CTI: Pharmaceutical industry hit

Arusha. Laurean Bwanakunu is not among the local officials who is amused by the state of the pharmaceutical industry in Tanzania.

Being the director general of the Medical Stores Department (MSD), an autonomous agency under the health ministry responsible for the procurement, storage and distribution of medicines and allied products, he is dismayed by the small number of local producers from where to procure the needed drugs for the growing demands.

“We are getting about 80 per cent of our supplies from outside and I am not seeing the situation reversing in the near future. Only two of the six pharmaceutical plants in the country are operational,” he said in Nairobi last week during the first high level multi-stakeholders conference on promoting pharmaceutical sector investment in the region.

No matter the challenges here and there, the agency had to abide by the government policy which emphasizes preference to local firms when procuring drugs and medical devices.

However, like other stakeholders in the health sector, Mr Bwanakunu is not seeing the government directive on the procurement of drugs working well because of the low production of pharmaceuticals by the few local industries which are operational.

He said besides the limited supplies from the local producers, MSD and other buyers have to cope with long delays in delivering them once the companies in question have been awarded tender and the quality of the products.

MSD has an annual budget of $600 million for procurement of drugs and allied products.

At one time, according to him, the agency gave a price incentive (reduction) of between 15 and 20 per cent for the local pharmaceutical producers to enable them compete on level ground with the foreign companies in the tendering process for supplies to MSD but this did not help.

However, Mr Bwanakunu sees the bright future for the industry if the government once acted on proposals made recently by a team of experts on how to boost the pharmaceutical sector.

The task force comprising of experts from MSD, National Health Insurance Fund (NHIF), TIB Development Bank, Tanzania Food and Drugs Authority (TFDA) and the Tanzania Industrial Research and Development Organization (Tirdo), is currently working on a novel plan to woo foreign investors in the pharmaceutical sector in Tanzania.

Details of the grand plan are scant but the project will be undertaken on the public private partnership (PPP). “No country can develop without the pharmaceutical industry”, he said, noting that this was an innovative way by the local Tanzanians on how to revive the pharmaceutical sector.

The minister for Industry, Trade and Investment, Mr Charles Mwijage, was quoted as saying in Dodoma recently that six companies had shown interest in investing in the pharmaceutical and medical equipment manufacturing. Among the products to be made are anti-biotics, drips and fluids and gauze to be manufactured from cotton.

Earlier the MSD boss briefed the conference on how the Tanzania government was supporting the sector by giving incentives to local manufacturers. But he was categorical that there was not much to rejoice about the pharmaceutical industry in Tanzania.

He said although the pharmaceutical industry is one of the sectors to be given priority under the industrialisation drive which the fifth phase government of President John Magufuli has embarked, more and more drugs and allied products would continue to be imported from abroad.

The Confederation of Tanzania Industries (CTI) says the country’s taxation system does not favour the local pharmaceutical industry to grow.

While all medicines and other finished pharmaceutical products are not charged import duty as per the World Health Organisation (WHO), Tanzania charges 10 per cent import duty and 18 per cent VAT on related raw materials.

“The same manufacturers are supposed to pay VAT on raw materials and other services like electricity and all these pile up the production cost,” says Hussein Kamote, director of policy and advocacy at CTI.

“Under such circumstances, it’s difficult for the local manufacturers to survive while foreign suppliers are also competing,” he adds.

There is one success story, though. Mansoor Daya, probably the oldest local drug manufacturer in the country, has been awarded a tender to make Paracetamol, a pain relieving drug, therefore, MSD has stopped importing it.

The East African Community (EAC) deputy secretary general in charge of Productive and Social Sectors Christophe Bazivamo emphasized the need for the partner states in the bloc to implement deliberate incentive packages to promote domestic pharmaceutical production in the region currently valued at $5.3 billion with a forecasted annual growth rate of 12.9 per cent.

He proposed a uniform preferential margin of 20 per cent for all regionally produced medicines and medical devices as well as imposing of tight restrictions on finished pharmaceutical products that can be or are produced locally from being imported.

“There is a huge opportunity to invest in the pharmaceutical manufacturing in East Africa”, he said. Available information indicate that presently there are 62 pharmaceutical companies in the region, 35 of which are in Kenya but supplying only 25 per cent of the Kenyan market.

Kenya’s cabinet secretary for EAC Affairs Ms Phyllis J.Kandie said 420 medicines and allied products have been registered across the six national medicines regulatory agencies in the region; Tanzania, Uganda, Kenya, Burundi, Rwanda and Zanzibar, alongside with 10 joint inspections.

In order to strengthen post-market surveillance system in the region, the EAC with the support of German government has procured eight mini-labs for Rwanda while plans are at advanced stages to supply similar number to Burundi and Zanzibar medicines regulatory authorities respectively.

“There is need therefore to support the growth of the sector by engaging and addressing the concerns of the local pharmaceutical manufactures and potential investors”, said Mr Emil Nelson, the project manager of the Federation of East African Pharmaceutical Manufacturers which is based in Arusha.

The pharmaceutical manufacturers operating from within the EAC region generally produce at a cost disadvantage to larger generic product manufacturers internationally due to a variety of reasons including scale and expensive asset base, it said in part.

On his part, Nazeem Mohamed, the chairperson of FEAPM has proposed a preferential margin of 20 per cent for all regionally produced medicines and medical devices in public tenders in tandem with Article 35 of the EAC Common Market Protocol.