Sh1.2tr pharmaceutical investment on the cards

Thursday July 18 2019

Medical Stores Department executive director,

Medical Stores Department executive director, Mr Laurean Bwanakunu 

By Alawi Masare @AMasare malawi@tz.nationmedia.com

Dar es Salaam. The government has embarked on a Sh1.2 trillion ($517 million) pharmaceutical project that will see three manufacturing plants being established through partnership with private investors.

The feasibility study for the project has been approved, and the next step is to identify partners as part of efforts to reduce the country’s reliance on pharmaceutical imports.

The government expects to have signed contracts with investors willing to set up manufacturing sites in Mwanza, Mbeya and Kibaha under public-private partnership (PPP) by next June.

The PPP commissioner in the Ministry of Finance and Planning, Dr John Mboya, told the International Pharmaceuticals Investors Conference in Dar es Salaam yesterday that prospective investors were assured of a ready market.

“These are viable projects which may take four to six years to break even. The government has given assurance to the investors. We have the domestic, EAC and SADC markets,” he said.

Dr Mboya added that the feasibility study had considered vital lessons from pharmaceutical industries in Kenya, Uganda and other countries.

Mr Fred Pondamali, MSD project manager for the Establishment of Medicine and Medical Supplies Manufacturing Plants through PPP, said contracts are expected to be signed by next June, and construction of the factories may take up to two years.

A $63 million plant that will produce intravenous fluids is expected to be built in Mbeya, while Mwanza will be the location of a medical cotton wool manufacturing plant whose cost is estimated at $46 million. The general pharmaceutical factory at Kibaha is expected to cost $408 million, according to Dr Mboya.

Some investors sought to know whether the government had plans to protect existing pharmaceutical manufacturers once the proposed factories start to operate.

However, Dr Mboya allayed their fears, saying high demand meant that all manufacturers would be assured of a reliable market.

“The Medical Stores Department (MSD) will ensure that nobody will be adversely affected once production starts at the new plants. However, demand is adequately high in Tanzania and the regional markets, so there is no need to worry,” he said.

Tanzania imports about 85 per cent of its medical supplies because existing local manufacturers don’t have the capacity to meet domestic demand.

MSD director general Laurean Bwanakunu said the country currently has only five pharmaceutical manufacturing plants. Three others are expected to start operating this year.

“We spend about Sh1.2 trillion annually to import medicines and other medical supplies. We need to have stocks that can last at least nine months, and this means that we incur additional holding costs. These proposed plants will enable us to drastically reduce such costs,” he said.

Trade and Industry minister Innocent Bashungwa, who opened the conference, assured existing and prospective pharmaceutical investors that the government was doing everything possible to improve the business environment.

“Just recently, the government abolished 54 charges in an attempt to reduce the burden on investors. We also have tax incentives provided through the Tanzania Investment Centre, and the government is currently reviewing laws that are seen to impede business. Tanzania is the right place for you to invest,” he said.

Tanzania’s pharmaceutical market is forecast to grow to $700 million by 2021 from $450 million in 2017, according to the World Health Organisation, United Nations Comtrade and Business Monitor International.