Drug makers threaten to close 600 factories next week

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ISLAMABAD: After failing to persuade the Ministry of Finance to lift a levy on raw materials used to make medications, the Pakistan Pharmaceutical Manufacturers Association (PPMA) issued an ultimatum, threatening to shut down 600 pharma manufacturing plants across the country next week.

The PPMA head, Qazi Mohammad Mansoor Dilawar, stated at a news conference on Thursday that the group vehemently opposed the government’s proposal to levy a 17 percent sales tax on medical raw materials. He said that the government had promised to reimburse the tax on raw material purchases, but that it had later declined to do so.

Mr Dilawar claimed that the prices of a variety of commodities, including bottles, aluminium, and impulsive glass, as well as energy and gas rates, were steadily rising, and that the government put a sales tax on them.

“In addition, the government has levied a sales tax on contractor and consulting services.” Regrettably, there is also a high tax on machinery and pharmaceutical plants imported. Now, despite the government’s agreement, a tax on raw material imports has been imposed, which is not being refunded,” he lamented.

Give the government five days to remove the 17 percent tariff on raw materials.

Former PPMA chairman Hamid Raza stated that the group has resolved to give the government five days to reconsider its decision, failing which the industry would be forced to strike.

Asad Shuja, a former chairman of the PPMA, cautioned that if the sector closed, there would be a lack of medications and their prices would rise. “In the end, the people will suffer as a result of the government’s choice, and we should not be held responsible,” he stated.

Usman Shaukat, a member of the PPMA’s Central Executive Committee, told Dawn that a 17 percent sales tax had been placed on raw materials or active pharmaceutical ingredients (APIs) used in the manufacture of medications.

Asad Shuja, a former chairman of the PPMA, cautioned that if the sector closed, there would be a lack of medications and their prices would rise. “In the end, the people will suffer as a result of the government’s choice, and we should not be held responsible,” he stated.

Usman Shaukat, a member of the PPMA’s Central Executive Committee, told Dawn that a 17 percent sales tax had been placed on raw materials or active pharmaceutical ingredients (APIs) used in the manufacture of medications.

“We met with Minister of Finance Shaukat Tarin several times and had guarantees from the government that our matter would be addressed, but the teams that negotiated with us were changed,” he added.

“We pay sales tax when we buy raw materials, which should be returned, but the Federal Board of Revenue (FBR) now says we need to present stock positions, which they will review.” It indicates that a new authority, in conjunction with the Drug Regulatory Authority of Pakistan (Drap), has been authorised to inspect our goods, delaying tax reimbursement,” he explained.

Usman Shaukat responded to a query by saying that the finance ministry had offered the industry an interest-free loan from the State Bank of Pakistan, but that this was not possible.

“We have no choice except to close 600 pharmaceutical production units, and the chemist and medicines association has chosen to close its medical stores as well,” he stated.

“The government should recognise that there is currently a scarcity of a number of medicines due to shrinking profit margins on pharmaceuticals,” he said, adding that energy costs were also rising, and that the government should take efforts to provide relief to the pharmaceutical industry. Otherwise, he said, medications would either go out of business or their prices will rise.

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