Cheap drug imports stifle local products

The pharmaceutical industry is facing stiff competition from cheap Chinese and Indian imports that now account for more than half of generic drugs used in the country.

This is according to a new report prepared by the East African Community (EAC) dubbed EAC Regional Pharmaceutical Manufacturing Plan of Action 2017-2027.

The competition from the Asian giants, and to a smaller extent Bangladeshi and Pakistan firms, is rising despite the Government’s attempts to zero-rate raw materials used in manufacturing of drugs.

“Kenya has the largest pharmaceutical market in East Africa, standing at $75 million (Sh7.6 billion). But most of this market is dominated by Chinese, Indian, Bangladeshi and Pakistani imports,” the report says.

But despite the challenge, the industry has recorded meaningful growth in recent years.

“Nonetheless, Kenya remains the fastest growing market in East Africa, with an estimated year-on-year growth rate of 15 per cent,” says the report.

Even as the country imports, it has also become the largest exporter of pharmaceutical products in the region, with most of the drugs from local manufacturers going to Uganda and Tanzania. Both consume half of the exports.

Other countries where Kenyan drugs are exported to include Malawi, Zimbabwe and Mozambique.

Last year, Kenya exported drugs worth $71.2 million (Sh7.1 billion), accounting for 1.2 per cent of the country’s total exports. It imported drugs worth $572.5 million (Sh5.8 billion).

According to Safiq Iqbal, the chief operations manager at Universal Corporation, one of the leading pharmaceutical manufacturers in Kenya, the industry has been facing a problem of delayed tax refunds.

“The government did a good job in zero-rating ingredients we import for the manufacture of medicines. But the problem comes from the Kenya Revenue Authority who delay in making tax refunds, which hurts our working capital,” Mr Iqbal said.