Multinational Financial Management

ASSIGNMENT 3

SUBMITTED TO

Ma`am Huma

SUBMITTED BY

Maryam Nawaz (2017-BBA-028)

DATE OF SUBMISSION

21-12-2020
Question:

Discuss the landscape of pharmaceutical Industry of Pakistan. Major FDI in this sector
and their performance comparison with the domestic firms for the last years specially in
the context of Covid -19.

Answer:

Pakistan has a very vibrant and forward-looking Pharma Industry. At the time of independence
in 1947, there was hardly any pharma industry in the country. The pharmaceutical industry in
Pakistan is growing at a rapid pace, contributing significantly to the national economy. In the last
couple of years, the Pakistani economy has been suffering due to bad economic conditions and
also been under strain due to the war against terrorism. The economy is also facing the problem
of domestic inflation, slow economic growth, as well as the devaluation of the Pakistani rupee
against other major currencies. Today Pakistan has about 759 pharmaceutical manufacturing
units including those operated by 25 multinationals present in the country. The Pakistan
Pharmaceutical Industry meets around 70% of the country’s demand of Finished Medicine. The
domestic pharma market, in term of share market is almost evenly divided between the Nationals
and the Multinationals. Medicine spending growth in the emerging pharmaceutical 
("pharmerging") markets continues to slow compared to the past five years and is projected to
grow at 5–8% through 2023, according to US-based global market research firm IQVIA.
Top Ten Pharmaceutical Companies in Pakistan:

According to their growth rate, here are the Top ten Pharmaceutical companies in
Pakistan:

 GSK – 32,388 million

 GETZ Pharma – 28,363 million

 ABBOTT – 26,688 million

 SEARLE – 24,561 million

 SAMI Pharma – 24,055 million

 MARTIN-DOW – 18,869 million

 HIGH Q – 15,352 million

 HILTON Pharma – 13,638 million

 GSK Consumer – 13,348 million

 Sanofi-Aventis – 13,094 million

 6% GSK
6% 15% GETZ pharma
6% ABBOT
SEARLE
7% 13% SAMI PHARMA
MARTIN DOW
9% HIGH Q
13% HILTON
11% GSK CONSUMER
12% SANOFI AVENTIS

Overall pharmaceutical sales for the outgoing fiscal year ended June 30, 2020 clocked in at
Rs453.5 billion, posting a growth of 9 percent.

On a quarterly basis, the overall sales for the quarter ended June 30, 2020 grew 4 percent to
clock in at Rs111.12 billion. In overall sales during the period, the share of national drug-makers
was 68 percent, up 10 percent, while that of foreign ones stood at 32 percent, a growth of 8
percent.

As per IQVIA report, medicine spending growth in the pharma emerging markets continues to
slow compared to the past five years and is projected to grow at 5 to 8 percent through 2023.
Turkey, Egypt and Pakistan are also forecast to have the greatest growth between 2019 and 2023.

The report forecasted that the global pharmaceutical market will exceed $1.5 trillion by 2023
growing at a 3 to 6 percent compound annual growth rates over the next five years – a notable
slowdown from the 6.3 percent seen over the past five years.

 Contribution of Pharma Industry in GDP

Following a Growth Rate of 5.8%, the Gross Domestic Product of Pakistan (GDP) was expanded
3.3% in June 2019 and 1% of Nominal GDP of US$ 283.3 billion – with Per Capita of US$
1480.9 – by 650 companies contributed to Pakistan’s Pharmaceutical Industry.

 Dominance by the Local / National – NATs

As it was recorded 2 years ago that Pakistan Pharma Industry is growing at an average rate of
12% per year with the 2/3rd Market share is dominated by the NATs and remaining 1/3 rd is under
MNCs dominance. We will share some interesting facts related to the Pharma Industry in
Pakistan.
 Pharmaceuticals size expanded in Q04 – 2019
Size of the Pharmaceutical Market is US $ 3.0 Billion (PKR 455 billion) in Pakistan. Almost 69
products have crossed PKR 1 billion and only 1 product has crossed PKR 5 billion 17 products
has crossed PKR 2 billion and 51 products have crossed 1 billion while PKR 3.6 billion grabbed
by just 562 products launched between 2018-2019.
Pakistani Pharma Industry has recorded a growth rate of 15.61% during 2018-2019 with
Compound Annual Growth Rate (CAGR) of 12.85%.
Where Top 13 Pharmaceuticals are above PKR 10 billion 53.90% Market share and Top 13
Companies have 90.3% share where Top 100 Corporate have 97.51% Market share.
The Macro Analysis of last 5 years shows that Pharmaceutical Industry is settling a new trend in
Pakistan as the NATs (National) are growing faster than MNCs (Multinational) with
a CAGR of 12.85% out of which 14.34% is contributed by NATs (National) and 9.87% by
MNCs (Multinational). The stark in contrast with the last year’s rupee devaluation of PKR to
US$, the growth of Pharmaceuticals was negative with total -6.55% CAGR (Compound Annual
Growth Rate) -6.69 by MNCs (Multinational) and -6.49% by NATS (National).
 Comparison with Q03 – 2019
If we compare just 4th Quarter of 2019 with the 3rd Quarter we will see a decline in ‘Value’ as
well as ‘Unit’, means a minus 0.32 Unit growth in Q04 of 2019 with 14.62% of Value growth in
the same Quarter.
 Highest Sales recorded in October 2019
A total Industry sale is highest in the month of October in 2019 as compared to last 18 months
i.e. PKR 28.4 billion for NATs (National) and PKR 13.38 billion for MNCs (Multinational).

Pakistan’s domestic pharmaceuticals growing faster than MNCs:

 Pakistan’s domestic pharmaceutical companies have shown cumulative average growth rate
(CAGR) of 13.1 percent in the last four years, outperforming multinational companies
(MNCs).
 Emerging faster than the MNCs, the local pharmaceutical companies’ quarterly revenues
surged to Rs320 billion till March 31, 2020 compared with Rs195.75 billion as of March 31,
2016. Similarly, MNCs increased their quarterly market size to Rs143.2 billion by the end of
the first quarter of 2020 as against Rs100.2 billion in Q1 2016.

Pakistan Economic Survey 2019-20 disclosed that the pace of contraction diminished in the
pharmaceutical sector, as it registered 5.38 percent decline during July to March in FY2020 as
compared to 8.66 percent decline in the corresponding period the previous year.

Also, the pharmaceutical sector recorded the highest sales in March, while it fetched $1.3 million
foreign direct investment (FDI) in April 2020. Analysts believe at the present growth rate the
market size for pharmaceuticals would double in the next 10 years in Pakistan.

But the impact of the pandemic would be severe in the coming months, as the International
Monetary Fund (IMF) has revised down its world GDP projections and now expects a
contraction of 4.9 percent in 2020.
Reference:
https://www.southasiainvestor.com/2020/07/pakistan-pharma-among-worlds-top-3.html
In Pakistan, FDI surges 66% to $1.56b in Jul-Jan FY20 | The Express Tribune

Pakistan Healthcare and Pharmaceutical Market Report 2019 - ResearchAndMarkets.com | Business

Wire