In BMI's Business Environment Ratings for Q110, Pakistan slipped from 13th to 15th - and last -place, out of the key markets assessed in the Asia Pacific region. In addition to the challenging economic environment, the country's pharmaceutical expenditure will also be shaped by the volatile political and security situation. Overall, we expect the pharmaceutical market value to increase at a compound annual growth rate (CAGR) of 9.39% in local currency terms, reaching PKR206.9bn (US$2.3bn) in 2014. Growth over our longer, 10-year, forecast is likely to be somewhat more subdued, at a CAGR of 8.75% in local currency, as the operating environment stabilises. Although Pakistan's pharmaceutical market opportunities are considerably underpinned by its vast and rapidly growing population, low per-capita spend on pharmaceuticals, the deficient regulatory environment and the recently heightened security risk will continue to pose major barriers to foreign direct investment (FDI) and multinational involvement in the country. Furthermore, the economic downturn is also having a marked impact on the pharmaceutical landscape, given that patients must foot most of their medical bills. In fact, while the introduction of a social insurance programme has been discussed, no real progress has been made to date. Nevertheless, the government recently began considering a health insurance scheme similar to India's insurance scheme for the poor. Still, the government actively supports local industries, although this comes with the risk of deterring foreign companies from operating in the country. International players are likely to protest the October 2009 decision by Pakistan's Federal Health Ministry to cancel the registration of 4,000 imported medicines, after local industrialists raised objections over the sale of these medicines in the country, given that they can be manufactured domestically. Most recently, Pakistan has also upped its efforts to attract foreign patients to the country, encourage the private sector to administer advanced treatments and ensure relaxing surroundings for recovery. It is hoped that people seeking healthcare in Pakistan will drive the overall tourism market, resulting in increased national wealth. However, the recent terrorist attacks clearly represent a major drawback to such efforts, with Pakistan's quest to become a medical tourism destination also restricted by questionable ethics. In terms of company news, Pakistan's ambition to become a significant exporter of pharmaceuticals came under threat in September 2009, after a Ugandan drugmaker sued a Pakistani pharmaceutical manufacturer for supplying substandard goods. Mavid Pharmaceuticals filed a lawsuit against Royal Group for breach of contract following the purchase of raw materials for a therapeutic ointment, Samodex, which were found to be 'fake' by the National Drug Authority (NDA). Mavid Pharmaceuticals initially sought to recoup its US$68,000 outlay, which had been ignored by Royal Group. In the course of 2008, the NDA had already withdrawn from the market sub-standard tetracycline and indomethacin capsules made by Royal Group, with the two events clearly presenting the company in a very poor light.
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