Articles Surgical Instruments' Industry contributes a prominent share in exports...

Surgical Instruments’ Industry contributes a prominent share in exports of country

Surgical Instruments’ Industry contributes a prominent share in exports of country

By Muhammad Sohaib Khalid Hashmi

SIALKOT, Oct 25 (APP):The Surgical Instruments Industry contributes a prominent share in the exports of the country and Pakistan exports about 250 million US dollars of surgical instruments to 140 countries across the world due to excellent skills of manufacturing instruments.
The industry practically got established in early 1940s in the country and mainly it is situated in and around the city of Sialkot where surgical instruments, dental and beauty instruments are manufactured.
It is estimated that 80% to 90% of the Surgical Instruments produced by the industry are exported to the world.
The industry has adopted the latest technology and equipment to produce the export quality surgical instruments a few decades ago. Over 99% of the country’s production is manufactured at Sialkot. According to the Pakistan Surgical Instruments Manufacturers Association (PSIMA) , over 2300 companies are manufacturing surgical instruments in Pakistan from which around 30 can be considered large and the remaining can be split as 150 units of medium sized and remaining as small units.
The industry produces on average over 150 million pieces of surgical instruments in a year with an estimated value of around 225to 300 million US dollars .Interestingly , approximately over 95% of the total production is exported.
This industry was started as a home industry , however , now besides small and medium units, a few units are large and have a 90% integrated system. A big number of the larger and medium sized firms are exporting their products , however, the smaller/vendor units usually supply to commercial exporters/traders in the country.
The surgical industry contributes 0.42 per cent of the total GDP whereas 100,000 to 150,000 workers are directly employed while 400,000 to 450,000 workers are indirectly working with the industry.
Pakistan supplies surgical instruments in four broad categories in the export markets.
The categories include instruments for medical, surgical and dental, Orthopedic appliances, Equipment using X-rays, alpha, beta, gamma rays.
A prominent surgical instrument manufacturer Sheikh Shehryar Saqib  told this scribe that  this was the sector where Pakistan has developed special capabilities to penetrate high income markets such as Germany, USA, France, Belgium and other.
The average export price of goods made in Sialkot was around 1.5-2.5 US dollar  which was much higher than what Chinese products get (0.35 US dollar). 
However, the price was lower than some of the more sophisticated producers such as Germany and France, the manufacturer said.
Shehryar said that the major thing was its raw material and luckily the main raw material was ‘steel’ . Around 60 per cent steel , used in the production of the surgical instruments, was  manufactured locally and the remaining 40 per cent was imported from Germany mostly, the trader said.
Sheikh Shehryar said that the surgical sector had achieved reasonable export performance growth during previous years , however, besides coronavirus ,lack of product diversification, inadequate shift out of low value disposable instruments to high value sophisticated products and uncertain business environment had badly affected this precious sector. The major impediments of the sector were low levels of productivity, inadequate technology upgrade and shortage of skilled staff, the industrialist said.
Sheikh Qaiser Mehmood , an exporter, told this scribe that most of the companies operate without any brands with only a couple of them moving to branding of their products. Moreover ,in upcoming years , the industry would have to face higher compliance requirements, especially when the industry produces more value added products and enters into more sophisticated markets. He said that Sialkot’s surgical instruments’ global production and value chain was labour-intensive and highly complex. It involves the import or local production of raw materials (including recycled steel imported from Germany and Japan) multi-tiered manufacturing centres, registered factories (“formal sector” workplaces), vendor-operated large, medium and small informal workshops, traders and suppliers of semi-finished and finished products, intermediary agents and international buyers,he added.
He said that formally registered factories employ both permanent staff as well as workers on temporary or agency contracts. The Sialkot surgical manufacturers cluster started as a cottage industry, based on social and familial networks. Skills had been transferred from one generation to another and businesses handed down from fathers to sons.Today Sialkot has over 9,000 manufacturers registered as members of the city’s Chamber of Commerce and Trade across a variety of sectors.
The surgical instruments cluster is considered the key SME export sector in Pakistan.
It is pertinent to mention here that the surgical instrument industry was growing alongside increasing demand in high-income importing countries. Sialkot’s market share of the global surgical instrument industry was significant but under-reported. Many products were routed through Germany and badged as “made in Germany”, which obscured more accurate trade figures, said Shehryar.
He said the surgical cluster saved a few exceptional manufacturers, generally lacking the resources and organising capabilities to diversify and keep up with new competition and market demand. The Cluster Development Initiative reports that profit margins of 62.5% of companies had decreased due to price competition among the cluster companies, as well as increased costs in the price of production.
Quality of Pakistani surgical instruments was good though not high and mostly meets the international as well as European standard .Production of instruments is a highly skilled task, so it cannot be easily taken over by newcomers to the field.
Abid Hussain, a small scale manufacturer said that out of the total number of surgical instruments manufactured in Sialkot, 60 per cent were disposable items and 40 per cent were reusable instruments. He said that for reusable instruments, expensive, high-grade steel, mostly imported from Germany, was used, adding that reusable instruments were produced with (mostly) a 5-year warranty on rusting, corrosion and precision and the final product involved up to 40 production processes whereas  for disposable instruments, local low-grade stainless steel was used and only about 20 processes are carried out.
Members of Surgical Instrument Manufacturers of Sialkot floated some recommendations for the betterment of the sector while talking to this scribe:
Pakistani Surgical manufacturers can produce  high quality, ethically produced, and inexpensive instruments, which could be regulated and supported from within Pakistan, and sold to ethically approved international suppliers and directly to public health purchasing authorities.
For improvement in the lives of workers , it was recommended to introduce collaborative institutional mechanisms to improve wages for workers, in line with the actual cost of living so that it is a good, healthy and supportive environment.  Sialkot Chamber of Commerce and Industry ( SCCI) and Surgical Instrument Manufacturers Association Pakistan (SIMAP) could coordinate with the state-run welfare institutions for labour to drive universal registration of workers in the sector so that they could access social security benefits. There could be improved governance, accountability and monitoring mechanisms regulating the roles and responsibilities of employers and public bodies.
The government should step forward and bring international buyers and suppliers to agree to common minimum standards for working conditions in the sector, recognising that this would have cost implications.
A committee of experts led by SCCI and SIMAP should undertake a mapping exercise of existing institutions, engage with them, design appropriate curricula in consultation with appropriate stakeholders. They should urgently seek investment in research, development and the professionalization of the industry.
A feasibility study should be conducted on alternative loan institutions to replace the advance payment (peshgi) system.
The  SCCI and SIMAP could consult with existing microfinance operations within the country and consult on the possibility of a financing programme targeted at workers in the surgical instruments industry. Workers should be consulted on this and their own views sought for alternatives to peshgi.The Surgical Industry has a vast potential to grow in the country as this sector has a good number of skilled professionals in the country ,but this industry can be boosted by providing governments support as well as a comprehensive planning and strategy to compete in the international market of surgical instruments.   

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