ISLAMABAD: The pharma industry on Thursday set the deadline of June 30 for the government to accept its three demands otherwise there would be no other option left for the cash-starved industry than to close down.

Speaking at a press conference at the National Press Club, Pakistan Pharmaceutical Manufacturers Association (PPMA) Chairman Qazi Mansoor Dilawar called for the refund of Rs40 billion collected by the government as sales tax on import of raw material, withdrawal of 17pc sales tax on import of raw material and 20-25pc increase in the prices of medicines to prevent collapse of the industry.

He also demanded an increase in the maximum retail price (MRP) by 20pc.

He said there was already shortage of some 40 medicines in the market which would assume an alarming proportion if no urgent steps were taken.

He said a promise had been made by the previous government that the sales tax imposed under the IMF pressure would be refunded within 48 hours but regretted that no mechanism had yet been put in place for the refund, blocking a huge amount of Rs40 billion.

What exacerbated the problem was three-time increase in the cost of raw material, manifold increase in freight charges hike in power tariff and fuel prices and devaluation of the rupee.

He also said the industry had to import 95pc of the raw material.

The PPMA president dispelled the impression that the sector was making windfall profits and said there were many medicines the cost of which exceeded the retail price.

He claimed around 70pc medicines in Pakistan were cheaper compared to India and Bangladesh.

Answering a question, he said much was said about the increase in the prices of 600 drugs after 13 years during the PTI government but no one talked about the decrease in prices of 400 drugs.

Former PPMA chairman Qaisar Waheed referred to the recent spike in Covid-19 cases, particularly in Sindh, and said the industry this time was not ready to meet the challenge if the situation aggravated further.

PPMA representative Usman Shaukat told Dawn that they had meetings with Finance Minister Miftah Ismail but the issue could not be addressed.

“In the current week, we had a meeting with Senate Finance Committee led by Saleem Mandwiwala as part of deliberations for the budget

recommendations. Miftah Ismail and former finance minister Shaukat Tarin were also present.

The PPMA reiterated its stance to provide a long-term solution to the imposition of GST on active pharmaceutical ingredients (API) and raw materials since Jan 2022 which is an anomaly as pharma products can’t pass through GST while cash flow of manufacturers is being hampered through it with no refund since January,” he said.

“While the finance minister said refunds are being processed now on manual basis, the industry stressed for a long-term solution to the issue by either abolishing the GST or making it zero rated on input and output.

Mr Tarin said there were also materials which were used in multiple industries in addition to pharma [such as in juices] and there could be a misuse element.

The PPMA replied that a negative list can be submitted to FBR of materials which are used in multiple industries and the GST regime can be imposed on those and the refunds processed on consumption basis. Raw materials that have only pharma use should be exempted from GST,” Mr Shaukat said.

“This was endorsed by all members of the committee and it was decided that within four days such a list shall be submitted to the Finance Ministry for resolution of the issue. We urge the ministry to address the issue,” he said.

Published in Dawn, June 24th, 2022