Shire; specialty drug company

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Executive Summary

This report has been drafted under the directions from the CEO of a UK-based company Shire, which is one of the fastest emerging specialty drug companies in the world. The report explores the feasibility for the company to expand its business in Pakistan. The company has expertise in several drugs including gastro-intestinal medicines and other specialty drugs which account for bulk of its revenues in UK and other countries.

In the light of the foregoing, the main thrust of the report would be to explore the best possible method of business expansion for the company i.e. to choose between export and foreign direct investment.

In doing so, the report takes a comparative view of the national business systems and cultures in both the countries; the existing patterns of trade between the two countries and a detailed analysis of Pakistani pharmaceutical (and health) industry.

The report highlights some areas which must be dealt with caution in order to do business with (or inside) Pakistan, especially in the area of pharmaceutical drugs. Moreover the corporate social responsibility, business ethics, human resources management and other related aspects have also been touched upon in this report.

Introduction

1.1 The Countries

Shire is based in United Kingdom which is a leading world economy and a highly industrialized country. In fact, during the days of the British Empire the UK economy was the largest in the world and the first to industrialise. In the year 2008 UK's world ranking was 6th in terms of GDP ($2,645,593). On the other hand Pakistan is among the developing nations of the world and ranked 47th with GDP at $168,276 in the same year. Pakistan is an attractive country for various Multi-national corporations for a number of reasons.

COUNTRY A (UNITED KINGDOM)

The British Economy is one of the most globalized economies in the world. It is the 6th largest economy and 32nd richest country of the world with regards to per capita income. London City is thought to be the largest financial centre in the world. In spite of that UK is among the countries which were worst hit by recent global economic recession. The unemployment rate had reached 6.3 per cent in the UK by the end of 2008 according to the Office of National Statistics - which totals to about 2 million unemployed workforces. This is expected to grow to the 2.5 million - 3 million s, or 8-10 per cent.

COUNTRY B (PAKISTAN)

Pakistan is one of the fastest growing economies of the world; touched a GDP growth rate of 8.4% in 2005. Today Pakistan has over 170 million consumers with an ever growing middle class. The average annual growth rate of GDP for the Pakistan is estimated at 6.5 percent for the period of 2005-09. Foreign Direct investment has risen from an average of $300 million in the 1990s to over $3.7 billion in 2008-09. Located in the heart of Asia, Pakistan is the gateway to the energy rich Central Asian States, the financially liquid Gulf States and the economically advanced Far Eastern tigers. (http://www.economywatch.com/world_economy/pakistan/)

1.2 The industries

The health-care industry incorporates several sectors that are committed to providing services and products aimed at improving the health of individuals. Health industry is the most vital of all the industries because it has a direct bearing on the lives of the people. Pharmaceutical companies comprise a significant area within the health-care industry which deals with manufacturing, marketing and sales of various drugs.

UK PHARMACEUTICAL INDUSTRY AT A GLANCE

The pharmaceutical Industry is the biggest sector investor in R&D in the UK accounting for around 25% of total investment by business, valued at £3.3bn, about £9m a day in 2005.

The UK industry has discovered and developed more leading medicines than any other country apart from the USA, and as much as the rest of Europe combined. Some 15 of the world's current 75 best-selling drugs were discovered and developed in Britain.

In world terms, the UK industry has 9% of pharmaceutical R&D expenditure: only the USA (49%) and Japan (15%) are ahead. The UK is the largest European recipient of pharma R&D, accounting for 23% of total; followed by France (20%), Germany (19%), and Switzerland (11%).

The Industry accounts for around 0.6% of UK GDP, and the UK is one of the world's largest exporters of pharmaceuticals by value. Industry exports in 2005 were £12.2 billion and created a trade surplus of £3.4 billion. UK domestic market accounts for 4% of world consumption. Larger markets are USA (43%), Japan (12%), Germany (5%), and France (5%).

The UK is regarded as an excellent business & R&D base by global pharma companies such as Pfizer, Eli Lilly, Merck, Novartis, Sanofi Aventis and Eisai which have invested substantially in discovery, development and manufacturing operations. The companies are supported by the trade association, the Association of the British Pharmaceutical Industry (ABPI).

UK-headquartered companies GlaxoSmithKline (world no 2 in prescription sales, 2004) & AstraZeneca (world no 6) both have achieved significant global success as creators of wealth and providers of health through exploitation of the UK science base.

In the UK, the industry employs around 73,000 people with about 27,000 in research & development and generates another 250,000 jobs in related industries. The major clusters for the pharmaceutical industry are found in the north east, north west, south east and east of England. There is also a significant research presence in Scotland.

The UK is active in seeking to improve Europe's competitiveness for pharmaceutical investment vis-a-vis the US and other countries.

Although competition for investment is increasing, the UK remains a very attractive location for R&D because of the recognised quality of the science base, the availability of high quality staff, the ease of doing business, good communications, market stability, and good dialogue with government.

Around 20 per cent of the world's top medicines were discovered and developed in Britain

Pharmaceutical industry exports in 2007 were £14.6 billion, creating a trade surplus of £4.3 billion

The industry employs around 72,000 people and generates another 250,000 jobs in related industries

According to UKs parliament publication, pharmaceutical trade is approx US$25 billion in 2007-08 which is number one revenue maker for UKs revenue department

(http://www.abpi.org.uk/)

The highlights of Pakistani pharmaceutical industry are mentioned below:

PAKISTAN PHARMACEUTICAL INDUSTRY AT A GLANCE

Pakistan meets 80% of its domestic demand of medicines from local production and 20% through imports.

The pharmaceuticals market size is Rs. 70 Billion (US $ 1.2 Billion), approximately.

The market for pharmaceuticals in Pakistan has been expanding at a rate of around 10 to15% since last few years.

At present 30 multinational pharmaceutical organizations are producing their products in Pakistan.

The Pharmaceutical manufacture and trade in Pakistan is regulated through the Drug Act 1976, And the rules framed there under.

This is a fairly comprehensive law. Pakistan was the first amongst the developing countries in the world to have introduced Good Manufacturing Practices as a mandatory requirement.

http://www.dcomoh.gov.pk/about/overview.php

2...Pakistan's national business system and cultural conditions

2.1 National Business System

The analysis of National Business Systems forms an integral part of any investment decision. The understanding of National Business Systems revolves around the global-local question. “This question concerns how multinationals can or should balance the pressures to develop globally standardized policies with the pressures to be responsive to the peculiarities of the local context” (Edwards and Kuruvilla, 2005). The advent of Institutionalist approach can be seen as a step against the strong dominance of best practice approaches which derive a single best practice for the internationalisation of companies (for example see Dörrenbächer, 2002). According to this view, MNCs are by no means free to choose a single best practice solution, but their internationalisation is shaped by their specific economic, political and institu­tional home environment. This is somewhat ignoring the fact the multinational corporations are sui generis located in more than one national business system with both home and (different/multiple) host country effects being at work.

2.2 NBS (strategic, political and economic) in Country B - Pakistan

The country came into existence on 14th March, 1947 as a separate homeland for the Muslims of sub-continent. More than 60 years since its creation, the country is faced with multitude challenges including that of defeating terrorism and extremism; building a stable and effective democratic government; and creating a solid foundation for sustained economic growth. In fact nearly half of the country's chequered history comprises of military take-overs and derailment from democratic process. These tempestuous historical events have negatively affected the pace of economic growth of the country.

2.3 Culture

Scholars have never been able to agree on a simple definition of culture. Hunt (1996, p. 52) cites the classic definition of culture, framed by sir Edward Tylor (1871) which reads that “culture is that complex whole which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society.” Culture composes of patterns, symbols, mean­ings, beliefs, assumptions, expectations values, norms, folkways, mores, religion, political and economic philosophy, language, education etc. and thus one should be cognizant of each of them while analysing any particular culture. In addition, relying solely on one definition to discuss a complex topic such as culture could be misleading.

2.3.1 Importance Given to Time

Let us take the example of businesspeople in United Kingdom who are keenly aware of the passage of time and are quickly irritated when their time is wasted because a business associate is late for a meeting or if they are kept waiting. In contrast in Pakistani culture time has elastic characteristic; keeping to a schedule is viewed as less important than finishing an interaction with people. It is akin to the meaning of time in Mediterranean; Latin and Arab cultures (for example see Hill, 2009, p. 89).

2.3.2 Cross-cultural communication

Communication in its general form refers to a process where information is shared by two or more persons and has relevance for at least one of the persons involved. Cultures can be divided into “low-context system” and “high-context system”, which describe the cultural rules around information exchange and, in particular, the degree to which information in a cul­ture is explicit, vested in words or precise and unambiguous meaning (low-context) and the degree to which it is implicit, vested in shared experience and assumptions and conveyed through verbal and non-verbal codes (high-context). Thus the high-context communication relies on shared experience and assumptions and high-context people will expect others to pick up what is bothering them and do not feel the need to be specific; they will talk around the point. Moreover, Placing, Tone and Gestures also signify another important aspect of high-context communication' Korac-Kakabadse et al (2001).

The comparison of the Western versus Asiatic communication styles reveals that the Western mode of communication is direct and explicit whereas the Asiatic mode of com­munication is indirect and implicit (Osland, 1990). This is pertinent to Pakistani peoples' mode and style of communication which values the emotional exchange and the pleasure of the interaction; and is more indirect and implicit and requires shared meanings. The staff of Shire (based in UK and more acquainted with high-contextual and straightforward mode of communication) will have to pay more attention to comprehend the intricacies of communication styles required in the host country's environment. The importance of communication becomes imperative for personnel in pharmaceutical industry who need to market their products by communicating with the doctors and specialists.

2.3.3 Religious and Ethical Systems

Religion may be defined as a system of shared beliefs and rituals that are concerned with the realm of the sacred. Ethical systems refer to a set of moral principles, or values that are used to guide and shape behaviour (Hill, 2009, p.96). Adherence to religion may have economic implications. For example Max Weber (1958, p.35) established a connection between ‘Protestant Ethics” i.e. frugality and wealth creation and emergence of modern capitalism. A vast majority (96.3%) of Pakistani population are Muslims (Greene, as cited by CNN, 2009). The Muslim women are conservative by nature and not as outgoing as Western women. The company representatives have to keep this cultural difference in mind when interacting with women. It goes without saying that one is likely to find modern women in the host country and this observation may not be applicable, still religious aspect of Pakistani population shall always have to be borne in mind.

2.3.4 Belief in traditional Medications

A considerable proportion of the population still believes in traditional methods of medication including Yunanani, Ayurvedic and Homoeopathy medicines. The main reason for this is the availability of these drugs in affordable cheap prices, and illiteracy rate. Another reason is that the population living in the rural areas do not have access to basic health infrastructure.

2.4 Demography, lifestyle and present scenario

Pakistan ranks 141 in the Human Development Report (2009). Important indicators from the same report are listed below:

o Life expectancy at birth 66.2 years

o Ranks in the Medium Human Development category

o Ranks Human Poverty Index (101 ranking)

o Total Births per woman (4)

o Population growth rate 2.3% (2005-2010)

o Population not using an improved water source 10% (2006)

o Probability of not surviving to the age of 40 ( 33.4%)

o Water pollution from raw sewage and industrial wastes

Some more statistics (The World Bank, 2009) about the host country are given below in the form of table:

o GDP (current US$) (billions) 2008 60,587.0

o GNI per capita, Atlas method (current US$) 2008 8,613

o Life expectancy at birth, total (years) 2007 69

o Population, total (millions) 2008 6,692.0

o Population growth (annual %) 2008 1.2

o School enrollment, primary (% net) 2007 86.9

o Surface area (sq. km) (thousands) 2008 134,095.4

3. Pattern and trade between UK and Pakistan

3.1 UKs pattern of trade

UK is currently tenth largest exporter of goods and second largest exporter of services in the world. In terms of capital flows, UK has the highest ratio of inward and outward investment to GDP of any leading economy. The pattern of trade resembles that of other developed/OECD countries i.e. Import primary goods and export manufactured goods.

3.2 Pakistan's Pattern of Trade

Pakistan is a developing country. Pakistan imports from UK amount to $874,588, which has gradually increased over the past years. Major chunk of Pakistan exports constitute of cotton / garments industry.

3.3 Trade between Countries

UK is the 4th largest trading partner among OECD countries, there is a balance in bilateral trade. UK's total exports to Pakistan totalled £119.9 million during period (Jan-March) 2009 which is 15% increase from the corresponding period of the previous year (2008). Major Pakistani imports from UK are specialised industrial machinery, power generation machinery, Telecom & Broadcasting Equipment, chemicals, pharmaceutical and medical products. Besides this, UK is the 2nd largest overseas investor in Pakistan with 6.8% market share FY2008-09 (July-April).

The following tables give a brief overview of UK-Pakistan trade Linkeages

UK EXPORTS TO PAKISTAN:

2005

2006

2007

2008

2009

(Jan-March)

% Change

£463.6m

£489.9m

£426m

£464.9m

£119.9m

+15%

PAKISTAN EXPORTS TO UK:

2005

2006

2007

2008

2009

(Jan-March)

% Change

£496.2m

£523.3m

£515m

£596.3m

£148.7m

+18%

Major Pakistani exports to UK are textiles (yarn, fabric, garments, towels & bedding), rice, leather and leather products, carpets and fruit.

OECD EXPORTS TO PAKISTAN:

Average UK market share of Pakistani Imports from OECD Countries (Jan-June 2008)

10.1%

UK is the 4th largest exporter (Jan-June 2008) among OECD Countries to Pakistan

1-USA (29..1%) 2-Japan (20.1%) 3-Germany (16.2%) 5-Italy (9.4%)

OVER 100 UK COMPANIES OPERATING IN PAKISTAN

There are over 100 British companies operating in Pakistan. Recent entrants include retailers Next and Costa Coffee. The International Power (IP) of the United Kingdom plans to invest further (approx.US$800m to US$1billion) in Pakistan to expand Kapco by 400 megawatts and Uch power plant by 600 megawatts to meet the future growing demand of electricity. Other significant players include Unilever.

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

3.4 Trade between Industries

Some leading UKs pharmaceutical firms for instance Pfizer, GlaxoSmithKline, Merk Co., Johnson and Johnson, etc. have expanded their business in Pakistan. Pakistan meets 80% of its domestic demand of medicines from local production and 20% through imports. The pharmaceuticals market size is Rs. 70 Billion (US $ 1.2 Billion), approximately. The market for pharmaceuticals in Pakistan has been expanding at a rate of around 10 to15% since last few years. (Drug Control Organization. Government of Pakistan).

3.5 Growth Factor and Opportunity in Pakistani Pharmaceutical Industry

The population of Pakistan is expected to reach 194 million by the year 2020. Pakistan is disease burdened country where 12% of the people suffering from diabetes; Hypertension is a very common public health problem in Pakistan 18%. ((Daily Times Pakistan);

The fast growing population of Pakistan coupled with the rise in the level of common (and generally life-long) diseases such as high blood pressure and diabetes provide Shire with an opportunity to invest in the country and capture the market for two main reasons: firstly the pharmaceutical market in Pakistan is dominated by the multi-national pharmaceutical companies. Secondly having a competitive advantage in specialty pharmaceutical drugs and an experience of maintaining excellent liaison with physicians, the company can take its share of the market with less effort. Another important feature of MNC operating in pharmaceutical sector in Pakistan is that the prices of drugs manufactured by them are comparatively much more than similar drugs made by local pharmaceutical industry; in 1993 the MNCs controlled 80% of the market share (see The News International). See Appendix ‘C' SWOT Analysis of Shire for doing investing in Pakistan.

3.6 Competitive Advantages of Shire

‘Shire is one of the world's fastest growing global specialty pharmaceutical companies with 2008 revenues of $3 billion and over 3,500 employees worldwide. The company's growth has been fuelled by acquisitions - there were six acquisitions in a six year period.' (for instance see Shire plc Annual Review 2008). Shire today has a presence in 23 countries and medicines available in nearly 40 countries. Mathew Emmens, Chairman of Shire sets out the strategic objectives (see Shire plc Annual Review 2008) of the company ‘to be fully globalized by entering new markets through Human Genetic Therapies (HGT) products, that require relatively little infrastructure.' This decision of the company to expand its business in Pakistan is in perfect consonance with the strategic goal of the company to penetrate new markets.

3.7 Protection Against Imports and FDI in Pharmaceutical Industry

As a signatory member of WTO the government was compelled to open its doors for FDI and international trade. Restrictions such as tariff and quotas have been reduced by more than 100%. It goes without saying that Pharmaceutical sector is directly linked to the health and well-being of the people and therefore is the most regulated of all the sectors. It is imperative for the government to protect the domestic pharmaceutical industry against domination of large MNCs. However there is existence of non tariff barriers for instance product standards drug licensing, quality control, manufacturing rules, marketing, labelling, packing etc. existent which pose a challenge for a new entrant.

4. The International Institutions, UK and Pakistan

4.1 WTO and Pakistan

As a developing country Pakistan faces high challenges in health sector. Much of these challenges have emanated from the implementation of new WTO regime. Pakistan has to maintain a balance between its obligations as a signatory of World Trade Organization (WTO) and at the same time to provide protection to its local pharmaceutical manufacturers in order to keep them in business. The framework of WTO restricts Government for using any exploitive or anti competitive practices (Asif, M. 2003).

4.2 WTO and UK (EU)

UK, like all EU members, is also the member of WTO since its establishment. UK is developed country and has significant contribution to the overall world trade and investment; it also enjoys a key position in the WTO to voice its concerns on economic issues. UKs position in EU is very significant because it has one of the biggest economies in the European trade bloc. However, considering the democratic nature of EU, all policies are not framed in accordance with UK's wishes; Common Agriculture Policy (CAP) is one of such issues.

4.3 Pharmaceutical industry (UK and Pakistan- regulations)

In addition to the WTO regulations Pakistan it is also imperative for Pakistan to abide by the TRIPS Agreement. Prior to the negotiation of the TRIPS agreement, over 50 countries (including developed countries) did not confer patent protection on pharmaceuticals. Many developing countries regarded the absence of protection as necessary to promote access to drugs at competitive prices. Implementation of the TRIPS Agreement may lead to high drug prices, low access and a weakening of national pharmaceutical industries. Pakistan being a member of WTO and WIPO is bound to conform its IPR laws in accordance with the requirements of TRIPS agreement. Cecilia (2000) cited by Asif M. (2003).

5.1 FDI in Pakistan

Trade liberalization strategies have resulted in opening of the Pakistani market for foreign players. More than 300 UK-based companies are operating in Pakistan which includes several pharmaceutical companies. In this backdrop, Shire has excellent opportunity to invest in Pakistan. Shire can introduce anti-diabetic and anti-hypertensive drugs in host country's market.

5.2 Different market entry strategies explanation

It is less advisable for Shire to opt for export rather than to go for FDI. In that scenario the company would not have been able to exploit the cheap skilled labour in pharmaceutical manufacturing sector in Pakistan. More than that, the Company would be obliged to pay high excise and import duty which makes the drugs more expensive and less competitive. It is however pertinent to mention that the company will need to focus on establishing its manufacturing unit in Pakistan - a country where bureaucratic lethargy and circumlocution makes the process of manufacturing too cumbersome. In spite of that ‘speed money' can catalyze the various procedures.

6. Ethics and Corporate Social Responsibility in Pakistan

Corporate social responsibility or CSR is a relatively newer concept in Pakistani corporate sector. CSR is a broad topic which covers social, environmental, economical, human right, ethical and legal aspects. The international market is adopting newer and innovative ways to show that they care for the humanity.

Workers health safety and suitable working condition

Avoid child labour where many MNCs already caught in past

Minimize environmental pollution and follow proper disposal of manuf acturing bi-product

Avoid animal testing for research purposes

To minimize or optimize the side-effects of medicines

To abide by the provisions of the Drug Control Act 1967 i.e. regarding the minimum standards of factory, health and safety measures within the premises of the building, standard uniform for workers working in the factory etc.

To ensure and Manage Diversity in the organization and Equal Opportunity for Pakistani workers

Donating money and equipments to hospitals, universities, orphanages, schools; and other philanthropic activities.

Welfare programme for employees e.g. pension, funds for marriage of dependents of employees, home and transport service, etc.

6.1 HRM and other departments' importance

HRM has acquired a key position in all organizations may it be the area of recruitment, selection, training, performance appraisal, employee benefits and motivation etc. the HR department plays the pivotal role. It is generally accepted that motivated and committed sales-force is one of the critical factors in the growth and profitability of the organizations. Research work carried out by Malik and Naeem (2009) found empirical evidence of salary and bonus on the motivation level of sales-force working in pharmaceutical Industry in Pakistan. Respondents rated “good wages” to be the top motivator; the next two included “Opportunities for advancement and development” and “loyalty to employees”; the salesforce of more than 10 years of work experience ranked “job security as another” important area. Shire should mainly focus on these areas within HRM to achieve its organizational goals and to maximize profits in the host country.

6.2 Sustainable development and ECO-friendly approach

A variety of environmental problems now affect our entire world. Waste management and management of important resources like water management have become highly important and more stress is being laid on these issues. Environmental pollution has become a gigantic problem for Pakistan especially because of spiralling population, limited resources and will of people and the Government to resolve and manage this issue.

6.3 Price Strategy, Marketing, and Transparent Approach

Pricing of medicines are suggested by the manufacturing pharmaceutical company but needs to be approved by the Ministry of Health's Pricing Department. There is a limit to the periodical or yearly increase in the initial price of the drug, which again needs to be sanctioned by the above-mentioned department. Shire can either take one or both of the following approaches to market its products in the host country. Firstly, it can sell the drugs to the Franchisers or Wholesalers after taking some profit margin on the Trade-Price of the Product, Secondly, it can opt to market its drugs, through Distribution Channels i.e. Medical Representatives who communicate / introduce the benefits of the drugs to the medical practitioners. A joint strategy can also be formulated to sell some drugs through former and remaining through the latter method.

7. Conclusion

Keeping in view the incredible success of various pharmaceutical industries based in UK who had gone for investment decision in Pakistan coupled with the strategic vision Shire to expand its business in various countries and regions of the world, it is advisable that the company opts for Foreign Direct Investment in Pakistan rather than exports. In future this manufacturing facility in South Asia may be used as export-platform to cater the markets of neighbouring countries. However the company can also opt to sell its drugs to Franchisers/Wholesalers rather than selling the drug through a network of Distributors, but this can only be done at the cost of cutting-down on its profit margins.

A country such as Pakistan with fast-growing population and a comparatively infant pharmaceutical industry provided Shire with a opportunity to cater for the drug needs of its people. Shire has a unique advantage of making specialty and life-altering drugs which could be sell at a much greater retail price than over-the-counter drugs; thus much greater returns on investment.

The company should focus on the host country's culture while establishing operations in it. Moreover the commitment to Corporate Social Responsibility, Ethical and Environmental will go a long way in enhancing the public image of the firm, which is indispensable for long-term success.

REFERENCES

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APPENDIX ‘A'

Pakistan Geo Strategic Location

Source: http://www.pakboi.gov.pk/pdf/IG/1.pdf

APPENDIX ‘A' Source: http://www.pakboi.gov.pk/pdf/IG/1.pdf

APPENDIX ‘A' Source: http://www.dcomoh.gov.pk/about/overview.php

APPENDIX ‘A' Pakistan - External Trade Statistics

Source: http://www.statpak.gov.pk/depts/fbs/statistics/external_trade/externaltrade_statistics.html

APPENDIX ‘A'

Leading exporters in world merchandise trade, 2008

(Billion dollars and percentage)

1

Germany

1461.9

9.1

11

2

China

1428.3

8.9

17

3

United States

1287.4

8.0

12

4

Japan

782.0

4.9

9

5

Netherlands

633.0

3.9

15

6

France

605.4

3.8

10

7

Italy

538.0

3.3

8

8

Belgium

475.6

3.0

10

9

Russian Federation

471.6

2.9

33

10

United Kingdom

458.6

2.9

4

Leading importers in world merchandise trade, 2008

(Billion dollars and percentage)

1

United States

2169.5

13.2

7

2

Germany

1203.8

7.3

14

3

China

1132.5

6.9

18

4

Japan

762.6

4.6

23

5

France

705.6

4.3

14

6

United Kingdom

632.0

3.8

1

7

Netherlands

573.2

3.5

16

8

Italy

554.9

3.4

8

9

Belgium

469.5

2.9

14

10

Korea, Republic of

435.3

2.7

22

Source: http://www.wto.org/english/res_e/statis_e/its2009_e/its09_world_trade_dev_e.htm

APPENDIX ‘B'

ECONOMIC FACT SHEET (June, 2009)

VITAL STATISTICS:

GDP(mp) (FY 2008-2009)

Rs.13095 billion

GNP(mp) (FY 2008-2009)

Rs.13502 billion

GDP Growth Rate (FY 2008-2009)

2.0%

Population (estimated)

164 million

Birth rate (Per 1000 Population)

25.0

Net population growth rate

1.87 %

Foreign exchange reserves (April, 2009)

US $ 11.09 billion
Total Revenues FY 2008-2009

Rs.1883 billion

Total Expenditure FY 2008-2009.

Rs.2445 billion

Overall Fiscal Deficit (2007-2008)

Rs.562 billion

Inflation (July 2008 - June 2009)

15%

Financial year

July-June

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

APPENDIX ‘B'
BREAKDOWN OF MARKET SHARE OF OECD EXPORTS TO PAKISTAN:

Country

2004

%Share

2005

%Share

2006

%Share

2007

%Share

2008

(Jan-June)

%Share

Japan

15.4

16.6

17.1

15.2

20.2

Germany

10.3

13.1

12.7

12.3

16.2

USA

22.4

13.7

19.3

20.3

29.1

UK

7.9

9.2

8.7

8.0

10.1

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

TRADE BALANCE:

Total Pakistan Imports (July08-May09)

Total Pakistan Exports (July08-May09)

US $ 28.8 billion
US $ 17.4 billion

Pakistan's total trade deficit (July08-May09)

US $ 11.4 billion

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

UK-Pakistan trade balance during Jan-March 2009 is in favour of Pakistan

(£28.8)million

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

MAJOR FOREIGN INVESTORS IN PAKISTAN: USA, UAE, UK and Norway

Total Foreign Direct Investment into Pakistan - FY 2008-09 (July-April)

US$ 3205.40million

New Direct Investment from UK FY 2008-09 (July-April)

US $ 220.2 million

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

BREAKDOWN OF UK DIRECT INVESTMENT:

2005-06

2006-07

2007-08

2008-09 (July-April)

US $ 244m

US $ 860.1m

US $ 460.2m

US $ 220.2

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

EU COUNTRIES MARKET SHARE OF EXPORTS TO PAKISTAN

Germany

UK

Italy

France

Sweden

2006

% Share

24.4%

17.9%

12.8%

9.1%

6.4%

2007

% share

23.9%

16.5%

13.7%

9%

5.3%

In 2007, the EU exports to Pakistan stood at ER 3.7billion which was 73% more than the exports for the same period of the previous year of ER 2.1billion

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

EU COUNTRIES MARKET SHARE OF IMPORTS FROM PAKISTAN

UK

Germany

Italy

Spain

France

2006

% Share

21.5%

17.9%

13.8

9.3%

8.3%

2007

% Share

21.1%

17.1%

13.3%

10.3

9%

In 2007, EU imports from Pakistan stood at ER 3.4billion which was 109% more then the imports for the same period of the previous year of ER 1.6billion

Source: http://ukinpakistan.fco.gov.uk/resources/en/word/June-2009

APPENDIX ‘B'

World trade in pharmaceuticals, 2007

Exports £

Imports £

Balance £

Switzerland

20,206

9,336

10,870

Ireland

9,664

1,520

8,144

Germany

24,395

18,810

5,586

UK

14,567

10,291

4,276

France

13,675

10,135

3,540

Sweden

4,726

1,731

2,995

Netherlands

7,439

7,276

163

Italy

7,607

8,466

-859

Spain

4,142

5,227

-1,085

Japan

1,736

4,625

-2,889

USA

17,491

35,801

-18,310

Source: http://www.abpi.org.uk/statistics/section.asp?sect=1

Sales share of the world's top 100 prescription medicines 2007 http://www.abpi.org.uk/statistics/makepie.asp?chart=5

Source: http://www.abpi.org.uk/statistics/section.asp?sect=1

APPENDIX ‘B'

UK Pharmaceutical trade

Exports

Imports

Trade Balance

1980

745

222

523

1985

1,426

590

1,184

1990

2,258

1,158

1,100

1995

4,939

2,812

2,126

1996

5,386

3,107

2,279

1997

5,455

3,192

2,262

1998

5,910

3,447

2,462

1999

6,332

4,260

2,072

2000

7,275

4,902

2,373

2001

9,144

6,405

2,739

2002

10,185

7,549

2,636

2003

11,935

8,374

3,561

2004

12,354

8,642

3,750

2005

12,272

8,758

3,514

2006

13,905

9,461

4,444

2007

14,567

10,291

4,276

Source: http://www.abpi.org.uk/statistics/section.asp?sect=2

10. Employment in the UK pharmaceutical industry

Employees (1,000s)

R&D employment (1,000s)

R&D as a % of total employment

Salaries and wages £million

Gross output per employee £

1980

73.3

12

17

412

33,315

1985

66.9

15

22

662

60,239

1990

71.1

18

26

1,120

90,549

1995

61.9

17

27

2,039

160,242

2000

66

25

38

2,214

190,492

2001

71

27

38

2,624

198,862

2002

84

29

35

3,086

183,940

2003

73

27

37

2,698

212,712

2004

73

27

37

3,040

208,753

2005

68

26

38

3,084

231,588

2006

72

28

39

3,414

235,278

2007

67

32

48

3,094

233,463

Source: http://www.abpi.org.uk/statistics/section.asp?sect=2

APPENDIX ‘B'

Leading pharmaceutical corporations' UK market share, 2007

Corporation

nat

primary care market*
sales £m

% share of
primary care market

hospital
market sales £m

% share of hospital
market

total market sales £m

% share
of total market

1

Pfizer

USA

955.16

11.2

136.38

4.2

1,091.54

9.3

2

GlaxoSmithKline

UK

873.76

10.3

183.16

5.7

1,056.92

9.0

3

Sanofi-Aventis

F

587.25

6.9

194.78

6.0

782.03

6.7

4

Astrazeneca

UK

585.21

6.9

82.38

2.5

667.59

5.7

5

Novartis

CH

288.47

3.4

170.46

5.3

458.93

3.9

6

Roche

CH

283.95

3.3

154.20

4.8

438.15

3.7

7

Wyeth

USA

215.05

2.5

171.90

5.3

386.96

3.3

8

Merck & Co

USA

309.04

3.6

43.96

1.4

353.00

3.0

9

Lilly

USA

264.29

3.1

80.22

2.5

344.51

2.9

10

Boehringer Ingelheim

D

225.04

2.6

42.59

1.3

267.62

2.3

11

Johnson & Johnson

USA

186.77

2.2

69.68

2.2

256.45

2.2

12

Schering Plough

USA

114.94

1.4

137.55

4.3

252.50

2.1

13

Novo Nordisk

USA

203.58

2.4

14.45

0.4

218.03

1.9

14

Bayer Schering

D

115.24

1.4

79.85

2.5

195.09

1.7

15

Abbott

USA

36.79

0.4

131.01

4.1

167.80

1.4

16

Teva

ISL

100.64

1.2

35.67

1.1

136.31

1.2

17

Bristol-Myers Squibb

USA

29.57

0.3

84.89

2.6

114.46

1.0

18

Mundi Int.

USA

104.26

1.2

9.57

0.3

113.83

1.0

19

Gilead Sciences

USA

1.62

0.0

103.38

3.2

105.00

0.9

20

Servier

F

99.29

1.2

2.99

0.1

102.28

0.9

21

EISAI

J

87.53

1.0

10.19

0.3

97.72

0.8

22

UCB

B

82.98

1.0

10.21

0.3

93.19

0.8

23

Takeda

J

91.94

1.1

1.23

0.0

93.17

0.8

24

Procter & Gamble

USA

88.17

1.0

3.88

0.1

92.05

0.8

25

Astellas Pharma

J

76.91

0.9

10.89

0.3

87.80

0.7

Source: http://www.abpi.org.uk/statistics/section.asp?sect=2

APPENDIX ‘B'

Value added by sector, 2007

http://www.abpi.org.uk/statistics/makebar2d.asp?chart=10

Source: http://www.abpi.org.uk/statistics/section.asp?sect=2

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