The Hindu Business Line : Will SAFTA boost pharma trade with Pakistan?

THE Chairman of Pakistan's major pharmaceutical company Hilton Pharma Pvt Ltd was in India recently, meeting up with representatives of the domestic industry.

Delhi-based Ranbaxy Laboratories Ltd has started preliminary studies of the Pakistan market.

Following the signing of the South Asian Free Trade Agreement (SAFTA), will these initiatives just remain gestures or translate into real business?

The potential seems to be there. The growth rate of the pharmaceutical industry in Pakistan is pegged at a healthy 15 per cent and the per capita spends are much higher compared to India.

According to the Federation of Indian Chambers of Commerce and Industry, the market is either dominated by imported drugs or drugs manufactured by multinational companies such as Glaxo, Roche, Rhone Poulenc, Bayer and Merck.

"Despite the growth in domestic production, the average import of drugs in Pakistan during the last three years, was as high 31.4 per cent compared to 14 per cent in India," FICCI said.

While the Indian domestic industry sees potential in doing business in Pakistan, it is adopting a cautious approach. "We will have to see how the agreement and relationship with Pakistan pans out," they said.

According to Mr D.G. Shah, Secretary General, Indian Pharmaceutical Alliance, "The pharmaceutical companies in Pakistan are keen to build relationships for directly sourcing raw materials or finished products. And if Indian companies are able to directly export there, then, this will be a big opportunity."

However, there should be some rationalisation of customs duty as Indian products attract a higher rate than those being imported from other countries.

Currently, Indian companies route bulk drugs and intermediaries to Pakistan via Dubai or London to escape the high duty levy.

Also, some formulations reach Pakistan through the porous borders that the two countries share, as these are cheaper here. Ciprofloxacin, used to treat infections, is about 10 times costlier in Pakistan compared to India.

Another official from a generic company said that direct investment in Pakistan might not happen immediately.

He said this would depend on the political relationship between the two countries.

Analysts tracking the sector, meanwhile, said the kind patent regime prevalent in the country would be important for the future of the domestic companies planning to foray into Pakistan.