Established in 1990, Association of Pharmaceutical Producers of Nepal (APPO) is the representative body of 50 Nepali pharmaceutical companies. Among them 37 are WHO-GMP certified. The association has long been lobbying on a range of industry related issues.
Shanker Ghimire, Executive Director of Asian Pharmaceuticals Pvt Ltd is the President of APPON who is in the post since September 2015. New Business Age caught up with Ghimire to talk about the problems of Nepali pharmaceutical producers, export possibility of medicines produced in Nepal, government support to the industries, among others.
How do you assess the growth of Nepali pharmaceuticals Industry?
Nepali pharmaceuticals industry is growing gradually. However, certain systems need to be developed. The growth of all domestic pharmaceuticals companies is not similar. Some 7-8 companies are doing well, but other companies are growing slowly. APPON has been focusing its approaches for healthy growth of the sector.
What factors are holding back the sector’s healthy growth?
We have an open market. However, there is no mechanism to regulate it. Various types of medicines are entering unofficially through the Nepal-India border. The government policies too are restricting the growth of the overall sector.
The governments in our neighbouring countries, for instance, are very supportive. They have been supporting the business directly and through various associated institutions. The new pharmaceutical companies get land easily, receive subsidised loans and don’t have to spend money in importing the technology. The governments themselves import the required technology for the industry utilising the taxes received from the business.
We don’t have such facilities. It is important for the government to prioritise the domestically produced medicine and encourage producers. The government can support the Nepali pharmaceuticals industry in many ways. We have suggested various things in this regard.
APPON has long been demanding the government to restrict the import of certain types of drugs? How do you think the import restriction will help?
Currently, 51 pharmaceutical industries operate in Nepal. Among them, 37 have already received WHO-GMP certification. We are self-sufficient in 72 types of drugs. Nepali pharmaceutical companies have long been asking the government to restrict the import of drugs for common cold, cough, headache, gastric, diabetes, different types of painkillers, vitamins and many other types of drugs that are produced here. The major reason for the unfair market competition is based on the import of such drugs. Similarly, we also produce hormones and steroids along with various antibiotics, anti-allergy drugs as well as drugs for high blood pressure and psychotropic drugs.
Import of such drugs also indicates that we are compromising on the quality of sensitive products like medicines. The Department of Drug Administration (DDA) itself has stated that it cannot guarantee the quality of all medicines available in the market. Our products are on-par with foreign medicines in terms of quality. We can correct the situation in case defects are found in our products. Even medicines produced in advanced countries at times fail in quality test due to human error in manufacturing.
Some non-tariff barrier measures can be deployed to control the import of medicines in which we are self-sufficient.
India and Bangladesh are two major pharmaceutical producers in the South Asia region. What can we learn from them?
We need to look into their best policies and practices. Many things can be learned from the development of the pharmaceutical industry in Bangladesh. The industry there meets 97 percent of the domestic medicine demand. Similarly, the country now exports pharmaceutical products to 112 countries across the world. The pharmaceutical industry of this South Asian country was similar to Nepal’s 25 years ago. The government there in many ways provides active support to the drugs manufacturers helping them to grow. Imports of different types of medicines that are produced locally are restricted in Bangladesh. The strategies used in Bangladesh have clearly shown that imports can be controlled despite the rules of the World Trade Organisation (WTO).
Likewise, the Indian government has 35 different institutions to help the pharmaceutical industry. Such institutions extend their support in a range of areas such as providing technology to pharmaceutical companies for free, acquisition of land to establish production facilities, helping in business financing along with ensuring a continuous supply of essentials such as electricity and water. Indian companies get active government assistance in bringing out new technologies and showcasing their brands and products in international exhibitions.
The government needs to invest money in R&D. If producers themselves spend on R&D they may not be able to digest all the costs. We are not asking the government to support in all areas like in India. We are just looking for the government to support us where it can.
Everyone including the regulator needs to believe that Nepali companies are able to produce quality medicines. We have time and again proved our manufacturing capabilities. In 2015 during the border blockade Nepali pharmaceutical companies sufficiently supplied the market with much needed life saving drugs that were in short supply. Earlier, Nepali companies distributed free medicines in large quantities immediately after the April earthquake.
What is the size of the pharmaceutical market in Nepal?
The size of the domestic pharmaceutical market is somewhere between Rs 36 billion to Rs 40 billion. Similarly, the total investment in the Nepali pharmaceutical industry stands at around Rs 50 billion. The investment is growing gradually with the entry of new companies and the established one adding capital. It requires Rs 800-Rs 900 million for a pharmaceutical company to construct a new wing.
What is the market share of Nepali pharmaceutical companies?
Nepali products cover 45 percent of the market with foreign company drugs making up the rest. This market structure has been stable for many years. However, Nepali producers have the ability to raise the market share to 60-65 percent within a short period and increase it to around 70-80 percent by 2025 if a favourable environment is created.
How has APPON approached the government concerning these issues?
APPON has approached the government frequently to discuss the solutions to the underlying problems. Nonetheless, the instability at the policy level has hindered our efforts. Frequent changes in the government and bureaucracy impede any progress made to address the prevailing issues. Similarly, committees are formed but they do not work actively to ease the hurdles the Nepali pharmaceutical sector has been facing.
How has the response been from the government?
Health Minister Gagan Thapa has been positive. The Ministry of Health has formed a committee in response to our calls. It will be fruitful for all of us if the committee works fast as the level of political uncertainty remains high in our country. In case of changes in the government, such an attempt is likely to go in vain. APPON has held two meetings with the committee till date to find pragmatic approaches to develop the domestic pharmaceutical industry. We will be providing our feedback on the meetings. We have already suggested that Nepal does not need to import around 70 types of medicines. The government can gradually reduce the number of imported drugs if it cannot restrict all at once.
Last year a taskforce was formed to resolve the dispute between the government and manufacturers regarding the pricing of medicines. What is the progress on the automated drugs pricing mechanism?
We do not have any recent update on the status of the taskforce. It started work on it during the tenure of the erstwhile health minister. But it looks like the taskforce has not progressed with the change in the government.
We have on many occasions suggested the government to initiate an automated pricing mechanism of medicines in order to prevent malpractice in the market. In today’s world, scientifically determining the prices is important. The price of raw materials keeps fluctuating in the international markets and various costs associated to the production, marketing and supply constantly go upwards. Nevertheless, we are forced to sell medicines at prices determined around a decade ago.
What do you think is the contributing factor for the pricing dispute?
It is an irony that we have been using a largely outdated Act in the pricing of medicine. The Drug Act, 2035 was introduced at a time when there was only one pharmaceutical company in the country. Moreover, it was meant to establish a uniform control mechanism on imports all over Nepal.
Various media reports have stated wrongly about the production cost of medicine in Nepal. Many factors play a crucial role in the pricing of medicines. If the government provides us more facilities, we can produce cheaper medicines.
Similarly, we often face criticism on the issue of ‘deal bonuses’ which I would like to clear through your magazine. We have not been able to end this due to various reasons. The import of foreign medicines puts a considerable pressure on us despite our unwillingness to engage in the ‘deal bonus’. Import restrictions are important in order to pave the way for us to sell our products at reasonable prices which will ultimately ensure fair market practices. Moreover, producers should focus on quality rather than the price as medicines are highly sensitive products.
Now there are around 50 pharmaceutical companies in the country. The government, without discussing anything with us, has kept the domestic pharmaceutical companies under the Act. The Nepali pharmaceutical sector carries a lot of potential. Many potent industries across various sectors sharply declined in the past due to government negligence. So, it is necessary for the government to actively support us in our growth. The sector also has become a major employer in the country. Where industries in other sectors have been facing a severe shortage of manpower, we have retained over 20,000 skilled people in the country who are working as pharmacists, micro-biologists and chemists in the pharmaceutical companies.
Some Nepali pharmaceutical companies have already received the Certificate of Pharmaceutical Products (CPP) certification which is one of the prerequisites for obtaining an export license from the DDA. How do you see the possibility of exporting Nepali pharmaceutical products?
The number of companies receiving the CPP certification is increasing. It shows a growing confidence in Nepali producers that they can take their products to the international market. Nevertheless, the export of medicine is not an easy task to undertake. Many impediments need to be ironed out before the export can begin. Similarly, we need to cooperate with the importing countries. The registration fees for medicines are quite high the world over. Generally, it costs USD 500,000 to register a pharmaceutical brand, while it is USD 5,000 to register a pharmaceutical product in many countries. The registration charge is just Rs 50,000-Rs 60,000 in our country. There are also some problems in the certification process here. These things need to be sorted out first.
How do you view the role of DDA?
DDA has been focusing all its efforts on acting as the regulator. However, the authority lacks adequate manpower. The lab and systems at the DDA were set up at a time when there were two or three pharmaceutical companies in the country, while the medicine import was also relatively lower compared to the present.
It is due to the lack of human and other necessary resources that the authority has asked us to do some of the standard testing of pharmaceutical products outside the country. However, lately, we have heard that the finance ministry and health ministry are coordinating to make the DDA more resourceful and are trying to bring in some new people.
Can pharmaceutical companies give some of their input?
We can help the DDA in terms of training and skill enhancement of its lab technicians. The labs of private companies are big and well managed. We have to wait for a long time to test the medicines. It is disappointing to see the DDA in such a condition. It takes around nine months to one year to test a newly produced medicine.
It’s been 17 months since you became the President of APPON? What has the association achieved in this period?
APPON is an industry representative entity with a lot of unity. It was our recommendation that the DDA should approach the international governing body for the WHO-GMP certification for Nepali pharmaceutical companies.
Our former presidents have also been working actively to help resolve many problems. APPON has clearly stated its agenda for the development of the Nepali pharmaceutical industry and we move forward keeping the agenda in mind with every successive governing body of the association. APPON has been maintaining its systems according to pharmacopeia and WHO-GMP standards.
Some doctors and health experts have suggested the DDA introduce a policy to prescribe drugs in generic names instead of brand names to bring down the high medicine prices. How do you view this proposal?
The distribution of medicines in generic names can be a new practice in the Nepali market. But firstly, we need to understand why drugs go to the market in generic and brand names in other countries.
Many advanced countries have been practicing the distribution of medicines in generic names as they have well established systems. Mistakes and the misuse of drugs are low there. However, we have not set up systems as such. We have an open and very porous border through which many types of drugs enter here illicitly. Chances are high that if we introduced the policy in the current situation, illicit trading of medicine will increase. Similarly, it will be very difficult to identify generic medicines that are produced domestically and those which are imported. It will create a pricing imbalance in the market. It is not that we do not want the policy of distributing generic medicines. A proper system has to be there for the purpose.
Likewise, the DDA needs to certify all medicines at the same level before introducing such a policy. We have 51 domestic pharmaceutical companies supplying their products in the market at present. Meanwhile, 200 Indian pharmaceutical companies and many Bangladeshi producers have been selling their products here. Given the dominance of foreign producers here, Nepali companies will be forced to cease their operations if the policy to distribute generic medicines is enforced without proper arrangements.