Local pharma manufacturers face hurdle


In addition to issues arising out of the economic crises, the local pharmaceutical manufacturing is also facing uncertainties as the Government is not honouring the buyback agreement in full terms, stated Gamma Interpharm Chairman Kalana Hewamallika.

The concept of the Guaranteed Buy Back Scheme was formulated by the government in 2014. Accordingly, the Medical Supplies Division (MSD) of Ministry of Healthcare and Nutrition would place orders with local pharmaceutical manufacturers and have to buy all the orders that had been placed.

MSD is the main organisation responsible for providing pharmaceuticals, surgical items, laboratory items, radioactive items and printed material to the State sector healthcare institutions throughout the country.

The buyback agreements was signed in 2015 and renewed in 2019 till 2024. In 2015, with the backing of buyback agreement, the local pharmaceutical industry manufactured 17 products, which increased to 90 products by 2019.

Hewamallika stated that things were good till 2019, and local manufacturers were increasing their investments in latest machinery to produce quality pharmaceutical products. However, he says in the last two years, the buyback agreements were not fully honoured, and the same products which were manufactured by local manufactures as per buyback agreement were now also procured from the State Pharmaceutical Manufacturing Corporation (SPMC), a semi-government organisation.  As a result, Hewamallika notes that his company’s turnover has reduced by 50% in the last two years.

He further stated that local industries currently manufacture 15% of the  local pharmaceutical requirements and can easily increase it to 35% within a decade, if the buyback agreement is properly honoured.

“If the MSD procures pharmaceuticals based on the buyback agreement, local manufacturers will invest more on R&D and machinery to manufacture more products. Now, there is uncertainty, as MSD is procuring from the SPMC, the same products which local industries started manufacturing based on the buyback agreement. The MSD procuring from SPMC is fine, as long as there is proper communication and transparency, so that local industries may not invest in products which MSD procures from SPMC.”  Hewamallika said.

If buyback agreements are fully honoured, it will boost local manufacturing, which in turn would pave the way to export pharmaceuticals, opined Hewamallika.

By Rajiesh Seetharam