Presentation on the affects of Counterfeit Drugs on the Pharma Industry.

1. PAKISTAN’S COUNTERFEIT
DRUG PROBLEM
A Supply Chain Management Perspective

2. 2
Abubakar Memon Muhammad Hasan Madiha Haque
Maheen Omair
THE TEAM

3. A counterfeit medication or a counterfeit drug is a medication or
pharmaceutical item which is produced and sold with the intent
to deceptively represent its origin, authenticity or effectiveness.
COUNTERFEIT
MEDICINES
3

4. COUNTERFEITING: AGLOBAL ISSUE
* According to a Survey
4
15%
of the world’s
medicines are
counterfeits
36%
Of anti malaria
drugs in Southeast
Asia are falsified
<50%
Medicines sold
online are fake
95%
Of online pharmacies
are unregistered
$1.5 TRILLION
Value of counterfeit
medicines worldwide
Important numbers

5. PAKISTAN’S PHARMA INDUSTRY
*Based on 1st year projections
5
An Overview
Contribution
to GDP
Total
Worth
# of
Employee
s
Total
Unit
s
Multinationals
1% $2.29 billion 105,000 650-750 25
- The industry has been growing at a rate of 15% (5 year CAGR)
- It is dominated by local firms, who represent 1/3rd of the industry
- Top 10 firms have 46% of the market share
- Top 100 firms have around 99% of market share
- Regulated by Drug Regulatory Authority of Pakistan

6. DRUG REGULATORYAUTHORITY OF PAKISTAN (DRAP)
6
Fake drug crisis in 2011 was the
driving force behind the formation
of this autonomous body, which
works under Ministry of National
Health Services.
Established in 2012
• Provide regulatory approvals
• Quality control function
• Policies related to contract
manufacturing, imports and
exports
Regulating the Pharma
Industry
• Drug Pricing Policy 2015
introduced a mechanism for
fixation and price adjustment
• The objective is to ensure
availability of drugs at rational
prices and discourage hoarding
• The cost and pricing division of
the DRAP is responsible for
controlling and fixing the price of
medicinal products under the
Drugs Act, 1976
Setting Price Controls

7. SUPPLY CHAIN OF PHARMACEUTICAL FIRMS IN PAKISTAN
*Based on 1st year projections
7
- Almost all of the raw material is imported from India, China and Bangladesh
- Works like automobile industry, where the firms are just assembling the raw material and not producing, or procuring them
locally.
- Representatives we contacted didn’t have the authority to share information regarding company distributors, although
various companies procure services of Agility, M&P and other reputable logistics companies (public information)
Importing of
raw
materials
Manufactur
er
Logistics
companies
India, China, Bangladesh
Pharmaci
es
40,000 big and small pharmacies
Institutional
Sellers
Hospitals and Governments
Authorized
pharma
distributors

8. SUPPLY CHAIN OF COUNTERFEIT DRUGS IN
PAKISTAN
*Based on 1st year projections
8
- Setting up a pharmaceutics manufacturing plant is very expensive, but counterfeiters can start this business by investing
as little as 0.2 million rupees
- At times, counterfeits end up at a registered pharmacy or with institutional sellers, which can be quite a disaster
- Potential for high margins attracts players in the supply chain, and each of them play their part in bringing counterfeits
closer to end consumers
Availability
of Raw
materials
Counterfeit
Manufacturer
s
Small
Distributors
Chemicals, packaging
material,
empty capsules and bottles
and
printing machines
Small,
unregistere
d
pharmacies
Online
Pharmacies
From operating on a rooftop
to
large facilities

9. IMPACT ON LEGAL SUPPLY CHAIN PLAYERS
9
Companies have to incorporate the
element of counterfeits into their
demand planning, which can
increase lead times for the entire
supply chain.
Difficulty in demand
planning
Different players in the supply chain
become suspicious and the entire
value chain is affected
Trust in the pharma
industry is compromised
Low margins already hamper
pharma industry’s efforts to expand,
implementation of costly measures
further reduce the industry margins
Implementation of costly
anti-counterfeit measures
Counterfeits are identical to original
drugs, hence any harmful impact
from their use has a trickle down
effect, meaning the reputation of
the company supplying original
drug is at stake.
Detrimental impact on
brand image
Counterfeit drug industry is worth
$1.3 trillion globally. This has a
huge implications on the revenues
of drug manufacturers, especially in
Pakistan, where drug prices are
highly regulated
Loss of revenue for
pharmaceutical companies

10. MAJOR CONTRIBUTORS
*Based on 1st year projections
10
- Other contributors
Drug
Regulatory
Authority
(DRAP)
Internet and
the age of
information
Understaffing
regulatory
bodies
globally
DRAP policies have led to
lower margins for the entire
supply chain. Higher margins
in counterfeits.
Wide availability of
information has made it easier
for people to manufacture
bombs and medicines in their
backyard
Regulatory bodies are highly
understaffed, hence they can’t
put in the required time to
implement policies
Rising
unemployme
nt and
poverty
Deteriorating economic
conditions have led to people
entering this illegal medicine
trade

11. GLOBAL PERSPECTIVE
11
COUNTER MEASURES
o RFIDs and Barcodes
o Leading pharmaceutical manufacturers are investing heavily in Blockchain technology
o Intercity codes
o Covert approach, also known as ‘taggant’
o Anti-counterfeit packaging (this is a $188 billion industry in itself)
o Special aluminum foil

12. OUR RECOMMENDATIONS
12
o Partnership with distributors to tackle counterfeit trade, reduce theft, and ensure
customer complaints reach the manufacturers on time
o Verification points in the supply chain – receiving of raw materials at manufacturer’s
facility to receiving of finished medicine at the distributors’ facility
o Hire product security team to ensure security along the entire supply chain
o Relaxing pricing policies, and improving inspection and anti-counterfeiting efforts (DRAP)

13. THANK
YOU
THANK YOU