By Sushila Budhathoki
Drug Drive : The Rising Business Of Pharmaceutical Companies In Nepal
Nepal’s pharmaceutical expense is at par with other South Asian countries, thanks to the increase in the number of pharmaceutical companies and their production. In 2008, the total per capita pharmaceutical expenses was US$ 6.96 while the total amount of pharmaceutical expenses stood at Rs 13.09 billion in Nepal. Mahesh Gorkhali, President of Association of Pharmaceutical Producers Nepal (APPON) says Nepali companies are growing at around 15-20 percent annually. The growth has resulted in around 42 per cent command of the market by Nepali products with strong presence and distribution network of marketers in the rural and remote areas.
A ‘Market Study Report on Pharmaceutical Products in Nepal’ conducted in 2011’ depicts the shining business of Nepali pharmaceutical industries. According to the report, Nepal experienced significant growth in medicine production in Asia when the growth rate was 11 per cent globally in the year 2009. Nepal obtained annual growth rate of pharmaceutical products at 19.52 per cent even ahead of India who saw 13 percent growth during the same period. According to the report, the total turnover of Nepali companies was approximately Rs 6.8 billion where the company registering lowest sales turnover was Rs 20 million and the highest at about Rs 600 million. The World Health Organization’s report ‘The World Medicines Situations 2004’ listed Nepal among 84 countries that produced pharmaceutical finished products from imported ingredients whereas India was categorized among 17 countries that had innovative capacity.
Pradeep Jung Pandey, President of Lomus Pharmaceutical Pvt Ltd says that Nepali companies are capable of producing some of the segments out of big variants of medicinal products. He adds, “We have the potential of increasing the market share at a fast pace.” Most of the Nepali allopathic medicines are of oral dosage forms of tablets, capsules, liquid, syrup, powder for oral suspension while topical preparation like cream, ointment and lotion are also produced. If vaccines, contraceptives, ARV (Anti Retroviral), large volume drugs and few others are excluded, Nepali companies tend to acquire big market share, say experts. Radha Raman Prasad, Director General and Chief Drug Administrator at Department of Drug Administration (DDA) states that medicines can be imported like other goods from the global market. “When the market is dictated by the Nepali industries, the foreign companies that cannot compete will automatically exit,” he says.
Demand, Supply and Investment
Demand of Allopathic medicines is high in Nepal. There are altogether 45 Nepali companies operating in the market with 4,677 brands and thousands of products. According to the market study 2011, public expense on pharmaceuticals was Rs 2.96 billion in the year 2008. Similarly, total private expense on pharmaceutical products was Rs 10.06 billion.
The size of Nepali medicine market is estimated at Rs 18 billion and the Nepali companies command 42 per cent market share. Manufacturing of oral antimicrobials like penicillin, β-lactam, Non penicillin, antifungals, anthelminthic and antiviral (Simplex) is common while some are engaged in producing non-steroid pain killers, nutritional supplements, enzymes, haematinics, oral steroids, cardiovascular (heart and blood pressure), diabetes, psychiatry (mental disorder) etc.
Many Nepali and foreign companies are importing and supplying pharmaceutical products. Their role is significant for fulfilling the demand of various kinds of medicines in Nepal. According to DDA, 257 foreign pharmaceutical companies acquired licenses to sell their allopathic medicines in the year 2067/68. Similarly, 11,769 medicines are registered with DDA including 7,092 foreign and 4,677 Nepali products. There are altogether 1,544 wholesalers and 8,110 retailers throughout the country.
The estimated investment in the pharmaceutical industry of Nepal is around Rs 735 million to Rs 1.47 billion. Mahesh Gorkhali, President of Association of Pharmaceutical Producers Nepal (APPON), explores the need of high investment for the establishment of a pharmaceutical Company. He says, “For a good company mainly producing tablets, capsules and liquids, around Rs 25-30 million is required as an investment depending upon the choice of machinery equipments, building, location etc. Establishing an industry in city areas is usually costlier than in the terai or hilly regions.” Nepali industries are not API (Actual Pharmaceutical Ingredients) manufacturers; they import raw materials from other countries. The cost of the raw materials is also increasing investment in the pharmaceutical industries.
Emerging Pharmaceuticals
The number of Nepali allopathic companies has reached 58, according to the DDA. Altogether, 11 new allopathic companies have been registered in the FY 2068/69 whereas only two allopathic companies were registered in the previous year. A number of pharmaceutical companies have been established in different districts like Dang, Bharatpur, Sunsari, Jhapa, Bhaktapur, Kathmandu, Nawalparasi, Birgunj, Lalitpur, Bara and Parsa with investment of billions of rupees (see table). According to the DDA, pharmaceutical companies registered in the FY 2068/69 have proposed a total investment of 1.83 billion Rupees including investment from both herbal and allopathic companies.
Job Destination
Pharmaceutical business has employed thousands of people in pharmaceutical production, distribution and marketing. There are 4,200 medical representatives, 2,474 pharmacists and more than 13,000 professionals employed with various pharmaceutical companies. Regular human resource like managers, accountants, computer operators, receptionist, cleaners, drivers, kitchencrew, HR and admin officers also find work with these organisations. Pharmaceutical companies also provide internship to hundreds of students every year who are mostly recruited in the very companies at a later stage. Sanju Acharya, Administrative Assistant at Nepal Pharmacy Council, opines that there is a huge demand of pharmacy graduates in the pharmaceutical sector. Pharmacy professionals are of two categories; those who have graduated in Pharmacy and above up to PhD level and the ones who complete three year Diploma in Pharmacy under the Council for Technical Education and Vocational Training-CTEVT program. Pharmacy students are highly in demand at Pharmacy colleges as teachers and laboratories and hospitals as researchers or lab assistants. By law, a hospital must own a pharmacy operating 24 hours, which also provides opportunity to these students. Graduates from the Institute of Medicine (IOM) and Kathmandu University are mostly found applying for foreign colleges in search of greener pastures. Having seen the better job opportunities, many colleges have started to include pharmacy as a subject in their curriculum. There are around 16 pharmacy colleges affiliated to Tribhuvan University, Pokhara University and Purbanchal University. Together, they produce pharmacy graduates for the industry with an annual intake of around 600- 650 graduates yearly. Kathmandu University runs B Pharm, M Pharm, Pharm D and PhD programs while CTEVT runs three year Diploma in Pharmacy program at 24 different institutions, with an annual intake of 960 persons. The undergraduates are mostly utilized in community pharmacies.
High Competition
The market share of Nepali companies in the urban set up is approximately 20 per cent and the rest 80 per cent in the rural markets. The reason behind this is credited to high competition among Nepali pharmaceutical companies and limited customers or prescribers, in spite of progressive marketing and promotion of the medicines. It clearly depicts that if the share of Nepali products increases in the city areas, their total share in the pharmaceutical market will experience a significant growth ultimately. However, new industry registrations too signal to follow the same trend which industrialists fear would lead to further competition. Government authorities state that the import of large volumes of drugs from other countries is due to the scarcity of varieties of medicines in the market. On the other hand, Industrialists accuse the government of importing many similar products from India which they say is also one of the reasons behind severe competition. Most of the medicines are ‘me too’ products which has compelled high competition between Nepali companies as well as the imported ones. Most pharmaceutical products are related to a particular disease or a group of diseases (therapeutic segment), and are not spread in diverse therapeutic segments. Apart from that, products like Albendazole, Amoxicillin, Azithromycin, Ciprofloxacin, Fluconazole, Paracetamol, Ibuprofen, Hyoscine, Metronidazole, Ofloxacin, etc are manufactured by around 20 to 30 companies. Similarly, around a dozen of companies produce the cardiovascular and diabetes medicines. “There should have been competition on varieties and quality of the medicines but some Nepali companies are desperately competing because of the similar products,” says freelance market researcher Rajan Raut. Similar products from foreign countries find their stand in the market even tougher as some of the Nepali products have even substituted imported products.
Monitoring and Inspection
The DDA – that has 31 staffs which include 13 drug inspectors of different levels – has been facing a hard time in operating effectively. Such a limited manpower is considered a very low number to maintain the growing number of pharmaceutical industries, wholesalers and retailers. With little human resource to speak of, DDA runs different programs like marketing authorization, inspection, import control, licensing, market control, medicine advertisement and promotion, quality control and clinical trial. Quality inspection of medicines including laboratory reagents, surgical items, bandage, sutures, catheters etc are also some areas the DDA has been found lacking at. National Medicine Laboratory is the only public sector laboratory which monitors quality of the medicines through samples collected by the DDA. However, it doesn’t publicize the results publicly. Lack of good distribution practice and storage practice seems a common problem in many places. This is the reason why consumers often complain about consuming outdated medicines or shortage of essential medicines, blood, oxygen etc. Lack of proper monitoring system of pharmaceutical product is feared to grow ineffectiveness. No medicine company is found reporting its medicinal errors. As per the law, up to Rs 300,000 is to be paid by the manufacturer as compensation if medicine causes harm to the consumer. Baburam Bhattarai, President of Nepal Chemist and Druggist Association urges the need of regulating unregistered medical stores because according to him, they contribute towards creating health hazards. He says, “The government monitoring system has not been so effective. Besides, the current political situation is also fostering such business.” There is no specified division or section in DDA for WHO-GMP inspection either. Although the DDA has insisted that it has not found a single case of counterfeit drug, doctors from different districts bordering India fear its presence in the Nepali market. High prices of medicines have always been a controversial issue. DDA has fixed the actual price for up to 10 medicinal products including saline, painkillers and oral dehydrates. Shyam Adhikari, Drug Inspector at the DDA says they are looking at a mechanism to ascertain the prices of Nepal made medicines as well as the imported ones in the coming days. Recently a ‘Price Monitoring Committee’ has been formed with the participation of members from the DDA, pharmaceutical industry and consumers’ representatives. However, the companies insist that they keep the profit margin scientifically with the approval of the Government of Nepal. Pandey points that the Nepali medicines are priced either at par or a little cheaper than those of their Indian counterparts. Citing the example of a paracitamol tablet, he says, “A single unit of citamol tablet costs Rs 2 in Pakistan and India while it costs only one rupee in Nepal.” Pharmaceutical companies do not produce drugs in a large volume neither do they run with full capacity. Nepali pharmaceutical companies are using 20 to 90 per cent of their respective capacities for production and operate about 8 hours daily which is said to be the major reason behind the high production cost of the medicines.
Investment in Research & Development
There are only two or three companies that have been producing biological products. Most of the demand of injectables and biological drugs is fulfilled through imports. Essential medicines which require high technology are donated to Nepal by different international aid agencies from abroad. They also provide vaccines for expanded programs of immunization and medicines for the treatment of tuberculosis, leprosy, HIV/AIDS and sexually transmitted infections (STI), malaria, kala-azar and filariasis etc, for free. Nepali companies are producing around 33 per cent of essential medicines mainly producing therapeutic drugs. Industrialists are apprehensive about invest in research & development (R&D) because of the current political instability and law and order situation, say analysts. Most of the Nepali companies have limitations in terms of technical capability and innovation. On the other hand, foreign companies including multinational ventures have access to latest technologies and are engaged in import of medicines. However, there is no technical collaboration between the multinational ventures and Nepali companies. Industrialists too agree that Nepali pharmaceutical companies should conduct varieties of research and fulfil the demand of high tech medicines in Nepal. They accuse the government for not supporting them adequately as R&D requires high investment, manpower and technology.
The Way Forward
Many Nepali companies are manufacturing high quality products of international standards and fostering the growth of the Nepali medicine market. Zinc tablet, which is useful for treating ringworm disease in children and popular among international companies, is a product of Deurali Janata Pharmaceutical (DJP). Radha Raman Prasad, Director at DDA, seems satisfied with the quality of Nepali pharmaceutical products. He says, “Few samples have been found lacking quality in the market due to some reasons but I think the overall quality of Nepali medicines is at par with international standards.” Experts involved in the business of medicinal products suggest drug producers to work collectively towards exporting Nepali medicines. Prasad admits that export is not just limited to the quality of the drug. He says that every country has some clauses and Nepal can fulfil those clauses. Some of the Nepali companies are even trying to export drugs to Singapore and Malaysia. “We are very rich in resources for pharmaceutical products, all we need is skilled manpower and the technology. Provided these aspects, we have huge potential for export,” he adds. The much awaited National Drug Policy has been drafted by the DDA. According to Prasad, efforts have been made during the preparation of the draft to address the issues of pharmaceutical industries. He says, “The draft focuses on new areas of thrust, in comparison to the previous policy which focused on export. It has a provision of contract manufacturing for technology input, providing incentive for R&D activities, manufacturing, clinical research and attracting foreign countries for R&D.” From a human resource perspective, students who have studied bio pharmacy abroad have started returning to Nepal. This development promises to enable companies to operate various researches. In August 2011, DDA permitted contract manufacturing of pharmaceutical products to the manufacturing contractors owning WHO-GMP certificate and licenses of the products. The Department of Commerce and Supplies and District Administration Offices are conducting inspections on a regular basis to find out sales of expired drugs and also making their findings public. GMP and GLP (Good Laboratory Practice) standards are meant to pave the way for assuring efficacy and quality of the drugs in the international market and are expected to ease the export of the products. Currently, there are 26 companies that are manufacturing pharmaceutical products by maintaining GMP standards. The rest are also in the process of obtaining GMP as the DDA has urged all non-GMP certified companies to come under GMP certification by the end of the year.
COVER STORY
‘The Growth of Nepali Pharmaceutical Industries is Quite Appreciable’
BABURAM BHATTARAI
President
Nepal Chemist and Druggist Association
(NCDA)
How do you see the growth of Nepali pharmaceutical industries in recent times?
The growth of Nepali pharmaceutical industries in recent time is quite appreciable. Around 42 per cent home demand is fulfilled by them so it can be considered satisfactory. I think the Nepali medicines are doing good business because the products are qualitative and the demand is increasing on a regular basis. I see a golden future for Nepali pharmaceutical products.
As far as my knowledge is concerned, the level of consumption for most of the products made in Nepal is satisfactory and so is their supply system. However, most of the companies are producing the same types of medicine which has created unhealthy competition.
How is the production and export-import business of pharmaceutical products in Nepal?
The history of allopathic medicine in Nepal is less than 100 years old. Medicine was used with the start of the modern medical system and during that time, pharmacy products were imported from different countries while such services were limited to only the big cities. The situation has changed now and we have many pharmaceutical companies established in our own country. Imported as well as home grown products are available even in the remote areas of the country today. However, it has not been smooth yet and the mishandling and misuse of drugs is a great threat.
Counterfeit drugs is said to be one of the biggest challenges faced by the pharmaceutical industry. What is NCDA doing towards it?
I agree with this statement to some extent. Basically, there are two reasons behind the availability of counterfeit drugs. The first one is that we share a open border with India and the second is that there are so many unregistered medical stores all over the country. The government monitoring system has not been effective enough. I don’t think that the NCDA member firms are involved in the supply of such medicines. The government should regulate these unregistered medical stores and bring them under the purview of the legal system. NCDA, on its part, is planning to release the list of registered medical stores and products available at these stores, on its website. It is always ready to support government initiatives to control the availability of counterfeit drugs.
Consumers often complain that the medicine prices vary from pharmacy to pharmacy. It is also said that the margin of profit is kept very high in pharmaceutical products. What do you have to say about such practices?
I cannot agree with your statements. NCDA was established with the mission to supply qualitative, effective and safe drugs at affordable prices and we are always conscious regarding the uniformity of medicine prices. However, there may be some misuses from unregistered stores despite all our efforts and commitments. NCDA is committed to endorse the sale of medicines at their justified prices. However, if there are any complaints on account of price manipulation, please do inform to any of our NCDA branches so that we can regulate such pharmacies.
As for the margin of profit being high in pharmaceutical products, this is nothing but plain rumor. We are keeping the profit margin scientifically with the approval of the Nepal Government.
A great amount of medicines are sold on a daily basis without the doctors’ prescriptions. How risky is this for public health?
This is a serious question that you have brought up. We all are quite aware about the health service standards in our country .We have a very limited numbers of doctors and that too, they are available only in the urban areas. Therefore, scores of villagers do not have access to services provided by doctors. This explains the situation of no prescriptions where there are no doctors. You have to acknowledge the fact that the patients have to get medicines anyway. Nowadays, the paramedics (HA, CMA & ANM) are dispensing medicines in the remote areas. The government is not bothered about this problem and many serious health hazards occur due to the state’s apathy towards health services.
The shortage of general medicines in rural areas often inconveniences many families in Nepal. What’s your take on this?
Although our business is a service business, there is a profit motive as well. The few pharmacy assistants and professionals that we have in the country confine themselves to the densely populated areas because they want to do good business. However, there are so many remote areas where there is no storage of general medicines but the problem is that the pharmacy dispensers are not available in such areas. I have also repeatedly drawn the attention of the concerned authorities to run orientation training targeting these areas so that the problem of dispensing medicines can be solved to a large extent.
How wealthy are we in terms of human resources especially in the production, marketing and distribution of pharmaceutical products?
As far as the availability of human resources is concerned, let me assure you that many pharmacists and pharmacy assistants are produced every year. The number of pharmacy colleges is also increasing. Most of the pharmacists are employed in industries and academics whereas the pharmacy assistants are engaged in dispensaries. But the tragedy is they are not available in the remote areas.
The Nepali pharmaceutical industries asked the government to stop importing Indian drugs sometime ago. Can it be considered reasonable in a liberal market economy?
Nepal is a small country in comparison to our neighbors and the market of any product is limited. It is not bad to promote indigenously produced medicines until our economy is competitive enough to export. Billions of rupees have been invested in the pharmaceutical industries. I think it’s the duty of the government to support these companies by whatever means possible.
What is the possibility for exports of Nepali drugs abroad? What are the challenges in this regard?
I don’t see any possibility of Nepali medicines for export in the current context. Even though all the companies of Nepal follow the WHO GMP standard, different countries may have different technical standards. The private sector effort to export medicines may not be an effective one. The government initiation is the primary requisite and a must to realize export efforts.
COVER STORY
‘The Overall Quality of Nepali Medicines is at Par with International Standards’
RADHA RAMAN PRASAD
Director General
& Chief Drug Administrator
Department of Drug Administration
How do you see the growth of Nepali pharmaceutical industry in recent times?
New industries are entering into the market but most of them are producing ‘me too’ drugs. The competition is heightening among such kind of drugs. The trend of new industry registration shows that producers are willing to produce similar kind of products that already exist in the market. Such a trend is more common than producing vital drugs and competing with imported products which may help reduce imports and market share of imported drugs. Although new industries have taken industry establishment reference letter for producing large volume drugs, further progress is not seen in the actual establishment of industries. It is very important to produce large volume drugs with quality but little progress has been made towards it. Even though producers are promising to do it, it has not happened till date.
New industries are being established every year. Do you see potential in them to make the country self sufficient in drugs and reduce imports?
It is not that they do not have the capacity to produce to the extent of self sufficiency but it is limited to specific drugs. The environment for producing numerous drugs to the extent of self sufficiency has already been created but not for all medicines. Nepali companies have a market share of 43 per cent. If vaccines, contraceptives, ARV (Anti Retroviral), large volume drugs and few others are excluded, Nepali companies will have a bigger market share. Some companies have an almost equal market position as Indian companies. Ethical promotions and marketing strategies have helped them create a niche in those sectors. Nepali drug industries have their presence in almost every part of the country.
Around 60 per cent of the drugs market is covered by the foreign companies. How can the share of Nepali industries be increased?
The consumers of medicines are mostly the prescriber groups. So, the confidence of the doctors and prescribers needs to be won with ethical marketing and by offering qualitative drugs. This will help to increase the market share. However, only over-the-counter sales and promotion through pharmacies cannot deliver good results compared to ethical promotions.
Although imported drugs are said to be expensive than locally produced ones, why aren’t Nepali medicines preferred by the prescribers? How can Nepali products be promoted?
It is necessary to look minutely into actual pricing. Some local drugs may be cheaper but it is difficult to say that products from established brands are actually cheaper. Such products are priced similar to the imported drugs. Quality assurance is the most important factor for promoting Nepali industries. Numerous producers and their associations as well as the DDA have moved towards quality assurance through various measures like complying with the WHO GMP standards. All the stakeholders are moving ahead keeping in mind quality as their central motive. It is a matter of satisfaction that Nepali industries are committed to quality assurance and they too are producing international standard drugs. Even though few samples have been found lacking quality in the market due to some reasons, I think the overall quality of Nepali medicines is at par with international standards. Many industries are now shifting to new locations, upgrading their technologies and carrying out renovation of their production units. Once quality is promised to the consumers, the market share will definitely increase.
It is often said that substandard medicines are being imported and expired medicines sold in pharmacies. What is your take on this situation?
At times, it’s not only the drugs imported from India but also the Nepali drugs that are found to be below standard. However, we cannot generalise the situation and say that all products lack quality. There have been cases like discovering some particles on tablets and solidified dry syrup but these are exceptions. We have not found the entire batch of a particular medicine failing in case of one or two samples that are found defective. If the temperature is not adjusted as per the requirement during storage, some medicines change colour naturally over time. A pharmaceutical company produces drugs which is transferred to distributors, then to retailers and finally to the consumers. If the quality is not assured in the supply chain, some complications may arise despite the producer maintaining optimum quality. The producers are slowly getting conscious about it and the DDA too is committed to move towards this direction.
Regarding the sales of expired drugs, it is very important to maintain a good pharmacy and dispensing practice. The pharmacy workers must properly look at the prescriptions and scrutinise the medicines before selling them and also give proper information to the buyers. When this system is not practiced, there is a chance of expired drugs getting sold. Substandard and expired drugs must be filtered at the time of sales. At present, there are inspections carried out by the Department of Commerce & Supplies and District Administration Offices to detect sales of expired drugs. Such activities have definitely brought a lot of awareness among consumers and also controlled such incidences.
Counterfeit drugs is also said to be one of the biggest challenges faced by the industry. What is DDA doing towards it?
We have not found counterfeit drugs as of now. It’s true that we have found some medicines that are not registered here but they are not counterfeit in the true sense of the term. Such unregistered drugs are confined to around four-five types which have high difference in their prices such as Ciprofloxacin, Omeprazole and some aphrodisiac drugs. We have been carrying out awareness campaigns asking customers to mandatorily take bill on the purchase of drugs which will prevent buying of unauthorised drugs. A conscious citizen must as for bill on purchase of medicines and also seek information about the medicines.
What is the level of competition of Nepali pharmaceutical companies among themselves as well as with the foreign companies?
The competition has always been there but it should now focus on quality while competing with ‘me too’ drugs in the market. Earlier, cardiac medicines were not produced within Nepal but now we have them. We also did not have the doctors’ confidence about higher antibiotics but now they prefer Nepali products. These are definitely very good signs. We have been monitoring and conducting inspection of Nepali industries, overseeing their quality and standard etc so we encourage using Nepali drugs with confidence. This confidence has also led Nepali industries beginning to tap the foreign market in recent times.
Raw materials as well as finished drugs are being imported at present. Which one is beneficial for our market situation?
The Nepali industries are compelled to import raw materials to produce drugs here because we are not API (Actual Pharmaceutical Ingredients) manufacturers. Therefore, it is necessary to import raw materials. In the current global context too, there is no base to deny import of any products. When the market is dictated by the Nepali industries, the foreign companies that cannot compete will automatically exit.
If Nepali companies can produce drugs here, the human resource can be rightly utilised. The availability of human resource is cheaper in Nepal than anywhere else. Qualified human resource is being produced within the country and at the same time, semiqualified human resource is equally available. We have a condition to import quality raw materials at competitive prices. It also creates employment not only in the production line but also in the marketing of products. The industries also pay taxes to the state so from that perspective, local industries must be promoted.
It is said that there is huge potential for export of medicines to India along with other markets. How much have we cashed in on this potential?
That potential has not been adequately explored as of now. A few industries that have reached a certain level of success in the local market have started looking towards those markets. All the drug producers must collectively move towards this direction to explore the potential.
COVER STORY
‘We have Gained Trust from the Consumers because of our Quality Products’
MAHESH GORKHALI
President
Association of Pharmaceutical
Producers of Nepal (APPON)
How do you see the growth of Nepali pharmaceutical industry in recent times? What is the kind of investment required to establish a pharmaceutical industry at present?
As per an estimate, we are growing at around 15 to 20 per cent annually. The cost of establishing a pharmaceutical industry in the country generally depends on the number of segments that the investors target to operate with. Pharmaceutical industries cover different segments like – tablets, capsules, liquids, injectables etc. If an industry tries to cover all these segments, high investment is required. At the same time, low investment can enable an industry to operate with a single segment. As per our calculation, anywhere from Rs 25 to 300 million investment is required for a company producing tablets, capsules and liquids depending upon the choice of the machinery equipments, building, location etc. Establishing an industry in city areas is usually costlier when compared to the terai or hilly region.
How is the production and export-import business of pharmaceutical products doing in Nepal?
There are altogether 45 Nepali companies operating in our market. Investors generally produce materials which they can sell even if they have a high production. There is a wide variant of medicines available in the market and we are capable of producing some of these, for example, Paracitamol tablets which are popular as citamol in Nepali households. To meet the remaining demand, we import a good amount of medicines from India, Bangladesh and some other countries. The export potential of Nepali medicines has not been tapped as yet. Nepali pharmaceutical companies occupy around 40-45 per cent market share while the rest is of foreign companies. Our companies can increase their market share only if we could expand our businesses massively. If we do not want to be contended only in the national market, we must grow and focus on exports.
How favorable is the government’s policy regarding the pharmaceutical industry?
We don’t find a clear-cut policy of government for the development of Nepali pharmaceutical industries. As such, the pharmaceutical market is rapidly growing internationally and we are obliged to introduce and produce newer medicines or molecules to survive in the market. Since we lack manpower in developing newer molecules, we try to import them as soon as they are developed. Department of Drug Administration (DDA) under the Ministry of Health regulates our companies but it usually hesitates to provide a license whenever we apply to import a new molecule. It says that the molecule is not mentioned in Pharmacopeia - a book where every medicine is featured. Actually, medicines are featured in Pharmacopeia sometime later after the invention. It’s the responsibility of the government to either perish or nourish the pharmaceutical sector as the citizens of this country have the right to have proper medications. By permitting to import newer molecules, providing incentives or soft loans and declaring tax holidays for some years will definitely create good environment for the pharmaceutical sector. The government must also act as a responsible body by addressing problems such as the shortage of powerhouse, in consultation with the stake holders. I think that the Ministry of Health has so many responsibilities and hence, they may not be able to look after the manufacturing industries properly. Nonetheless, I believe they will formulate some good policies in the near future to encourage new investors when they realize our potential as a growing industry.
What are the challenges of the Nepali pharmaceutical industry in meeting the demand of pharmaceutical products in the market?
Around 250 companies are involved in importing medicines from other countries so the biggest challenge we have is the faith of the consumers on Nepali products. The pharmaceutical market normally grows with the increase in the prescriptions or the number of the prescribers. We have gained that kind of trust from our consumers because of the quality products we deliver. All the leading doctors and medical experts prescribe Nepal made products which means the main challenge is already taken care of. Another challenge is to introduce newer molecules.
We need some lab testing which are often tedious, time consuming and expensive. We need to maintain refresh standard for which we don’t have the facilities but that can be procured. Furthermore, we have to develop our human resources including the marketing professionals so we are conducting different trainings and workshops to improve their capabilities.
What is the benefit of importing pharmaceutical products from India? What kind of competition have domestic factories been facing with hundreds of Indian products and companies in the domestic market?
While moving from illness to wellness in the case of human health especially, pharmaceutical products have proved to be one of the essential elements in curing diseases. However, we don’t produce all kinds of medicines. For instance, we don’t produce saline water which is considered as an urgent medication for many diseases. We import it mainly from India as medicines such as this are beneficial to human health.
Competition between companies is natural in every business and pharmaceutical industries are no exception. Competition with importing companies is ethical in our business. However, there seems to be a fierce competition between the Nepali companies because of similar medicinal products and limited customers. Everybody wants to promote his own brand and the more number of companies, the more number of brands are there.
Although imported drugs are expensive than locally produced ones, why aren’t Nepali medicines prescribed much?
This is untrue as majority of the doctors are prescribing our medicines. This is the reason why we are having 40- 45 per cent market share despite having competition from so many foreign companies. There has been a good promotion of our medicines and the doctors prioritize them whenever they prescribe the medicines to the patients.
How wealthy are we in terms of human resources especially in the production, marketing and distribution of pharmaceutical products?
Initially, we had a real problem with human resource be it the marketing or production areas. It was very hard to train young graduates especially those without a science background. Thus the promotion of the products used to be a difficult task in the past.
In production also, there were not enough graduates who could earlier meet our criteria. However, there are 17 - 18 colleges now with pharmacy as a major subject. They are producing a good number of bachelors every year that can be utilized in pharmaceutical industries. We don’t have scarcity of such manpower now.
However, we don’t have quality manpower who could import newer molecules from foreign countries. Good companies have been providing trainings for their employees and sending them to different countries like Japan, Bangladesh and India for their capacity enhancement. They are improving and we hope that we will produce the required manpower for this sector as well.
It is said that the margin of profit is kept very high in pharmaceutical products. What do you have to say about that?
Even though it seems so, it is not true. Actually, certain products have really high margins mainly because of the high expenses involved in their production. To produce a single medicine, we import different raw materials including chemicals and packaging materials. Besides, producing quality medicine is a very lengthy and time consuming process. There are other costs involved too which make medicines more expensive, for example, the marketing aspect. Whatever is the margin, the fact is that the product must be sold because without the sale of a product, there can be no profit.
It is said that there is a huge potential for export of medicines to India along with other markets. How much have we cashed in on this potential?
Let me give you an example when my company used to export medicines in India a few years ago. We had applied to the Indian authorities for exporting medicines to which they agreed and we started to send our medicines. However, despite having all the certification and documents of our products, they would put our stock in their quarantine office once it reached Raxaul in India. They would say that approval can be provided only after some lab testing but by the time they did so, it would be already six months late. Another three months would be spent for lab testing so it’s only after nine months that we would be able to get the approval to supply our medicines in the Indian market. The same process would apply for each consignment. After all this, the Indian retailers would not agree to keep medicines having less than six months of validity. It continued for two years and we had a business of Rs 50-60 million only. After two years, we could not undergo the criteria once they applied a new system for Nepali companies. It became costlier and that is when we stopped exporting our products. However, we are again targeting India for the expansion of our products and hopefully, we will be successful in our endeavour.
Raw materials as well as finished products are being imported at present. Is it beneficial for our market?
Yes, it is. We cannot produce medicines without raw materials and finished products since we don’t have the big plants to produce chemical and other essential materials. We don’t need to produce raw materials ourselves because of the limited market we have. Unless we expand our market, we can continue to import these items.
COVER STORY
‘Maintaining GMP and GLP Standards will give Credibility to our Products Internationally’
MOHAN PRASAD AMATYA
Chief
National Medicine Laboratory
What is the major function of the National Medicine Laboratory?
Our main objective is to ensure that safe and effective medicines are available in the Nepali drug market. Though it is the Department of Drug Administration (DDA) that awards license to pharmaceutical factories, it is our responsibility to test and evaluate the standard of their laboratories and drugs and refer them for the registration. Factories should obtain market license for each of their products. We develop Reference Standard and make it available to the pharmaceutical companies and laboratories. We also inspect retail and wholesale pharmacies to check the quality of drugs. The price monitoring of the marketed drugs is within our scope of work and we deploy drug inspectors for this task. They visit the market on a regular basis, purchase drugs from the pharmacies and bring it to us. We inspect quality, composition, packaging and every other detail of these drugs. If such drugs are found below the standard, we report it to the DDA which recalls these products from the market. Similarly, we visit laboratories and inspect products of foreign countries before importing them to Nepal.
Pharmaceutical companies also have their own laboratories. How good are they?
A pharmaceutical company must set up its own laboratory. We visit their laboratories and conduct a thorough inspection. Aspects like hygiene of the lab and precautions taken for the safety of its manpower, availability of equipments and trained manpower, location of the lab and its space, structure of the building, availability of water and other resources are taken into account while giving approval to the laboratories for production. We visit them regularly even after the approval Therefore, we must say that existing labs have been maintaining the required standard. Of course, there is a lot of scope for improvement and it’s a continuous process. All in all, they are good.
Out of 49 pharmaceutical factories operating in Nepal, only 26 have been producing pharmaceutical products under the World Health Organisation’s (WHO) Good Manufacturing Practice (GMP). Why is this number so low?
It’s been about 8 years that Nepal became a member of the WTO. However, our pharmaceutical companies were established long before we got associated with the WTO. At that time, our aim was to encourage people to invest in the pharmaceutical sector so that the country can gradually substitute imported medicines. The procedure to obtain operating licenses was not that strict. Now that the country has entered an agreement with the WHO to maintain its GMP standard, we could not ask them to upgrade their laboratories and manufacturing units overnight. It requires huge capital for a company to be at par with the international GMP standard. The DDA has been asking the existing factories to upgrade themselves time and again by allowing a certain time-frame to them. In fact, the DDA has directed all existing pharmaceutical companies to upgrade themselves by the end of this year. Because of this provision, many companies have applied for GMP and few of them have already received the certification. However, there are still some companies that have not applied for this process. I believe the DDA will take adequate measures against such factories in the future.
Have all the pharmaceutical companies been maintaining Good Laboratory Practices (GLP)?
It is very essential to maintain GLP to establish a pharmaceutical industry. Companies that do not maintain GLP are not allowed to begin production. Before any pharmaceutical product is produced, we check whether the laboratory has used standard raw material and put the lab in the suitable location and purchased good quality machines or not. When the product is made, we analyse its composition, packaging, punching, amount of active drug in the medicine and its storage. These aspects fall under GLP and we make sure that factories are up to the mark on each of these aspects before granting it permission to operate. To make our existing factories concerned about GLP, we conduct trainings on this aspect regularly.
What special benefits will we have by producing pharmaceutical products in line with the WHO’s GMP and GLP guidelines?
Maintaining GMP and GLP standards will give credibility to our drugs in the international market. It will eventually pave way for the export of our products. Though there are only 26 pharmaceutical manufacturing companies that have been producing products maintaining GMP standard, about five companies are in the process to get the certification. We will be visiting their manufacturing plants and the laboratories to refer for the certification.
So, we do have an opportunity to export our products.
Export is not just limited to quality of the drug. Every country has a specific policy about importing drugs from another country. If our country can fulfil those clauses, we won’t have problem in exporting our products. Even India that has been exporting its products to almost all corners of the world, is willing to import drugs from us. But it has set some clauses regarding drugs import. If we can fulfil these clauses, India can be a potential market for our medicines. Therefore, export is more related to the policy of a specific country. Some of our companies are trying to export drugs to Singapore and Malaysia as well. We are very rich in resources for pharmaceutical products. All we need is skilled manpower and the technology. Provided these aspects, we have huge potential for export.
What sort of drugs are we strong in and where do we still need to do research?
The domestic production has been able to fulfil 60 per cent of the current demand. For the remaining 40 per cent, we have to be dependent on imports. We are strong in therapeutic drugs but we still have to be dependent on imports for injectable drugs and biological products. It takes a huge capital and expert manpower to produce such drugs. The labs need to be sterilised and made aseptic to produce these medicines. Even the building has to be designed in a specialised way for such drugs. There are only two or three companies that have been producing biological products. Most of the demand for injectable and biological drugs is fulfilled through imports.
What is the status of human resource in the pharmaceutical sector?
In the last few years, pharmaceutical sector has been witnessing a growth in the quantity of trained manpower. The existing four universities of our country have been producing manpower for this sector. Kathmandu University (KU) has been operating classes of pharmacy at the Bachelor, Masters and the Doctorate levels. Tribhuvan University (TU) also runs a bachelor level programme while Purbanchal Univeristy (PU) has given affiliation to about 19 colleges to operate pharmacy classes. Similarly, Pokhara University also has a Bachelor of Pharmacy programme. So, around 500 students graduate in this sector annually.
Where do these graduates get job placement?
A large number of students with Bachelor degree in pharmacy open their own pharmacies while some others work in pharmaceutical factories, laboratories and hospitals. A few of them pursue a teaching career but most graduates from the Institute of Medicine (IOM) and Kathmandu University go abroad in search of greener pastures. The flow of application for establishing pharmaceutical factories was high a few years back but the present political situation has been a hindrance in establishing new factories. Therefore, the graduates find the overseas market better for greater exposure. If the country could emerge from the present political turmoil, they too can find employment opportunities in their own country.
