MERCK According to Merck, the current pricing method was a major deterrent to launch now products in the market

pricing he claimed was a limiting factor . Many of Merck products that have been launched globally have not been launched here owing to the situation of the industry. Merck Pakistan has received an average price rise of around 10% to 12% over the past 10 years. This price rise being an specific products and not all, that is on a case to case basis. The last price rise, across the board was given in 2000/01 only those products received a rise which were running on extreme losses. According to Merck a 5% price rise after every 2 years is a must to maintain profitability. Most MNCs the Merck boast on their superior to maintain their quality. Raw-materials from superior sources must be imported. Given the fact that globally price have been rising and the rupee has been depreciating, the cost of raw materials rises. Since no price rise is given profitability suffers. According to Merck the current pricing method favors and encourages the use of sub standard practices and raw-material and supports those firms which use it. Ideally speaking the price mechanism should be allowed to function which is the best allocator of price. The ministry of health should simply have a monitoring and watchdog role. According to Qazi Zia, no individual firm can manipulate the market to reap unlimited profits for an unlimited period of time. The MOH should be able to catch any firm involved in such practices and penalize it. Merck Pakistan has around 70 products in the market and all of them are patented the company war not satisfied with MOHs stance on the protection of intellectual property rights. The action Merck takes is to the organization that has violated its intellectual property, and complain to the ministry according to the Merck the MOH plays a dual role here on are hands, the MOH issues and approves the patent of the original producer on the other hand the MOH issues manufacturing lisences to the copying firm as well such un-ethical practices of the MOH have led to its falling credibility. Mr. Qazi Zia, claimed that the MOH does this simply to encourage the local manufacturer, and support the domestic industry. The local industry does not have that significant quality control, not that significant R&D cost and nor that significant quality raw-material cost. The MOH needs to provide the MNCs an incentive to launch new products in the market. An effective means could be 10 reduce the patent period for 10 years to 5 years. But for these 5 years, the MOH must ensure no generics flooding the market. The MNC should be at-least able to cover some of its R&D cost. This might be a win-wins situation for both the local and foreign firm.

The post devolution stage of the industry is confusing, and uncertain. DRA (Drug Regulatory Authority) in its the sense would be beneficial to the industry. Instead of going over to multiple regulation authorities, a federal DRA is a comparatively better idea. It saves time and effort. Currently, Merck has around 3% of Pakistanis market share. Again the other MNCs Merck considers both local and foreign firms to be equally a threat to their market share. Merck competes on quality at affordable prices in case of branded generics, Merck is providing the market with the best, multinational level quality at very cheap rates. Merck manufactures all medicines here in its two plants Quetta and SITE in Karachi. Merck has a special agreement with the government of Balochistan on maintaining the plant there, gives its economic performance and contribution. Quetta has its constraints in terms of lakc of infrastructure, un availability of raw material skilled labor, but merck has no plans to relocate else where. Merck has also started exporting from Pakistan to other 3 rd world countries like Myanmar, Afghanistan, Srilanka etc, exporting has been taking place since 3 to 4 years around 10% of exports are geared towards export. The registration process is much longer in these countries it takes around 2 years to have your drug registered, by the other countrys authority Merck only imports 1 manufactured product. Merck imports raw-material from Europe, China and India no local raw material is used in the process. Merck Pakistan does outsource some of its production to other local companies like Bosch and Nactor. Injectable antibiotics are produced this way. Around 4-5% of Mercks production is produced this way. More than 90% of Mercks machinery is imported from European countries and China. The remaining small machinery that is locally produced is bought from Pakistan. Extensive training programs are conducted for labor, most of which is in house. Machinery usage training is done via manuals and old employees. Most of the training is in house training. Merck Pakistan has a proper testing facility but does not have an R&D department as such. The granting of MFN status to India was not very welcome and managers at Merck were of the view that the local industry would be swept away, owing to Indias economics of scale and the

availability of locally produced raw material there. According to Merck, apart from a few large MNCs and national companies, the pharmaceutical industry would be swept off if there is no protection. International workshops and conferences are regularly attended by Mercks employees on average around 15% - 20% of the work force is sent to such work shops and conferences 4 to 5 times a year. Merck does have a marketing department and none of its marketing effort is outsourced. Pharmaceutical marketing is very limited in that the target market is not the end consumer, the doctor / prescriber is the market for pharmaceuticals. Merck considers it unethical to bribe doctors to convince Mercks products. Mercks field force is 350 people strong. Each major doctor is visited twice a month. On average 200 doctors are on a field force employees call or visiting list. Mr. Qazi Zia claimed that doctors have an extremely tough job these days. More than 500 companies products are competing within the doctors choice range while prescribing medicines to the patients. There is a reminder at least twice a month. PACKAGING Merck designs its own packaging according to the requirements of the MOH but production is outsourced, to other local firms packaging expense makes around 15% to 20% of Merck costs. This is quite large compared to other MNCs costs. In the last 10 years Merck has launched around 20 new products. Merck has been participating in relief efforts on its CSR front contributing goods and drugs in the 2005 earthquake and 2010 flooding. Merck has around 20% of its workforce in the unskilled category 50% BSCs 30% MSc and Pharm Ds Merck has 1 Ph.D hired.