By Solomon Mekonnen
Ethiopia is in the midst of a sustained growth surge that is becoming increasingly appreciated by international finance institutions.
The Government's Growth and Transformation Plans (GTP) I and II set ambitious targets for
further improvements in health, educational attainment, in terms of access to power, transportation, telecommunications etc. One of the sectors identified initially within GTP I was the pharmaceutical sector because of its potential to contribute to improved health outcomes.
This would put the sector in a position to become internationally recognized source of pharmaceutical feedstock materials and, amongst other things; it also generates significant foreign exchange earnings for the country, said Dr Giorgio Roscigno, a Consultant with Strategic Target Alignment with GTP II Goals.
According to sources, domestic demand for pharmaceutical products has grown by 25 percent on average reaching to 10 billion birr in 2013/15 and yet the share of the domestic companies does not exceed more than 20-25 percent. This shows that there is a huge discrepancy between demand and supply in pharmaceutical products and in order to fulfill the domestic demand of pharmaceutical and medical equipment in the coming few years.
In other words, the annual pharmaceutical market in Ethiopia is estimated to worth USD 400- 500 million and is growing at an impressive rate of 25 percent per annum. Accordingly, in 2014 local pharmaceutical manufacturing companies supplied products worth USD 44.2 million which is still far below what is expected.
A workshop on Local Pharmaceutical Manufacturing Development Incentive Packages and Strategic Target Alignment with GTP II Goals recently held in Addis recommended the need to establish new pharmaceutical industries for fulfilling domestic pharmaceutical demand here yesterday.
Ministry of Industry Domestic Investors Transformation and Investment Research and Evaluation Director Hunegnaw Abebaw said that not only it is necessary to upgrade existing companies, but also it is essential to establish new industries in the field.
Presenting a paper on Review of GTP I Performance on Pharmaceutical Industry and Assumptions and Targets of GTP II, Hunegnaw said that In 2010/11, there were 13 pharmaceutical and medical utilities manufacturing industries. However, in 2013/14 this number grew to 22 companies. Among these industries, nine of them are engaged in manufacturing of human drugs, one company is engaged in production of animal vaccination, and the other engaged in producing empty capsule while nine industries are engaged in medical equipment production. In the Growth and Transformation Plan period, it was targeted to build 10 factories and 9 of them have already become operational, he added.
Meskele Lera from Pharmaceutical Fund and Supply Agency (PFSA) presenting a paper entitled assessment of the success and challenges of existing incentive schemes to pharmaceutical industries said that local pharmaceutical companies are given 25 percent price protection when compete with foreign suppliers. Incentive packages are reasons for the survival of local industry in the past five years, he added.
Limited product diversification by local pharmaceutical manufacturers so far about, 114 items manufactured locally, duplication of items produced by local manufacturers, storage space constraint from PFSA side & also from local industry, limited production capacity are among challenges facing local pharmaceutical industries, he explained.Industry State Minister, Dr Mebrahtu Meles speaking on the occasion said: "It is wonderful to have this strategy in a very short period of time in such manner. In the course of this discussion for the realization of the five year action plan in the pharmaceutical industry, we are expected to discuss on how to establish governance and management structure meant to lead the plan of action."
World Health Organization Representative to Ethiopia Dr Pierre Mpele speaking on the occasion said that National Strategy on Pharmaceutical Development Sector was launched in July 2015. The launching of the Strategy was a real landmark in the history of Ethiopian Pharmaceutical Sector to certify the economy and health aspiration of Ethiopian people. Pharmaceuticals are among the most important pillars of the health system. We cannot think of a health system without availability and access to affordable, safe, effective and quality medicine. Pharmaceutical sector continues to be a priority area in the Ethiopian health policy and national strategic plan, he added.
He added that the development in pharmaceutical manufacturing industry is key in ensuring uninterrupted availability of essential medicine in all parts of the country including rural areas which is in line with the Ethiopian primary health care.
The targets set in the strategic plan should also be align with the target of GTP as related to pharmaceutical manufacturing. WHO and other UN Agencies will provide all necessary assistance in the implementation of the strategic plan. WHO is close to provide an expert to work with the project implementation office, Mpele added.
Dr Giorgio Roscigno also said that local pharmaceutical manufacturing companies have demonstrated that they fall short of reaching the standards required for WHO. Currently, 4 manufacturers qualified while others are expected to make reasonable investments in plant modernization to be able to qualify, he said.
According to him, incentives given to the sector, local pharmaceuticals are granted by Development Bank of Ethiopia loans of up to 70 percent for new investments, and up to 60 percent for upgrading projects which are tax free for the first five years. 100 percent exemption from payments of custom duties and other taxes levied on imports is given to all granted capital goods, such as plants, machinery equipment, and construction material, he added.
In addition to the existing incentive instruments outlined above the strategic plan proposes the additional incentives in the Strategic Plan for GTP II,
Creating new incentives tailored to company positioning along the value chain; instituting time-sensitive import-product restrictive policies to create a "window of opportunity' within which local pharmaceutical companies can transform and improve themselves to replace these imported products from within local formulation and manufacture resources which adhere to accepted WHO practices are few of the incentives, are among the others.
source:ethiopian herald
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