Ashfaq Yusufzai
PESHAWAR, Jun 16 2006 (IPS) – Next to pirated films and music on CDs, the hottest selling Indian items in Pakistani markets these days are pharmaceutical drugs smuggled in from the neighbouring country.
Owing to a long history of rivalry and warfare, trade between the South Asian neighbours is minimal. But the ever-increasing costs of drugs, manufactured locally by multi-national corporations (MNCs) or imported, is encouraging chemists to turn to India s massive generic drugs industry.
Chemists, especially in rural areas, are doing a roaring business selling all sorts of preparations smuggled in from India. Antibiotics, analgesics, sedatives, tranquilisers and other medicines such as hormones, drugs for hypertension, ulcers and contraception are making their way across the border on such a scale that MNCs, and local drug manufacturers are finding it hard to compete.
Many Indian drugs are ten times cheaper and as good as those marketed by MNCs, says local doctor Gul Jamal. I myself have been using an Indian brand for chronic stomach problems and find it quite effective.
Ikramullah, whose mother is a cancer patient, says he buys smuggled drugs for injections from India because they cost only a fraction of locally made preparations.
And nowhere in the country is the business in smuggled Indian drugs greater than in this frontier city with ready access to Afghanistan, which imports millions of dollars worth of drugs from India under special agreements.
In the lawless rural parts of the North West Frontier Province (NWFP) that shares borders with Afghanistan many chemists deal only in smuggled drugs from India, although some of the products on their shelves do not carry literature and other necessary details such as expiry dates and price.
However, a drug analyst at the Federal Quality Control Board in Islamabad, told IPS that most drugs smuggled in from India are safe and that authorities are reluctant to stop the illicit trade because that could mean denying poor people access to affordable drugs.
Pakistan has not yet accorded India most favoured nation (MFN) status but this may change as countries in the region fall in line with South Asian Free Trade Association (SAFTA) and World Trade Organisation (WTO) rules. When SAFTA and WTO rules are fully implemented and there are no trade barriers there will be a sharp reduction in the smuggling of medicines from India to Pakistan, said a local chemist, Malik Nawaz Khan.
Recently, Pakistan began importing anti-retroviral drugs for HIV/AIDS patients from India through the World Health Organisation (WHO). We have put in place stringent measures to stop these drugs from being put on open sale in markets. These drugs are supposed to be given to the patients after certain tests and under the supervision of trained doctors, said Dr Quaid Saeed, WHO programme officer for HIV/AIDS.
Currently, there is no direct link between the WTO and pharmaceutical smuggling from India to Pakistan . However regional agreements such as SAFTA and the tariff structures do play a role, said Ayyaz Kiani of the non government organisation (NGO), The Network .
Kiani said that although Pakistan has not granted MFN status to India the tariffs that it applies on imports from India are much lower than Pakistan s WTO-bound tariffs. These tariffs would apply to any additions made in Pakistan s positive list for India (under SAFTA) , he told IPS.
The issue of Indian drugs being sold in Pakistan is not a new one. It has been debated several times in the National Assembly but without any tangible outcome.
Pakistan-based MNCs are importing raw materials from their mother countries which causes increase in prices, said Ghulam Sarwar Mohmand, former president of the Frontier Chamber of Commerce and Industries. Besides, the Indian government also provides subsidies for certain drugs which keeps prices low, he added.
But pharmaceutical drugs are cheap in India because of a 1970 law which allowed Indian manufacturers to get around international patents and grow rapidly. By the time India acceded to WTO patent rules, last year, the country had built up the largest number of United States Food Drug Administration (FDA) approved manufacturing facilities outside the U.S. and these benefit from unbeatably low production costs.
Keeping in view the competitive pharmaceutical market, low prices for medicines in India and rising pharmaceutical demand in Pakistan, exporters from India and importers in Pakistan cannot gain maximum profit from legal trade, mainly due to tariff structure and hindrances in trade facilitation, said Kiani, whose NGO has been working on drug-related issues since 1992.
One option is circular trade , which is carried out through third countries (such as Dubai and Singapore and now Afghanistan) which then re-export them to Pakistan. While this is costly a number of Indian manufactures, such as truck tyres are indirectly, but legally, imported into Pakistan this way.
For their part, Indian pharmaceutical companies are keen to gain a toehold in Pakistan s pharmaceutical market which is estimated to be worth 140 million US dollars but is presently dominated by MNCs.
Currently, MNCs control 60 percent of Pakistan s pharmaceutical market with the rest going to about 100 drug importers and about 300 licensed manufacturers.
Working through the Federation of Indian Chambers of Commerce and Industry (FICCI) Indian pharmaceutical companies have been putting pressure on the Indian foreign ministry to get Pakistan s trade barriers against India removed, at least in the drug sector.
We have been holding a series of discussions with officials on specific sectoral trade relaxation, Amita Sarkar, additional director at FICCI told IPS correspondent Ranjit Devraj in the Indian capital of New Delhi.
There is hope in the composite dialogue process through which Pakistan-India ties have been steadily improving over the last two years. Bilateral trade now exceeds 800 million US dollars against 334 million dollars in 2004. But, contraband trade is believed worth more than twice that figure.
According to the Indian Drug Manufacturers Association, Pakistan imports bulk drugs from all over the world, except India which happens to be a leader in the export of bulk drugs.
Smuggling remains the best option to avoid tariffs, standards and documentation issues, Kiani said.
