PRE-FEASIBILITY STUDY

ON
FORMULATION OF PHARMACEUTICAL AND HEALTH PRODUCTS

Pakistan Council of Scientific and Industrial Research. PCSIR.

HEAD OFFICE
Constitution Avenue, Sector G-5/2,
051-9225393
Islamabad.

Pharmaceutical Research Centre

Pakistan Council for Scientific and Industrial Research,
Government of Pakistan
www.pcsir.gov.pk

Note: All Services / information related to PM’s Youth Business Loan are Free of Cost
April, 2014

1 of 12
1. DISCLAIMER
The PCSIR is not liable for any loss, damage or expense during the implementation and
execution of the project. All terms and conditions will be clarified in MoU.

In this document, we provide the information regarding the subject matter. The material of
whole the document is based upon the data and information collected from various reliable
sources which may differ from case to case. The information has been provided on ‘as is
where is’ basis without any warranties or assertions as to the correctness or soundness
thereof. Leather Research Centre PCSIR, its employees do not assume any liability for any
financial or other loss resulting from this memorandum in consequence of undertaking this
activity. The contained information does not preclude any further professional advice. The
prospective user of this memorandum is encouraged to carry out additional diligence and
gather any information which is necessary for making an informed decision, including taking
professional advice from a qualified consultant/technical expert before taking any decision to
act upon the information.

2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in
project identification for investment. The project pre-feasibility may form the basis of an
important investment decision and in order to serve this objective, the document/study covers
various aspects of project concept development, start-up, and production, marketing, finance
and business management.

The purpose of this document is to facilitate potential investors in fat-liquors by providing

them a general understanding of the business with the intention of supporting potential
investors in crucial investment decisions.

The need to come up with pre-feasibility reports for undocumented or minimally documented
sectors attains greater imminence as the research that precedes such reports reveal certain
thumb rules: best practices developed by existing enterprises by trial and error, and certain
industrial norms that become a guiding source regarding various aspects of business set-up
and it’s successful management.

Apart from carefully studying the whole document one must consider critical aspects
provided later on, which form basis of any Investment Decision.

3. INTRODUCTION TO PCSIR LABORATORIES COMPLEX, KARACHI

Pakistan Council of Scientific and Industrial Research (PCSIR) created in 1953, is a premier
scientific and industrial research organization in the country with its laboratories located at
Karachi, Lahore, Peshawar, Quetta, Hyderabad, Skardu and Islamabad.

PCSIR Laboratories Complex, Karachi is one of the laboratories of PCSIR and is engaged in
doing research, development, testing / analysis / calibration, consultation and production
activities. PCSIR Laboratories Complex, Karachi is the first analytical laboratory of Pakistan
to be awarded Accreditation to ISO-17025 by Pakistan National Accreditation Council
(PNAC).

2 of 12
 The main objectives of PCSIR are effective utilization of national resources for self reliance
and development of export oriented technologies. Thousands of analytical / technical services
had been provided to public and private sectors. A large number of patents & processes have
been leased to industrial sector for commercialization. The sealed patent documents contain
legally all true claims and after getting such documents the inventor is able to commercialize
its patent and also enable to reinforce.

4. EXECUTIVE SUMMARY
PCSIR Laboratories Complex, Karachi is one of the laboratories of PCSIR and is engaged in
doing research, development, testing / analysis / calibration, consultation and production
activities. PCSIR Laboratories Complex, Karachi is the first analytical laboratory of Pakistan
to be awarded Accreditation to ISO-17025 by Pakistan National Accreditation Council
(PNAC).

Thousands of analytical / technical services had been provided to public and private sectors.
A large number of patents & processes have been leased to industrial sector for
commercialization. As PCSIR is the biggest R & D organisation in the country and the
Karachi Laboratories Complex is the biggest among all units of PCSIR, doing R & D and
publish papers in National & International Journals of high impact factor. KLC has skilled
Scientist & Technologist and most of the scientists are Ph. D. in their relevant subject.
Completed many in house R&D and funded projects. For the execution of the business with
PCSIR Laboratories Complex, Karachi skilled manpower will help the entrepreneur; there is
direct or indirect generation of employment. By only investment of approx. Rs. 2 million,
production of five products and their commercialization will take place. This prefeasibility
will start a small business which latter on capture the whole market.

5. INTRODUCTION TO SCHEME
Prime Minister’s Youth Business Loan, for young entrepreneurs, with an allocated budget of
Rs.5.0 billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-
up per annum for one hundred thousand (100,000) beneficiaries, through designated financial
institutions, initially by the National Bank of Pakistan (NBP) and the First Women Bank
Limited (FWBL).

Loans from Rs.0.1 million to Rs.2.0 million with tenure up to 8 years inclusive of 1 year
grace period, and a debt: equity of 90:10 will be disbursed to SME beneficiaries across
Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan, Azad
Jammu & Kashmir and Federally Administered Tribal Area (FATA).

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

Allopathic system of medicine that is mostly based on the synthesis of naturally occurring
compounds that are used as a medicine. Pharmaceutical chemistry and drug designing
constitutes one of the most important aspects of therapeutic disciplines. It is in fact a complex
and interactive process, which involves scientist from many disciplines working together to
provide many type of information. Since last 200 years there is a remarkable increase in the
use of medicines among the both urban and rural populations. The increasing reliance of the
general public on allotropy system has resulted in an increase in demands of medicine in
Pakistan.

3 of 12
Essential drugs provide safe, effective treatment for the infectious and children diseases that
affect the vast majority of the world’s population. The purpose of essential drugs is to reduce
morbidity from common illnesses by ensuring equal access to the essential drugs and rational
use of the drugs. Formulation of different pharmaceutical products and essential drugs
according to the WHO recommendations and their commercialization reduce its import and
save the foreign exchange.

The following types of product will be made:

 10% Urea Ointment (Dermatological drugs, Topical)
 Antifungal Drug (Dermatological drugs, Topical)
 Menthodex (Dermatological drugs, Topical)
 Rub Vaporub Balm (Dermatological drugs, Topical)
 Mos Shoo with Citronella (Insect repellent)
 Vaporized Mosquito Repellent with Citronella (Insect repellent)

Benefit of Products

10% Urea Ointment

It is used as dermatological drug (Topical), Drugs affecting skin differentiation and
proliferation, can be used in the form of ointment or cream. All ingredients are in the ratio of
according to the WHO recommended.

Antifungal Drug
It is an essential drugs used as dermatological (Topical), antifungal drug, can be used in the
form of ointment or cream, easily prepared and very cheap. All ingredients are in the ratio of
according to the WHO recommended.

Menthodex
Menthodex is a dermatological product should be used externally and has numerous
advantages for conditions that require a soothing and penetrating balm. Apply where the skin
is smooth; gently rub until the color disappears. Menthodex when rub in skins of minor cuts,
wounds and abrasions it gradually releases iodine and inhibits the growth and stop the
activity of bacteria and thus promotes healing. It also prevents infection. As menthodex
contains menthol so it relieves congestion, releases soothing aromatic vapors, gives cooling
to the wound and in cuts.

It is used for the symptomatic relief of muscular pain and stiffness (including rheumatic
pains, backache, lumbago, sciatica, fibrositis, muscular aches, sprains and strains, painful
bruising) and chilblains where the skin is unbroken.

Mos Shoo with Citronella

Mos Shoo is used as insect repellents, it provides protection to man and animals from the
annoying insects, pest, mosquitoes, fleas, flies, ticks and chiggers. It is effective for eight
hours. It is used in the formulation of lotion, cream and in ointment. It can be applied on
hands and in cloths. Adverse effects which may only arise due to incidental handling or oral
ingestion.
Vaporized Mosquito Repellent with Citronella

4 of 12
 Vaporized Mosquito Repellent is used as insect repellents; it provides protection to man and
animals from the annoying insects, pest, mosquitoes, fleas, flies, ticks and chiggers. It is
effective for eight hours. It is used in the form of liquid and vaporised by electricity. Adverse
effects which may only arise due to incidental handling or oral ingestion.

7. CRITICAL FACTORS

 Lack of marketing and advertisement of the products in public and private sectors.
 Lack of awareness about intellectual property rights for the protection of process and
products.
 Higher return on investment and a steady growth of business is closely associated with
regular training and capacity building of the entrepreneur and employee.
 Higher prices make the quality products less reachable as compare to cheap and low grade
products.

8. INSTALLED & OPERATIONAL CAPACITIES

See the number 12 (PROJECT COST SUMMARY)

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Karachi, Lahore and big cities of Pakistan.

10. POTENTIAL TARGET MARKETS

Local Market

5 of 12
11. PRODUCTION PROCESS FLOW

Process flow diagram for the production of 10% Urea Ointment, Antifungal Ointment,
Menthodex & Rub Vaporub Balm

Chemical Raw Material Heat

Stirring

Finish Product

Packaging Supply to the

Market

6 of 12
 Process flow diagram for the production of Mos Shoo with Citronella & Vaporized
Mosquito Repellent with Citronella

Chemical

Raw Material

Chemical

Finish Product

Packaging Supply to the

Market

12. PROJECT COST SUMMARY

A detailed financial breakup is given to analyse the commercial viability of the

products under the “Prime Minister’s Youth Business Loan” scheme.

Name of Product / Activity : Formulation of Pharmaceutical and Health Products

Capacity : 200 Kg / Batch
Production Time per Batch : One Day
Packaging Size : 50 to 100 g

7 of 12
12.1 Project economics
Production capacity 48,000 Kg per year each product (200 Kg per day)
The following table shows Internal Rate of Return, Payback Period, Future Value and
Net Present Value

Table 1: Project Economics

Sr. # Description Details

1. Internal Rate of Return (IRR) 50% per year
2. Payback Period (yrs) 1.5

12.2 Project Financing

Table 2: Project Financing

Sr. # Description Details

1. Total Equity (10%) Rs. 192,272/-
2. Bank Loan (90%) 17,30,448/-
3. Mark-up to the Borrower (%age / annum) 8%
4. Tenure of the Loan (Year) 8%
5. Grace Period (Year) 1

12.3 Project Cost

Following requirements have been identified for the operation of the proposed
business.

Table 3: Project Cost

Sr. # Capital Investment Amount (Rs.)

1. Permanent Equipments 447,000/-
2. Furniture & Fixture 125,000/-
3. Office Equipments 150,000/-
4. Expandable Supplies 724,000/-
5. Human Resource Development ((HRD) 444,000/-
6. Utilities 32,720/-
Total 19,22,720/-

12.4 Space Requirement

Area has been calculated on the basis of space requirement for production,
management and storage.

8 of 12
 T able 4: Space Requirement

Sr. # Space Requirement (Sq.) Yards

1. Management building 30
2. Processing Area 70
3. Open Area 20
Total Area 120 Yards

Premises may be obtained on rent @ Rs. 25,000/ to 35,000/ per month

12.5 Permanent Equipments:

The following permanent equipments are required.

Table 5: Permanent Equipments

Sr. # Items Quantity Rs. (in rupees)

1. SS Vessel (300 Kg) One 150,000/-
2. SS Bucket (300 L) One 25,000/-
3. Heavy duty Mechanical Stirrer One 200,000/-
for 300 Kg Vessel
4. Top Loading Balance One 50,000/-
5. Big Spatula (four feet long) Two @ Rs. 500 1000/-
6. Plastic Drums 300 Kg Capacity Two @ Rs. 500 1000/-
7. Working Tables with Stone Two @ Rs. 5000 10,000/-
Surface
8. Gloves, Lab. Coats, Glasses etc As per 10,000/-
requirements
Total: 447,000/-

12.6 Furniture & Fixture

Table 6: Furniture & Fixture

Sr. # Items Quantity Amount Rs. (in urpees)

1. Chairs Six @ Rs. 4000 24,000/-
2. Revolving Chair One @ Rs. 6000 6,000/-
3. Office Table Two @ Rs. 8000 16,000/-
4. Fans Four @ Rs. 3500 14,000/-
5. Split (1.5 Ton) One @ Rs. 65,000 65,000/-
Total: 125,000/-

12.7 Office Equipments

9 of 12
 Table 7: Office Equipments

Sr. # Items Quantity Amount Rs. (in rupees)

1. Computer Desktop One 45,500/-
2. Laptop One 80,000/-
3. Computer Printer One 18,000/-
4. Net Working One 5,000/-
5. Telephone Three @ Rs. 500 1,500/-
Total: 150,000/-

12.8 Expandable Supplies:

Table 8: Expandable Supplies

Sr. #. Items Amount Rs. (in rupees)

1. Chemicals and Raw Materials 3,49,000/-

2. Glass Ware 75,000/-
3. Standards 2,50,000/-
4. Miscellaneous or Contingencies e.g., Patents, 50,000/-
Publications, Postage, Stationary etc.
Total: 724,000/-

12.9 Human Resource Development (HRD)

Table 9: Human Resource Development ((HRD)

Sr. # Item Qualification Salary Per Year

1. Lab. Technician Inter Science / B. Sc. 360,000

(01 person @ Rs. 30,000/-per With experience of
month, with annual handling lab.
increment) equipments
2. Un-Skilled Person Matric/ Non Matric 84,000/-
(01 person @ Rs. 7,000/-per
month, with annual
increment)
Total 444,000/-

12.10 Utilities
Table 10: Utilities

10 of 12
 Sr. #. Utility Cost Required Per Batch
1. Electricity Rs. 1536 / Batch
Rs. 30,720 / Month
2. Water Rs. 100 / Batch
Rs. 2000 / Month
Total Rs. 32,720/-

Grand Total: (Table 5 to Table 10) Rs. 19,22,720/- (1.92272 Million)

12. 11 Revenue Generation

Table 11: Revenue Generation

Sr. # Items Unit Price/ Kg First Year First Year Revenue

Production Quantity Generation
1. 10% Urea Ointment Rs. 500 / Kg 40,000 -48,000 Kg* Approx. 10 Million*
2. Antifungal Cream Rs. 2000 / Kg 40,000 -48,000 Kg* Approx. 20 Million*
3. Menthodex Rs. 750 / Kg 40,000 -48,000 Kg* Approx. 10 Million*
4. Rub Vaporub Balm Rs. 1,000 / Kg 40,000 -48,000 Kg* Approx. 20 Million*
5. Mos Shoo with Rs. 600 / L 40,000 -48,000 L* Approx. 10 Million*
Citronella
6. Vaporized Mosquito Rs. 1300 / Kg 40,000 -48,000 L* Approx. 20 Million*
Repellent with
Citronella
* As per demand

11 of 12