International School Of Management Sciences Newport University, Karachi

The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy
(A Feasibility Study)

Presented To

The Board of Advance Studies & Research Newport University

In Partial Fulfillment of the Requirement of The Degree of Master’s Of Business Administration in Marketing Submitted By Naveed Shahban Ahmed 1999

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RECOMMENDATION FOR ORAL EXAMINATION
This Thesis entitled Contribution of Multinational Pharmaceutical Companies in the Development of Pakistan Economy (A Feasibility Study) prepared by Mr. Naveed Shahban Ahmed in partial fulfillment of the requirement for the Degree of Master in Business Administration, (Specializing in Marketing), has been examined and is recommended for oral examination.

S. H. SHAHID, Ph.D. Research Advisor Newport University (ISMS) Karachi Campus

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APPROVAL SHEET
This research study has been examined and assessed for Partial Fulfillment of the Requirement for the degree of Master Of Business Administration, (Marketing major). This study is approved by the examiner on oral examination with the grade of____________

S.H.SHAHID PhD. Examiner

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LETTER OF ACCEPTANCE
This research study entitled “Contribution of Multinational Pharmaceutical Companies in the Development of Pakistan Economy, (A Feasibility Study)” prepared by Naveed Shahban Ahmed, is accepted in Partial Fulfillment of the requirement for the award of Master’s Degree in Business Administration, (Marketing Major).

Mirza Raza Ali, Chief Executive Officer, NewPort University, Karachi Campus

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ABSTRACT
Research and discovery are the essence of the pharmaceutical industry, and its successes have, over the past forty years, played a crucial role in maintaining the pre-eminent position of the pharmaceutical industry in the world today. But such activities demand a sustained rate of huge investment over a long period. The increasing sophistication of medical and research instruments and of computers for molecular modeling has opened up important new medicine developed opportunities. But they are expensive and have added to the overall research costs as well as volume of investigation being undertaken by the pharmaceutical industry. It is estimated that it takes on average 12 years from parent filing to the launch of a major innovative medicine at a total cost of around US $400 million, as compared with US $100 million reported in 1985. Even so there is no guarantee of success in a highly competitive market where novel products are constantly and rapidly made obsolete or entirely replaced by new innovations - New Chemical Entities (NCEs) Originally the Pakistani pharmaceuticals industry engaged in the packing and distribution of imported medicines. Even now the manufacture of drugs are limited, due largely to non-availability of raw materials. The industry has emerged as a processing and conversion industry, which is engaged mainly in converting raw material into different dosage forms and packing of the finished products. The Pakistani Pharmaceutical industry has been undergoing a great deal of criticism and is probably a victim of misinformation. The defamatory remarks, accusing the manufacturers of marketing and selling the medicines
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at very high prices were made in certain sections of the press. Though this allegation has no concrete basis, as the Pharmaceutical Industry is highly regulated, suspicious do come to mind. Moreover, much has been said accusing the industry of producing low quality drugs and catering to a monopoly. These remarks can do a lot of harm to the industry and measures should be taken to keep the industry from earning a bad name. However, the main purpose of this study is to find out the main contribution of Multinational Pharmaceutical Companies in the development of Pakistan economy, in this regard the researcher can not dispense with out it to say that a lot of problems are also being faced by the industry that poses threat to the country’s health care system. The study focuses to discover the “The contribution of Multinational Pharmaceutical companies in the development of Pakistan economy” In so doing, the researcher is attempting to highlight the following areas so that the insight can be obtained. • The strategies of multinational pharmaceuticals • The investments of multinational pharmaceuticals. • The social contributions by the multinational pharmaceuticals. • The problems faced by the multinational pharmaceuticals. • The growth chances of multinational pharmaceuticals.

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ACKNOWLEDGEMENT
All thanks to Almighty Allah who provided me moral courage and spiritual inspiration to keep me on the right path to achieve plans and goals in my life. I would like to express my sincere gratitude to all my professor who guided me during the completion of my Master in Business Administration. I am Thankful to my research advisor Dr. S.H. Shahid for his valuable comments and suggestions during the completion of this thesis. I am also thankful to Mr. Z.K. Jaffery and Mr. Baqar Raza for his cooperation in obtaining important information and published material of Multinational Pharmaceutical Companies. I expressed my profound thanks to my friends Mr. Majid Shoaib and Mr. Aamir for his assistance in collecting data. Lastly I would like to express my love to affectionate parents, sisters, bhabi and specially brother Kamran Ahmed Bhimra for their continuos encouragement. May Allah reward all of you for your guidance; I wish you all happy life. Naveed Shahban Ahmed

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DEDICATION

I dedicate this thesis to my beloved parents

Who have given the inspiration in

My life by educating me

And

Praying

For the success and happiness.

Naveed Shahban Ahmed

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TABLE OF CONTENTS
S.No.
1 2 3 4 5 6 7 8 9

CONTENTS
Title Page Recommendation For Oral Examination Approval Sheet Letter Of Acceptance Abstract Acknowledgment Dedication Table Of Contents List Of Tables CHAPTER 1 Problem and its Background Introduction Theoretical Frame Work Statement Of The Problem Significance Of The Study Limitation Of The Study Definition Of Terminology

Pg. #
ii iii iv v vii viii ix xi

10 11 12 13 14 15

1 1 5 6 7 8 9

CHAPTER 2 Review of the literature & studies 16 Related Literature The Pharmaceutical Industry In Pakistan A Note About Pharma Bureau A Note About OICC&I CHAPTER 3 Research method & procedure Research Design Respondent Of The Study Sources Of Data Research Instrument Treatment Of Data

10 10 10 15 18

17 18 19 20 21

25 25 25 25 26 27

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S.No.

CONTENTS

Pg. #
28 28 36 41 42 44 55 56 61

CHAPTER 4 22 Presentation Analysis & Interpretation of Data Major Therapeutic Categories Import & Export Tax Structure Competitive Structure Economic Significance Drugs Distribution Government Regulations Pros & Cons Of The Industry CHAPTER 5 Summary Of Findings, Conclusions & Recommendation 23 Summary Of Findings 24 Conclusions 25 Recommendations Bibliography Annexures

65 65 70 74 76 77

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LIST OF TABLES
T.No Contents Pg. #
14

Chapter 2 1 Comparison Of Performance Of Major Players In Pharmaceutical Industry Chapter 4 Sales Of Top 10 Companies Demand Of Drugs Total Expenditure Of Health Projected Demand Expenditure On Health By South Asian Countries Per Capita Consumption Of Drugs Import And Export Of Medical And Pharma Products Percentage Share In Total Imports Of Different Medicines Sales And Market Growth Of Top 10 Companies

2 3 4 5 6 7 8 9 10

29 31 32 33 34 35 37 38 44

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