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State bets on new incentives to grow local pharmaceutical sector

By Ally Jamah | August 9th 2016

The Government is hoping new incentives will boost the local production of medicines to take on cheap imports from India and China.

Health Cabinet Secretary Cleopa Mailu said his ministry and that of Industrialisation are working on a package that will be unveiled soon.

“There are long-term gains to be had in stimulating the development of local industrial capacity to secure the supply of national medical products, as well as benefit the local economy,” he said.

Dr Mailu added that some of the incentives being considered include the Kenya Medical Supplies Authority (Kemsa) giving preference to locally produced medicines in public procurement, removal of tariff barriers, combating sub-standard products and supporting human capital development.

The country’s 35 pharmaceutical companies supply about 30 per cent of the domestic market, and export supplies across the region, particularly to Uganda and Tanzania.

Pharmaceutical industry expert Wilberforce Wanyanga added that the proposed incentives should be targeted at local firms that have invested in upgrading their production systems to the minimum international standards.

He said the standards, dubbed Good Manufacturing Practices (GMP), would ensure the local industry produces pharmaceutical products of guaranteed quality. This would enhance their share of local and export markets.

Market competitiveness

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Currently, 34 of the 35 local firms cannot bid for lucrative donor-funded programmes for essential drugs, such as HIV and Aids, malaria or tuberculosis , as they do not meet GMP pre-qualification requirements.

Kemsa, which procures pharmaceuticals for the Government, also sources for most drugs from abroad because of a lack of local firms that meet this pre-qualification criteria.

“Investing in achieving GMP is costly and takes time. That is why local firms that invest in it should be given significant incentives for some years so as to maintain price and market competitiveness,” Dr Wanyanga said.

He added that the Government should help the local industry access affordable financing from international and local markets, as well as technical assistance.

“A majority of local firms are relying on costly short-term loans from commercial banks. This is not sustainable if we are to strengthen the industry,” Wanyanga said.

Palu Dhana, a local manufacturer and member of the Federation of Kenya Pharmaceutical Manufacturers (FKPM), said the Government should impose taxes on imported medicines that can be produced locally to protect the industry.

“For medicines that are not produced locally, such as the ones to treat cancer, there is no need to slap taxes on them for now until local manufacturers have the capacity to produce them,” he said.

Mr Dhana also asked the Government to review the heavy taxes on raw materials that local pharmaceutical manufacturers import to produce medicines.

He said this has been driving up the costs of doing business and made businesses uncompetitive in domestic and export markets.

“With the right incentives and a level playing field, we can compete effectively,” he said.

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