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GSK suspends manufacturing of Panadol, says it’s losing money

GSK suspends manufacturing of Panadol, says it’s losing money

KARACHI: GlaxoSmithKline Consumer Healthcare Pakistan Ltd has suspended the manufacturing of Panadol, saying it has become unsustainable to produce the over-the-counter medicine on negative margins.

In a regulatory filing to the Pakistan Stock Exchange (PSX) on Friday, the pharmaceutical company said it’s “forced to declare” force majeure — a condition in contracts that frees all parties from liability in an extraordinary event — with respect to the production of Panadol tablets, Panadol Extra tablets and children’s Panadol liquid range.

These products are based on paracetamol, a generic drug for reducing pain and fever. There’s been a shortage of Panadol products in the local market with increased demand amid a rising number of dengue and malaria cases.

Editorial: Panadol shortage

“Despite exhaustive efforts of the company to mitigate this matter through dialogue, the situation is now beyond our control,” it said, adding that it has repeatedly appealed to the federal government to approve the “adjustments to the selling price” of the Panadol range of products amid an “extraordinary and rapid” increase in the cost of raw material.

Speaking to Dawn, Topline Securities Deputy Head of Research Sunny Kumar said GlaxoSmithKline buys a “major chunk” of paracetamol, which is the raw material for Panadol products, from PSX-listed Citi Pharma Ltd while importing the rest from foreign countries.

“The raw material that Citi Pharma imports to make paracetamol has also become expensive. It’s a global phenomenon,” he said.

Mr Kumar said the pharmaceutical company isn’t at fault. “At the same time, it’s understandable that the government is under pressure to give the public some relief by withholding drug price increases. The only solution is to increase the prices to a level that justifies production on a sustainable basis,” he said.

The company obtained the price increase approval in the Drug Pricing Committee (DPC) of the Drug Regulatory Authority of Pakistan (Drap) on Jan 12. Subsequently, the DPC recommended that the federal cabinet approve the same increase. However, the cabinet rejected the proposed increase “after a prolonged delay… without any intimation of reason(s) given to the company”.

Although the pharmaceutical firm received a routine Consumer Price Inflation (CPI) adjustment for 2022 from Drap on Aug 25, the same is “not commensurate with the debilitating increase in the prices of the raw material of paracetamol”.

Under the prevailing drug pricing policy, pharmaceutical companies are allowed to increase prices in line with the CPI unless the measure of headline inflation is in double digits. In that case, the increase can’t be more than seven per cent for lifesaving drugs and 10pc for other medicines.

In a letter to the principal secretary to the prime minister, the company urged the federal government to take urgent action and rationalise the prices of the Panadol range in line with the recommendations by the DPC of Drap.

Meanwhile, GlaxoSmithKline told investors on Friday it recorded a net loss of Rs345.2 million in the July-September quarter as opposed to a net profit of Rs363.9m in the comparable period a year ago.

Published in Dawn, October 22th, 2022

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