How is the Pharmaceutical Industry facing the Covid-19 crisis ?

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How is the Pharmaceutical Industry facing the Covid-19 crisis ?

As the Nepali pharmaceutical industry weathers the current crisis, medicine producers say the challenges can be transformed into opportunities if the government provides support to the industry.


Never during his five years in the medicine business, has Santosh Bhandari, a pharmacist, ever witnessed such an enormous demand for paracetamol-based pain relievers, vitamin and zinc supplements, and antibiotics such as amoxicillin and azithromycin. “The outbreak of coronavirus has rocketed the demand for certain types of supplements and antibiotics. People are buying these types of drugs with or without prescriptions,” he says. Abhinav Acharya, a physician working at Bir Hospital says that while it is potentially harmful to consume antibiotics, supplements and pain relievers without medical consultation, many people with mild Covid-19 symptoms are using such drugs on their own. “These types supplements have also proven useful particularly for those Covid-19 patients who are not critically ill,” he says. Similarly, steroids like methylprednisolone and dexamethasone used to treat Covid-19 patients with deficient oxygen levels are also in strong demand.    

Pharmaceutical producers say they have increased production and stockpiled these types of medicines and supplements so as to ensure sufficient supply in the market.  According to Shankar Ghimire, managing director of Asian Pharmaceuticals, demand and sales of medicines that are considered to boost immunity and treat Covid-19 patients have stayed strong for the last one year. “Since the outbreak of coronavirus, certain over-the-counter supplements and pain reliver medicines have grown by 15-20 percent compared to the pre-pandemic period. Likewise, demand for certain prescribed medicines like Asrini Asclot 75, used by heart patients, and certain types of steroids has also grown,” he informs.

Deepak Prashad Dahal, immediate past president of the Association of Pharmaceutical Producers of Nepal (APPON), says that this demand has risen mainly due to word of mouth recommendations rather than doctors’ prescriptions. “The use of these medicines has also gone up because of social media posts as Covid-19 cases continue to rise,” mentions Dahal who is also the managing director of Phyto Phrama Nepal Pvt Ltd and Medivet Pharmaceuticals Lab Pvt Ltd.

According to Ghimire, Nepal is almost self-reliant in production of vitamin and zinc tablets, and paracetamol-based pain relievers while certain types of antibiotics and steroids are also produced here. However, the country still relies on imported life-saving medicines and many types of steroids and antibiotics.

The soaring demand has started to cause a shortage of even the widely available paracetamol-based medicines. Pharmaceutical producers say that it is basically due to the overbuying and stockpiling by consumers. According to Dahal, 30 tonnes of paracetamol was imported in March to meet the growing demand. “Currently, we have sufficient stock to meet the demand for the next three months,” he informs.

However, the demand for medicines used for treatment of many other diseases and aliments has declined by 40-45 percent, claim pharmaceutical producers. They say it is because of transportation restrictions imposed by the government under the prohibitory orders and hesitation of people to go to hospitals and clinics due to the fear of contracting coronavirus. Ghimire, who is also the former president of APPON, says that many people assume pharmaceuticals in Nepal are making huge profits at present which is not true. “There has been a misconception contrary to the real situation because only the sales of certain drugs have gone up while sales of others have declined sharply,” he says, adding, “The business of domestic pharmaceutical companies has shrunk by almost 45 percent.”

This situation has affected new and small pharmaceutical companies compared to established producers. According to entrepreneurs, sales of small producers have almost reduced by half while established companies like Asian Pharmaceuticals and Deurali-Janta Pharmaceuticals have lost around 25 percent of their sales in the past one year.

According to Hari Bhakta Sharma, executive director at Deurali-Janta Pharmaceuticals, the Covid-19 crisis has also affected the overall domestic medicine production. “Talking about Deurali-Janata, our production is currently at 60 percent of capacity because of shortage of raw materials, and reduced workforce,” he shares. Sharma says that transport restrictions across the country to curb the spread of coronavirus and the massive outbreak in neighbouring India have made it difficult to import molecules and raw materials to manufacture medicines. On the other hand, pharmaceutical companies have not been able to import raw materials from China as the northern neighbour has unofficially closed its borders with Nepal since last year.

According to Sharma, more than half of the raw materials come from India and the rest from China, Bangladesh and European countries. Similarly, the rising cost of raw materials in the international market is also adding to the cost for Nepali pharmaceutical companies. “Production of raw materials and intermediate products has reduced in the international market basically due to the disruption in supply chains and our cost has gone up by 2-3 folds as a result,” mentions Sharma.  

Besides this, the difficulty in collecting payment dues from the market has become another major challenge for domestic pharmaceutical companies causing problems for the firms to manager their cash-flow.  

According to a Nepal Economic Forum report, the size of the Nepali pharmaceutical market in 2020 was estimated at Rs 53 billion. As per official statistics, the country imported medicines worth Rs 28.65 billion while the total production of domestic companies amounted to Rs 24 billion last year. According to APPON, 59 pharmaceutical companies are in operation currently and 26 are in the pipeline.

It is estimated that Nepali products have a share of around 50 percent in the domestic medicine market. Dahal says that domestic production is able meet 70 percent of the total demand of medicines in Nepal. It is estimated that Nepali products have a share of around 50 percent in the domestic medicine market. Dahal says that domestic production scaled up to meet up to 70 percent of the total demand of medicines in Nepal.

Entrepreneurs say that the government needs to support the domestic pharmaceutical industry to prevent a disaster during crisis situations. They claim that if a favourable environment is created, domestic companies will be able to produce medicines used for treatment of patients of emergency cases and serious health conditions. Sharma of Deurali-Janata says that that the government has lately allowed domestic companies to conduct clinical trials of certain medicines. “Our company is currently conducting the phase-III clinical trial of the antiviral medicine Favipiravir on Covid-19 patients in Kathmandu, Pokhara and other major cities,” he says, adding, “It is for the first time that a clinical trial of a medicine is being carried out in the country.”

According to Dahal, Nepali producers are capable of producing medicines of international quality. He says that medicines produced by Nepali pharmaceutical companies meet the pharmacopoeia standards of United States, United Kingdom and India. He suggests the Drugs Administration Authority (DDA) to conduct timely inspection and testing of the medicines delivered in the market to ensure the quality. Dahal also says that there is a need to ease the bureaucratic hassles faced by producers. “We face hassles while seeking approval for the use of formula of new drugs. But the situation is different for foreign brands as they receive such approvals easily,” he mentions.

Pharmaceutical producers say that the government’s indifference to implement previously announced measures also hinders the growth of domestic companies. When Gagan Thapa was the Minister for Health in 2016-17, the Health Ministry announced a tax waiver on the import of raw materials. But it has not been implemented yet. Similarly, prices for 50 types of paracetamol-based medicines, oral rehydration salts and zinc supplements haven’t been adjusted for over a decade, say producers. “The government in 2008 fixed the consumer price of a paracetamol tablet at Re 1 which now costs us Rs 1.56 to manufacture. The international price of raw material to produce it has gone up many times over these years,” claims Dahal, who adds, “This has eroded our capacity to compete with foreign medicine brands.”

According to producers, restricting imports of drugs and other pharmaceutical products that Nepal is self-reliant in can aid to the growth of the domestic pharmaceutical industry. Ghimire of Asian Pharmaceuticals says that Nepal is self-sufficient in producing some 70 types of drugs including most types of tablets, syrups, and creams and ointments at present. APPON immediate past president Dahal says that such restrictions will also help Nepali companies to gradually begin the production of high-value medicines like insulins, monoclonal antibiotics and even vaccines in the future. “Technically speaking, Nepali pharmaceutical companies are even capable of exporting medicines if supported by the government. So, the government should list the pharmaceutical industry in the priority sector and provide subsidised loans, tax rebates on the import of machinery and raw materials and bring in anti-dumping policies to safeguard the industry,” he says. 

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