Pakistan Observer

Law & order Poor conditions forcing MNCs to quit Pakistan

Amanullah Khan

Wednesday, September 04, 2013 - Karachi—On the back of poor law and order and business conditions the multinational company Johnson & Johnson is reportedly wrapping up its drug production unit not internationally but in Pakistan only indicating level of crisis persisting in pharmaceutical industry.

The multinational company has been expanding its drug business all over the world including in emerging countries like India however the situation is outright opposite in Pakistan, where the American drug producing giant has decided to shut down its medicines production plant, Janssen having incurred stringent operational losses and lack of government’s commitments and interest towards foreign investors.

Johnson & Johnson is not alone to leave Pakistan, which is considered mainly a lucrative and big market for pharmaceutical companies with dense population having high vulnerability of epidemics outbreak, but a few big names in international healthcare arena have done the same earlier in recent years including Bristol-Myers Squibb, Merck Sharp & Dohme Limited (MSD), Searle Pharmaceuticals, and Organon.

The crisis in pharmaceutical industry is getting worst as the manufacturing of different medicines were suspended first, and now multinational companies in particular has all set to disinvest and planning their closure gradually in Pakistan.

The prolong unsettled issues and pathetic attitude of the government towards sensitive industry has forced global pharmaceutical giant to wrap up its business in Pakistan paving the way for different multinational drug manufacturing companies to follow the suite though it will also hurt the sentiments of foreign investors working in the country or willing to invest in the future in pharmaceutical and different industries.

Sources said that local and multinational companies are reluctant to buy out plants of Johnson and Johnson Limited Pakistan despite of the fact the company has established wide range of medicine products portfolio and sales share in local market because a prospect acquirer of the company will have to face similar harsh challenges which caused the departure of Johnson & Johnson.

In Pakistan, previous governments have capped the prices of medicines since 2001 which cost heavily to drug manufacturers having no further capacity to absorb the impact of high production cost including expensive imports of raw material, package content, and utility expenses.

Furthermore, the new government is seemingly firm to continue its rigid pricing policy in the future which may cease productions of many medicines which is beyond the financial feasibility of manufacturing companies as scores of the medicines have already been stopped producing by multinational and local pharmaceutical companies due to constant losses.
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