Term Report - Final Mbr

Business Research Methods Term Report

SHRINKING MARKET OF HERBAL PHARMACOPOEIA MEDICINES IN PAKISTAN Submitted to

Professor Akhtar Ehsan Mirza Submitted by Syed Asad Mehmood (MEN-2200475) Mohammed Furqanuddin (MEN-2200462) Qazi Noman Imtiaz (MEN-2200471)

TABLE OF CONTENTS

1. Preface … 1 2. Problem: Shrinking Market of Herbal Pharmacopoeia Medicines in Pakistan … 2 3. Unani Tibb an overview … 3 4. Status of Unani Tibbi Medicines Practices and Medicines in Pakistan… 3 5. Causes of market shrinkage … 5 a. Current Status of Unani Tibb … 5 i. Rivalry Factor … 5 ii. Role of Herbal Medicine manufacture … 5 iii. Role of Quacks …6 iv. Spurious medicines … 6 v. Herbal medicines not always safe … 6 vi. Counterfeit Medicines … 6 b. Marketing Practices … 7 i. Selling Tactics … 7 ii. Competition Avoiding Tactics … 7 c. Lack of Intuitive Research and development activities. … 7 i. Backward packaging style … 7 ii. Lack of Market Development oriented research … 8 ii

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iii. No Technological Improvement … 8 d. Role of Regulatory Bodies …8 i. Ineffective enforcement of relevant legislation …8 ii. Lesser coordination between regulator and Manufacturers …8 iii. Lesser role of ministry of health …9 The way forward …9 a. Manufacturers Responsibilities … 9 b. Authorities Responsibilities …10 Conclusion … 10 Bibliography … 13 Acknowledgement … 14

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PREFACE In this report, we try to evaluate the under discussion issue in the perspective of modern days businesses hyper competition that forces to businesses to thinned its margins considerably. That also shows the clear power shifting to customers, who are increasingly telling companies what product features they want, what communications they will tolerate, what incentives they expect, and what prices they will pay. This research report is by method a Causal-Comparative study, in which we have identified an effect that is “Shrinkage of Herbal Pharmacopoeia Medicines Market Size” and dig out possible causes. We have tried our best possible efforts to explore, and discuss cause-effect relationships. In preparation of subject research report, we have conducted survey of Medicines wholesaler and retailers of Nazimabad, Joriabazar, and Liaqatabad, and representatives of Herbal Medicines manufacturers in order to get the reliable information; hence these peoples are our source of primary data.

In preparation of that report, we want to give special acknowledgement to our course facilitator Professor Akhtar Ehsan Mirza, who had a great influence on our thinking towards subject of Business Research. Syed Asad Mehmood MEN-2200475 Mohammed Furqanuddin MEN-2200462

Qazi Noman Imtiaz MEN-2200471

Problem : Shrinking Market of Herbal Medicine in Pakistan Over the year we have witnessed a great worldwide revival of interest in the use of herbal medicines both in developed as well as developing countries, according to WHO, 80% of the world population rely chiefly on plant based traditional medicines specially for their primary health care needs. The international scenario is: America: Herbal medicines continue to grow enormously over the years and continue to be a major market in US pharmacies and constitute a multi billion dollar industry selling approximately 1500 botanicals and dietary supplements or ethnic traditional medicines. United Kingdom: Sale of herbal medicines in the UK increased at the ratio of 5% per since 1990. Germany: Over 70% of German physicians either prescribes medicinal herbs or refer their patients to traditional practitioners. China: Herbal medicines represented 33.10% of the total drug market in 2000s. Japan: Herbal medicines constituting about 4% of the total market for pharmaceutical products in 2000s. India: 70% population is reported using traditional medicine for primary health care. Although in Pakistan situation is not so worsen for whole herbal medicines market, but for pharmacopoeia medicines (Hamdard Pharmacopeia of Eastern Medicines lists 186 single vegetable drugs used exclusively as unani medicines in 2

various forms i.e. majons, khamiras, jawarish, oils, arqiat, syrups etc) situation is alarming. As per our survey, the sale trend of 10 major dawakhanas (herbal medicine manufactures) are on decline side year-by-year. The Market shrinkage of Herbal Products (Pharmacopoeia Medicines – Majons, Khamiras, Syrups) is evident from the fact that, both major players of the market are comprehensively on middle men disposal, which market player gave them better financial incentive middle men sell their products. Both manufacturers are year-by-year deploying and employing Trade (Middle Man) Beneficial Marketing Strategies. Intermediaries focus strategy pushing end-user/consumer away from manufacturers. Companies at market decline stages use to ask consumers what benefits they would like added to the product, that benefits could be added at any level, it will particularly proved useful at Augmented and Potential product levels Major manufacturers are keen to avoid competition, because it is very well understood that, any effort to reduce the share of competitor, will lead towards further shrinkage of the market. They are happy and well satisfied with cold war like strategies. Unavailability of ideal and healthy competition further leading the whole market towards the decline, because competition produces a continuous round of new product attributes. If a new attributes succeeds, competitors soon follow and then offer it. Unani Tibbi an overview From centuries, man has used self-coined traditional means for treating for ailments, and continues to use them along side modern medicine even today. Despite all the marvelous advancements in modern medicine, traditional medicine has always been practiced. Traditional medicine refers to health practices, approaches, knowledge and beliefs incorporating plant-, animal- and mineral-based medicines, spiritual therapies, manual techniques and exercises, applied singly or in combination to treat, diagnose and prevent illnesses or maintain well-being. 3

The herbal or ‘Unani’ or Greco–arab system of medicine is a growing industry worldwide. Global sales of herbal products now exceed a staggering US$40 billion a year. Pakistan has a very rich tradition in the use of medicinal plants for the treatment of various ailments, based predominantly on the Unani system of medicine, which dates back to the Indus valley civilization. Status of Unani Medicinal practitioners and Medicines in Pakistan Pakistan has current population of 162 million growing at a rate of over 2% per annum making it the fifth largest country in the world. With the low literacy rate of around 30% and with over one-third of the population falling below the official poverty line it is not surprising that Pakistan has one of the highest infant mortality rates in the world. The life expectancy at birth is around 63 years. Fortunately, the economic recovery in Pakistan is robust with around 6% real GDP growth and per capita income of around $2,200 [CIA World Factbook]. The annual GDP of Pakistan stands at around $370B of which less than one billion is spent on pharmaceutical purchases (not included traditional medicines) that account for expenditure of less than one-third of one percent of GDP, one of the lowest in the world. This is contrasted with the highest expenditure made in the US where full 2.5% of GDP goes toward pharmaceutical purchases (around $300B). The average per capita yearly expenditure in Pakistan is around $5.50 or Rs. 350/yr. However, these numbers could not be extrapolated as generalized because of the great dichotomy in the distribution of per capita GDP, high cost of treatment of diseases in the poverty-ridden populations, irrational prescribing trends, etc., As a result, even though the total expenditure on drugs is not large, the affordability of safe and effective medications remains one of the most serious problems facing the country. In addition to other Complementary and Alternative Medicines systems such as Ayurvedic and homeopathic, the Unani system has been accepted and integrated into the national health system. Pakistan is the only country in the eastern 4

Mediterranean region where formal Unani teaching institutions are recognized. There has been significant movement at the policy level in terms of CAM regulation. There are 45000 traditional healers, of who about three-quarters are practicing in rural areas. The presence of these practitioners in rural areas may be regarded as a source of health care delivery for the rural majority of Pakistan. Approximately 52600 registered Unani Medicnial practitioners are practicing in both the public and private sector in urban and rural areas. About 360 tibb dispensaries and clinics provide free medication to the public under the control of the health departments of provincial governments. In Pakistan, over half the population (66%) lives in the rural part of the country. Poverty, compounded by illiteracy, low status of women, and inadequate water and sanitation facilities, has had a deep impact on health indicators. Limited knowledge of health and disease, cultural and household remedies, perceptions of a health service and provider and social barriers, and the cost related to the provision of an effective health service have been the major barriers. The health care system in Pakistan has two main divisions: the public domain and the private domain. The public sector, which is regulated and recognized but mainly composed of an allopathic system of health care, is severely under-utilized due to certain weaknesses including insufficient focus on prevention and promotion of health, excessive centralization of management, political interference, lack of openness, weak human resource development, lack of integration and lack of a public health policy. In the private sector, there are very few accredited outlets and hospitals, but many unregulated hospitals, medical general practitioners, homeopaths, hakeems, traditional/spiritual healers, Unani (Greco–arab) healers, herbalists, bonesetters and quacks. In Pakistan herbal medicines are fall in following overlapping categories, which established by Drug Regulatory Authorities: 1. Non-Essential Drugs, all those molecules that do not fall under the WHO Essential Drugs List. A price 5

control mechanism for these drugs will be based on competition wherein a substantial price reduction will be required upon expiry of patents on new molecular entity. 2. Medicines that do not require a prescription— (it is important to know that being it does not mean a medicine is safe or its price uncontrolled) 3. Medicines which are best taken out of drugs category registration such as food supplements, vitamins and other such products. Unnecessarily classifying non-drugs as drugs allows drug companies to promote them through professional means. Causes of Market Shrinkage a.

Current Status of Unani Tibb i)

Rivalry Factor: The relationship between the conventional allopathic physician and the Unani Tibb practitioners is of rivalry and animosity, just as happens in any other part of the world. Orthodox medicine has never been in favor of traditional medicines, these practices are denounced vigorously by restricting their access, labeling them as antiscientific and imposing penalties on their practice. Some understandable factor for this rejection includes lack of education, training, regulation and the evidence base of Unani practitioners. Strong, sophisticated, research based and pin-pointed (Segmented) marketing efforts of national and multinational pharmaceutical firms slowly pushes the market of herbal medicines into declining stage and gradually decreasing the total need level for Herbal Products

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ii)

Role of herbal medicine manufacturers: The part of herbal medicine manufacture in revitalization of unani tibb is very limited. From past several years major herbal medicines manufacturers are not doing enough to improve the status of “Unani Tibb”, and “Unani Tibb Practitioners” in order to develop them as a strategic business partner, as various Multinational and National Pharmaceuticals firms doing with allopathic physicians, they supports closely associated profession to support their business. Herbal medicine manufactures, due to the nature of business, usage of brand building tools are restricted then other business. They cannot openly publicize pure unani pharmacopoeia medicines, the channel they are forced to use to expand of maintain the size of market is only and only the practitioners that is the true and most important significance of herbal practitioners.

iii)

Role of Quacks: Due to unavailability of proper check and balance mechanism, Quacks are openly playing with lives of innocent peoples in suburban and rural areas of Pakistan, and giving unani tibbb practitioners a bad name and lowering respect for them and their medicines in the community.

iv)

Spurious medicines: A massive influx of spurious / unregistered medicines in the market with lustful advertisement is another major reason which is giving bad name to Unani Tibb and its medicines. These drugs are also building the wrong (Only specialized in sex oriented 7

medicines) perception about Unani Tibb amongst the mind of consumers. v)

Herbal medicines not always safe: There is a general belief amongst the consumers that the herbal medicines are always safe, because they are natural but evidence suggests some medicines like kushtas, syrups, majons can create health hazards and developed side effects, reactions if not properly produced or prescribed.

vi)

Counterfeit Medicines: These medicines are produced with out following safety and pharmacopeias standard and then deliberately and fraudulently mislabeled with respect to identity and/or source. It may contain wrong active ingredients, wrong amounts of the ingredients or no active ingredients at all. These medicines can cause death or disability as result. There are gaps in the herbal medicines trade cycle from the manufacturer to wholesalers, distributors and retailers and then to end users, which give the way to slip in or to proliferate, counterfeit medicines. Particularly, in the case of herbal medicines, counterfeit medicines emerging as a dilemma, which is threatening the leading manufacturers’ reputation.

a. Marketing Practices i)

Selling Tactics: As we discussed earlier major players of market are strongly emphasizing on selling tactics, not pursuing brand-building and consumer oriented measures even though they are dragging their products into FMCGs products category. It’s quite clear that, in 8

the selling tactics they are using, every thing for intermediaries and nothing for end users (Customers). Herbal medicines manufactures are utilizing their resources and to some extend succeeded to convert some of their very herbal medicines into more like FMCGs (Fast moving consumer goods), the best examples of these star products are ROOH AFZA, CINKARA, GAISTOFIL, CARMNIA, and JOHAR JOSHANDA, i.e. Medicines that can be taken with out prescription for primary health care needs. ii)

Competition Avoiding Tactics: As we mentioned earlier, there is no idle competition exists between major manufactures, consumer are least concerned with brand or name of manufacturers, their buying decision is totally based on availability of product no matter who produced it. Due to that factor, manufacturers are free to enhance prices, which will lead to a chain reaction; “oneafter-other”, vice versa prices will hardly vary manufacturer-to-manufacturer. It makes the fact proven here that; the most effective price control mechanism is indeed a healthy competition. Our study suggest that, whenever, due to the increase in cost of doing business, manufacturer force to rise price, they loss substantial part of their consumer-ship.

b. Lack of Intuitive activities i)

Research and development

Backward packaging style: From past several years Major manufacturers of herbal products have not undertaken any significant intuitive product development 9

process. Lack of market development oriented research is shows from the SKU’s (Stock Keeping Units) outlook and style that remains more or less as it was 20-30 years back. ii)

Lack of Market Development oriented research: There is a lack of Market Development oriented research, both market players strongly focusing on segments like Lower Middles class and nonprofessional’s class, with deep emphasis on intermediaries based marketing planning.

iii)

No Technological Improvement: One of the most dramatic force shaping people lives is technology that released wonders. Every new technology is a force for “creative destruction” for others; the vibrant movement of western pharmaceutical industry hurt the herbal medicine industry, like many old industries herbal medicine manufacturer striving very hard to survive. They are not involving any significant technology based innovation in order to improve their portfolio of brands.

c. Role of Regulatory bodies i)

Ineffective enforcement of relevant legislation: Presently, the drug regulation finds a place in the Concurrent Legislative List Section 20 given in the further schedule of the 1973 Constitution of Islamic Republic of Pakistan. In exercise of powers conferred upon the Federal Government by the aforesaid provision of Constitution, and Act entitled “Drugs Act, 1976” was promulgated to regulate the import, export, manufacture, storage, 10

distribution and sale of drugs. The mission of the regulatory bodies, should be “To protect and promote public health by ensuring equitable access to safe, efficacious, quality and affordable medicines and other selected health products and their rational use through implementation of available regulation and effective enforcement of relevant legislation.” ii)

Lesser coordination between regulator and manufacturers: Although, the government of Pakistan has in place a number of organizations and initiatives aimed at strengthening and coordinating various aspects of the Alternative Medicines Sector, supplemented by non-government and private sector initiatives. However, stronger coordination of the sector at the national level under a strategic plan is imperative, which will produce offshoots into research and development.

iii)

Lesser role of ministry of health. Much has been said and even some has been done to take herbal medicines under the full fledge control of Ministry of Health, unfortunately, this has not materialized because of multitude of factors, mostly political but also scientific such as the means of definitive testing of these products. When the health of majority of Pakistanis is at stake, it is unconscionable not to take herbal medicines into full control. There are so many gray and lacunas areas in the regulations which are availed by the fake herbal medicines producers, sellers 11

and Quacks to escape from the grip of law under the thirst of money. The way forward a.

Manufactures responsibilities i)

There is a definite need to design training and capacity-building and supportive programs for the unani practitioners who need such continuing education, hence bringing them into the mainstream and elevating their status in society, that programs should be supported by the Government and sponsored by the herbal manufacturers.

ii)

Effective and systematic marketing and public awareness campaigns are needed to support the base i.e. unani tibb, its system of healing.

iii)

The medicines are being used have not been thoroughly researched, and by and large there is only evidence from 100-50 years old documents, therefore, more financial allocation towards the research and product improvement and development required.

b. Responsibilities

Authorities

i) The state regulatory authorities have crucial role to play in this scenario, in terms of recognition of unani tibb, financing and appreciating training and research in the filed. ii)

A positive interaction between all cadres of health providers, academicians, policy 12

makers, and researchers has to harnessed to work for a common goal.

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iii)

The inclusion of some introductory modules of unani tibb into the medical curriculum of allopathic medical schools should be considered.

iv)

Close monitoring of the medicines distribution channels are needed and various law enforcing agencies can play a pivotal role. Stricter penalties and laws must impose on those who found convicted. All the data about sale or purchase of the medicines are properly monitored and medicine supply chain must be transparent.

v)

Consumer education is also important and the public should know basic way of identifying the quarks, spurious and counterfeit medicines. The Ministry of Health should start the campaigns, continuing education, and refresher courses for those who are involved in the medicine trade with the help of herbal medicines manufactures.

Conclusion The unani tibb and its pharmacopeias medicines is an important source of health care, business activities, it is the responsibility of herbal medicines manufacturing firms to make some extra efforts, by involving more finance in technological research and development expenditure and participating and implementing standards and codes of practice for the industry, in order to avoid the decline stage pharmacopeias medicines market. It is also the responsibility of government to provide relaxation to herbal medicine manufacturers so that they can stand firmly on their feet in order to gain strength and promote their 13

potentials to compete generally in local market and particularly in international market in the wake of WTO regime to bring more foreign exchange. The revitalization of herbal pharmacopeias medicines is purely in the interest of poor patients who need cheep and their very own source of treatment. Effective utilization of these medicines will enhance the health of nation; unani tibb has the potential to provide more employment opportunities.

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BIBLIOGRAPHY (SECONDARY DATA)

Philip Kotler. Marketing Management: 11th ed., Prentice-Hall of India 2002

Review Article Pakistan J. Med. Res. Vol. 43 No.4, 2004 Inamul Haq. Safety of medicinal plants

IN THE SUPREME COURT OF PAKISTAN (Appellate Jurisdiction) Criminal Misc. Application No. _______/2006 In Criminal Misc. Application No. 66 of 2006 Written reply on behalf of Secretary Health, Ministry of Health, Islamabad.

Babar T. Shaikh and Juanita Hatcher : Complementary and Alternative Medicine in Pakistan: Prospects and Limitations Health Systems Division and Community Health Sciences Research Development Office, Department of Community Health Sciences, Aga Khan University, Karachi, Pakistan

A Framework for Drug Regulatory Authority Submitted to Ministry of Health Government of Pakistan By Sarfaraz K. Niazi, Ph.D. Consultant to the Ministry of Health, Government of Pakistan

Financial Reports of three major herbal medicines manufacturer

Marketing Research Reports

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ACKNOWLEDGMENT (PRIMARY SOURCES)

1. Mr. Naseeumuddin of Naseem Store, Nazimabad Karachi. 2. Mr. Haseeb Taqi of Taqi & Sons, Jodia Bazar, Karachi. 3. Mr. Hakeem Shakeel Ahmed, Liaqabatabad, Karachi. 4. Mr. Jameel Akhtar (Managers Sales Planning, Hamdard) 5. Mr. Asif Ali Zaidi (Manager Accounts, Hamdard) 6. Mr. Noman Rizvi (Coordinator Matab Sale, Qarshi)

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The assignments perform by the group members: Primary Data Collection through interview and questioners, by Mr. Asad Mehmood and Mr. Furqanuddin, Secondary data collected by Mr. Qazi Noman Imtiaz. Report formatting, compiling, and proof reading is done by Mr. Asad Mehmood.

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