FEAPM-Position-Paper-1 - Support to the East African Integration

Support for Local Pharmaceutical Manufacturing
Proposed Model for the Growth of the East African Pharmaceutical Manufacturing Sector
Background
This Model is based on the Government of Ghana’s
interventions in supporting its local pharmaceutical
manufacturers. The ‘Ghana Model’ has proven to be
successful in developing a very healthy local industry
which has reduced the reliance on imports and the
prevalence of counterfeit products in the market.
In the mid 1980’s the Ministry of Health in Ghana was
very concerned about the proliferation of counterfeit
and sub-standard medicines in the country. Their
research indicated that these types of medicines were
mostly imported into the country. Concurrently, there
was pressure on the Government to support local
production of essential drugs which was in a nascent
stage at that time. The Government set about developing
a policy to address the above issues.
The Policy
The proposed Model is based on the positive impact of
the policy interventions adopted by the Government of
Ghana in the late 1980s. The so called “Ghana Model”
aimed to achieve the following:
•
Eliminate or reduce the high level of
substandard and counterfeit medicines on the
market, which were mostly imported into the
country;
•
Grow the local pharmaceutical manufacturing
industry and thus reduce the reliance on
imports.
Key Features of the Policy
Price Preference
A preferencial margin of 20% for all locally
Produced Medicines and medical devices in
national tenders
Tax Incentives
No duties on imports of raw and packing
material, pharmaceutical manufacturing related
equipment as well as spare parts for this
equipment
Import Classification
Classification of medicines according to the
table which shows different approaches to
banning and/or taxing the import of medicines
Import Classification “Ghana Model”
Category
Feature
Finished product imports
banned
List of finished products that are NOT allowed to be imported, initial list included 14
products. These were products manufactured by more than one local company with the
right quality and in quantities necessary.
Finished product imports
allowed but taxed
A large list of finished products which could be imported but the following taxes need to be
paid:
Import duty
VAT
NHI tax
Others
Total 30%
Finished product imports
allowed with no tax
10%
12.5%
2.5%
5.0%
(VAT no re-claimable)
A list of products that can be imported without any tax. These were mostly specialised
products that local companies could not produce and had no immediate plans of producing.
Policy Impact
In the past 20 years since the implementation of the policy, many positive effects have been achieved:
•
•
Significant reduction in the prevalence of sub-standard and counterfeit products ;
The share of local products has increased to around 30% of the total medicines used in Ghana
(Market Growth);
•
In 1989 there were only 9 manufacturing companies in Ghana, today there are 25;
•
Three pharmaceutical companies are listed on the Ghana stock exchange;
•
•
•
•
•
•
The pharmaceutical industry currently employs approximately 3800 persons directly;
Three Ghanaian companies are in the process of attaining WHO approval;
Several of the companies export their products within the West African Region;
One Company manufacturers Active Pharmaceutical Ingredients (APIs);
Several companies have partnered with multi-nationals to manufacture products and
One company manufactures ARVs.
Conclusion
The success of the Ghana Model can serve as a best practice example and therefore as a justification for
the EAC to put in place more preferential policies for local pharmaceutical manufacturers.
FEAPM’s Position
Through the adoption of the East African Community Regional Pharmaceutical Manufacturing Plan of
Action (EACRPMPOA) and the EAC TRIPS Policy, the EAC Partner States have made a significant step
towards strengthening and promoting local pharmaceutical production at the EAC level. In order to
achieve this, a balanced mix of policy measures regarding procurement, taxation and import should be put
into action, including:
•
20% price preference for local manufacturers;
•
Import substitution of key finished products that can be produced locally in the right
•
Zero tax on all raw materials used in pharmaceutical manufacturing;
quality and quantities.
In the context of the EAC Common Market, these measures can only bring positive results, if they are
developed and enforced in a harmonized and coordinated manner.