Dar es Salaam. The government is coming up with a new incentive as it seeks to attract more investors into the pharmaceutical sector.
Under the plan, it is raising the price preference to locally-manufactured medical supplies from the current 15 to 25 per cent.
That means, if a locally-produced medicine is sold at Sh125 and the imported one at Sh100, the government will pick Tanzanian product to promote the local pharmaceutical factories. The minister for Health, Community Development, Gender, Elderly and Children, Ms Ummy Mwalimu, said yesterday that the government was serious on promoting local pharmaceutical industries.
“I have already submitted the proposal to increase price preference to the minister for Finance and Planning,” said Ms Mwalimu at the manufacturers and suppliers annual general meeting.
The government announced in May to have abolished 16 charges and cut 23 fees payable to the Tanzania Food and Drugs Authority (TFDA) and Government Chief Chemist to attract investments to the industry.
Pharmaceutical manufacturers also pay 20 per cent of income as corporate tax instead of 30 per cent paid by other companies, according to Tanzania Revenue Authority.
The Medical Stores Department (MSD) says it imports between 85 and 90 per cent of the medical supplies due to insufficient local manufacturers production. Tanzania’s annual pharmaceutical procurement increased by 20 per cent to hit $1 billion (Sh2.25 trillion) in 2018/19 as the government deepens availability of medicines in the country.
According to MSD Finance and Planning director Sako Mwakalobo, this local market figure rose from $800 million in the previous year.
“We have a huge market but the largest share of money goes overseas,” said Mr Mwakalobo.
The increase might have been prompted by deepening of availability of essential medicines, which Ms Mwalimu said increased from 40 per cent in 2015 to 90 per cent currently.
The government changed its procurement strategy from using supplier agents to buying directly from manufacturers since 2016.
“After doing away with the middle men, we have seen cost reduction by an average of 40 per cent. We are not going to change this strategy as it helps the government save about $2 million per year,” said Ms Mwalimu.
“Currently, we currently sign supply contract after every two years but we can discuss how to improve this if there are any issues. We can reduce or add the tenure if we agree,” she added.
For their part, suppliers were happy with the government move to procure products directly from manufacturers saying it actually assured them market.
“Sometimes the middle men did not deliver medicines to the government and we end up getting losses. This arrangement has specifically boosted our factory,” said the director of Mwanza-based Prince Pharmaceuticals Co, Mr Hetal Vithlani.
“The main challenge for now with the manufacturers like me is availability of reliable and cheap loans. For instance, we would want to build another factory for cotton wool in six months but it’s not easy to get loans and interest is very high. The banks should put them at single digits around 7-9 per cent,” he added
Mr Rudraksh Narula, the director of India-based Narula Exports which has been supplying medical equipment to MSD for the last 15 years said the current arrangements were okay but payment time should be shortened.
“We normally receive payment after a month or two but it’s more convenient if we could be paid with 15 days,” he said.