity and child health centers, 340 dispensaries and 450 diagnostic centers operating in the
private sector. These figures are likely to significantly underestimate the situation, as it does not
include the large number of doctors practicing independently from their own offices, mostly located in
urban areas.

• Most of the provinces stressed the need to improve primary care when outlining their
healthcare strategies following decentralization of healthcare policy-making.
• Low pay and poor working conditions have contributed to personnel shortages at
government health centers and little has been spent on maintaining facilities.
“The primary care, even in the remote areas, it doesn’t exist. Most of the
primary care, again I would say that they do have budgets, they do have
people, they do have ghost employees. The budget has been spent, but not on
the ground.” (Hospital Administrator)
• There is also a growing trend for university hospitals to provide polyclinics that offer
outpatient care and many of these provide free treatment for the poor under special
charitable programs.

47
Secondary Care
Provincial governments continue to focus on improving already established facilities
and setting up new ones, but with limited success. The private hospital sector will
continue expanding to meet the increasing demand for healthcare and to fill the gap
in public healthcare provision.
Public Hospitals: There are three levels of public hospitals, ranging in size upwards from the
smallest THQ hospitals to DHQ hospitals and tertiary hospitals. Tertiary hospitals frequently function
as teaching hospitals and some are autonomous, but only a minority of the population is estimated to
have access to a tertiary hospital. Although many patients, by choice, visit tertiary hospitals in the first
instance, people living in more rural areas cannot afford to travel to a tertiary hospital.
According to the Pakistan Economic Survey 2014-15, Pakistan now has 1142 public sector hospitals,
with a ratio of one bed to 1,593 people. There is wide acknowledgement that this is woefully short of
the number required, but expansion in the sector will be difficult to achieve. The newly empowered
provinces are already facing a significant challenge in improving hospital conditions in the
government sector at the same time as attempting to incorporate hospitals previously managed
centrally by the MoH into the existing structure. Population growth is exacerbating the problem and it
is unlikely that the public sector will be able to close the gap within the scope of the prognosis period.
“The demand and supply is huge. There's a gap. For instance if I say global
average of 2.5 beds per 1,000, and considering the population of Pakistan, we
require at least 500,000 beds. On the ground we just have 125,000 to 130,000
beds, which includes all the hospitals, government hospitals, hospitals which are
there in a neighborhood, and you don't know even the standard of that particular
facility. Once you go to the interior of any province or in the rural areas, rural
areas everything has been compromised.” (Hospital Administrator)
Chronic under-funding is likely to remain a problem in the public hospital sector. Financing is
determined on the basis of the number of beds and the total cost of treating the poorest patients.
Although user charges apply, the charges are small and public hospitals mostly do not have a formal
charging system. Moreover, they often fail to obtain government grants that they should receive.
Inpatients pay a nominal fee, with higher charges for better accommodation, and patients usually
have to pay for all their supplies. At the same time, medical equipment is often under-used and poorly
maintained, while the incidence of hospital-acquired infections is high. There are lengthy waiting lists
and long waiting times, exacerbated by the fact that doctors generally spread out their working time
between different locations across the private and public sectors.
Private Hospitals: As is the case for private primary healthcare providers, there are no reliable
current statistics concerning the number of private hospitals operating nationally. The latest WHO
Health Systems Profile of 2007 estimated that there were 500 private hospitals, traditionally
characterized by small providers with an average of about 30 beds, although the real figure is
estimated to be higher. Most private hospitals are either owned by a sole proprietor or a group of
partners, while some of the most important are not-for-profit charitable institutions, many of which
are growing in size. The private hospital sector will continue to be a much more attractive and
favorable environment for multinational companies, as purchasing by these hospitals is viewed as
more rational than in the public sector.
The AKU Hospital in Karachi, the Liaquat National Hospital in Karachi and the Shaukat Khanum
Memorial Cancer Hospital in Lahore are regarded as the leading private hospitals in Pakistan. AKU
operates seven hospitals, 164 health centers, a maternity home, two medical centers, a physiotherapy
unit and seven community dental units, which reach more than 600,000 people in rural and urban
Sindh, Punjab and the Frontier, northern areas and Chitral. The main hospital in Karachi has 599

48
beds and has been accredited by the Joint Commission International since 2006. As the largest not-
for-profit private healthcare group in Pakistan, its goal is to supplement the government's efforts in
health care provision, especially in the areas of maternal and child health and primary healthcare.
Liaquat National Hospital has approximately 700 beds and offers 30 medical and surgical specialties
providing both inpatient and outpatient services.
Shaukat Khanum Memorial Cancer Hospital, set up by the former cricketer Imran Khan, is also a
charitable hospital and is financed half by donations and Zakat funding and the remainder by revenue
earned from hospital services (such as diagnostic services), while 75% of patients are financially
supported. It increased the number of beds from 102 to 195 in 2015 and is planning to build two more
hospitals, one in Peshawar, which is under construction, and another in Karachi, which is under
planning. The hospital already has a diagnostic center in Lahore and a diagnostic center and clinic in
Karachi. In addition, it has 105 laboratory collection centers throughout Pakistan.
Another charitable hospital providing free treatment financed by Zakat contributions is the Indus
Hospital in Karachi, established in 2007. The Indus hospital offers high caliber medical care with
state-of-the art facilities at no cost to patients. Since 2007 the hospital has treated more than 2.2
million outpatients; 132,377 inpatients and conducted over 51,173 surgeries at a total cost of PKR4.89
billion.

• A survey of 65 DHQs by the Free and Fair Election Network (FAFEN) in December 2012
revealed a lack of specialized medical facilities such as cardiology, specialist chest,
orthopedic or psychiatry departments in many hospitals
• A FAFEN survey of 72 THQs in Punjab, Sindh, KP, Balochistan and FATA conducted in
November 2012 reported that over 41% of medical positions were vacant, with a
particular shortage of anesthetists, physicians, ENT specialists, and dermatologists.
• Media reports highlight lack of equipment in hospitals across the country, or where
equipment is available, the lack of qualified staff to run it. There are also persistent
reports of shortages of medicines in hospitals and of staff demanding payment for what
should be free treatments and medicines.
• Civil Hospital Karachi (CHK), one of Pakistan’s largest teaching hospitals, with 1,900
beds, suffered acute medicine shortages during 2014; the shortages were caused by the
Sindh finance department placing a freeze on public healthcare funds. As a result
patients were required to purchase their own medicines from private retail outlets;
CHK’s stores of antibiotics in particular had been completely depleted. Sporadic
medicine shortages will remain a recurring problem in the near term at least, particularly
in the provinces of Sindh and Balochistan.
• The KP government approved a package of PKR7.8 billion for repair of 14 DHQ

hospitals, procurement of healthcare equipment, recruitment of 1,083 nurses and
establishment of additional job openings for medical officers in district hospitals and
Primary Healthcare (PHC) facilities. The KP province also approved the creation of
Primary Healthcare Management Committees (PCMC) and Hospital Management
Boards for PHC facilities and DHQ hospitals.

49
Prescribing and Dispensing
Prescribing
The prescribing environment will continue to lack regulation in the dominant private
sector, and over-prescribing, administration of injections when they are not needed
and indulgence of patients’ preference for more expensive products will remain
common. Although some prescribing guidelines are in place, they are followed
randomly and mainly by specialists.
Doctors working in Pakistan’s private sector are not subject to any form of prescribing control. Private
practitioners frequently over-prescribe and polypharmacy is common. Patients are used to receiving
prescriptions for multiple products, regarding it as a sign of medical competence. Patients also prefer
to have their drug treatment administered by injection. Many patients still believe that the more
expensive a medicine, the more effective it is, and some doctors are more than willing to indulge this
preference for commercial reasons, particularly if they are dispensing physicians (see Dispensing).
The PMDC very occasionally investigates cases of prescribing malpractice and has the power to
withdraw medical licenses if there is enough evidence to support a case of misconduct, but in practice
this is a relatively rare occurrence. The government, both at federal and provincial level, continues to
take steps to control the prevalence of unethical prescribing, but with only limited success.
Consequently a culture of inappropriate prescribing has abounded.
Medical academics can have an influence on their students’ subsequent prescribing practice, but they
would like to see a rationalization of guidelines and greater room for discussion about the topic.
Greater attention is paid to international prescribing guidelines by academics in medical colleges and
specialists, but it will take time to filter down to general practice level. There is particular concern
about the use of expensive treatments like injectable third generation cephalosporins for common
infections like community-acquired pneumonia, which are not only more costly than necessary but are
also likely to encourage resistance to antibiotics.
National treatment guidelines have been introduced for some common diseases, but they are not
widely followed. The medical societies in Pakistan have run symposia to promote better prescribing
and provide guidelines to general practitioners (GPs), but progress is slow and patchy. Indeed, much
greater awareness of good prescribing practice needs to be encouraged at general practice level, since
by far the majority of physicians are GPs. GPs also need to be made more aware of the importance of
sterilization of their instruments, particularly with the continuing spread of hepatitis C. Some
progress towards stopping unnecessary injections has been made in urban areas, but there is some
doubt that this is filtering down to the rural parts of the country.
Generics (branded and unbranded): Legislation was introduced in 1972 which required doctors
to prescribe by generic name, but this law was reversed by the 1976 Drugs Act when generic
prescribing did not lead to a reduction in prices.
Many doctors remain wary of generic medicines, largely due to concerns over efficacy and quality in
the absence of bioequivalence standards. For dispensing physicians the very low prices are also a
significant deterrent, as well as patients’ own negative perceptions of generic medicines.

50
• Local guidelines for management of infectious diseases, Parkinson’s disease and sepsis
have been launched in Pakistan, but their adherence in the public and private healthcare
facilities is essential for disease control.
• The impact of introduction of the PMNHP on prescribing is uncertain (see Healthcare

Provision, Health Insurance). In theory, the scheme should push up consumption of
medicines indicated for chronic and catastrophic illnesses, but a question mark remains
over how rapidly the program shall extend to its full reach and what exactly will be
covered.
• In the hospital sector, doctors could be increasingly subject to more controls on the
medicines they prescribe to insured patients, if health insurers begin to form affiliations
with pharmaceutical manufacturers (see Healthcare Provision, Private Health
Insurance).
• The recent increase in the number of new medical colleges is expected to have a small
positive impact on prescription volumes, but progress will be very slow unless the
authorities adopt a more proactive stance.
• Patients’ ability to pay, as well as pharmaceutical company’s sales and marketing

activities, will continue to be the major influence on prescribing.
• Dispensing doctors are particularly influenced by industry incentives, including extra

discounts, international trips, cars and financial benefits, although DRAP is beginning to
take steps to curtail such practices. (see Pharmaceutical Business Environment, Sales
and Marketing).
• Recent surveys conducted in various cities confirm that the majority of prescriptions are
issued by branded names. More concerted efforts to encourage generic prescribing are
an unlikely prospect for the prognosis period, at least.

51
National Essential Drugs List
Access to essential medicines in Pakistan remains weak due to pricing controls,
insufficient funding and irrational drug use. Policies need to be formulated for joint
action across Federal and provincial level to improve the availability of essential
drugs.
Representing a list of the minimum medicines needed for a basic health system and based on the
WHO list, the National Essential Drug List (NEDL) consists of a core list of products to treat priority
conditions selected on the basis of current and predicted future health relevance and potential for
safe, cost-effective treatment. In addition there is a complimentary list of essential medicines for
priority diseases for which specialized diagnostic or monitoring facilities and/or specialist medical
care and training are required. A square box symbol is used to indicate similar clinical performance
within a pharmacological class. Products are listed by generic name within their therapeutic classes
and dosage forms are listed in alphabetical order.
The original aim of the NEDL was to standardize public procurement of medicines, as the provinces
and federal government formerly had their own lists. There has been no indication that there will be a
return to separate provincial lists in the newly devolved government healthcare system.

• The NEDL forms the basis for prescribing in government hospitals and the National Drug
Policy in theory mandates its use for all government bulk procurement of medicines. In
practice, however, it is not binding and listed molecules are frequently unavailable in
either public or private facilities due to insufficient funding.
• The NEDL was originally intended to be revised annually and reviewed periodically, but
the latest edition of the NEDL dates back to 2007, consisting of 335 medicines of different
pharmacological classes.
• At provincial level, the Punjab government is making concrete progress with providing
medicines free of charge: funds were allocated to district authorities to provide patients
with access to 18 essential medicines; and the district of Rawalpindi was requested to
double the budget for free medicines to PKR60 million in 2014-15.
Hospital Purchasing
New procurement processes have been introduced in Punjab, KP and Sindh
enabling central purchase of medicines across all public hospitals of a particular
province.
Prior to devolution, MoH administered hospitals made purchases through a national procurement
agency, which organized the national level tenders. Following devolution the procurement process has
become much more fragmented. In the devolved healthcare system the provinces are setting up their
own procurement procedures and are forming Central Medicine Coordination Committees at the
provincial level to organize central tenders in all their districts. For example

52
• Punjab began implementing a new procurement process at the end of 2012, which includes
greater quality assurance based on selecting vendors with higher quality standards. The
process includes inspection of manufacturing facilities, and demanding that manufacturers
supplying drugs have a certain level of manufacturing capacity in the country. This has
allowed the entry of better quality manufacturers who previously were not interested in
competing in the tender system.
• Delays in drug procurement by district level Purchasing Committees in KP and reluctance of

companies to apply for smaller bids to far-flung districts had led to the centralization of the
medicine procurement process in the province since 2012.
“I think there is a lot of improvement in the tender business now these days
because [in] the last 1 or 2 years, they are going to central purchasing where
committees have [been] developed in the provinces. [These committees] are
choosing good quality products by collecting all the data about them and then
approving them for procurement… Now with tender purchasing, a particular
product is bought at the same price across all institutions buying through that
central tender in that province.” (Local Pharmaceutical Distribution executive)
Hospital tenders can be issued annually, half-yearly or quarterly, with annual tenders covering the
government’s financial year and hospital’s budget duration from 1 July to 30 June. Earlier, suppliers
seeking to participate in bidding for a tender had to register with the individual hospitals and provide
proof of registration and ownership of a manufacturing license, along with a security deposit.
Drug pilferage from government hospitals to the retail sector continues to plague the sector. In spite
of provision of stamped products to the designated institutions, these low priced products find their
way into the open market. Strict measures need to be enforced on drug procurement procedures
followed by the institutions and punitive actions to be taken against defaulters.

• In 2014, Sindh Healthcare Department joined the other provinces by changing the
criteria for drug procurement in all government-run hospitals, by shifting the
responsibility from medical superintendents at individual hospitals to a central
purchasing body.
• Inadequate funding, changing criteria’s for drug procurement and delayed release of
funds leaves government hospitals short of essential medicine supplies, forcing inpatients
to purchase their own medicines in the retail sector.
• Khyber Pakhtunkhwa Health Department faced criticism upon cancelling financial bids
for drug procurement for the government hospitals in the province for the year 2015-16.
Amidst delays, districts have been allowed to procure medicines for their hospitals in the
short term, and a transparent drug procurement policy shall be developed as a long-term
solution in the province.
• The private hospital sector will continue to be a much more attractive and favorable
environment for multinational companies, as drugs are directly purchased from the
vendors. Private hospitals usually have formularies but these are used more as a means to
manage purchasing rather than as a prescribing control.

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Dispensing
The dispensing sector remains largely unregulated. Dispensing of prescription-bound
medicines without a prescription is prevalent, whilst most medicines are dispensed in
the absence of a qualified pharmacist. Substitution is commonplace, largely driven
by incentives from pharmaceutical companies as well as difficulties in maintaining
adequate stock levels.
Prescription drugs are freely available in retail pharmacies and it is estimated that majority of sales of
prescription-only drugs are sold without a prescription. Physicians writing a prescription frequently
insist that patients bring back the medicine so that they can check whether the patient has received
the correct drug. Refills are usually purchased over the counter. Since qualified pharmacists are rarely
present in community pharmacies, the person dealing with the patient usually supplies whatever the
patient asks for, even if it is a controlled drug. The lack of qualified pharmacists is particularly
dangerous, since many pharmacy assistants and patients are illiterate and cannot read the
instructions for use.
The big private hospitals have been recruiting pharmacists recently, as they are seen as useful in
improving patient safety and reducing drug costs. Many pharmacy graduates also emigrate after
working for two years or so in a private hospital, mainly to work in the Middle East, and also to
Canada or the USA. So far, government hospitals have lagged far behind private hospitals in recruiting
pharmacists.

• Substitution is prevalent and is expected to remain so. The practice is encouraged by
financial incentives from pharmaceutical companies, as well difficulties in stock
management.
• Doctors are free to dispense in Pakistan and they mostly set up their own pharmacy
alongside their private clinic. They are particularly susceptible to industry persuasion and
are believed by pharmacists to charge higher prices than retail pharmacies. The KP
government introduced Institution-based practice (IBP) at the teaching hospitals,
thereby discouraging these private centers.
• In future, government hospitals may have to recruit more pharmacists to comply with the
National Drug Policy’s rule that there should be one pharmacist on duty per 50 hospital
beds. Punjab is regarded as more advanced than the other provinces in employing more
pharmacists in public health facilities, but while KP and Balochistan are improving,
Sindh is far behind.

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Pricing
Pricing System
Pricing remains a critical issue for the pharmaceutical sector, with a new policy
introduced by DRAP in March 2015. After a decade long price freeze, the new policy
gives some scope for price increase upon adjustment with respect to inflation post
July 2016. As a first step, successful implementation of the policy in terms of
hardship cases in the short term, will determine the confidence of the industry
throughout the prognosis period.
Historically, pharmaceutical prices in Pakistan were controlled at federal level in accordance with
Section 12 of the 1976 Drugs Act. The legislation stipulated a list of approximately 800 essential
medicines subject to government price controls, with the remaining ‘decontrolled’ products still
requiring prior price approval.
Following the abolition of the former MoH, responsibility for pharmaceutical pricing moved to
DRAP’s Costing and Pricing Division, under the guidance of the Drug Pricing Committee (DPC). The
DPC was established in July 2012 and is intended to function as an expert committee; establishing
price levels and issuing recommendations to the Federal Government. The Director of the Costing and
Pricing Division of DRAP chairs the DPC committee with members drawn from the Secretaries of the
Departments of Health from each province and a representative from the Federal Ministry of Finance.
Representatives from the Pakistan Medical Association and the Consumer Rights Commission of
Pakistan act as co-opted members, whilst representatives from the Pharma Bureau and the Pakistan
Pharmaceutical Manufacturers Association (PPMA) are present as observers.
Drug Pricing Policy, 2015

DRAP prepared a draft for ‘The Drug Pricing Policy Order 2014’ after taking inputs from the PPMA,
Pharma Bureau, Pakistan Chemists and Druggists Association and public sector stakeholders
including ministries of Commerce, Industries and Finance, and Board of Investment. This was
presented to the Mr Nawaz Sharif for endorsement in January 2015. After more than two years of
discussions, the DRAP introduced the Drug Pricing Policy in March 2015. The PPMA and the Pharma
Bureau had strongly advocated the introduction of an international reference pricing mechanism, as
well as annual price increases in line with inflation, and a single price for generics. Their lobbying
activities seem to have carried some weight, since the new pricing policy incorporates some of these
ideals.
• For the purpose of setting Maximum Retail Prices (MRP), drugs for human use are divided in
two categories: Scheduled drugs and Non-Scheduled drugs
• Scheduled drugs: Over 320 molecules and vaccines have been added to the list of
scheduled drugs. These include biologicals; infusions; drugs used to treat cancer, TB, hepatitis
and HIV; 160 medicines of public health interest from the NEDL, and the 50 top selling
medicines by volume. All New Chemical Entities (NCEs) will also be added to the schedule.
• Price for Originator NCEs: The price for originator NCEs shall be based on the average
price of the same brand in India and Bangladesh.
° If the product has been marketed in only one of these countries the price will be fixed
accordingly, after considering exchange rate parity.

55
° If the product is not available in either India or Bangladesh, the price will be pegged
according to prices in developing countries (those with price regulation) or on the basis of
wholesale prices in developed markets (UK, New Zealand, Australia) or calculated on the
basis of trade price grossed up by 15%. As a last resort, the manufacturer’s requested
maximum retail prices will form the basis of a pricing decision.
• Price for generics of NCEs: The price for generic variants of NCEs shall be fixed at least
30% below the originator brands.
° If the originator product is not available in Pakistan, the price will be referenced against
prices in India and Bangladesh in the first instance, or prices in developing countries, or
wholesale prices in developed markets.
° If the originator product is not registered in Pakistan and its pricing is not available from
the mentioned sources, the generic price will be referenced to the average price of the top
three generics in India and Bangladesh.
• NCEs will be listed in the Schedule for four years or until the entry of at least three generics in
the market, whichever is later. After that, Original brands in the scheduled list will be subject
to an annual price decrease of 10% for three consecutive years and then considered non-
scheduled. Generic medicines must then be priced at least 15% below the originator product.
• Originator products with fewer than three generic equivalents on the market will be exempt
from annual price reductions even after four years of being on the schedule, as will products
priced below their reference products from India and Bangladesh.
• Non-scheduled Drugs: Low cost drugs that fall below a designated price threshold (Rs 3
per tablet/5ml syrup, Rs 4 per ml for eye, ear or nose drops, or inhalation solution, and Rs 15
per injection) will be considered non-scheduled medicines. They shall not be subject to
pricing regulations and the threshold limit for low cost drugs will increase by 50% of the
consumer price index each year.
• The MRP of all scheduled medicines is to be frozen at October 2013 prices until 30 June 2016.
After this, manufacturers of scheduled drugs are permitted an annual increase of 50% of the
consumer price index, with an overall cap of 4%, whilst the price of non-scheduled drugs may
increase by 70% of the consumer price index, with an overall cap of 6%.
• Hardship cases: These cover drugs that have become non-viable to the market.
° For the products that are unprofitable, the new pricing policy shall allow manufacturers
and importers to apply for a price review, once in every three years for a particular
product, after paying the prescribed fees to the Authority.
° The MRPs, according to the formulas agreed, are calculated by grossing up the trade
prices by 15%. The trade prices for products manufactured locally and the imported ones
are calculated by marking up manufacturing costs and import costs respectively.
° The price increase, post-review, for a particular drug should not be more than 8% per
annum of the already approved MRP. This clause shall not be valid on orphan drugs,
lower priced drugs and intravenous infusions. The increase in case of low priced drugs
should not be more than 25 paisa per tablet/ capsule/ 5 ml of syrup.
° Pending hardship cases for scheduled molecules were to be processed on priority and
decided by 31 December, 2015. The decisions on duly filled forms for new hardship cases
are to be made within 90 days of submission.

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• In order to encourage exports to developed countries (namely USA, Europe, Japan and
Australia), locally manufactured products approved for export will be exempt from local price
control.

• The drug pricing policy introduced in 2015 was long awaited by the industry and should
help in restoring confidence in the DRAP. Though it proposes maintenance of the
current price freeze until June 2016, it is expected to bring a positive impact in the
prognosis period once the prices are adjusted to inflation annually.
“This policy provides for a regular price revision on an annual basis. Now,
whatever that quantum may be. Today the inflation is low; CPI is low, so
maybe the increase will be low. Obviously when the inflation is low, we
actually don't need that much of adjustment. But at the years of high
inflation and CPI, we will get the adjustment automatically as per laid
down policy… In summary, yes, there would be price increases. Maybe
marginal right now, but in the long run it will be all right.” (Local
• With time, industry has started to appreciate the formulation of the pricing policy, as it is
the first such policy in Pakistan and it provides the basis for further amendments to suit
the industry dynamics.
“The pharma industry is skeptical about it (pricing policy), but I would say
in the long run it's going to be beneficial for the industry. If there is a policy,
though it is not very attractive right now, but when we go and talk to them
and develop a new consensus in 2017 or later, they are going to consider
our point because there is a policy, there is a document. There will be
amendment or additions or modifications to the current policy. I would say
it's a positive step and time will actually prove the impact.” (Local
• The list of drugs in the Schedule will be revised at least every three years, and possibly
more frequently, as deemed fit by the Policy Board.
• Because of indecisiveness about the pending hardship cases beyond the promised date of
31 December 2015, some multinationals increased their drug prices by 15% after seeking
stay orders from the Sindh High Court. In March 2016, the Drug Pricing Committee
(DPC) reviewed the pending applications for hardship cases and approved price
increases up to 8% for two dozen such applications.
Price Trends
As nearly all drug purchases are paid for out-of-pocket, policies that lead to higher
costs for the population will remain publicly unpopular, a factor that will heavily
influence government decisions. A decade long price freeze had led to an
increasingly unbearable level of pressure on profit margins. The new pricing policy
introduced by DRAP is a welcome step in establishing a more transparent pricing
mechanism.

57
The last across-the-board price increases were awarded in 2001 under a system of sporadic increases
to reflect the inflation index for domestic components used in manufacturing and the rupee exchange
rate for imported products. Since the price freeze started in 2002, all imported products, including
active ingredients, have been significantly affected by inflation, and from 2007, the depreciation of the
rupee against the US dollar and euro. The pharmaceutical industry has had limited scope for
profitability over the last few years, with consumption being the sole driver of growth. To account for
the increasing manufacturing costs, the DRAP issued a notice allowing for a 15% increase in prices for
11,000 drugs in 2012, but it was withdrawn by Mr Nawaz Sharif the very next day.
Lack of confidence in the pricing policies of Pakistan pushed some manufacturers to adopt extreme
measures by increasing their drug prices without regulatory approval and initiating legal action in the
provincial courts in order to achieve sanctioned price rises. They were successful in achieving
restraining orders on price rises ranging from 40% – 430%, on the pretext that these drugs were
decontrolled and not subject to notification in the official gazette.
Between 2012 and mid-2014, 105 cases of unauthorized price increases were identified by DRAP, and
17 companies had filed writ petitions in different courts and were granted stay orders for the increased
prices. DRAP turned to the Supreme Court to take control of the situation and issued appropriated
orders for disposal of suits filed by pharmaceutical companies in the provincial high courts. The field
officers from DRAP have become very vigilant and have been taking strict actions, such as stock
seizures, against pharmaceutical companies selling overpriced drugs. Provincial Health Authorities
have been advised by the DRAP to take control of the situation as storage and sale of drugs comes
under their responsibilities according to the Drugs Act of 1976.
Lack of a transparent pricing mechanism in Pakistan has kept the pharmaceutical industry under
tremendous pressure for a decade. Not only has this situation hindered industry growth but also
discouraged multinational companies from investing further in Pakistan. Indeed, some
pharmaceutical MNCs have already wrapped up their operations and moved to countries where
regulatory mechanisms are well-balanced and where local industry is moving at a faster pace.

• Owing to the Supreme Court’s directive and industry pressure, the DRAP involved many
stakeholders in discussions over the draft for the pricing policy. After two years of
rigorous discussions, the draft was presented to the President in January 2015 and
brought to effect in March 2015 (see Pricing System). The policy introduces international
reference pricing and inflationary adjustments for prices of drugs in the schedule.
• Despite the establishment of a form of international reference pricing under the new
pricing policy, pharmaceutical prices in Pakistan will remain low by regional standards
during the course of the prognosis period. The drug pricing policy is predominantly
concerned with establishing a mechanism for setting prices for new original brands and
generics to the market.
• There are no indications that DRAP intends to conduct a retroactive price review of
established medicines and thus the impact of price regulation on marketed products will
largely be confined to annual price reductions of those medicines listed on the schedule.
This will largely offset any positive impact deriving from higher prices of new products.

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Discounts and Margins
Eroding profit margins for manufacturers continues to result in a squeeze on
discounts and margins across the value chain.
Margins and discounts in Pakistan operate as follows:

• The leading national distributors charge their principals fees and work on margins ranging
from 5-10% of what is on average a very low price in Pakistan. Distributors rarely give
discounts, but up to 1% is shared with retail pharmacies.
• Regional distributors and wholesalers usually take a margin of 5–6% but they do not provide
the same level of marketing support as the major nationwide distributors. Smaller distributors
and wholesalers share their profit margins with retail pharmacies and generally give away 1–
4% of their profit margin. As a result, they rely on more generous discounts gained of up to
28% for distributors and 18% for wholesalers from achieving sales targets. Maintaining high
volumes is a crucial business strategy.
• There is a fixed retail pharmacy margin of 15% of the ex-manufacturer price. Because margins
are fixed, pharmacies press manufacturers for discounts to give them a greater overall margin.
Pharmacies also sometimes break the fixed margin rule and a 2011 WHO study found many
pharmacies charging prices 17–50% above the regulated price for three out of 20 original
branded drugs. The retail sector passes some of the margin and discounts it receives on to
consumers, usually accounting for 3–6% of the 15% margin, and retail pricing can be very
competitive.

• Retail pharmacies have been exploiting drug shortages caused by problems with pricing
and with the import quota system for controlled drugs and have been charging higher
prices for some drugs recently.
• The few chain pharmacies that are currently operating in Lahore and Punjab purchase
centrally and usually try to obtain special discounts that are not available to independent
pharmacies. Discounting in the form of bonus goods is widespread for OTC products, but
is not used routinely in the ethical sector.

59
Regulatory Environment
Drug Regulatory Authority
The Drug Regulatory Authority of Pakistan, DRAP, saw an improvement in its
functioning in the past year, with the appointment of Dr. Muhammad Aslam Afghani
as the new CEO. It still has a long way to go in fulfilling its regulatory obligations,
particularly with regard to drug pricing and registration.
DRAP, which is under the administrative control of the federal government, was officially established
following the signing into law of the Drug Regulatory Act 2012 by Pakistan’s then president, Asif Ali
Zardari, on 12 November 2012. It is responsible for the regulation of importation, manufacture,
storage, licensing, registration and pricing of medicines and medical devices in line with the 1976
Drugs Act. DRAP now also incorporates the former Federal Drugs Control Administration and its
provincial sub-offices, as well as the Central Drugs Laboratory in Karachi, the National Control
Laboratory for Biologicals in Islamabad and the Federal Drug Surveillance Laboratory in Islamabad.
A Policy Board is responsible for general direction, administration and monitoring of the authority,
chaired by the Secretary of NHSRC and consisting of 14 other members: the CEO of DRAP; a
representative of the Ministry of Law and Justice; health secretaries of Sindh, KP, Punjab, Gilgit-
Baltistan and the Federally Administered Tribal Areas; and six experts from the public and private
sector. The intention is to also draw an expert member from each province, with specialism in drug
manufacturing, quality control, drug regulation, public health, pharmacy services, health finance,
health economics, health management, pharmacology or biotechnology.
The authority is made up of nine functional divisions, each with a director and there are also divisions
to manage budgets and accounts, human resources, legal affairs and management information
services. The functional divisions are as follows:
• Pharmaceutical Evaluations and Registration Division, responsible for evaluation, assessment
and registration of human and veterinary medicines.
• Drug Licensing Division, responsible for licensing manufacturing facilities.
• Quality Assurance and Laboratory Testing Division, which enforces current Good
Manufacturing Practices and undertake testing and research of drugs. It will carry out post-
marketing surveillance and evaluate, coordinate and monitor safety, efficacy and quality of
registered drugs, including clinical and toxicological studies, drug recalls and withdrawals.
• Medical Devices and Medicated Cosmetics Division, which is responsible assessing, listing or
registration of human and veterinary medical devices, and medicated cosmetics, shampoos
and soaps.
• Biological Drugs Division, which evaluates, assesses, registers and licenses biologicals for
human and veterinary use. It will also act as a national control authority for biologicals.
• Controlled Drugs Division, which is responsible for regulating and allocating quotas of
narcotic drugs and psychotropic substances in consultation with the federal government.
• Pharmacy Services Division, which will develop and promote pharmacy services.
• Health and OTC Products (non-drugs) Division, which assesses, licenses and registers
alternative medicines, nutritional products and food supplements.

60
• Costing and Pricing Division, which is responsible for costing and pricing of therapeutic
goods.
On setting up DRAP, the finance minister approved the transfer of the account of the Central Research
Fund collected from the pharmaceutical industry to the Drug Regulatory Authority of Pakistan Fund.
The Central Research Fund was introduced through the Drug Research Rules of 1978 and contains the
proceeds of a 1% tax levied on pharmaceutical companies’ profits annually. A variety of other sources
contribute funding to the new authority, including: grants from the federal government to cover
salaries and retirement benefits of existing staff; donations and endowments; grants and loans from
the federal and provincial governments; loans and grants from national and international agencies;
and charges and fees collected by the authority.
Whilst DRAP is now firmly established, there are some significant challenges to overcome if DRAP is
to operate effectively and successfully. Indeed, not all of the divisions within DRAP are yet fully
functional. The industry needs a regulatory authority that is independent, professional, and staffed by
competent personnel.

• After functioning for two years without a CEO, Dr Muhammad Aslam Afghani was
appointed to the position in 2015. The expectation is that DRAP will achieve much-
needed improvements in efficiency and timeliness.
“There has been a way forward with the DRAP because the industry growth
has slowed down due to non-functionality of the DRAP. They have started
the new registration and have made progress so, I think, a good thing that
has happened is that a new CEO has been appointment and they are
reorganizing themselves.” (Local Pharmaceutical Company Executive and
former PPMA Chairman)
• A major issue has been the short supply of qualified personnel, as well as a lack of
standard operating procedures. Industry experts point out that efforts are being made to
increasing the human resource capabilities, as well as creating consistent policies in
DRAP.
• One positive development is the implementation of a Good Governance for Medicine

(GGM) Program by the WHO in Pakistan in 2014. It is a three-step program aimed at
increasing transparency and accountability in drug regulation, specifically covering
registration, manufacturing, distribution, supply and marketing of medicines. The WHO
experts will work alongside with around 30 representatives drawn from federal and
provincial governments, as well as a handful of stakeholders from the private sector.
• As DRAP becomes more efficient it is hoped that closer adherence to regulations

contained within the legislation can be achieved, but this will require the recruitment of
additional inspectors in order to maintain adequate surveillance of the sector. This will
be a longer-term objective however, as for the time being DRAP continues to struggle
with meeting its basic regulatory obligations. The industry remains increasingly
frustrated that DRAP is not fulfilling its regulatory obligations, particularly with regard
to drug pricing and registration.

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Drug Registration
Lack of transparency in the registration process and indefinite processing times
remain a major hurdle in terms of achieving market access.
The Drug Regulatory Authority Act 2012 indicates that the DRAP will act within the framework of the
1976 Drugs Act, thus the pre-existing rules on drug regulation continue to apply:
• New molecules can only be registered if they are already licensed in the US, UK or other EU
countries, Canada, Australia or Japan. Products banned for safety reasons in those countries
cannot be registered in Pakistan.
• Fast-track registration of NCEs is allowed for products registered in two or three developed
markets, out of the US, EU countries, Japan or Switzerland, providing that the product’s
strength and indications are identical to those registered in one of these countries.
• Fixed combinations can only be registered if the dosage of each ingredient meets the
requirements of a defined population group and if the combination can be proven to offer
superior benefits compared to single substance compounds administered separately.
• Generic names have to be at least as prominent in drug labeling as the product’s brand name.
Prior to the establishment of DRAP, drug registration took 24 months in the case of a NCE, and
approximately six to eight months for generics. Since then, regulatory approval timelines have
extended considerably and a significant backlog of applications has developed, around 16,000
according to news reports. Regulatory submissions from local manufacturers account for a large bulk
of the applications. DRAP introduced a fast-track registration process for local manufacturers in 2012,
through which companies apply for fast-track processing for a maximum of 20 products in their
portfolio, but are charged an additional fee (three times the normal registration fee). Fast-track
applications are restricted to 20% of the total work schedule of the DRAP.
Drug Registration Fees: According to an order released by the DRAP in 2012, fees for imported
anticancer drugs, immunosuppressants and HIV/AIDS drugs, biologicals and contrast media or any
other new molecule not manufactured in Pakistan was kept at PKR100,000 per product. For me-too
products and renewals, the fee was set at PKR200,000. At the same time, local manufacturers had to
face a 300% increase in fees for fast-track product registrations, which they found difficult to reconcile
with the government’s reluctance to grant an across-the-board price increase. The PPMA rejected the
very high fee structure recommended by DRAP for new drug registrations, drug registration renewals
and import of raw materials. The multinational industry, on the other hand, favors higher fees to filter
out non-serious applicants. Some industry executives continue to challenge the sharp increase in the
registration fees, but not much has changed since 2012.

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Registration fees
Drug type Fee (PKR) Renewal Fee(PKR)
New drug or molecule / drug not manufactured locally 50,000/- 20000/-
Any other drug for import 100,000/- 20,000/-
Drug for local manufacture 20,000/- 10,000/-
Drug for import 40,000/-
Drug for local manufacture 20,000/-

*vide S.R.O 1117(I)/2012
Source: Drug Regulatory Authority of Pakistan
Manufacturing Licenses: Failure to renew manufacturing licenses has also caused significant
problems. It had been feared that many more drugs would have to be withdrawn from the market
because they would not have valid manufacturing licenses.
Under toll manufacturing contracts, local companies manufacture drugs for multinational companies
and, according to the PPMA, it is an effective way of saving costs without compromising the quality of
drugs. It is reported that around 6,500 medicines are currently manufactured by this means in
Pakistan. DRAP has been accused of wanting to discourage the practice by issuing licenses for toll
manufacturing for three months only instead of for two years; this results in the additional
administrative and financial burden of applying and paying for renewal of licenses every three
months. The PPMA has warned that this could put local jobs at risk.
Clinical Trials: A clear government policy is still needed to regulate clinical trials. Not only do
multinational companies need a definition of how clinical trials should proceed, they also need data
protection and the availability of more qualified facilities to undertake clinical trials. Until 2010 there
were no clinical trial centers equipped to meet international standards, but now the Aga Khan
University and Dow Medical University in Karachi have international standard clinical trial facilities
and the industry is cautiously optimistic about the future of clinical trials in Pakistan. Three further
facilities are being set up in Lahore and Islamabad.

• The DRAP is functioning effectively post appointment of a CEO in 2015. However, some
cases of misconduct were reported at the end of 2015, for example, issuance of false
registration certificate for Everlong, and over 100 files missing from the Pharma
Evaluation and pricing wing of DRAP. As a response, the Ministry of National Health
Services announced a change that shall be implemented in the next six months in
converting the dossier submission system to online Common Technical Documents in the
form of CDs. This shall help in streamlining the registration process.
• Millions of Hepatitis C patients are still facing a long wait for cheaper oral drugs for this
deadly disease. Because of sensitivity of the disease, importance of these drugs, and
eliminate chances of false claims, DRAP conducted investigations at the manufacturing
sites of the prospective companies and granted formal registration letters to 11
pharmaceutical companies in February 2016, thereby enabling the launch of its generic
versions in the short term.

63
• Industry executives report that a new trend is developing as a result of the bottlenecks in
regulatory approval, whereby permission is sought to prescribe medicines on an
individual named patient basis. This could further add to the authority’s administrative
burden.
• Over recent years there has been an increase in third party contract-manufacturing by
local manufacturers, and many multinationals have expanded their portfolio of imported
finished products. The industry is hopeful that a new toll manufacturing policy will be
introduced during the prognosis period.
• Starting from July 1, 2015; sales tax is levied on toll manufacturing at the federal level, as
proposed in the Finance Bill 2015 through the amended definition of the term supply.
There is an ongoing dispute between the provincial and the federal government on the
exclusive rights for sales tax collection on toll manufacturing. Either of the governments
needs to exclude the term from their clauses to avoid double taxation.
Import Regulations
Amendments to the import regulations in Pakistan, primarily regarding raw materials,
should help in controlling the proliferation of counterfeits in the country.
Import of pharmaceutical products is regulated by DRAP under the conditions and limitations laid
down in the 1976 Drugs Act. A DRAP representative must inspect the manufacturing facility abroad to
ensure adherence to good manufacturing practice before the product can be registered in Pakistan;
inspections must also be carried out when the registration is renewed. Products manufactured and
approved for sale by the US Food and Drug Administration (FDA), European Medicines Agency
(EMA), Health Canada, or the regulatory bodies of Japan, Australia, Switzerland, any of the regulatory
bodies of Western Europe and certain Eastern European regulators are exempt from overseas
inspection of their manufacturing facilities. Products approved by the US FDA, EMA, Therapeutic
Goods Administration of Australia and the Japanese Regulatory Authority are exempt, even if they are
manufactured outside of these countries. Products pre-qualified by the WHO are also exempted from
inspection of their foreign manufacturing facilities.
Old regulations specify that products marketed in Pakistan must be manufactured locally within three
to five years of launch, but these rules have not been implemented. DRAP’s import policies have
already been blamed for contributing to the shortages of many life-saving drugs not manufactured in
Pakistan.
Import Duties and Tax: Almost all raw materials used in pharmaceutical manufacture in Pakistan
have to be imported, as they are not produced locally. Earlier, manufacturers had to pay up to 10%
import duty on raw materials and up to 20% import duty on packaging materials, as well as 10% sales
tax on imported packaging and raw materials. In 2012, the customs duty on 88 pharmaceutical raw
materials was reduced from 10% to 5%. The Import policy order of 2013, allows import of
pharmaceutical (allopathic) raw material of pharmaceutical grade in the form of unprocessed
ingredients, to pharmaceutical industries with a valid license of manufacturing in accordance with the
provisions of the Drug (Import and Export) Rules, 1976.
The 2014-2015 budget went further, by making provision for the removal of import taxes on these
goods through a State Regulatory Order (SRO), however customs authorities claim that while the
exemption stands under tax laws it is not valid under customs laws. Once again the pharmaceutical

64
industry has been caught in the middle of the confused regulatory environment, with some medicine
stocks ceased in the latter part of 2014.

• DRAP has been accused of increasing the registration fee for imported medicines tenfold,
from PKR20,000 to PKR200,000, and of requiring importers to pay for DRAP to inspect
overseas manufacturing facilities, mainly in India and China, every year rather than every
five years. These added costs have discouraged local importers from ordering drugs from
abroad, resulting in shortages of drugs used to treat TB, cancer and hepatitis.
• In 2015, the Federal Government issued an SRO to exempt sales tax on import and supply
of raw materials for manufacture of active ingredients and pharmaceutical drugs,
provided only those raw materials shall be exempted that fall under customs duty not
more than 10 per cent.
Quality Standards
Sub-standard and fake medicines continue to plague the sector, creating an urgent
need for raising quality standards to curb the prevalent infiltration. Local
manufacturers and DRAP are making efforts to comply with international standards
to improve the quality of drugs manufactured locally.
Concerns about manufacturing quality came to the fore following a series of drug safety concerns over
the last five years, however there has been little progress with raising standards in real terms.
None of Pakistan’s drug manufacturing sites are internationally approved, whether by the FDA, the
EMA or the WHO. As well as being an indication of the quality of manufacturing, this means that
international agencies are not inspecting facilities in the country. Furthermore, there is an urgent
shortage of drug inspectors in Pakistan. Closures of premises for non-compliance reasons are very
rare and this will continue to facilitate the circulation of substandard products.
In 2013, the KP department of health announced the appointment of drug inspectors in each district
of the province. The inspectors have the power to inspect any premises that may be manufacturing
drugs and are authorized to arrest people involved in purchasing and distributing counterfeit drugs.
Under the Drugs Act, drug courts were set up in Karachi, Quetta, Lahore, Peshawar, Islamabad,
Gujranwala, Multan, Faisalabad and Bahawalpur to regulate the importation, exportation, storage,
distribution, manufacture and sale of drugs. However, these courts’ effectiveness has been hampered
by some basic problems, including the appointment of drug court members on a part-time basis, drug
inspectors’ reluctance to attend legal proceedings, and lack of space. Each drug court comprises a
chairman, who is qualified for appointment as a high court judge, and two members who must be
expert in the medical or pharmaceutical fields.

• Leading local pharmaceutical companies are implementing measures to raise quality
standards; currently Getz Pharma is the only pharmaceutical company in Pakistan to have
a WHO Pre-Qualified Quality Control Laboratory, making it a leading pharmaceutical
exporter in the country.

65
• The Punjab government tried to introduce the Punjab Drug Ordinance (see Key
Developments and Trends, Counterfeits) in 2015, in an attempt to address the issue of
quality of drugs manufactured in the province. The measure attracted criticism from the
industry and was subsequently annulled. Industry experts consider quality to be a federal
matter and expect central regulations addressing the matter in the future.
• DRAP is trying to get certification from the WHO or Pharmaceutical Inspection Co-
operation Scheme (PIC/S). If successful, Pakistan’s image in terms of the quality of drugs
manufactured will be significantly boosted and will have a positive impact on growth of
the export market.
“The DRAP has been announcing that this year i.e. in 2016, they are going to
apply for a PIC/S membership, and it seems that they are keenly working
for the WHO standards and they are looking forward for a PICS
membership for the DRAP… Once DRAP applies for that, industry has to
take itself at the same level automatically. It's going to be a challenging task
for everybody, DRAP and the industry, but this is going to take the Pakistan
industry into the next dimension. Definitely it will increase the chances of
exports also.” (Local Pharmaceutical Company Executive)
Intellectual Property
Enforcement of intellectual property rights remains a problem and intellectual
property litigation will continue to be a frustrating process, although multinationals do
report some successes in fighting generic company patent infringements once cases
come to court.
The Patents Office, which is part of the Intellectual Property Office (IPO), holds responsibility for
regulating patents. Pakistan is a member of the World Trade Organization (WTO), with an obligation
to respect the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. Nevertheless,
until the drug registration activities of the MoH were suspended in 2011, generics were frequently
approved prior to a molecule’s patent expiry, including products such as clopidogrel, montelukast and
pegylated interferon. Bringing legal proceedings against patent infringers has proven very difficult and
slow, and even when judgments are given in favor of the patent holder, implementation of court
rulings is not always effective and illegal generics can remain on the market.
Intellectual property litigation will continue to be a frustrating process, although multinationals do
report some successes in fighting generic company patent infringements once cases come to the
courts. Much greater enforcement of intellectual property law is still needed and the multinational
industry would like to see patent linkage between DRAP and the IPO to ensure that generic versions
are not approved ahead of patent expiry and that patents are not infringed in future. Such a linkage
appears unlikely in the near future as DRAP struggles to meet its current obligations.
Pakistan once again remained on the US Trade Representative’s ‘priority watch list’ in 2015 as there
have not significant improvements to Intellectual property rights protection. It was noted that
Pakistan has not yet fully implemented the Intellectual Property Organization of Pakistan Act (2012).
The report also urged that measures be taken to instill adequate data protection in order to prevent
unauthorized disclosure and commercial use of tests and other data generated for the purposes of
obtaining marketing approval.
While it is unlikely that the issues have been resolved to the Pharmaceutical Research and
Manufacturers of America’s (PhRMA’s) satisfaction, Pakistan does not appear in PhRMA’s 2016

66
Special 301 submission. This is perhaps due to the fact that so few US companies now operate in
Pakistan.
Pharmacy Regulations
The Pharmacy Council of Pakistan continues to work towards the promotion of the
profession in the country, by improving their status in the healthcare delivery
ecosystem.
Pharmacists are registered and regulated by the Pharmacy Council of Pakistan (PCP), which was
established under the Pharmacy Act of 1967 to regulate pharmacists, pharmacy support personnel and
pharmacy premises in Pakistan. The Pharmacy Services Division of DRAP is responsible for the
development and promotion of pharmacy services. Neither institution has so far been effective in
enforcing the dispensing regulations contained in the 1976 Drugs Act.
Since 2007, there have been attempts by pharmacists in Punjab and more recently in Sindh to
establish a system to regulate the types of pharmacy professional that can dispense particular types of
product, which would improve dispensing practice and help to counter the supply of substandard and
counterfeit drugs. In this system, class A products, such as biologicals, antibiotics, chemotherapy
products and narcotics, should be dispensed only by a qualified pharmacist. Dispensing of class B
products, consisting of more commonly used products like antacids, anti-inflammatories and
painkillers, could be undertaken by a pharmacy technician who had completed a two or three-year
diploma program, while pharmacy assistants, who would only be allowed to sell traditional OTC
products, would have to have completed a one-year training program.
These rules exist in theory but have never been implemented, mainly due to the lack of availability of
qualified pharmacists and the low margins on which pharmacies operate in Pakistan. Pharmacies are
usually owned by unqualified retailers who cannot afford to hire a pharmacist and are frequently
located very close together, compete fiercely and do not necessarily achieve high volume sales. Their
businesses also depend particularly on the sale of antibiotics and antipsychotics over-the-counter,
which has not encouraged them to comply with regulations.

67
• Whilst implementation of effective pharmacy regulations is still lacking, a tightening of
regulations to prevent the previously common practice of pharmacists selling their
licenses has at least been achieved. The regulatory authorities are crosschecking and
stamping the pharmacist’s certificate when he or she is hired by a pharmacy and it is sent
to all the provincial pharmacy councils in Pakistan for verification.
• It has been suggested that there should be a new category of prescriptions for controlled
drugs issued by DRAP, with copies of these prescriptions kept by the patient, retail
pharmacy and physician so that they can be checked by DRAP inspectors to prevent
controlled drugs from being bought without a prescription. Curbing this practice will be
challenging, since retail pharmacies rely heavily on profits from the sale of prescription
medicines under-the-counter.
• In 2015, the PCP allowed pharmacists to use the title of a doctor, to elevate the profile
and dignity of the profession and improve their role in the healthcare ecosystem
following the global standards. This was opposed by the PMDC, on the grounds that
pharmacists were not trained to perform surgeries. A decision needs to be made on it by
the NHSRC.
Counterfeits
Federal and provincial governments need to collaborate in formulating and enforcing
strict anti-counterfeit regulations in the country to safeguard the industry and patients
from substandard and fake drugs.
Without effective pharmaceutical market monitoring, sales of counterfeit and substandard drugs with
insufficient active ingredients have proliferated, while smuggling of spurious copies of nearly all well-
known brands and sales of expired medicines are further problems. The current shortages affecting
certain essential medicines (see Pricing, Pricing System) has exacerbated the problem, driving trade in
black market medicines.
A series of well-publicized scandals in 2012 involving the deaths of patients after taking contaminated
and fake medicines prompted some action at provincial level to improve drug safety. For example,
Punjab established the Pakistan Drug Testing and Research Centre, a public-private partnership to
test products more rapidly, which previously would have had to be sent overseas for testing.
Law enforcement agencies have taken some steps to track down producers of fake and counterfeit
medicines, while individual companies have their own anti-counterfeit teams which work with local
authorities, but these measures have failed to have a significant impact so far, mainly due to
insufficient resources and too much bureaucracy. Detection is also impeded because a large
proportion of the population lives in rural areas and because the supply chain is under-regulated,
complicated and fragmented. Retail pharmacists are attracted by the large margins to be obtained
from dispensing counterfeits and patients are generally not sufficiently educated to spot counterfeits,
particularly when drug packs are split into individual tablets or strips.

68
• As a measure to control counterfeits in the province, the governor of Punjab promulgated
The Punjab Drug Ordinance 2015, and merged the law on spurious and substandard
drugs. The entire industry protested against the imposition of this ordinance as it
pronounced production and sale of either of these products a punishable offence with a
ten year sentence or a fine of PKR1 to 5 million and a non-bailable warrant against the
offender. The ordinance was considered flawed, for two reasons: firstly, it treated
substandard and spurious drugs at the same level; secondly, it allowed penalization of
pharmacists selling unregistered OTC products, which in itself is a significant market.
Amidst the industry protests, this ordinance was annulled and did not become law.
“That was another extreme and a very draconian measure, an ordinance,

which has been challenged in a court of law by the industry before the
ordinance turns into a law. Now this ordinance says that if there is a
misbranding of a product, this is considered a spurious product, this is
considered a dangerous product, and within 24 hours, a drug inspector can
raise an FIR, at a police station. The entire management of a company can
be arrested. I think this is a very draconian measure. I think it was very
counterproductive.” (Local Pharmaceutical Company Executive)
• Strategies pursued by manufacturers to prevent counterfeiting have met with short-term

success, such as frequent pack changes accompanied by trade awareness campaigns,
schemes to encourage patient compliance, defending trademarks and carefully targeted
education of healthcare professionals.
• Distributors try to be vigilant in identifying the presence of counterfeits by checking batch

numbers, but there is no organized monitoring system and counterfeiters also tend to use
the same batch numbers so often the only method of detection is for the manufacturer to
analyze the product in a laboratory.

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Pharmaceutical Business Environment
Operating Environment
The operating environment for the pharmaceutical industry in Pakistan continues to
face constant pressure in terms of pricing and regulatory policies. With the DRAP
becoming more active, the pricing and regulatory landscape is expected to achieve
some stability, but more needs to be done to regain the confidence of manufacturers.
The DRAP, though established in 2012, has been facing teething issues until now. With the
appointment of Dr. Aslam in 2015, some order has been restored in the working of the DRAP. As a
result, a new pricing policy came into effect in March 2015, which introduces a basis to determine the
prices of original products and generics, however it might not be enough to revive the faith of
manufacturers in Pakistan’s operating environment. Nevertheless, industry experts are optimistic
about the functioning of the DRAP and believe that this will bring some order to the regulatory
landscape. Regulatory guidelines for drug registration, marketing authorizations, contract
manufacturing etc are outdated and need updates to foster confidence among manufacturers, both
multinational and local.
The imposition of a ten year price freeze on pharmaceuticals (see Pricing, Pricing trends) has
significantly impacted the industry. Pressure on operating margins has been intense, and forced the
multinationals, in particular, to rethink their business strategies in the last five years. The operating
environment has been particularly difficult for US companies: Bristol-Myers Squibb left the market in
2009, Merck Sharp & Dohme (MSD) in 2010 and Johnson & Johnson (J&J) in 2013.
Drug shortages continue to impact the industry, as for certain products the industry could no longer
maintain production at the low price levels, which led to product withdrawals. For example, folic acid,
an essential drug, has been missing from the market for six months. DRAP has declared 40 such drugs
as ‘Orphan drugs’, which means essential drugs needed in the market in spite of lack of commercial
viability. A government decision needs to be made on the pricing and availability of orphan drugs and
‘hardship cases’ in the coming months (see Pricing and Reimbursement, Pricing policy).
“The DRAP in the last three years, they are not doing anything, especially for the
new products, for the price increase, for the registration. If the condition remains
the same, then it will create a lot of problems for the pharma industry.
Regulatory rule is very, very critical. If it does not improve, it is not going to be
good because there has to be some sort of decision making. But nothing is
happening.” [Local Pharmaceutical Distribution executive]
Despite the clear challenges, industry executives remain cautiously optimistic about the outlook for
the market in the next five years and beyond. A number of factors point towards more buoyant
prospects, including rising socio-economic standards, the size of the population and steadily
expanding access to healthcare services. As such volume will remain the major factor underpinning
market growth, although industry executives anticipate some opportunity for increased prices as
quality standards gradually begin to improve.

70
• Multinational companies have adopted differing strategies towards the Pakistan market;
some have decided to withdraw investment from the country in the context of
determining global priorities in the currently difficult economic and commercial climate.
• Rationalizing and restructuring business operations have been important strategies in

maintaining profitability. Those with large-scale manufacturing facilities have been able
to focus on maintaining high volume production as a means of diluting the impact of
rising overheads.
• Multinationals are also increasingly looking to niche and specialized therapy areas, where
limited competition will ensure continued demand.
• Establishment of a pricing policy offers some hope for greater stability in the market,
although opportunities to achieve above inflationary price increases will be minimal.
Industry Structure
The pharmaceutical industry in Pakistan will continue to undergo a major shift with
local manufacturers growing aggressively in contrast to multinationals who are
rethinking their strategy in the region. Due to the unpredictable regulatory
environment and pricing pressures, some of the leading multinational companies
have shut their operations in Pakistan after operating here for decades.
According to the Pharma Bureau, there are approximately 600 national manufacturers and 21
multinationals operating in the country. About ten multinationals undertake their own manufacturing
and the remainder have joint ventures or licensing agreements with local companies. According to the
PPMA, nearly 40% of multinational brands are produced under such agreements by local
manufacturers, with about 12,000 different products contract manufactured. Other multinational
companies are represented by importers. Despite the large number of companies, the sector is quite
concentrated and the leading 15 companies account for 56% of sales in 2015, according to IMS Health
audit data.
Weak intellectual property provisions combined with a lax regulatory environment have pushed the
multinational companies away from Pakistan. In addition, innovative products have struggled to
capture the market because out-of-pocket payments continue to account for a major share of the
healthcare expenditure. The share of MNCs is constantly decreasing: declining from 74% in 1992 and
57% in 2002 to a mere 40% in 2014. The scenario is reversed for local manufacturers, their share
increasing from 57% in 2011 to 60% in 2014.
“Yes, I mean, not only is it because of weak regulatory activity, but even the right
pricing was not being considered for the MNCs. When they wanted to bring in
something new, they were not allowed to bring it at the price they wanted to
launch it at, also because there was no patent respect in this country. MNCs, they
were always given a very tough time whenever they launched anything which
was a new chemical entity.” (Analyst)
MNCs have been under constant pressure to keep their drug prices under check, with a price freeze
imposed on all drugs in Pakistan for more than a decade. Even the new pricing policy announced by
the DRAP in March 2015 lays down a price reduction of 30% on the original brands that have been

71
part of the NEDL for more than three years. Most of the drugs enlisted there are manufactured by the
MNCs and shall impact their already suffering operating margins in the long run.
Pharmaceutical Trade: Pakistan’s trading potential has been hindered by weak regulatory
enforcement, which has left the local industry without internationally recognized certification for
manufacturing standards. Currently the biggest export market for Pakistani producers is Afghanistan,
meeting 80% of their medicine needs and giving tough competition to other competing countries.
Additional important export destinations are Sri Lanka, the Philippines, Vietnam, Sudan and other
African countries.
The value of imports is almost three times that of exports, however. Imports come mainly from
developed countries, with Switzerland, Denmark, Germany, Belgium and France being the leading five
exporters of pharmaceutical goods to Pakistan. Pharmaceutical companies rely on using imported
active ingredients for 60-70% of products in terms of their sales value. India is reported to be losing
its status as the leading source country for purchasing active ingredients, with China able to offer
comparatively lower prices.

• Local manufacturers are expected to increase their share of the market over the
prognosis period and the trend will accelerate if more multinationals follow through to
retract from the market.
• Leading local manufacturer, Getz Pharma, has adopted an aggressive business strategy
that includes investment in new brands and new therapeutic areas. The company is also
set to become the first in Pakistan to receive international accreditation for its recently
upgraded state-of-the-art manufacturing facility in Karachi, having been granted pre-
approval from the WHO. Overall, Getz is reported to have invested PKR6 billion in the
business over the last four years.
• In 2015, the private sector union for importing medicines in Afghanistan, backed by the
Afghanistan Chamber of Commerce and Industries, has imposed a ban on import of
Pakistani medicines to Afghanistan.
• PPMA has adopted “Vision 2025” to increase the Pakistani pharmaceutical exports from
a meager $200 million to $5 billion in ten years. To achieve this, the following measures
have been proposed:
° Plan to establish at least ten FDA approved manufacturing units in Pakistan
° Launch of one-window operations of TDAP, DRAP and other officials involved in

granting documents for medicine imports
° Reduce the requirement of one year of local manufacturing before becoming eligible
for registration for medicine exports.
• Potential trading opportunities between Pakistan and India continue to be held back by a
lack of agreement on the terms of the Most Favored Nation (MFN) status. As of early
2016, Pakistan has ruled out all possibilities of granting the MFN status to India.

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Leading Corporations
Growth of local generic companies is expected to continue to outpace that of the
multinational sector. There are four local companies in the top ten rankings in
Pakistan. The leading local players are expected to seek international accreditation
of their manufacturing facilities, opening up the export market beyond traditional
lower-value destinations.
GlaxoSmithKline remained the market leader in the year to the end of September 2015, with a market
share well ahead of its nearest competitor, Abbott, although Abbott once again saw higher growth
than GlaxoSmithKline during this period.
Four domestic manufacturers feature in the list of top ten corporations, with Searle moving to eighth
place on the back of strong annual growth of 22.4%. Indeed, in terms of annual growth each of the
four domestic players posted the highest growth rates amongst the top ten players, highlighting the
increasingly difficult operating conditions faced by multinational manufacturers.
Getz, the leading national manufacturer, is owned by the distribution company, Getz Brothers, which
also owns the leading distributor, Muller and Phipps (see Distribution). It has a portfolio of over 70
branded generics and is focusing on producing branded generics and biosimilars where there is
limited competition. Getz already markets and manufactures four biotech products.
Sales of Leading Corporations (MAT Q3 2015) Retail at Ex-Manufacturer Prices
Company PKR (million) Market Share (%) Annual Growth (%)
GlaxoSmithKline 24326.6 10.0 5.5
Abbott 15426.2 6.3 9.1
Getz Pharma 13813.1 5.7 19.1
Sami 12085.3 5.0 18.9
Novartis 10412.8 4.3 7.1
Pfizer 9042.9 3.7 3.9
Sanofi 8688.9 3.6 6.8
The Searle Company 6791.2 2.8 22.4
Merck Kgaa 6271.6 2.6 8.3
Hilton Pharma 6152.5 2.5 10.8

Source: IMS Health

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Leading Products
Ferozsons launched a new drug, Sovaldi in Pakistan, as a licensee for Gilead
Sciences, and reported record sales in its first year.
Augmentin (clavulanic acid + amoxicillin) continues to be the top selling product in Pakistan, and
anti-infectives the leading therapeutic class, with four such products featuring in the top ten. Sovaldi
was introduced in the market by a local manufacturer, Ferozsons Laboratories, on a license from
Gilead Sciences and rapidly emerged as a strong competitor. It became the second leading product in
its first year on the market and underpinned Ferozsons phenomenal year-on-year growth of 139% in
the 12 months to September 2015.
Getz Pharma's branded generic Risek (omeprazole) witnessed the highest growth, at 18.8%, among
the already marketed drugs, closely followed by GlaxoSmithKline's Panadol (paracetamol), at 17.1%.
All the products marketed by the local companies featuring in the top ten, continue to grow at double
digits. Novartis's OTC for calcium, Cac 100 Plus, had a negative growth; probably as a result of the
enlistment rules introduced for alternative medicines by DRAP (see OTC Market).
Sales of Leading Products (MAT Q3 2015)

Retail Sector at Ex-Manufacturer Prices
PKR Market Annual
Product Molecule Manufacturer
(million) Share (%) Growth (%)
Clavulanic Acid +
Augmentin GlaxoSmithKline 3573.0 1.5 6.5
Amoxicillin
Sovaldi Sofosbuvir Ferozsons 3018.5 1.2 -
Risek Omeprazole Getz Pharma 2203.0 0.9 18.8
Brufen Ibuprofen Abbott Pharma 1946.2 0.8 9.2
Novidat Ciprofloxacin Sami 1941.3 0.8 14.4
Panadol Paracetamol GlaxoSmithKline 1793.0 0.7 17.1
Oxidil Ceftriaxone Sami 1739.1 0.7 14.1
Velosef Cefradine GlaxoSmithKline 1710.9 0.7 2.4

Insulin Human
Humulin 70/30 Base + Insulin Eli Lilly 1499.5 0.6 10.5
Human Isophane
Ascorbic Acid +
Pyridoxine +
Cac 1000 Plus Novartis Otc 1482.2 0.6 -0.9
Colecalciferol +
Calcium
Source: IMS Health

74
• 2015 saw the introduction of Sovaldi (sofusbuvir), which has set a new record in the
Pakistan pharmaceutical industry. Ferozsons Laboratories was the only company to have
the rights to sell and market the product in Pakistan, on behalf of Gilead Sciences. Inspite
of being priced at Rs33,000 for 28 tablets; Sovaldi is still mostly inaccessible for the
masses.
“We saw the launch of Sovaldi in Pakistan, which is definitely a new record
in the history of Pakistan industry. I mean nothing which has been launched
ever in Pakistan will have matched how well Sovaldi has performed. Even in
the next ten years, I don’t think there will be any new products launched that
will achieve so much growth, revenue and market share as Sovaldi has
done.” (Analyst)
• DRAP was inspecting manufacturing facilities of 14 additional local companies that plan
to launch a generic version of Sovaldi in Pakistan. It issued registration letters to 11 of
these companies in February 2016, allowing them to launch generic versions of Sovaldi at
PKR5,868 for 28 tablets. Generics for the product are expected to hit the market in early
2016. Approval for local manufacturing of the raw material for this drug has also been
granted, making Pakistan the five raw material producing country for Sovaldi.
Research and Development

Research and Development (R&D) will continue to be under-developed in Pakistan,
with few companies able to make sufficient investment. The larger local companies,
like Getz, will focus on developing generics that are difficult to replicate, including
biologicals and new dosage forms, allowing them to gain a competitive advantage
over other generic producers.
Many multinational companies are looking for new countries in which to perform clinical trial work,
as the cost of running trials continues to rise, including in both China and India. Pakistan has
significant potential for clinical trials due to its population size, but the operating climate has largely
deterred multinational companies so far. Most clinical studies undertaken are Phase IV promotional
studies. Part of the problem has been too few suitable test centers, although this is slowly changing
(see Regulatory Environment, Drug Registration).
The situation is unlikely to change in the next five years unless Pakistan can offer a low cost base and
provide the required regulatory framework for clinical trials.
Generics Market
Branded generics will continue to grow significantly, although growth in value terms
will be restrained by low prices. Sales of unbranded generics will be mainly confined
to government hospital procurement.
The share of the retail sector held by original brands continued to deteriorate in 2015, with only 16.3%
of sales in terms of value attributable to original products, whilst licensed brands increased their share

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to 9.8%. ‘Other products’, consisting mainly of branded generics and copy products, decreased their
share to 73.6%. The share accounted for by unbranded generics remained static at 0.3%.
Value Share (%) of the Retail Sector by Licensing Status

Ex-Manufacturer Prices (MAT Q3)
Market Sector 2014 2015
Original Brands 17.1 16.3
Licensed Brands 8.6 9.8
Unbranded Generics* 0.3 0.3
Other Products** 73.9 73.6

*Products marketed under the generic name of active ingredients(s).
** Includes: branded generics, copy products, products where there is no evidence of a licensing agreement, products for which
a licensing category has not been identified, and non-patentable products.
Source: IMS Health
Audited sector sales show that unbranded generics saw their share of sales, in volume terms, decrease
from 1.2% of the market in 2014, to 0.8% in 2015. Meanwhile, ‘other products’ volume share increased
to 77.1% in 2015. The higher penetration of the market in volume terms, compared with value sales, is
indicative of the intense pricing pressure for generics.
Volume Share (%) of the Retail Sector by Licensing Status

Standard Units (MAT Q3)
Market Sector 2014 2015
Original Brands 15.2 15.4
Licensed Brands 6.5 6.6
Unbranded Generics* 1.2 0.8
Other Products** 77.0 77.1

*Products marketed under the generic name of active ingredients(s).
** Includes: branded generics, copy products, products where there is no evidence of a licensing agreement, products for which
a licensing category has not been identified, and non-patentable products.
Source: IMS Health
Distribution
Pakistan’s diverse and fragmented distribution system, consisting of distributors,
sub-distributors, wholesalers and direct-distributing companies, is experiencing
growing pressure on margins.
Out of more than 900 distributors, stockists and wholesalers, there are only nine distributors that
have nationwide distribution capability. About 7–8% of the market is supplied directly by
manufacturers to public institutions and dispensing doctors. By far the leading distributor is Muller &
Phipps, which is part of the Getz group of companies. It has grown at a CAGR of 26%, and recorded
annual revenue around PKR60 billion. Muller & Phipps has the broadest coverage, distributing to

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more than 975 towns and districts, and more than 32,000 pharmacies, specialists and institutes.
Other significant distributors include Vikor, UDL and Parazelsus. Vikor handles import, sales,
promotion and distribution for national and multinational clients through 29 distribution facilities
nationwide. Parazelsus, which is owned by Zuellig, the leading South East Asian pharmaceutical
distribution company, serves over 30,000 pharmacies and medical stores from 20 branches in
Pakistan. In addition to the major companies, some smaller distributors have exclusive contracts to
distribute for specific companies, particularly in specialized areas.
About 90% of business between distributors and retail pharmacies is conducted on a cash basis,
although distributors are reluctant to accept large quantities of cash since it is too risky for the
individuals responsible for collections. The average pharmacy order is reported by distributors to be
about PKR11,000 to PKR15,000, but doing business with individual retailers is relatively risky.
Pharmacy chains are regarded as safer and are generally allowed to purchase on credit or by issuing
cheques. Since 2012, distributors have also had the added expense of hiring security services to
protect their deliveries, particularly in Karachi. For the time being however, volume sales continue to
largely compensate for a comparatively low value market.

• Margins throughout the supply chain continue to be negatively impacted by the
challenging pricing situation. Pricing adjustments to reflect inflationary changes, as
mandated in the new pricing policy, will at least offer better prospects in the prognosis
period.
• Manufacturers are becoming more conscious about compliance and good distribution
practices. There is a shift happening with national distributors being preferred more than
the regional distributors.
“Actually there has been a serious pressure on the distribution discounts,

because that is the single largest item which comes on the Profit and Loss
statement of the manufacturers, and the easiest thing is to cut it down. But
what I'm seeing very lately, recently a new trend has been emerging that the
manufacturers at large are getting conscious about compliance and good
distribution practices.” (Pharmaceutical Distribution Company Executive)
“Anti-counterfeit is basically now a big issue in Pakistan. That's why the

[manufacturers] are focusing on one window operation, through a national
distributor where they can monitor and find out if there are any problems,
because counterfeit products, if we go through regional distributors, there
are 60-70 retail distributors and it is very difficult to monitor them.”
(Pharmaceutical Distribution Company Executive)
• Delivery frequency to retail pharmacies has increased as pharmacies have been reducing
inventories for financial reasons.
Retail Pharmacy
The retail pharmacy sector is not adequately meeting the needs of the population.
Most outlets are condensed in urban centers, leaving more rural communities
comparatively under-served; few are adhering to regulatory standards.
Retail pharmacies are frequently located close together in the cities, particularly in Karachi, and are
typically fiercely competitive on price. They are generally small outlets, focusing on the supply of

77
drugs and a few household items; they have yet to evolve into the more diversified establishments that
are the norm in more developed countries. Observation of regulatory standards established under the
Pharmacy Act of 1967 (see Regulatory Environment, Pharmacy Regulations) is lax in the vast majority
of outlets due to an insufficient number of qualified pharmacists.
Nationally it is reported that there are 0.9 pharmacists per 10,000 population, considerably below the
WHO’s recommendation of 1.0 per 2,000 population, however the number working in the retail sector
is considerably lower, around 0.4 per 10,000 population. There are an estimated 63,000 community
outlets across the country.
Over the past ten years there has been a concerted national program to boost the number of pharmacy
graduates and to elevate standards of training, but progress has been slow. The pharmacy schools, of
which there are now over 52, are now beginning to produce more qualified pharmacists, producing
over 5,000 doctors of pharmacy every year. Most seek employment in private hospitals or the
pharmaceutical industry rather than in community pharmacies, due to better salaries and working
conditions. To establish a new pharmacy is also very costly for a pharmacy graduate and is estimated
to require PKR1 million in start-up costs, an unattractive prospect given the competitive nature of the
business.
Some small chains are beginning to emerge in up-market areas of Lahore and Punjab, offering a 24-
hour service. One of the biggest chains is Servaid Pharmacy, which was set up in 2005 by the
diversified retail group, Service Sales Corporation. With 24 outlets in Punjab serving more than
10,000 customers each day, it also has a network that operates through community pharmacies and
hospital pharmacies. The company is committed to becoming a larger chain by means of a network of
consumer-centric stores offering high standard products and services.
Other small chains include: Fazal Din’s, with 11 outlets in Lahore and one each in Gujranwala and
Sialkot, all manned by qualified pharmacists; CSH Pharma Group in Lahore, which has three
community pharmacies and runs pharmacies in Jinnah Hospital and the Mayo Hospital; and
Mahmood Pharmacy in Lahore. Some of these chains also supply hospitals and act as wholesalers and
importers. Pharmacists believe that they could make a greater contribution to efforts to improve
public health and the curriculum for pharmacy training appears to be moving in this direction.
Community pharmacy is seen as well placed to deliver pharmacy-based preventive health services,
such as immunization and screening programs to increase early therapeutic intervention in chronic
diseases like diabetes, hyperlipidemia, obesity and hypertension.

• Online retail pharmacies such as ‘Sehat’ and ‘Dawai’ have started to gain popularity in
Pakistan.
• Pharmacists joined protests against the Punjab Drug Ordinance of 2015 (see Key
developments and trends, Counterfeits) to retaliate against the proposed punishments for
druggists selling unregistered OTCs.
• Small pharmacy chains are more likely to employ pharmacists and are beginning to offer
the prevention and monitoring services that will support improvements in the nation’s
health status.
• More concerted efforts to raise the caliber of training and to encourage graduates into
community outlets are needed. The need for tighter surveillance of the sector by DRAP
also remains a pressing issue.

78
OTC Market
Given the rising socio-economic standards and the relative youth of the population,
there is some optimism about future growth potential, particularly where vitamins and
nutraceuticals are concerned.
The OTC sector is relatively under-developed, largely due to the prevalence of under-the-counter
selling and thus a lack of distinction between OTC and prescription-bound medicines. The majority of
people tend to buy cheaper over-the-counter medicines for cost-effective treatment of infectious
diseases in Pakistan. The inaccessible primary care setup adds to the difficulties, pushing patients
away from prescription medicines as a first line of treatment for many diseases. A large proportion of
pharmaceutical spending is financed out-of-pocket and many people who are unable to access
healthcare are reliant on readily available OTC remedies. Prices are not directly regulated by DRAP,
but are theoretically subject to prior approval. Market forces ensure that prices remain competitive
and hence attractive for the consumer.
In the last couple of years, alternative medicines such as homeopathic, herbal, nutraceuticals, etc have
become a growing market. Fewer product innovations in the pharmaceutical industry have provided
an opportunity for alternative medicines to innovate and address the market needs. Earlier, there
were no price controls or regulations imposed on nutraceuticals.
In a bid to curb the proliferation of counterfeit and sub-standard medicines the DRAP moved to more
closely regulate homeopathic medicines and nutraceuticals and issued the Alternative Medicines and
Health Products (Enlistment) Rules in 2014, under which, all the products need to be enlisted with the
DRAP. Industry experts have mixed views around this regulation, as on one hand, it will help in
keeping a check on deceptive marketing, while on the other, it will overburden the already
understaffed DRAP.
“[Last year, the nutraceuticals] which were previously unregulated, have now
been placed under the remit of the DRAP ... Where they say that you submit your
dossier, you submit your manufacturer details, and there's a whole lot of
procedure now established. Although, it doesn't come under price control, but
still, you have to get the product enlisted, which is a variation of registration
process. That has actually created a huge hue and cry here in the industry,
especially for the ones that were not dealing with DRAP or Ministry of Health
previously.” (Local Pharmaceutical Company Executive)

• Self medication is on the rise, with well informed and educated people trying products
that claim to have fewer side effects. Vitamins and nutritional products are seen as one
particular area offering strong growth potential. The majority of local companies are
opening nutraceuticals divisions in Pakistan.
“What I personally see [is] that the alternate medicines are catching up. I see
a lot of well-informed and educated people, getting curious and finding ways
and means to know about the alternate medicines and even trying them.”
(Local Pharmaceutical Company Executive)
• The Alternative Medicines and Health Products (Enlistment) Rules passed in 2014 led to
a concern in the industry, as this segment was earlier unregulated. The newly imposed
regulations impacted this sector negatively in the short term. In the longer term, well-
defined guidelines for registration and authorization of products in this segment shall
help in controlling counterfeits or sub-standard products.

79
Sales and Marketing
Sales and marketing activities will continue to focus on traditional detailing activities,
but in requesting that manufacturers publicize marketing expenditure (including
incentives provided to prescribers) DRAP has, at least notionally, begun to take
action against unethical promotional practices.
There has been a strict control on advertising of drugs in Pakistan since the introduction of the Drug
Act of 1976. Ethical criteria for medicinal drug promotion are detailed in Schedule G of SRO 145
(I)/76, dated 12 February 1976. The Federal government has been responsible for deciding the drugs
that are eligible to be advertised and the content of those advertisements. The maximum expenditure
allowed on advertising, sampling and other promotional activities has been limited to 5% of the
annual turnover of the manufacturer. Medical representatives; documentary films; and professional
journals circulated among the medical, pharmaceutical and allied professions only are the permissible
methods of promotion. Advertisement approvals are valid for a maximum of two years only, and can
be revoked from being published in the journals in case the Federal Government finds it to violate the
specified conditions.
Marketing through medical representatives remains the preferential mechanism of promotion for
pharmaceutical companies. Educational events are also important marketing tools, ranging from
scientific conferences to drug launches. Physicians rely on these events because there is very little
information supplied by any other sources for continuous medical education in Pakistan. In practice,
regulation of industry sales and marketing practices remains notoriously weak, particularly where
domestic companies are concerned. Multinational companies are subject to higher standards in
accordance with the International Federation of Pharmaceutical Manufacturing Associations code of
practice, with US and UK companies additionally constrained by strict national anti-bribery laws.
In September 2013, the SECP advised that DRAP should implement a mechanism for ensuring more
effective regulation of marketing practices in the pharmaceutical industry. A draft code compiled by
SECP seeks to clamp down on foreign trips by restricting industry-sponsored international
conferences and encouraging conferences and training of health professionals to take place within
Pakistan. In addition, it states that meetings should not coincide with sports, entertainment or other
leisure activities.
Whilst new legislation governing industry marketing practices has yet to emerge, DRAP does appear
to be taking steps to increase transparency with regard to the interactions between the industry and
healthcare workers. In April 2014, under the direction of the National Accountability Bureau (the anti-
corruption authority), DRAP issued a directive to pharmaceutical companies to provide details
pertaining to marketing expenditure, including a complete list of doctors and consultants that
received financial incentives or benefits in kind. Manufacturers were requested to comply with the
directive within seven days by posting the requested information on their official websites.

• The Pharma Bureau urges DRAP to issue an Ethical Code of industry marketing practices
alongside measures to ensure national enforcement.
• Multinationals continue to remain focused on larger cities, while local companies have
started to target tier 2 cities in the rural areas.

80
• In March 2015, Sindh Health Department issued a directive to ban all foreign tours
sponsored by multinational pharmaceuticals for its medical officers and consultants.
Similar orders had previously been issued, but are not implemented rigorously.
• Following global pressure of closer scrutiny on promotional spending in the

pharmaceutical industry, GlaxoSmithKline has publicly announced that it will withdraw
all promotional payments and incentives given to prescribers from 2016. Other leading
multinationals could follow GlaxoSmithKline’s example in a bid to protect themselves
from controversial legal battles and substantial financial penalties.
• Most of the multinational companies are already under strict regulations from their
global headquarters to control spending on promotional activities. Local manufacturers,
on the other hand, are reeling under eroding margins, and hence, do not have surplus
funds to spend on sponsoring trips as promotional tools.

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Appendix A: Glossary
AKHS Aga Khan Health Services
AKU Aga Khan University
BHU Basic Health Unit
BISP Benazir Income Support Program
CAGR Compound Annual Growth Rate
CDD Control of Diarrheal Disease
CHK Civil Hospital Karachi
DHQ District Headquarter
DPC Drug Pricing Committee
DRAP Drug Regulatory Authority of Pakistan
EMA European Medicines Agency
EPI Expanded Program of Immunization
FAFEN Free and Fair Election Network
FDA Food and Drug Administration
GDP Gross Domestic Product
GFATM Global Fund to Fight AIDS, Tuberculosis and Malaria
GP General Practitioner
IDA International Diabetes Foundation
IMF International Monetary Fund
IPO Intellectual Property Office
KP Khyber Pakhtunkhwa
LHW Lady Health Worker
MDG Millennium Development Goal
MoH Ministry of Health
MRP Maximum Retail Prices
NCD Non-Communicable Diseases
NCE New Chemical Entity
NEDL National Essential Drug List
NGO Non-Governmental Organizations

82
NHA National Health Account
NHSRC Ministry of National Health Services Regulation and Coordination
OTC Over-the-Counter
PCP Pharmacy Council of Pakistan
PHCC Punjab Healthcare Commission
PhRMA Pharmaceutical Research and Manufacturers of America
PIC/S Pharmaceutical Inspection Co-operation Scheme
PKR Pakistani Rupee
PMDC Pakistan Medical and Dental Council
PML (N) Pakistan Muslim League (Nawaz)
PML (Q) Pakistan Muslim League (Quaid-i-Azam)
PMNHP Prime Minister’s National Health Program
PPMA Pakistan Pharmaceutical Manufacturers Association
PSDP Public Sector Development Program
R&D Research and Development
RHC Rural Health Center
SBP State Bank of Pakistan
SDG Sustainable Development Goal
SECP Securities and Exchange Commission of Pakistan
SLIC State Life Insurance Corporation
SRO State Regulatory Order
STI Sexually Transmitted Infections
TB Tuberculosis
THQ Tehsil Headquarters
TRIPS Trade-Related Aspects of Intellectual Property Rights
UN United Nations
UNDP United Nations Development Program
UNICEF United Nations Children's Fund
USAID United States Agency for International Development
WHO World Health Organization
WTO World Trade Organization

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Appendix B: Sources and
Methods
Coverage
The IMS Market Prognosis series comprises 49 countries, listed in the table below.
Country Coverage 2016
Algeria Denmark Italy Poland Switzerland
Argentina Egypt Japan Portugal Taiwan
Australia Finland Korea Romania Thailand
Belgium France Malaysia Russia Turkey
Brazil Germany Mexico Saudi Arabia UK

United Arab
Canada Greece Netherlands Singapore
Emirates
Chile Hong Kong Norway Slovakia USA
China Hungary Pakistan South Africa Venezuela
Colombia India Peru Spain Vietnam
Czech Republic Indonesia Philippines Sweden
The IMS Market Prognosis reports are divided into two main sections:
• Market Overview and Forecasts
• Market Prognosis in-depth Report
The Market Overview and Forecasts section contains a market synopsis, market forecasts including
key drivers, market segmentation forecasts (for 24 countries covered by Market Segmentation data),
and therapeutic class forecasts. This section is updated on a twice-annual basis in March and
September.
The in-depth report provides a detailed commentary of the key issues affecting the healthcare and
pharmaceutical industries over the next five years. Each report also provides an assessment of the
economic and political climate. It is updated on an annual basis in either March or September. The
following subjects are covered within the in-depth section:
• Economic Environment
• Political Environment
• Healthcare Provision
• Prescribing
• Reimbursement

84
• Dispensing
• Pricing
• Regulatory Environment
• Pharmaceutical Business Environment
Market Prognosis also generates regional summaries in an interactive excel format.
Market Forecasts
The five-year pharmaceutical market forecasts are based on an IMS Health proprietary econometric
analysis using IMS Health data, and on third party analysis and five-year forecasts of the main
macroeconomic indicators, including - where used – forecasts of exchange rates, provided by the
Economist Intelligence Unit (a sister firm of The Economist).
The development of an econometric model is the approach best suited to country market forecasts.
This approach allows IMS Health to uncover long-term equilibrium relationships between different
sets of variables (i.e. economic and pharmaceutical variables). In turn, this also allows the
determination of the speed of adjustment to these equilibria, together with any short-term
relationships that may exist (see 'Forecasting Methodology').
Five-year forecasts are provided for:
• Pharmaceutical price growth (average price per standard unit)
• Volume (standard units)
• Sales
• Gross domestic product*
• Consumer price index*
• Population by age distribution*
• Real private consumption*
• Real government consumption*
• Current account balance*
• Exchange rate movements*
* These data are provided by the Economist Intelligence Unit.
Market Segmentation Forecasts

Market Segmentation forecasts are provided for 24 of the Market Prognosis countries – see ‘Market
Segmentation Forecasting Process’. The following three categories are forecast in each of the 24
countries and are defined using IMS MIDAS Market Segmentation criteria:
• Non-generics
• Generics
• Other

85
Therapeutic Class Forecasts
The therapeutic class forecasts cover ten key ATC1 classes accounting for an average of more than 90%
of pharmaceutical sales in the individual country markets. These forecasts are provided individually
for all the countries covered (see 'Forecasting Methodology').
The therapy areas included are:
• ATC A: Alimentary Tract and Metabolism
• ATC B: Blood and Blood-Forming Organs
• ATC C: Cardiovascular System
• ATC D: Dermatologicals
• ATC G: Genitourinary System and Sex Hormones
• ATC J: Systemic Anti-infectives
• ATC L: Antineoplastic Agents and Immunomodulators
• ATC M: Musculoskeletal System
• ATC N: Central Nervous System
• ATC R: Respiratory System
Regional Overviews
Regional summaries are provided in an interactive excel format; allowing the user to copy and paste
out data and charts.

86
Forecasting Methodology
The pharmaceutical market for each IMS Market Prognosis country is modelled and forecast by
market sector in terms of both price-driven growth (average price per standard unit) and real volume
growth (standard units). From this analysis, the results of which are presented in full, actual price
forecasts are derived (see 'Useful Definitions').
The primary market data source for each forecast is the IMS MIDAS database.
Total Market Forecasting Process

The IMS Market Prognosis projections are based upon ten years of volume and price quarterly sales
data. Pharmaceutical volume and price data in each audited market sector are independently analyzed
and projected using the Forecast Pro comprehensive forecasting and forecast management system.
Forecast Pro contains a wide range of forecasting models, including exponential smoothing and
ARIMA, and an Expert system that identifies the best fit for each historical data set. Adjustments are
made where necessary to reflect market understanding. Econometric analysis is performed and
econometric impacts are applied to the baseline where relevant. The macroeconomic variables are
provided to IMS Health by a third party, the Economist Intelligence Unit (EIU).
After the baseline projection has been optimized, events (i.e. expected environmental and legislative
developments, which are not reflected in the historical data or the economic forecast) are applied to
derive a final forecast. This step takes into account all the results from qualitative research amongst
local industry experts and opinion leaders.
Each event is quantified by four parameters:
• The date the event is expected to occur.
• The probability that it will occur. The probability is quantified in the short term (i.e. at the
potential start date of the event) in the medium term (18 months after the starting date of the
event) and in the long term (36 months after the starting date of the event).
• The percentage impact it will have on the baseline projection. This is separately quantified
for each sector of the market and for the volume and price component.
• The time it will take to exert its full effect.
The forecasts are consolidated at actual prices and augmented to account for unaudited market
sectors, thus providing total national market forecasts at actual prices.

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Market Segmentation Forecasting Process
Market Segmentation forecasts are included for 24 countries:
Segmentation coverage
Australia Finland Japan Spain
Belgium France Mexico Sweden
Brazil Germany Norway Switzerland
Canada Greece Poland Turkey
Czech Hungary South Africa UK
Denmark Italy South Korea USA
For each country, total market sales are divided into the following three categories:
• Non-generics - Sales of “protected”, “no longer protected” and “never protected” products,
excluding generics;
• Generics – Sales of generic products;
• Other – Sales of OTC, non-categorized and other products.
These segments are defined according to IMS MIDAS Market Segmentation data as follows:
Definition of Categories According to Market Segmentation
Rx/OTC * Market Segmentation Protection Status** Final Classification
Rx Non Generic Products Protected
Rx Non Generic Products No Longer Protected Non-generics
Rx Non Generic Products Never Protected
Rx Generic Products Never Protected
Rx Generic Products No Longer Protected Generics
Rx Generic Products Protected
Rx Non Categorized Products Prot Not Covered
Rx Non Categorized Products Prot Unknown
Rx Non Categorized Products Prot Under Investigation
Rx Non Categorized Products Never Protected Other
Rx Other Products Never Protected
OTC Non Generic Products Protected
OTC Non Generic Products No Longer Protected

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OTC Non Generic Products Never Protected
OTC Generic Products Never Protected
OTC Generic Products No Longer Protected
OTC Generic Products Protected
OTC Non Categorized Products Prot Not Covered
OTC Non Categorized Products Prot Unknown
OTC Non Categorized Products Prot Under Investigation
OTC Non Categorized Products Never Protected
OTC Other Products Never Protected

*US A10C class is reclassified as Rx-bound.
**Vaccines are reclassified as Rx-bound protected products for all countries.
For each segment, a five-year baseline forecast is generated using exponential smoothing or ARIMA
models. Events are applied to each segment (both loss of exclusivity and general environmental
events). The evented segment forecasts are then totaled and compared to the total market forecast in
each of the forecast years. The difference between these two sets of numbers is used to adjust or
normalize the segment forecasts so that they are consistent with the total market forecast throughout
the prognosis period.
Therapeutic Class Forecasting Process

The ATC1 forecasts are based on ten years of historical sales data in local currency derived from IMS
MIDAS. This data is extrapolated for five years using exponential smoothing or ARIMA models to
obtain a provisional forecast. The provisional forecasts for the 10 key ATC1 classes and a combination
of others are totaled and compared to the total market forecast in each of the forecast years. The
difference between these two sets of numbers is used to adjust or normalize the ATC1 forecasts so that
they are consistent with the total market forecast throughout the prognosis period.
For the 24 countries with market segmentation data, loss of exclusivity events have been applied to
the ATC1 forecasts.

89
Sources
Primary and Secondary Market Research
The information presented in each country report is collected through extensive fieldwork. Face–to-
face or telephone interviews are conducted with key industry and government personnel, including:
• Ministry of Health officials.
• Multinational research-based pharmaceutical companies (marketing/business

development/strategic planning).
• Local pharmaceutical companies.
• Generics companies.
• Trade and industry associations.
• Retail pharmacists/primary care physicians/specialists.
• Hospital physicians/pharmacists.
• Wholesalers/distributors.
Further information relevant to each country is collected from a wide variety of information sources.
These include:
• IMS Health publications.
• Government reports and statistical yearbooks.
• Special studies and position papers from international healthcare agencies, consumer groups
and other organisations.
All findings are derived in co-operation with the IMS Health local offices in each country.
Pharmaceutical Market Data

The pharmaceutical market data source for each report is the IMS MIDAS database. All sales and
price levels used in the IMS Market Prognosis country reports are given at ex-manufacturer level with
the exception of Japan, where NHI (public) prices are used, and Taiwan, where sales data are
presented at trade level.
It should be noted that ex-manufacturer price is only one basis for measuring industry performance.
Clawbacks and other forms of taxation, especially in Europe, market dynamics such as parallel trade,
and discounting mean that actual values are likely to be lower than those derived from ex-
manufacturer prices.
All historical and forecast sales data in the IMS Market Prognosis reports are provided in local
currency.
Pharmaceutical Market Coverage

Pharmaceutical sales figures for individual market sectors shown in this report are audited by IMS
Health using a representative sample of pharmaceutical suppliers available in the distribution

90
channels. These sales figures are projected to include the whole of the sector and are held on the IMS
MIDAS database.
Total market sales forecasts take into account the audited sales as well as any market sector not
audited by IMS Health. The value of the unaudited market sector is calculated by applying a grossing
up factor to the audited sales, depending on the percentage of coverage in the country. The grossing
up factor is calculated based on information collected locally by IMS Health offices.
Unless research suggests otherwise, the unaudited share of the market is assumed to remain constant
for the duration of the forecasting period.
Event Impact Calculation

Demographic Changes
There is an event within each forecast that considers the impact of projected demographic changes.
The specific changes for each country are estimated using data from the Economic Intelligence Unit
(see Deriving Demographic Impacts for Age Groups). These changes are then applied to the baseline
to adjust for changes in population.
For those countries covered by IMS Prescribing Insights (Argentina, Brazil, Canada, France,
Germany, Italy, Japan, Mexico, Spain, UK, USA), the population changes are then weighted to
account for usage by age. For volume calculations, the demographic impacts by age are multiplied by
the proportion of total prescriptions written for each age group. For sales and price calculations, the
demographic impacts by age are multiplied by the Diagnosis Value (DV) for each age group. The DV
apportions total sales by age group, and therefore provides a better measure of the impact of
population changes on sales.
Deriving Demographic Impacts for Age Groups

For each country, demographic changes are measured over the historical period. It is then assumed
that the baseline projection will incorporate an identical change over the forecast period.
• For example, if the number of 15-64 year olds increased from 100 to 105 over the five-year
historical period, then the baseline projection would assume an increase to 110 over a further
five years.
This projection is then compared to the EIU forecast population changes for the 15-64 age group to
derive a five year demographic impact for this age category.
• Suppose that the EIU provides a five-year forecast of those aged 15-64 of 122.
Impact = (Forecast Population - Baseline Population) / Baseline Population

= (122-110)/110
= 0.109
Therefore, in this age group, demographic changes would have an impact of 10.9%. This calculation is
made for every age group and then summed to create a total market impact.
Applying Demographic Impacts to Country Level Forecasts

For each country, the demographic impacts are then multiplied by the percentage of prescriptions for
each age group. By summing the impacts across age groups, a total demographic impact on volume is
obtained. In the example below, the final impact is 0.32%.

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Example:
Demographic Distribution of Country
Age group
impact prescriptions impact
0-14 1.17% 8.5% 0.10%
15-64 -2.06% X 63.5% = -1.31%
65 plus 5.47% 28.0% 1.53%
Total 100% 0.32%
To calculate a price impact for each country, the demographic impacts are then multiplied by the
diagnosis value distribution for each age group. By summing the impacts across age groups, a total
demographic impact on sales is obtained. A price impact is then calculated by dividing the sales
impact by the volume impact.
For example (1+0.0054)/(1+0.0032)-1 = 0.22%.
Example:
Demographic Distribution of Country
Age group
impact diagnosis value impact
0-14 1.17% 4.9% 0.06%
15-64 -2.06% X 62.6% = -1.29%
65 plus 5.47% 32.5% 1.78%
Total 100% 0.54%
The population growth, prescription and diagnosis value distribution for each country
are detailed below.
Total
Total
Historical Forecast Population
Population
Country Age groups Growth 2010- Growth 2015- Diagnosis
Prescription
2015 2020 Value
Distribution
Distribution
0-14 1.6% 2.1% 15.7% 7.6%

Argentina
15-64 7.3% 5.3% 69.1% 70.3%
65+ 11.8% 12.7% 15.2% 22.1%
0-14 -4.5% -6.5% 17.6% 12.3%

Brazil
15-64 6.7% 5.3% 70.1% 69.9%
65+ 20.6% 23.3% 12.3% 17.8%

Canada
0-14 4.1% 7.3% 8.4% 5.1%
15-64 2.9% 1.3% 60.5% 66.9%

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65+ 18.3% 18.4% 31.0% 28.0%
France 0-14 1.6% 1.3% 13.2% 5.5%
15-64 0.4% 0.1% 52.7% 53.7%
65+ 13.4% 12.3% 34.1% 40.8%
0-14 -4.9% -0.1% 7.2% 4.6%

Germany
15-64 -1.2% -1.3% 45.8% 52.6%
65+ 2.4% 7.7% 47.6% 42.8%
0-14 1.5% -0.6% 3.1% 3.9%

Italy
15-64 -0.6% -1.1% 39.8% 39.8%
65+ 8.1% 5.9% 63.8% 56.3%
0-14 -3.4% -3.2% 8.6% 6.0%

Japan
15-64 -5.1% -4.5% 36.6% 36.5%
65+ 15.7% 8.5% 54.8% 57.5%
0-14 -3.2% -3.4% 20.6% 15.1%

Mexico
15-64 8.7% 7.4% 70.6% 71.7%
65+ 18.9% 26.1% 8.7% 13.1%
0-14 7.2% 0.9% 8.2% 4.7%

Spain
15-64 0.4% -0.3% 54.3% 51.1%
65+ 9.1% 7.9% 37.5% 44.3%
0-14 3.3% 5.1% 5.1% 3.6%

UK
15-64 1.4% 1.2% 56.0% 48.7%
65+ 12.6% 8.4% 67.1% 47.7%
0-14 1.3% 2.6% 14.2% 6.8%

USA
15-64 2.3% 1.7% 56.8% 63.5%
65+ 15.8% 17.5% 29.0% 29.7%
New Product Launches

New product launch impacts have been calculated using data on pipeline products and recent
launches from IMS Analytics Link’s Forecast Module. This service provides country level drug
forecasts based a consensus of equity research brokerage projections. These country-based new
product sales cannot be converted directly to a sales impact, as there will be concomitant loss of
revenues from cannibalization of existing products. Historical analogues were used in each country to
adjust sales for this cannibalization effect and derive a final net impact of new products over the five
year forecast horizon.

93
Calculation of Generic Competition
The impact of generic competition is calculated at the total market level, and - for countries where
segmentation forecasts are available - for the non-generic and generic sectors. The method used to
derive these impacts is dependent on the availability of IMS MIDAS Market Segmentation data.
Generic Impact using IMS MIDAS Market Segmentation

For those countries covered by market segmentation, the following methodology is used to calculate
the impact of generic competition:
A combination of historical data analysis and expert local opinion is used to determine the following
for each country:
• Average erosion rate of brand following patent expiry.
• Average price differential between generic and original brand (prior to patent expiry).
• Average time to peak generic erosion.
For each country, the factors determined above are applied to all products predicted to lose patent
protection over the five-year prognosis period (from IMS MIDAS Market Segmentation). Generic
erosion, price differential and market share of brand are combined to derive the impact of each patent
expiry on the total market and, where segmentation is included, the original brand and generic
sectors. These impacts are applied over time according to expected date of patent expiry and time to
peak generic erosion. Finally, the year-on-year impacts for each patent expiry are totaled to generate a
total generic impact at total market and sector level for each of the five forecast years.
Generic Impact without Market Segmentation

For the remaining countries, the following approach is used in order to identify the molecules that will
face generic competition in the forecast period:
The analysis is limited to the top three molecules ranked in terms of sales in each of the ten leading
ATC1 classes.
In respect of the identification of the expected start date of generic competition for each of these
molecules, IMS Market Prognosis adopts a conservative approach. If there is an extension of the
product patent protection of a particular form/salt of a molecule, IMS Market Prognosis takes this as
the starting date for generic competition.
However, it might happen that generic versions of other salt forms enter the market at the product
patent expiry of the base form. In Germany, for example, this has happened in cases like enalapril and
amlodipine. Therefore, molecules for which generic versions are already present in the market are
excluded from the section of the report on likely start of generic competition.
Useful Definitions
Compound Annual Growth Rate
The CAGR is the compound annual growth rate required for the first value to grow to the level of the
second value – if the growth rate is the same each year. In reality, the growth rates may have been
higher in some years, and lower in others, but the CAGR is a measure of the overall growth rate. For
instance, suppose you have a sector of a market, which is 100. To make the calculations easy, imagine
that the first year’s growth rate is 15% and 0% in the second year. At the end of two years, you have

94
115. In statistics, the first year is called the base period or the reference period, and the second year is
called the given period. The CAGR is calculated using the formula:
((value in given year)/(value in base/reference year))^(1/(number of years different))
In the example the formula would be:
(115/100)^(1/2) = 1.0724
or a CAGR of 7.24%.
So, an annual growth rate of 7.24% in each of the two years would give the same final increase of 15%.
Standard Units
Standard units are used as a measure of volume. These are the number of dose units, such as the
number of tablets, the number of 5ml doses, or the number of vials, sold for a particular product.
Standard units equate the number of milliliters of liquid preparations such as 5ml of liquid, to the
standard solid dosage of one tablet. This lets us compare solid to liquid forms more precisely.
Standard units are defined for all product forms.
Generic Definition Using The IMS MIDAS Market

Segmentation Feature
For countries for which the IMS MIDAS Market Segmentation feature is available, IMS Market
Prognosis uses the product status categories defined in the feature. It includes the following
categories:
• Generic Products: This category includes Rx-bound unbranded products sold under their
international non-proprietary name, company branded products and branded generics (where
these products have never been under patent protection, were launched after the protection
expired on the original product and are subsequently launched products).
• Non-Generic Products: This category includes Rx-bound products that are currently
under patent protection, original products that are no longer under patent protection, and line
extensions.
• Non-Categorized Products: This category includes Rx-bound products out of scope of the
IMS Market Segmentation feature, products for which the product status is unknown and
products which are under investigation.
• Other Products: This category includes Rx-bound products that have never been under
patent protection and were launched before the protection expired on the original product
(copy products).
OTC products are excluded from the above described categorization to form a separate category.

95
Total Market
Other: Vitamins,
Originally Protected Never Protected
Minerals, etc
Not Never Protected Copy

Protected
Protected Generics Products
Unbranded Unbranded Unbranded
The
Company Company Company Generic
Branded Branded Branded Market
Branded Branded Branded

96
Generic Definition Without the Market Segmentation
Feature
For the purpose of this report the generic market definition excludes products which have never been
patented.
These include:
• Diagnostic products e.g. glucose blood tests and multiple urine tests.
• Chemical containing products e.g. acetylsalicylic acid, glycerol, magnesium.
• General products e.g. baby milks, mouth washes, skin lotions.
• Natural products e.g. albumin, antithrombin II, bioflavonoids, factor IX.
Once these products have been taken out, the IMS MIDAS database classifies the products into four
categories:
• Original Brands: a branded product that is being manufactured and/or marketed by the
originator of its active ingredient. If an original brand is marketed as a parallel import, it is
also classified as an original brand.
• Licensed brands: a licensed brand is a product that is being manufactured and/or marketed
by a company under the terms of licensing agreement with the molecule originator. A product
is also considered to be a licensed brand if it is marketed by a distributor, a co-marketing
company, a co-promoting company, a co-development company, a sub-license holder, a
parallel importer, or if the originator does not market the product at all but has licensed it out
to another company (companies) to market it on its behalf.
• Unbranded: an unbranded product is a product marketed under the generic name of its
molecule ingredient(s), rather than a brand name. A product name with a slight variation in
the spelling of its ingredient(s), or with the manufacturer name or abbreviation added to the
ingredient name as suffix is also considered to be unbranded.
• Other Brands: an ‘other’ brand is a branded product that is marketed by a company that is not
the molecule originator and for which there is no evidence of a licensing agreement between
the originator and the marketing company. A branded product in this context has its own
(non-generic) name and registered trademark.
The generics market definition used in this report includes only the unbranded category. This allows
for analyses of the unbranded generics market.
Although unbranded can be used to calculate the size of the generics market in many countries, it
underestimates the size in those countries with branded generics. Other brands cannot just be added
to unbranded since many products in this category whilst not being original brands are not generics
either. All the data in this report refer only to the unbranded category.

97

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IMS Market Prognosis

Published March 2016

© 2016 IMS Health Incorporated or its affiliates. All rights reserved.

Published: March 2016

Market Prognosis 2016-2020 | Pakistan

Market Prognosis 2016-2020 | Pakistan

Market Prognosis 2016-2020 | Pakistan

Market Prognosis 2016-2020 | Pakistan

Market Prognosis 2016-2020 | Pakistan

Market Prognosis 2016-2020 | Pakistan

• Provincial governments continue to focus on improving already established facilities and

Prescribing and Dispensing

Market Prognosis 2016-2020 | Pakistan

• Enforcement of intellectual property rights remains a problem and intellectual property

Pharmaceutical Business Environment

Market Prognosis 2016-2020 | Pakistan

Market Prognosis 2016-2020 | Pakistan

Key Issues Affecting Market Growth:

 Increasing burden of communicable as well as non-communicable diseases (NCDs) will

Change in the Prognosis:

Market Prognosis 2016-2020 | Pakistan

Other Outlets 44111 49869 56282 63187 70604 78541 12.2

Annual Growth (%) 13.4 13.1 12.9 12.3 11.7 11.2

Total Market 299057 338096 381573 428386 478670 532483 12.2

Annual Growth (%) 13.4 13.1 12.9 12.3 11.7 11.2

Table 2: Total Market Sales (2015-2020) US$* (million)

Total Market 2850 3222 3636 4082 4562 5074 12.2

Annual Growth (%) 13.4 13.1 12.9 12.3 11.7 11.2

Market Prognosis 2016-2020 | Pakistan

Table 3: Retail Pharmacy/Private Sector (2005-2015)

2006 34511 5.5 2.15 5.8 74308 11.6

2007 35584 3.1 2.30 6.9 81886 10.2

2008 38833 9.1 2.48 8.0 96480 17.8

2009 40659 4.7 2.76 11.0 112101 16.2

2010 42922 5.6 2.97 7.8 127594 13.8

2011 47044 9.6 3.24 9.0 152430 19.5

2012 49259 4.7 3.56 10.0 175544 15.2

2013 51720 5.0 3.89 9.2 201332 14.7

2014 54279 4.9 4.14 6.4 224774 11.6

2015** 55575 3.8 4.40 7.6 244262 11.7

Market Prognosis 2016-2020 | Pakistan

2016 59704 5.5 4.83 7.2 288227 13.1

2017 62650 4.9 5.19 7.6 325291 12.9

2018 65671 4.8 5.56 7.1 365199 12.3

2019 68769 4.7 5.93 6.7 408066 11.7

2020 71931 4.6 6.31 6.4 453942 11.2

Retail Pharmacy/Private Sector Volume (Standard Units)

Historical/Forecast Growth (%)

Historical/Baseline Forecast Growth

Market Prognosis 2016-2020 | Pakistan

Historical/Forecast Growth (%)

Historical/Baseline Forecast Growth

Retail Pharmacy/Private Sector Sales

Historical/Forecast Growth (%)

Historical/Baseline Forecast Growth

Market Prognosis 2016-2020 | Pakistan

Private Sector Market

Private Sector Market

Recent and future product