Zimpapers Logo

Currently, capacity utilisation in the sector is at 25 percent.
According to a recent report compiled by a think-tank, the National Economic Consultative Forum (NECF) Health Taskforce, pharmaceutical manufacturers are still confronted by myriad challenges that are still threatening the survival of all the nine licensed companies in the country — CAPS, Datlabs, Graniteside Chemicals, Meditech, Plus Five Pharmaceuticals, Pharmanova, Reckitt &  Colman, Varichem

Pharmaceutical and Zimbabwe Pharmaceuticals.
There are real fears that if the situation continues unabated the companies might either fold or relocate to neighbouring countries where conditions are relatively conducive for production.
It is generally believed that the Government needs to come up with a raft of policy measures  meant to ensure that the local industry is incentivised, while at the same time levelling the playing field so that local products can ably compete with imports.

Under the current legislative framework, “foreign drug suppliers are given irrevocable letters of credit that they use as a security deposit to raise pre-shipment finance before they supply orders they have won”.
However, local suppliers are required to supply on open credit ranging between 30 days and 60 days by NatPharm.
Another anomaly that is tilting the scales against local manufacturers is that while authorities require local manufacturers to make upfront payment of Value Added Tax (VAT) on pharmaceutical raw materials and duty on packaging materials, imported finished products come in duty-free, a development that makes local products very uncompetitive.

Players in the sector are now proposing that it will be favourable if the Government comes up with a framework to ensure that the country’s developmental partners preferentially procure locally manufactured drugs specifically for humanitarian assistance projects in Zimbabwe.
Statistics indicate that the country is capable of supplying 122 products, or 46 percent of the 260 drugs that are contained in the 2006 Essential Drug List of Zimbabwe (EDLIZ).

Although Zimbabwe’s pharmaceutical industry is rated second in the region after South Africa in terms of development and sophistication, it has since slipped to ninth position on the continent.
Presently the industry exports most of its products to regional markets such as South Africa, Botswana, Namibia, Zambia, Malawi, Tanzania, Angola and the Democratic Republic of Congo.
“Varichem, for example, is the first and currently the only one in Sub-Saharan Africa to produce generic three-in-one ARVs. Like the rest of the industry, currently it is facing serious viability challenges due to the preference being given to cheap imported drugs and is faced with closure of some of its factories once again.

“If the situation continues, indications are that many pharmaceutical companies may fold or relocate to neighbouring countries to carry out production in order to survive,” read part of the report.
Furthermore, though the sector has found a niche market in neighbouring South Africa, the legislative requirement for drugs to enter the country only through Oliver Tambo Airport, which presupposes transportation solely by air, has made local products uncompetitive.

Apart from problems that are peculiar to pharmaceutical companies, there are also challenges that are already plaguing the local economy such as the low liquidity in the market, including the high utility costs for power and water, that are making locally manufactured products expensive compared to imports.
Industry representatives are now pushing for Government to scrap VAT on imported raw materials and duty on packaging materials.

Also a ban on the importation of large quantities of commonly produced products such as aspirin, paracetamol, cotrimoxazole and amoxicillin is being proposed. Humanitarian organisations are being lobbied to allow non-governmental organisations permission to source locally unless if it can be proved that the local industry cannot supply.

Added the report: “Humanitarian organisations’ assistance should cover short-term requirements during emergency periods and have their assistance turned to developmental assistance, which seeks to upgrade local production capacities.  Furthermore, this will protect the country from the supply of unregistered drugs into the country, which may not be that useful to the country. Questions still remain on the immunisation drugs used in 2010, which caused fatalities in children.”

The NECF notes that if the proposed recommendations are adopted, capacity utilisation will ultimately increase to 80 percent in less than a year, while there will be improved availability of essential medicines and drugs.

Local companies will also, as a result, be able to produce more than 50 percent of the country’s essential drug requirements and resuscitate companies, for example, those that used to produce drips. It is claimed that the sector has the potential to increase regional exports by more than 200 percent if only it is able to increase its competitiveness and improve its pricing.

Generally, the country’s economy has been on an upward trajectory, with growth estimated to have topped 8,1 percent last year.
Growth is forecast to reach 9,1 percent. The retail sector, especially for food and beverages, has shown tremendous growth since the economic stability ushered in by the formation of the inclusive Government in February 2009.

But sectors such as the pharmaceutical industry have remained shackled by lingering challenges still prevalent in the economy.
Pointedly, CAPS has injected US$12 million in recapitalising and retooling its operations, but it still remains affected by the challenges in the subsector. There is now a growing consensus among experts that the Government needs to adopt sector-specific interventions for all industries in order to encourage broad-based economic recovery and growth.-The Sunday Mail