High Compliance and regulatory risk, coupled with steep production costs, unending power cuts, and import-related costs for pharmaceutical products and raw materials, have stifled growth in the local pharmaceutical manufacturing and retail sector, Industry players have said.
By Michael Gwarisa
The high costs of doing business have had a ripple effect on the consumers as the cost of pharmaceutical products locally is beyond the reach of many and in some cases, has led to drug stock-outs as operators struggle to produce and procure pharmaceutical products from source markets.
Speaking at the inaugural Joint Conference for the Pharmaceutical Wholesalers Association (PWA) and the Community Pharmacists Association (CPA), Varichem Pharmaceutical Managing Director, Mr Lloyd Chapanga said the cost of doing business in the pharmaceutical sector was no longer sustainable.
As you know, the industry is heavily regulated. Here by the Medicines Control Authority of Zimbabwe (MCAZ), and in the region where we do exports, regulatory authorities in those countries also follow the same route,” said Mr Chapanga.
He added that the incessant power cuts have added a layer of pain to the already existing woes as they now have to fork out huge sums of money to fuel generators to run the manufacturing plant.
“Most of the costs is hidden in terms of lost sales, out of stock and other things like that. We must do GNP compliance. If you don’t have GNP compliance, you don’t have products to sell. Power is also critical. Our factories have to be pressurized to maintain the necessary pressures and the company standards. For Vairchem, we have generators that run the factories.
“We have two sides. One where we make the penicillin and one where we make the conventional products. In that facility, we use about 120 liters of Diesel per hour to power the plant and at times it goes for two days without power. We had to add another tan of the 1000 liters of Diesel so that we maintain productivity.”
He said the risk of compliance consumes about 20 to 25 percent of the operating budget in the sector and at the company level, 10 percent to 12 percent is due to compliance issues.
The Zimbabwe Pharmaceutical market is estimated at US$245 Million. Imports account for 88 percent and 12 percent of drugs are consumed by local manufacturers.
Pharmaceutical Wholesalers Association president, Mr Dumisani Danda said the Risk of compliance has greatly driven the cost up of pharmaceutical products for both the consumer and retailers.
“Many a times, we get asked why for example someone goggles for Paracetamol and online, it’s costing less but locally it costs above that. Looking at the supply chain, we get drugs from the manufacturers then from the manufacturers, they come to us the wholesalers, and then from wholesalers, we distribute to retail pharmacies, hospitals, and eventually our ultimate client, the patient.
“So as a pharmaceutical wholesaler, you generate a purchase order, then you send it to the manufacturer. These drugs we import are supposed to be MCAZ registered. The manufacturer then issues us with a Proforma invoice. From the Proforma invoice, there are conditions we are supposed to meet as wholesalers for example the Minimum Order Quantity (MOQ). This states that a wholesaler can only buy a full batch from the manufacturers in India, South Africa, etc. 99 percent of the time we buy a full batch. Let’s say a batch has 10,000 units, you are supposed to buy 10,000 units, they will not allow you to buy less than that,” added Mr Danda.
As for the pricing, wholesalers get a Post Insured Freight (PIF) invoice which covers against risk of either loss or damage in the freight processes and this in turn also pushes the cost of pharmaceutical products up.
“For some suppliers, you are supposed to pay 50 percent when placing an order and 50 percent upon when the shipment is ready. For others, you pay 100 Percent before they even start manufacturing. The lee time normally is between 60 to 90 days then there are other manufacturers like Novartis, IRANGE right you have a lee time of eight months that’s why at times we have some shortages. You pay now 100 percent then you would wait for eight months in order to get your product.”
Meanwhile, Clariator Mvurume, the Senior Regulatory Officer at MCAZ said while they acknowledge the challenges of Pharmaceutical players, they have relaxed importation measures for some medicines that are not even on the MCAZ register in a bid to expand options for consumers.
“The more the products that we have on the register, the fewer the interruptions we have on the supply chain. As an authority, we want to register more products so that our public has access to more options and fewer interruptions. We also process import licensing and also the processing of Section 75 applications that we know sometimes we do not have registered options, but we are saying we cannot deprive the public of the medicines that they need just because they are not registered,” said Mvurume.
