an assessment of kenyan pharmaceutical · landscaping the kenyan pharmaceutical manufacturing...
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An Assessment of Kenyan Pharmaceutical Manufacturers
Production of 7.1% Chlorhexidine
Digluconate for Umbilical Cord Care
March 2015
MAILING ADDRESS PO Box 900922 Seattle, WA 98109 USA
ADDRESS 2201 Westlake Avenue Suite 200 Seattle, WA, USA
TEL: 206.285.3500
FAX: 206.285.6619 www.path.org
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Acknowledgments
Support for this project is made possible by the generous support of the American people through the
United States Agency for International Development (USAID) under the terms of the HealthTech
Cooperative Agreement # AID-OAA-A-11-00051. The contents are the responsibility of PATH and do
not necessarily reflect the views of USAID or the US Government.
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List of acronyms
API Active pharmaceutical ingredient
CWG Chlorhexidine Working Group
EAC East African Community
EMA European Medicine Agency
EOI Expression of interest
GMP Good Manufacturing Practices
LMIC Low- and middle-income countries
PPB Pharmaceutical and Poison Board
TFDA Tanzania Food and Drug Authority
UNICEF
UNIDO
United Nations Children’s Fund
United Nations Industrial Development Organization
USAID United States Agency for International Development
USP United States Pharmacopeial Convention
WHO World Health Organization
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Introduction
Within the overall implementation plan of the United Nations Commission for Life-Saving Commodity,
the Chlorhexidine Working Group (CWG) has been working to establish local production for 7.1%
chlorhexidine digluconate for umbilical cord care (the chlorhexidine product) in selected countries in
order to increase the product’s availability at affordable pricing.
Local production is defined as production in low‐ and middle‐income countries (LMICs) by locally
owned companies or subsidiaries of multinational companies. The potential benefits of local production
include improvement in reliability of supply, realization of foreign import savings, development of further
innovation capacity, creation of enhanced export capacity, and development of human capital. Local
production of high-quality medicines could also lead to cost savings and improvement in product quality,
depending on the product to be produced and on regular surveillance of the LMICs’ quality control
systems.i Furthermore, local production could allow products to be better adapted to local cultural
preferences.
The profile of the chlorhexidine product is appropriate for local production because:
The chlorhexidine product does not require proprietary active pharmaceutical ingredients (APIs),
equipment, or processes for manufacturing.
Pharmaceutical companies in many LMICs are capable of secondary production (i.e., the production
of finished dosage forms from raw materials and excipients) for topical medicines. Thirty‐four
countries in Africa have stated that they have secondary‐level production.ii
The API utilized in the production of 7.1% chlorhexidine digluconate for umbilical cord care—20%
chlorhexidine digluconate—is manufactured in multiple countries and is readily available for
purchase and import.
The cost of raw materials is not significantly high for the chlorhexidine product, but the costs
associated with shipment and import duties will likely constitute a large portion of the total cost (and
will, therefore, significantly affect the pricing) of the finished chlorhexidine product.
Nevertheless, local production of the chlorhexidine product will not be feasible in every LMIC.
This report describes how we came to the conclusion that local production of the chlorhexidine product is
feasible in Kenya and how we subsequently selected manufacturers in that country that are interested in
and capable of producing the chlorhexidine product.
In order to ascertain the feasibility of local production in Kenya, PATH first performed a landscape
analysis using secondary data. Throughout this process, we used the “Checklist for production decision-
making” (Appendix 1) developed by the CWG. Subsequently, PATH and United States Pharmacopeial
Convention (USP) traveled to Kenya to perform rapid assessments of manufacturing facilities and to
conduct preliminary due diligence analysis on those manufacturers interested in the production of the
chlorhexidine product. Our objective was to select manufacturers that are capable of producing a
chlorhexidine product of good quality and who would, therefore, be eligible to receive technical
assistance. In addition, representatives from USP and PATH also had an opportunity to meet with the
Kenyan Pharmaceutical and Poison Board (PPB) to confirm what regulatory mechanism would apply to
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the chlorhexidine product. The following sections summarize the results of the landscape analysis, the
subsequent rapid assessment of manufacturing facilities, our business due diligence analysis, and a
summary of our discussion with the PPB.
Landscaping the Kenyan pharmaceutical manufacturing industry
Kenya has a population of 43 million people and experiences approximately 1.5 million live births
annually.iii The pharmaceutical market in Kenya is estimated to have been US$642 million in 2013 and is
growing to reach US$1.12 billion by 2018. This growth can be attributed primarily to growth in gross
domestic product, spending on medicines due to a growing communicable and noncommunicable disease
burden, as well as growth due to an increase in both population and urbanization.iv Kenya thus presents a
sufficient and attractive domestic market for prospective local manufacturers for the chlorhexidine
product.
There are currently approximately 37 licensed pharmaceutical companies in Kenya.iv Kenya is the largest
producer of pharmaceuticals in the Common Market for Eastern and South Africa region. Kenya is also a
member country of the East African Community (EAC). Approximately one half of Kenyan exports of
pharmaceuticals were destined for the United Republic of Tanzania and Uganda in 2010.v Since the EAC
is moving toward harmonizing medicine registration in the region, prospective manufacturers for the
chlorhexidine product will likely find opportunities outside Kenya when demand for the product increases
in neighboring countries. Although Kenyan pharmaceutical manufacturers face competition from
products from India and China in their domestic and export markets, they are closer to the markets in the
region, and this gives them a competitive advantage.
All pharmaceutical manufacturers in Kenya must be certified with Good Manufacturing Practices (GMP)
standards by the PPB of Kenya.v One of those manufacturers has been audited by a World Health
Organization (WHO) prequalification team and supplies their products to United Nations Children’s Fund
(UNICEF). A few of Kenyan pharmaceutical manufacturers were audited by BEGECA mbH (Aachen,
Germany) as part of the Public-Private Partnerships Project funded by Gesellschaft für Technische
Zusammenarbeit. This indicates that the Kenyan pharmaceutical industry is fairly advanced among
countries in the African continent.
Local manufacturers in Kenya produce a variety of pharmaceuticals in different product forms, including
analgesics; antacids; antibiotics; eye, nose, and throat preparations, anti-inflammatories, nutritional
supplements, antimalarials and artemisin combination therapies, antispasmodics, anthelmintics, and
antihistamines. These local manufacturers appear to be supplying less than 30% of the local demand, with
the remaining 70% of the market being occupied by imports, since donor-funded programs source
products from outside Kenya.v Considering that average operating capacity is only 53% to 67% based on
a survey that United Nations Industrial Development Organizations (UNIDO) performed,v Kenyan
manufacturers remain able and willing to add additional pharmaceutical products to their portfolios.
Government policy is also supportive of local production; the Kenya National Drug Policy (second
edition) is putting emphasis on certain key elements necessary to revitalize the pharmaceutical sub-sector
in Kenya, including ensuring equitable access to affordable medicines through public, private, and other
sectors.v
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Local manufacturers, however, rely heavily on imported raw materials, including APIs. UNIDO’s report
published in 2010 states that most companies import 80% to 90% of their raw materials, mainly APIs and
packaging materials. Importing the API for the chlorhexidine product, however, will not likely be a
significant problem, since a few companies in Kenya already produce antiseptics using the same API as
that of the chlorhexidine product and then export the finished products to other countries.
As a result of this landscape analysis, we were able to check off 7 out of 14 landscape factors on our
checklist (Appendix 1), which indicates that local production of the chlorhexidine product in Kenya is
feasible. Therefore, we decided to move forward with selecting manufacturers that would be interested in
and capable of manufacturing the chlorhexidine product.
Selecting interested and qualified manufacturers
In October 2014, USP and PATH solicited an expression of interest (EOI) by advertising in a national
newspaper in Kenya. In order to increase the response rate, we requested the Federation of Kenya
Pharmaceutical Manufacturers inform its members of the advertisement. Seven manufacturers responded
to the EOI. USP subsequently sent a list of questions to the responders in order to further investigate their
capacities and capabilities. Based on their responses, we selected the following five pharmaceutical
manufacturers for on-site assessments (listed in alphabetical order):
Dawa Limited
Ivee Infusions EPZ Ltd.
Laboratory & Allied Ltd.
Regal Pharmaceuticals Ltd.
Universal Corporation Ltd.
In November 2014, representatives from USP and PATH visited these five pharmaceutical manufacturers.
During this visit, PATH conducted preliminary business due diligence analysis through interviews while
USP conducted a rapid assessment of their manufacturing facilities.
The preliminary business due diligence focused primarily on assessing manufacturers’ level of interest,
their domestic and international distribution capacity, and their experience in working with the
government sector in the hope that the results would provide supplementary information for manufacturer
selection. A financial assessment was not part of this due diligence analysis because financial stability
will be part of the tender requirements and will be assessed at that time if the government procures the
chlorhexidine product. In addition, the due diligence analysis did not analyze cost implications of locally
producing the chlorhexidine product. This analysis will need to be subsequently made with the selected
manufacturers based on the potential demand size as well as sources identified by the manufacturer for
the API and other raw materials.
The rapid assessment of manufacturing facilities was conducted in order to identify significant or gross
deviations from WHO GMP and to determine which manufacturers would be worthy of a full GMP
assessment, the next step in identifying areas for improvement.
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Summary results of preliminary business due diligence analysis
All five of the companies that PATH and USP visited are interested in the chlorhexidine product. Among
them, four companies—Dawa, Universal, Regal, and Laboratory & Allied—currently produce or have
previously produced antiseptic products (solutions) containing chlorhexidine digluconate by importing
the API from India. Therefore, they are already aware of sources of the API for the chlorhexidine product.
In fact, some of their interest stems from their desire to leverage the API that they are procuring to expand
their product portfolios.
In addition, Universal and Regal have already started developing the chlorhexidine product both in liquid
and gel forms. Universal has already put samples of the chlorhexidine product of both forms into stability
chambers, and Regal was about to start stability tests on both forms at the time of our visit. These actions
indicate how significant their interest is in the chlorhexidine product.
Except for Ivee Infusion, all the other four companies have capacity to produce both topical solution and
semisolid pharmaceuticals (such as gel). In addition, these same four companies have capacity to fill
multiple sizes of tubes and bottles. Therefore, they will be able to produce either the liquid or gel form of
the chlorhexidine product for multiple-day application—the administration regimen that the Kenyan
Ministry of Health has decided on. Ivee Infusion has capacity and capability to produce only the solution.
Also, Ivee Infusion’s specialized production process was limited to accommodating only the larger sizes
of containers required for multiple-day application.
All five companies use distributors to sell their products in Kenya and other countries; however, the
revenue structure varies among companies. Dawa, Regal, Laboratories & Allied use distributors to sell
their products to both the government (through tenders) and retailers. They also generate a larger portion
of their revenues from sales to the domestic market, although they have capability to export their products
to other countries. Regal also distributes its products to United States Agency for International
Development (USAID) programs. Unlike those three companies, Universal use to sell its products to
governments through tenders; however, it no longer participates in government tenders and has shifted its
sales to international organizations such as UNICEF while generating some revenue from sales to the
private sector in Kenya. Ivee Infusion has not directly participated in government tenders although its
distributors might have, and its primary focus is on export markets.
Based on this preliminary business due diligence, we recommend selecting Dawa, Laboratories & Allied,
Regal, and Universal to proceed to the next step of GMP assessment. We excluded Ivee Infusion from our
recommendation because: 1) its distribution channel primarily focuses on export markets and the private
sector in Kenya, and it does not have substantial experience in working with the government sector and 2)
its production facility is too specialized to accommodate producing the chlorhexidine product in either gel
or liquid forms for multiple-day application.
Summary of rapid assessment of manufacturing facilities
USP and PATH visited the five Kenyan pharmaceutical companies to tour their manufacturing facilities.
Observations made during the facility tours and meetings are provided below. The focus of the rapid
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assessments is to determine if manufacturers have the basic facilities in place to manufacture
pharmaceutical products. Key findings from manufacturers visited are outlined in Table 1.
Table 1. Key findings from Kenyan manufacturers visited
Company Key Findings
Dawa Limited Current production facility includes non-beta lactam, including topical gels and liquids, beta
lactam and injection plants with the latter having an automated liquid line.
A manufacturing facility upgrade is planned to be completed by June 2015 that will be built
to meet GMP requirements.
Ivee Infusions EPZ Ltd.
The current facility has been producing products since August 2013 and can produce liquid
only.
Chlorhexidine API is sourced from India.
The company has developed a chlorhexidine solution that has completed 6 months of
accelerated stability studies and has also compiled 10 months of real-time stability data.
The company makes its own bottles via an automated infusion process that is also part of
its automated product manufacturing process. Current bottles have a 10-ml capacity. The
manufacturer has the potential to increase the bottle capacity to a maximum of 15 ml.
The company’s primary focus is injectable medicines, thus its water system must be able to
meet the requirements for water for injection. If used in chlorhexidine solution production
this may unnecessarily drive up product cost.
Small but adequate quality control lab with essential equipment.
Laboratory & Allied Ltd.
The company has the ability to make all dosage forms including gels and liquids.
The company has the essential utilities and equipment needed to manufacture
chlorhexidine gel and/or liquid.
The water system was indicated to have been validated and appropriately set up to control
for water quality.
The design and construction of the new facility was optimal for manufacturing and
preventing cross-contamination. This is important given the manufacturer also produces
beta-lactams.
Regal Pharmaceuticals Ltd.
The company appears to have adequate facilities and processes in place to manufacture
according to GMP. For example the raw materials storage area as well as other holding
areas have undergone thorough temperature mapping studies to understand and control
environmental temperature. The facility layout was also designed to prevent mix-up and
cross-contamination.
The company currently produces gels as well as liquids, thus the required manufacturing
equipment is currently in house.
Chlorhexidine product development is still under way, but development was to be
completed soon.
The firm indicated that in April 2014 the facility underwent an audit by Pharmaceutical
Inspection Convention and Pharmaceutical Inspection Co-operation Scheme member
organizations.
Chlorhexidine API is sourced from a supplier with a drug master file.
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Company Key Findings
Universal Corporation Ltd.
The company has shown that it can manufacture products under GMP. The quality control
laboratory is well equipped with modern analytical equipment with as many as nine high-
performance liquid chromatography instruments.
The company currently produces gels as well as liquids, thus the required manufacturing
equipment is currently in house.
In October 2011, Universal received WHO prequalification for the HIV medicine
lamivudine+zidovudine tablets.
Universal began developing chlorhexidine gel and liquid formulations; both are in stability
studies.
Chlorhexidine API is sourced from an Indian supplier.
The company was previously inspected by UNICEF and USAID.
Summary of discussion with PPB
The PPB is responsible for registration and evaluation of pharmaceuticals as well as GMP inspections of
pharmaceutical manufacturing facilities. Pharmacovigilance is not included in its scope of work. They are
currently trying to expand their scope of work to include medical devices and diagnostic tests.
Product classification:
- The chlorhexidine product will be classified as an over-the-counter medicine since it will make a
medical claim. Antiseptics containing chlorhexidine digluconate are considered to be borderline
products as long as they do not make medical claims (this does not apply to chlorhexidine for
umbilical cord care).
- The registration process for over-the-counter medicines and prescription drugs are the same. If a
product is categorized as a borderline product, evaluations for quality, safety, and efficacy are not
required.
Registration timeline:
- A fast-track process (regulatory dossiers are evaluated within 30 days from the date of dossier
submission) is available for locally produced pharmaceutical products. Imported pharmaceutical
products require 12 months for evaluation.
- The registration fee is US$500 per product for local manufacturers. The fee becomes US$1,000
for an imported product.
- Six-month stability tests (both accelerated and real-time stability tests) are required for product
registration. Pharmaceutical manufacturers are required to continue to perform real-time stability
tests up to 24 months.
- Evidence that shows that products have been submitted for analytical testing is required at the
time of regulatory dossier submission. Analytical tests do not have to be completed by that time.
- European Medicine Agency (EMA) Article 58 is recognized in Kenya.
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Regulatory harmonization in the EAC:
- The process is similar to that of the EMA. Products for neglected tropical diseases and those
identified as lifesaving commodities under the UN Commission are eligible to take advantage of
EAC harmonization.
- Tanzania Food and Drug Authority (TFDA) is the coordinating agency. Pharmaceutical
manufacturers must submit regulatory dossiers to the TFDA. Copies will be sent to the national
regulatory authority of the country in which the pharmaceutical company is located. GMP
inspection, certification, and evaluation will be conducted jointly with the TFDA and the relevant
national regulatory authority.
Recommendation and next steps
Based on the rapid assessment of manufacturing facilities and the preliminary business due diligence
analysis that we performed in November 2014, we believe that there is no significant concern in
designating the following three companies as potential manufacturers of the chlorhexidine product.
Especially since Regal and Universal have already started product development and their products are
likely to be in the market in the near future, we do not see any supply gap in Kenya.
Laboratory & Allied Ltd.
Regal Pharmaceuticals Ltd.
Universal Corporation Ltd.
We will need to assess Dawa’s manufacturing facility after it completes its ongoing renovation in order to
fairly assess its manufacturing capacity and capability.
As next steps, USP and PATH will continue to assist the three selected manufacturers until they succeed
in registering the chlorhexidine product in Kenya. Assistance will include a full GMP assessment,
identification of areas for improvement, and development of corrective action plans by USP. USP will
then need to continue to follow up with manufacturers to ensure that corrective action plans have been
properly implemented and that regulatory dossiers have been created to meet the standards of the PPB.
In addition, PATH initiated a market research study in 2014. The results of that market research study and
the demand forecasting that PATH did based on the results of that study will be shared with the Ministry
of Health, manufacturers, and other key stakeholders. This information should be helpful to
manufacturers as they formulate effective introduction plans. The CWG will also continue to work in
other countries in Africa to raise awareness about the chlorhexidine product. These countries might
become potential markets for Kenyan pharmaceutical manufacturers.
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i Kaplan W, Ritz L, Vitello M. Local production of medical technologies and its effect on access in low and middle income
countries: a systematic review of the literature. Southern Medical Review. 2011;4(2):4‒14.
ii United Nations Industrial Development Organizations (UNIDO). Pharmaceutical Manufacturing Plan for Africa. Addis Ababa,
Ethiopia: UNIDO; 2012. Available at:
http://www.unido.org/fileadmin/user_media_upgrade/Resources/Publications/Pharmaceuticals/PMPA_Business_Plan_Nov2012
_ebook.PDF. Accessed December 3, 2012.
iii United National Children’s Fund (UNICEF). State of the World’s Children 2015 Country Statistical Information. Available at: http://www.unicef.org/infobycountry/kenya_statistics.html. Accessed February 18, 2015.
iv Business Monitor International. Kenya Pharmaceuticals and Healthcare Report; Q1 2015. Business Monitor International;
2014.
v UNIDO. Pharmaceutical Sector Profile: Kenya; UNIDO; 2010. Available at:
http://www.unido.org/fileadmin/user_media/Services/PSD/BEP/Kenya_Pharma%20Sector%20profile_TEGLO05015_Ebook.p
df. Accessed February 18, 2015.
A-1
Appendix 1: Checklist for production decision-making
Questions Column A Column B Column C
Landscape Manufacturing assessment
Remark
Yes/No Yes/No
Capability and capacity of pharmaceutical companies
Are there any pharmaceutical manufacturers in your country that have a Good Manufacturing Practices (GMP) certificate issued by the local regulatory authority and have a manufacturing license for their current products?
☒ Yes
☐ No
☐ Yes
☐ No
Are there any pharmaceutical manufacturers in your country that already produce topical medicines in liquid or gel form?
☒ Yes
☐ No
☐ Yes
☐ No
Is the existing capability of pharmaceutical manufacturers adequate for manufacturing 7.1% chlorhexidine digluconate for cord care? [Note: The adequacy of manufacturing capability should be assessed by trained GMP auditors].
☐ Yes
☐ No
☒ Yes
☐ No
Are pharmaceutical manufacturers knowledgeable about where to obtain quality active pharmaceutical ingredient (API), excipients, and other raw materials?
☒ Yes
☐ No
☐ Yes
☐ No
Do these pharmaceutical manufacturers have a good record of financial stability over time? [Note: Financial statements over the past 3 to 5 years could be used as verification].
☐ Yes
☐ No
☐ Yes
☐ No
Needs further evaluation
Given the domestic market size for 7.1% chlorhexidine digluconate, are there pharmaceutical companies willing to sell the product to public-sector purchasers at affordable prices?
☐ Yes
☐ No
☒ Yes
☐ No
Affordability
Given the domestic market size for 7.1% chlorhexidine digluconate for cord care, can the API, excipients, and other materials be obtained from quality sources at reasonable costs?
☐ Yes
☐ No
☐ Yes
☐ No
Needs further evaluation
[If the API is imported] Do the tax and import duties for the API significantly affect the price of the finished product?
☐ Yes
☐ No
☐ Yes
☐ No
Needs further evaluation
Can 7.1% chlorhexidine digluconate for cord care be produced more inexpensively locally than importing a 7.1% chlorhexidine digluconate product? [Note: Price and cost associated with importing a product from Lomus or purchasing from the United Nations Children’s Fund Supply Division Catalogue can be used as a bench mark.]
☐ Yes
☐ No
☐ Yes
☐ No
Needs further evaluation
Sustainability
Are pharmaceutical manufacturers able to sustain the supply of 7.1% chlorhexidine digluconate, given the domestic market size, product pricing, and cost of production of the product?
☐ Yes
☐ No
☐ Yes
☐ No
Needs further evaluation
If the domestic market size is too small to sustain the supply:
Are there viable markets in neighboring countries into which the 7.1% chlorhexidine digluconate could be exported?
☒ Yes
☐ No
☐ Yes
☐ No
Are there any trade zones or regulations that could facilitate the export of 7.1% chlorhexidine digluconate for cord care while maintaining affordable end-user pricing?
☒ Yes
☐ No
☐ Yes
☐ No
Are pharmaceutical manufacturers in your country able to meet any larger regional demand?
☒ Yes
☐ No
☐ Yes
☐ No
Are pharmaceutical companies in your country capable of exporting and marketing medicines to neighboring countries?
☒ Yes
☐ No
☐ Yes
☐ No