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Pakistan Pharmaceuticals : Pharmaceutical Association clarifies drugs overpricing

 

• Pakistan’s Pharmaceutical Manufacturer’s Association (PPMA) today clarified that the news regarding overpricing of certain drugs is baseless and misleading. 
• To note, there has been reports in the media that the Govt. has started a crackdown against pharmaceutical companies which are selling medicines on exorbitant prices. It has been reported that the production activities of pharmaceutical units with overpriced medicines has been stopped for further action as per the law.
• There has also been chatter in the market that Drug Regulatory Authority of Pakistan (DRAP) has started investigation on up to 100 drugs which are being sold at higher prices than the ones approved by the Govt., as per SROs issued in Dec 2018 and Jan 2019, allowing price hike of up to 15% on avg. In these SROs, prices of some medicines were raised while prices of certain medicines were also lowered.
• PPMA clarified that the Govt. allowed to raise prices by 15% to pass on the impact of PKR devaluation against US$ which was also endorsed and directed by the Supreme Court (SC). Moreover, prices of around 450 products were increased beyond 15% due to the pending hardship cases of last 10 years, which were approved by DRAP, under the directives of SC, as per PPMA.
• Various overpriced drugs (manufactured by listed and unlisted pharmaceuticals) are currently under scrutiny by DRAP. This include Hydralin and Peditral, both of which are part of The Searl (SEARL), contributing 10-15% to the company’s total sales, as per channel checks.
• To note, prices of these drugs were lowered by DRAP in previously issued SROs as mentioned above, against which SEARL went to the court and took stay order.
• We therefore see no material impact on SEARL (part of Topline Universe) as the case is still pending with the court.
• However, in case of an adverse outcome where the court asks the company to follow DRAP issued SROs on prices (according to which prices for Hydralin and Peditral were lowered), it will negatively affect SEARL’s annual earnings by around 4-6%, we estimate.