Pharmaceuticals sector: Where are we?

HARARE - Presently, Zimbabwe has an acute shortage of critical drugs and medicines. Around 80 percent of available drugs and medicines are imported with the remaining 20 percent locally manufactured.

This is despite local pharmaceutical manufacturers’ ability to produce many of the medicines on the Essential Drug List for Zimbabwe. 

The unavailability of foreign currency to import both finished medicines and raw materials for local manufacture of medicines and drugs has created a huge healthcare delivery gap. India accounts for 60 percent of Zimbabwe’s medicines imports and the balance of 40 percent coming from South Africa, Germany, the United Kingdom, the USA and a few others. 

NatPharm, the State drug procurement, warehousing and distribution entity under the Health and Child Care ministry, is a significant player in the medicines and drugs market. 

There is need to reconsider opportunities for local manufacturing and possibly widen the product range to cover common diseases.   

The value of Zimbabwe’s pharmaceutical market is unknown ranging from $200 million to $500 million. What is known is over $400 million worth of drugs are imported into the country annually.  Most of which are basic drugs of which 75 percent could be locally manufactured with any surplus exported into the region.

The five main local manufacturers Varichem, Plus 5, CAPS, Datlabs and Pharmanova have a role to play. Unfortunately, the current state of equipment and manufacturing processes has affected their ability to produce vital drugs and medicines with more than $40 million needed to retool the sector. 

In addition, challenges emanate from management changes over the years, which has in some cases resulted in non-renewal of manufacturing agreements and trade licences. 
South African pharmaceuticals prefer to manufacture at home but seem reluctant to set up base in Zimbabwe or other Sadc countries. 

The requirement by South African laws that medicines and drugs be airlifted rather than road or rail transported has made it almost impossible to export Zimbabwean manufactured medicines into that country.

To effectively compete in the manufacture of drugs Zimbabwe must modernise its equipment, skills levels and avail adequate foreign currency. We must focus on critical drugs and medicines in which competitive advantages exist. 

As for the state of drugs, new drugs are expensive while supply of old drugs is inconsistent which sometimes results in resistance. Although the Global Fund has ensured that HIV/Aids drugs are always available, the bigger problem is with antibiotics.

It is important that NatPharm supplied drugs are effectively used in government hospitals and the public sector.

Zimbabwe’s drugs and medicines regulatory environment is effective. The medical regulatory authority that oversees the pharmaceutical manufacturing industry is the Medical Control Authority of Zimbabwe (MCAZ). MCAZ is responsible for pharmaceutical surveillance, licensing, enforcement, laboratory services, Evaluation and Registration activities for the sector. It was established by the Medicines and Allied Substances Control Act (Masca) (Chapter 15:03) has done a fairly good job. 
Registration processes are rigorous and thorough for both imports and exports. The aim is to ensure citizens are safeguarded against obvious threats. 

Unfortunately, pharmacies have increased prices for medicines and drugs by as much as 400 to 500 percent. The extent to which the general populace is turning to the black market for medicines and drugs should be ascertained. The proliferation of unlicensed medicine sellers is a major concern as unscrupulous people take advantage of the current situation and smuggle various untested medicines and drugs into the country. This drives future health complications. 

The absence of a strong medicines regulatory environment in some neighbouring countries has fuelled the proliferation of unlicensed and dangerous drugs into Zimbabwe and the region. It is critical that the authorities effectively clamp this and ensure that drugs and medicines are readily available through formal channels. The pricing must be right.

The Pharmaceutical Society of Zimbabwe acknowledges the health sector is failing to import enough antibiotics and drugs for ailments such as cancer, diabetes and hypertension. This poses a question on how supplies can be improved. There are solutions.

Pharmaceutical companies have in the past fifteen years depended on internally generated funds to finance acquisition of plant, equipment, machinery and working capital. This has hampered innovation and recapitalisation, leading to inefficiencies and loss of regional competitiveness. 

In addition, some infrastructural challenges have emerged. In some cases, manufacturers have limited access to good quality water at high pressure to feed the reverse osmosis plants. Intermittent supply of electricity is sometimes another challenge. Sinking boreholes and installing standby generators to ensure consistent supply of water and electricity has its challenges. On the other hand, Indian pharmaceutical competitors have access to concessionary loans and export incentives. The country’s economic instability is a factor but policy incoherence has often been highlighted as another negative factor in local pharmaceutical manufacturing.

Funding

In October 2017, Health and Child Care minister Obadiah Moyo advised the industry that the Reserve Bank of Zimbabwe (RBZ) had disbursed US$6,7 million and another $3,3 million from a total requirement of US$29 million. This was positive but inadequate. Of the $3,3 million, $1,5 million was given to NatPharm to fund public sector supplies and $0,8 million to local manufacturers to increase capacity for the local and export markets. The balance of $1 million was allocated to private sector pharmacies to import essential drugs and medicines for chronic illnesses like diabetes and high blood pressure among others.

It is important to ascertain the correct monthly foreign currency requirements for the pharmaceutical sector. The sector needs $8 million or more monthly. In 2018, the sector advised that the future looked uncertain as the RBZ was failing to clear over $50 million of outstanding invoices for drug imports backdating to 2017. 

The long outstanding invoices for drug imports must be cleared. 

Importing raw materials to increase capacity utilization will create economies of scale and lower production unit cost while increasing employment levels. It has also been proven that for every job created in the pharmaceutical manufacturing industry seven other jobs are created in other supporting industries like packaging, laboratory instruments services, consumables, transport, ICT, sugar and others.  

According to McKinsey and Company the value of Africa’s pharmaceutical industry jumped to $20.8 billion in 2013 from just $4.7 billion a decade earlier. Growth is continuing at a rapid pace and predicted to be over $40 billion by 2020. That’s good news for multinationals and pharmaceutical companies seeking new sources of growth as developed markets stagnate. It’s also good news for patients who are now accessing medicines previously unavailable on the continent. Zimbabwe can get a slice of the cake.

Global pharmaceutical companies need local business partners-manufacturers, packaging companies and distributors to help them navigate the continent’s many markets. 
Given widely varying consumer preferences, price points, manufacturing, and distribution infrastructures they must invest in local partnerships to understand varying regulatory environments including partnering governments. Johnson & Johnson partnered with the South African government to introduce an education program for maternal, newborn, and child health that operates via mobile-phone messaging.

The US’s 330 million people constitute 46 percent of global medicine expenditure. It is the world’s largest pharmaceutical market with China second. Developed market spending growth will be driven by original brands, while pharmerging markets will continue to be fuelled by non-original products. 

On other hand, Africa’s 1.04 billion people account for 14 percent of global population and carries 40 percent of global diseases burden. Africa produces only 3 percent of global medicine output. The pharmaceutical manufacturing sector in Africa contributes only 25 to 30 per cent of the continent’s needs.

Generic drugs are the way to go for a developing country like Zimbabwe. They are 70 to 90 percent cheaper than brand name drugs making them more affordable for a large majority of Zimbabweans and Africans at large.  

The manufacture of life-saving drugs is concentrated in few African countries with South Africa topping the list at 70 percent and an additional 20 percent in Nigeria, Ghana and Kenya. Eighty-five percent of drugs sold in Africa are imported with Senegal importing 80 percent of its medicines. 

Currently, most generic come from India. Today no African country is entirely self-sufficient in pharmaceuticals. This raises concerns for both for governments and patients. As a result, in 2001 the 55 members of the African Union signed the Abuja Declaration to support the development of a plan for pharmaceutical innovation in Africa. To date this has not been followed through and operationalised. 

A focus on local manufacturing  

Poor access to basic generic medicines is a good reason to produce local medicines and to be less dependent on other countries. Local production can facilitate access to medicines for those in need. Most Zimbabweans have no health insurance. 

So either the government buys and imports the drugs from outside for distribution to the national health system or the patient has to pay from their own pocket.

Local production has some benefits. Saving of foreign currency, creation of jobs, increase of exports, technology transfer, raw materials produced locally will be cheaper, improvement of self-sufficiency in drug supply. Local production improves medicines security of supply which is of national security importance.

The problem is that these benefits are not always there when drugs are produced but sometimes even with these the price cannot compete with prices from India and China. This is because of economies of scale, export subsidies and other factors.  

Zimbabwe is one of the few countries in Sadc with a strong pharmaceutical manufacturing sector, second only to South Africa. Others are improving. 

In the 80s and 90s Zimbabwean pharmaceutical companies were exporting pharmaceutical drugs to South Africa, Zambia, Namibia, Malawi, Tanzania, Burundi, Rwanda, Botswana, Democratic Republic of Congo, Mauritius, Kenya, Uganda and Mozambique. The companies had registered products in Kenya, Tanzania, Malawi, Zambia, Mozambique, Lesotho, Swaziland, Namibia, Uganda and South Africa. All this was lost in the last 20 years. 

The big challenge is to produce high quality drugs that meet WHO standards. This can be easily resolved by bringing in technical know how from abroad but it is not always feasible as big manufacturers are protective. 

The opportunities    

A company from Bangladesh has set up a plant in Kenya valued at US$20 million in one of Kenya’s EPZs for pharmaceuticals manufacturing. The plant will cover EAC, Comesa and Sadc market. It is strategic.  Zambia’s imports of pharmaceuticals have increased by 90 percent since 2010 from $115 million in 2010 to $220 million in 2014. The top five sources of medicaments for Zambia in 2014 were South Africa, India, UK, Denmark and the US, with Zimbabwe coming a distant 14. 

Zimbabwe could do better given its proximity. Both countries are members of the Comesa and have Sadc preferential trade schemes.

The capacity to generate foreign currency from exports is huge from the Sadc market. More than 75 percent of the medicines consumed in Sadc are imported. The Sadc pharmaceutical market is worth more than $6 billion.

Prerequisites for success in manufacturing medicines

True, to succeed in the production of medicines Zimbabwe needs good pharmacists, biologists, chemists, doctors, and technicians. But this alone is not enough. The economy must start working again. In fact, part of the reason we were able to manufacture and export drugs and medicines in the 80s and 90s is because our economy was working.   

The Anti-monopolies and Tariffs Commission must be more visible to guarantee equity and fair play in the pharmaceutical industry to avoid dominance by the big players and countries. Issues of pricing and competition are critical to avoid collusion that is detrimental to patients.

With respect to local production of pharmaceuticals, at policy level there is a perceived conflict between pharmaceuticals industrial policy which aims to promote local manufacturing while the health policy aims for maximum access to essential medicines. These two must be aligned.  

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