According to the 2081-2082 budget, a new phase of economic reform is necessary to build a prosperous, socialist-oriented nation with an independent and advanced national economy. One of the five key objectives of the budget is to increase production, productivity, and employment.
The pharmaceutical industry, with a 50-year history, has evolved from producing medicines for common ailments to manufacturing high-tech products. It provides employment to over 50,000 Nepali workers, both skilled and unskilled. In the context of skilled labour migration, the pharmaceutical industry offers domestic employment opportunities, contributes to state revenue through regular taxes, participates in foreign currency earnings, promotes self-reliance, supports epidemic response efforts, maintains a universal distribution system, and contributes to national technological development.
Notably, the industry has initiated exports, with Nepali medicines reaching countries like the Philippines, Uganda, and various African nations, a significant achievement for the country.
Generally, the capital required to establish a pharmaceutical industry in Nepal is significantly higher than that needed in India. This suggests that Nepal’s regulatory policies may be more stringent compared to its neighbours. While the World Health Organisation’s Good Manufacturing Practices (WHO GMP) have revised the concept of high-tech industries, the government has been slow to implement conducive customs policies, investment policies and tax systems that would support the pharmaceutical industry.
Despite the potential to boost the national economy, there seems to be a reluctance to develop cooperative systems. This hesitation may stem from a fear of upsetting neighbouring countries and a lack of commitment to domestic industrial growth and job creation.
The pharmaceutical industry, which has made substantial investments and employs thousands of Nepalis, is facing challenges. Many industries report difficulties in generating sufficient revenue for further growth due to limited sales. Ironically, the government continues to import medicines for common ailments like cold, cough, pain, stomach issues, allergies and antibiotics, even though domestic industries have the capacity to produce these medications.
In the current economic climate, importing common medications is particularly problematic. To support domestic industries and reduce reliance on imports, the government should consider restricting imports of vitamins, antibiotics, pain killers, ointments, antacids, gastric medications, paracetamol and medications for blood pressure and diabetes. While the government advocates for reducing imports and increasing exports, it has yet to implement concrete policies and regulations to support domestic industries. This inconsistency hinders the realisation of self-reliance.
The government’s role in protecting investments in the pharmaceutical industry is crucial. The capital invested by banks, which ultimately belongs to the people, should be safeguarded. To ensure this, the government should implement a domestic marketing system. If such measures are not taken, the government must be held accountable for potential losses to the people’s investments.
In Nepal,
1. Indian, Bangladeshi, and Pakistani products dominate the market, while Nepal exports virtually nothing to these countries.
2. Additionally, food supplements are being imported from India as medicines without proper regulatory inspection of their manufacturing facilities.
3. The number of brands in Nepal exceeds 25,000, a significantly higher percentage compared to neighbouring countries.
4. Industries with substantial investments are gradually shutting down.
5. Imports continue to surge, leading to an expected increase in the trade deficit.
6. Nepali pharmaceutical industries are adopting the latest technologies, including biotechnology, biosimilars, and anti-snake venom and anti-cancer drugs.
7. Despite a population of around 30 million, Nepal has over 300 domestic and foreign companies marketing their products, a significant number considering the population size.
8. The lending market is experiencing significant growth.
A lack of coordination between the Ministry of Health and the Ministry of Agriculture has led to confusion regarding the regulation of neutraceuticals. While one ministry has banned certain products, the other has allowed their import.
Government policies toward the pharmaceutical industry, which has significantly contributed to the country’s technological advancement, job creation, and support during epidemics and natural disasters, seem to lack transparency, particularly in banking policies.
According to World Health Organisation standards, pharmaceutical research and development is a mandatory and lengthy process, often requiring 1.5 to 2 years for a single product. Given the diverse product range of pharmaceutical companies, it may take up to five years to complete the entire production cycle.
However, Nepal Rastra Bank (NRB) policies mandate that industries that are not profitable within three years will be ineligible for further funding. This stringent policy contradicts the long-term nature of pharmaceutical development. Without a five-year development window, industries may be forced to present a misleading picture of their progress.
Therefore, the promotion of the indigenous pharmaceutical industry, which can help boost the economy, is indispensable for the following:
a. Create a positive environment for loan refinancing and reduce interest rates, even if temporarily.
b. Exempt or provide relief from taxes and duties.
c. Reduce brand restrictions, tariff barriers and non-tariff barriers.
d. Impose a ban on the import of cough syrup, pain killers, antibiotics, ointments, vitamins, nutraceuticals, etc., that are abundantly produced domestically, or implement alternative measures promptly.
e. Formulate a policy mandating the purchase of domestically produced medicines by government and government-licensed institutions, whenever possible.
f. Both VAT and non-VAT products should be facilitated and managed through the Department of Drug Administration.
g. Adjust prices of foreign brands to align with domestic prices, as some foreign brands are significantly more expensive.
Given the current economic situation in the country, the pharmaceutical market and industry have played a crucial role in economic development, job creation, tax and customs revenue generation, and promoting self-reliance. It is imperative to draw the attention of all stakeholders to this significant contribution.
(Ojha is Executive Director of Ideal Pharmaceuticals. He can be reached at Ojha.idealpharma@gmail.com)
