--By Akhilesh Tripathi

The good news is the domestic pharmaceutical industry is in good health, despite the massive earthquake of April 25 last year and the ongoing unofficial blockade by India. It’s not that these events have not affected the industry at all but, according to the Association of Pharmaceutical Producers of Nepal (APPON), it has battled the odds well to cope with the emerging situation.

“Fortunately, most drug factories are located in the Terai. So, they remained safe during the earthquake and even those in Kathmandu suffered only minor damage,” Shanker Ghimire, president of APPON, says, “Lack of fuel has created problems in transportation. There is lack of raw material. But industrialists have even been airlifting raw material to keep the industry running as the blockade continues.”

According to APPON, there are 47 pharmaceutical companies registered with them. Forty of them are running and 37 of them are WHO-GMP certified.

Around a dozen other pharmaceutical companies have been registered and are expected to start operation over the next few years. According to Balkrishna Khakurel, Director General of the Department of Drug Administration, the number of registered pharmaceutical companies is around 50. 

Pharmaceutical industrialists say that the size of the domestic pharmaceutical market currently stands at Rs 46 billion and that the industry has been growing at 18-20 percent per year over the past 7-8 years. Similarly, according to them the investment in the industry has already reached around Rs 18 billion. 

Despite having several constraints like power crisis and labour unrest, the domestic pharmaceutical industries have attained an encouraging growth. Manufacturers say that the sole factor behind the growth is quality. “Some of the companies are able to compete even in the global market,” says founder and executive director of Deurali-Janta Pharmaceuticals, Hari Bhakta Sharma. He added that ever since five Nepali companies won a WTO Good Manufacturing Practice (GMP) certificate in 2004, most of the companies seem to be more cautious about quality. 

Although Nepal’s domestic medicine market is still dominated by foreign products, particularly Indian products, domestic manufacturers are increasing their market share. According to a study carried out by South Asia Watch on Trade Economics and Environment (SAWTEE), the share of domestic companies in the country’s pharmaceutical market was only about 30 percent in 2005. Today, according to industry insiders, domestic companies have an impressive share of 45 percent.

“The industry has definitely made a lot of progress, especially over the past one decade. But it is yet to utilise its full potential because of several reasons,” observes Sharma. 

The entry of private sector pharmaceutical producers after the 1990s changed the face of the domestic drug market which was once overwhelmingly dominated by foreign products. 

Such has been the growth of the pharmaceutical industry that even at times when many other manufacturing industries seem to be performing badly, investors seem to be confident and willing to invest in pharmaceutical production. “We are seeing at least one new industry joining the fold every year and this is a healthy sign for the industry,” says APPON President Ghimire, adding that the quality and zeal of manufacturers to move with global trends have helped them to attain an impressive growth.

“Even at the current growth rate, we expect that the domestic manufacturers will capture at least 80 percent of the domestic market share by 2025,” says Ghimire.

Producing Essential Drugs
In the initial years, the Nepali companies used to produce only normal medicines for illnesses like common cold, diarrhoea, fever, cough, a few antibiotics and tonics. But today, they have evolved from that situation and are now producing essential drugs even for cardiac, diabetic and liver patients.  

“Except for 10 percent of medicines, we produce all kinds of medicines here in Nepal,” says Mahesh Gorkhali, Marketing Director at Nepal Pharmaceuticals.

According to sources, while new companies are using the latest available facilities for manufacturing drugs, the old ones too are upgrading and doing everything they possibly can to maintain quality. 

Export Possibilities
According to industrialists, there is a possibility of exporting medicines from the country if the government supports the industry.  Some domestic companies have already started exporting medicines, according to Prabhat Roongta, managing director, Maruti Pharma Pvt Ltd.

Roongta says Lomus Pharmaceuticals is taking the lead in exports. “Besides Lomus, four other domestic drug-makers—Nepal Pharmaceuticals Laboratory (NPL), Deurali-Janata Pharmaceuticals, Elder Pharmaceuticals and National Health Care Nepal—have received the Certificate of Pharmaceutical Product (CPP), one of the prerequisites for obtaining the export licence from the Department of Drug Administration (DDA),” says Roongta.

Sharma of Deurali-Janta says that despite having immense potential for exports, the sector is yet to achieve its full potential. Lack of government initiative to promote the sector, according to Sharma, has played a major spoilsport. “We don’t have a sound economic and social environment for industrial operations. The pharmaceutical industry can achieve much more than what it has so far,” Sharma said, urging the government to do more to promote domestic companies rather than increasing dependency on imported products.

What the Govt Can Do
According to Sharma, domestic companies are running only on 50 percent of their installation capacity. “Some government policies need to be changed for the industry to operate at full capacity,” he says.

Prem Jatiya, managing director of Magnus Pharma, says the government should not import the medicines in which Nepal is self-sufficient. “The government should formulate a law which clearly states that once there is enough supply of a particular medicine from domestic companies, the government will stop the import of such products,” he says.

APPON President Ghimire agrees with Jatiya when he says, “We are not demanding a harsh policy on drug imports. We just want the government to prioritise domestic production,” he says, urging the government to at least amend its tender procedure for drug purchases.

“The tender procedure of the government seems more oriented towards importing drugs. Since domestic products are equally competitive, the government should make the process compatible with the domestic industry,” he stresses