ISLAMABAD: After failing to convince the Ministry of Finance over the issue of tax imposed on raw material used to manufacture medicines, the Pakistan Pharmaceutical Manufac­turers Association (PPMA) gave an ultimatum that it would close around 600 pharma production units across the country next week.

Speaking at a news conference on Thursday, PPMA chairman Qazi Mohammad Mansoor Dilawar said the association strongly rejected the government’s decision to impose 17 per cent sales tax on raw material of the medicines. He claimed that the government had given an assurance that the tax on purchase of raw material would be reimbursed, but it later refused to do so.

Mr Dilawar said the prices of a number of materials such as bottles, aluminium and impulse glass, as well as electricity and gas rates, were continuously rising and the government also imposed sales tax on them.

“Moreover, the government has imposed sales tax on services of contractors and consultants. Unfortu­nately, there is also a huge tax on import of machinery and pharmaceutical plants. Now a tax has been imposed on import of raw material which is not being reimbursed despite commitment by the government,” he regretted.

Give govt five days to withdraw 17pc tax on raw material

Former PPMA chairman Hamid Raza said the association had decided to give five days to the government to reconsider its decision, otherwise the industry would have no option but to go for the strike.

Another former chairman of the PPMA Asad Shuja warned that in case of closure of the industry there would be a shortage of medicines and their prices would also increase. “Ultimately, the masses will suffer because of the government’s decision and we should not be blamed for it,” he said.

Member of the PPMA’s Central Executive Committee Usman Shaukat, while talking to Dawn, said that 17pc sales tax had been imposed on the raw material or active pharmaceutical ingredients (APIs) used in manufacturing of medicines.

“We had a number of meetings with Minister of Finance Shaukat Tarin and every time we got assurances from the government side that our issue will be addressed, but then the teams, which negotiated with us, were changed,” he added.

“We pay sales tax at the time of purchase of raw material which should be refunded, but now the Federal Board of Revenue (FBR) has been saying that we should provide stock position and they will check them. It means that a new body, along with the Drug Regulatory Authority of Pakistan (Drap), has been authorised to check our stock, which will delay the reimbursement of tax,” he said.

In reply to a question, Usman Shaukat said the finance ministry had offered the industry that it could get interest-free loan from the State Bank of Pakistan, but even it was not feasible.

“We have been left with no option but to close 600 pharmaceutical production units and it has been decided that the chemist and drugs association will also close their medical stores,” he said.

“Government should understand that there is already shortage of a number of medicines just because of narrowing profits on medicines,” he said, adding that energy cost was also continuously increasing due to which the government should take steps to provide relief to the pharma industry. Otherwise, he warned, medicines would either disappear from the market or their prices would go up.

Published in Dawn, March 18th, 2022