Why private sector's investment in pharmaceutical industry is crucial - The Citizen

Dar es Salaam. Members of the private sector have been challenged to invest in the manufacturing of drugs and medical devices in order to build a vibrant, sustainable, and locally driven sub-sector.

The move will reduce the country’s reliance on the importation of medicines, save much-coveted foreign currency, and create jobs for the majority of Tanzanians.

The Household and Population Census 2022 shows that Tanzania has a population of 61.74 million, which indicates that the pharmaceutical market is rapidly growing in the country.

Regionally, the opportunity is broadened by the presence of 283.7 million citizens in the East African Community (EAC) as well as 380.96 million others in the Southern African Development Community (Sadc).

In fact, Tanzania’s Medical Stores Department (MSD) was selected in 2017 as the sole distributor of medicines, medical supplies, and laboratory equipment for the Sadc members. This just further shows how big the market potential for Tanzania’s pharmaceutical industry is.

Tabling the 2023/24 budget, Health Minister Ummy Mwalimu said that by March 2023, Tanzania has 36 factories that manufacture drugs, medical devices, and other health products.

She said 11 factories manufacture medicines, 10 of which are owned by the private sector, while one factory is owned in partnership between the government and the private sector.

Ms Mwalimu said 25 of the 36 engage in manufacturing medical equipment.

“The government’s focus is to cut back on imports of health supplies from the current 80 percent to below 50 percent by the year 2030,” she said.

The government wants the private sector to take the lead in strengthening and revitalising the country’s pharmaceutical industry.

The director of industry development at the Ministry of Industry and Trade, Mr Lugano Wilson, says the private sector’s leading role should be more sustainable and play a significant role in job creation and the country’s economic growth.

Mr Wilson was speaking during a private sector dialogue on the drafting of a model policy to resolve bottlenecks in the regional Antiretroviral (ARV) value chain held in the city recently.

“The private sector’s engagement in the sector is crucial, especially in understanding barriers impeding domestic manufacturing of medicine and medical equipment such as incentives, regulatory policies, access to finance, and access to foreign markets, among others,” he said.

He said 80 percent of all medicines and medical devices used in the country are imported from outside the Sadc region, something that drains foreign currency.

Furthermore, he said this undermines the country’s financial capabilities, which could be used for the implementation of development projects and providing affordable healthcare services to citizens.

“Deliberate efforts are required in the manufacturing of ARVs, too, whose demand has been rapidly growing. Since the government has a role in creating a conducive environment for business prosperity, it is now the responsibility of the private sector to tap the opportunities and close the gap,” he said.

The Tanzania Medicines and Medical Devices Authority (TMDA) manager for the Eastern Zone, Mr Adonis Bitegeko, said that in 2022, the country’s pharmaceutical market value was estimated to be $4.57 billion.

He said the market has been growing at an estimated annual rate of nine percent, noting that the product’s value share in the domestic pharmaceutical market ranges between 10 and 20 percent.

“The government is prioritising increasing domestic production of pharmaceutical products in order to reach 60 percent market share by the end of 2027,” he said.

He said there were another nine factories that are in different stages of construction, including eight firms that manufacture human medicines and one that specialises in the manufacturing of veterinary remedies.

“The provision of incentives to investors is behind investors’ growing confidence. Incentives range from the areas of Value Added Tax (VAT) waiver for imported manufacturing equipment to reduction of time processing applications for product registration,” he said.

“Other incentives are cancellation of medicine retention fees, exemption of raw material importation fees, and export levies chargeable to finished products,” he added.

According to him, other incentives are provided through the reduction of inspection fees and the condensing of corporate tax from the previous 30 percent to the present 25 percent.

Other incentives provided to investors with the TIC certificates include access to different services such as permits, licences, and approvals issued at the one-stop facilitation centre.

He said the government recognizes properties that are owned by private investors and provides adequate protection against commercial and non-commercial risks.

However, Katwaza Pharmaceutical Industry Limited’s managing director, Churchill Katwaza, said the presence of some investment barriers discourages investment in the sector.

He said the barriers include the failure to respect investment incentives provided at the TIC one-stop centre, noting that some of these incentives are ignored.

“Most of the time, these incentives are ignored at the points of entry, forcing investors to dig deeper into their pockets in order to get imported goods cleared for investment,” he said.

“It is unfortunate that government institutions publicly differ in positions despite an agreement made at the one-stop centre,” he added.

Furthermore, he said investing in the sector was expensive, requiring billions of shillings in capital. Small-scale investors are supposed to compete with products manufactured by global pharmaceutical giants from Europe, the US, and Asia.

Reached for comments, TRA director for taxpayer services and education Richard Kayombo said officers stationed at the TIC one-stop centre are only responsible for investment facilitation.

“They are not in charge of customs issues at border points and at seaports and airports. It is the responsibility of customs officers in the said places to inspect and confirm the details of imported goods,” he said.

“The officers will then determine the Harmonized System (HS) Code. This is because every product has a classification that appropriately establishes its tax status,” he said.

He stressed that officers stationed at the TIC one-stop centre are unaware of what is happening at the points of entry.

For his part, a senior lecturer at the Department of Science, Technology, and Innovation Studies (STIS) in the School of Social and Political Sciences (SSPS) at the University of Edinburgh, Mr Geoffrey Banda, said proper regulation is important in the sector for safety and the efficacy of the technology used.

He said that while drug regulatory capabilities are prevalent in Africa, institutional capabilities among regulatory bodies vary among African countries.

The World Health Organization (WHO) says there are 54 National Medicines Regulatory Authorities (NMRAs) on the continent.

However, only seven percent of these institutions have the ability to perform their core functions as stipulated by the NMRA.

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