Download - Ethiopian Pharmaceutical Industry-1st draft
Pharmaceutical Industry in Ethiopia
Prepared by Access Capital Staff
Amira Mohammed November 2008
ContentsI. General Overview of Ethiopia Heath sector Development......3II. Overview of the Pharmaceutical Industry...............................4III. Market Situation...................................................................6
3.1 Local Production.................................................................63.2 Import.................................................................................73.3 Export.................................................................................8
IV. Government Incentives.........................................................9V. Opportunity & Treat................................................................9
5.1 Industry wide opportunity..................................................95.2 Industry wide Constraints................................................10
Pharmaceutical Industry Page 2
I. General Overview of Ethiopia Heath sector Development
In Ethiopia, 47% of the population lives below the poverty line.
However, the health coverage service has improved recently reaching
87 percent.
The country is mainly known for frequent medical crises breaking out
such as cholera, malaria, measles, typhoid, and several other medical
crises. Adding to this the age old tuberculosis and HIV/AIDS pandemics that plague
the country.
Indicators 2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
Total Population65,344,00
067,220,
00069,127,
02173,043,
51075,067,
00077,127,
000PHS coverage (%) 61 61 64 72 77 87PHS * coverage (%) 68 71 70 83 92 98EPI coverage (%) 52 50 61 70 76 73No of facilitiesHospital 115 119 126 131 138 143Health center 412 451 519 600 635 690Health stations 2,452 2,396 1,797 1,662 1,206 1,376Private clinic not for profit
434 383 359 379 480 397
Private clinic for profit 1,235 1,229 1,299 1,578 1,784 1,756Health posts 1,311 1,432 2,899 4,211 5,955 9,914Pharmacies 311 302 275 276 246 320Drug shop 309 299 375 381 476 577Rural drug venders 1,856 1,888 1,783 1,787 1,754 2,121Human resource in servicePhysicians 1,888 2,032 1,996 2,453 2,115 1,806Health officers 484 631 683 776 715 1,151Nurses 12,838 14,160 15,544 18,809 17,845 18,146Health assistant 8,149 6,856 6,628 6,363 4,800 3,148Para medical 3,824 4,641 5,215 6,259 5,431 3,863Health extension works 2,337 8,901 17,653Human resource graduates
Pharmaceutical Industry Page 3
Specialists 91 103 96 183 57 207General practitioners 152 182 193 309 188 161Health officers 183 181 249 333 247 789Nurses 1,562 1,465 2,384 4,536 1,618 1,846Para medical 656 1,054 999 803 791 789Health extension workers
2,737 7,090 7,136 8,560
Source: Ministry of Health *PHS coverage includes service provided by private
health facilities
The Ethiopian government millennium goal is building a wide
reaching system that focuses on communicative diseases, such as
HIV/AIDS, tuberculosis, and malaria and maternal and childcare
health issues such as immunization and reproductive health
Currently, the government is following a twenty-year health
development implementation strategy, known as the Health Sector
Development Program (HSDP), with a series of five-year investment
programs. HSDP proposes a sector-wide approach to achieve the
government's objectives.
II. Overview of the Pharmaceutical Industry
The pharmaceutical sub sector contribution to the overall economy is
minimal. (Contribution to GDP, foreign exchange, employment).
For long period, the pharmaceutical industry was monopolized by one
government organization till the current government regime came to
power with free market economy in 1991 which introduce private
companies with aggregate investment close to 754 million birr ($76
Million).
However, the sub sector is still highly underdeveloped & dominated
by few manufactures and depends on imported products.
As compared to the population density of the country, the local
industries are insignificant in terms of addressing the public demand.
Pharmaceutical Industry Page 4
Currently the local pharmaceutical manufacturing industry consist of
two state run companies and eleven private owned pharmaceutical
companies engaged in the production of human and veterinary drugs
with total capital outlay of 516 million birr( $ 52 Million) . They are
mainly involved in the manufacturing of tablets, capsules and IV
fluids.
Currently these industries are operating way below capacity due to
several factors, mainly shortage of finance.
The pharmaceutical industry is one of the sectors which the
government is giving attention in order to enhance the local
pharmaceutical industries so that they can produce a substantial
portion of the pharmaceuticals and medical supplies required for
domestic consumption and for export. Thus, the government is
developing a strategic plan which will be finalized and put to work
soon.
The total number of pharmaceuticals (human and veterinary) and
medical supply firms that are operating in a country were seventeen
(two public and fifteen private). Only two firms produce and export
veterinary medicine.
Table List of Local Pharmaceutical Manufacturing Companies
S/N Name of the factory Production Type Ownership1 Addis pharmaceutical
factory S.CHuman Pharmaceutical
Public Enterprise
2 Asmi Plc Surgical dressing and antiseptic disinfectants
Private Limited Company
3 Cadila Pharmaceuticals (Ethiopia) PLC
Human Pharmaceutical
Private Limited Company
4 Dana trading PLC Medical Supply/Absorbent cotton/
Private Limited Company
5 East Africa Pharmaceuticals
Human & Veterinary pharmaceuticals
PLC/British Sudanese Joint Venture
Pharmaceutical Industry Page 5
6 Ethiopia Pharmaceuticals Manufacturing (EPHARM)
Pharmaceuticals and medical supplies Public
Enterprise 7 Fawes Pharmaceutical
PLCPharmaceutical liquid manufacturing/Oral liquid/
Private Limited Company
8 National Veterinary*/GOV)
Veterinary Medicine /vaccines/
Public Enterprise
9 Pharmacure P.L.C Large volume intravenous /IV /fluids
Private Limited Company
10 Rx Africa Human Pharmaceutical
Ethio-American Joint Venture
11 Sino Ethiop Associate (Africa)
Pharmaceutical Raw Material /hard empty gelatin capsules/
Ethio Chinese Joint Venture
12 Moab Medical Supplier /Sanitary towels , napkins & cosmetics/
Private Limited Company
13 Desta Medical Supplier /first aid bandages/plasters/
Private Limited Company
14 Bethlehem Pharmaceuticals **
Human Pharmaceutical
Private Limited Company
15 Etab Syringe Manufacturing Medical
Supply/Syringes/
Private Limited Company
16 Biosol17 Life Line
Note: ** companies currently not operational
Out of these seventeen factories only thirteen factories are currently
operational while four factories have been closed due to financial
problem. And most of the existing companies are manufacturing
below installed capacity and produced a limited number of products.
III. Market Situation The market for pharmaceuticals and medical supplies is obtained
either through imports or from local manufacturers.
Pharmaceutical Industry Page 6
Domestic market is highly dependant on imports as the local
manufacturing units cover only a small portion of the requirement for
domestic needs. Drugs manufactured locally only cover 15 percent of
the national demand. The rest is filled through import. At present
local manufacturers on average only produce 23 million birr worth of
products.
There is a huge market gap in pharmaceutical products, i.e. not all
essential drugs for the country is currently produced or under served
by the local pharmaceutical and medial supply industry which is
substituted by import.
It is estimated that the Ethiopian market is around US $200 million,
which can be divided into:
o Purchase/imports through tenders by Ministry of Health and
NGOs (TB, HIV and malaria drugs)- US$ 100million
o Purchases/imports through tenders by PHARMID, Government
owned company (general medicines):- US$ 30million
o Purchase/imports by Trade market (general medicines):- US$70
million
III.1 Local Production The current operational industries are mainly involved in the
production of human medicine (antihistamines and antiallergic, anti-
infective, cardiovascular drugs, central nervous system drugs, drug
used for correcting water, electrolyte and acid-base disturbances,
drug used in musculoskeletal and joint diseases, gastrointestinal
drugs and vitamins); Veterinary medicine (veterinary boli &
veterinary vaccines) and medical supplies (bandages & adhesive
plasters).
All of the drugs produced in Ethiopia are generic.
Pharmaceutical Industry Page 7
The local manufacturers are highly dependant on imported raw
materials and other essential inputs as there is no sufficiently
developed chemical industry in the country.
Out of the total 300 (19 pharmacological group of drug) essential
drugs listed prepared by Drug Administration Control Authority
(DACA), only 90 drugs( 9 pharmacological group of drugs) are being
produced locally in a very limited amount which clearly indicates
there is untouched and wide investment opportunity in the sub sector.
Most of the manufactures don’t have GMP certification and only six
companies have GMP certification from DACA.
There are no local manufacturers that produce TB and HIV medicines
and these are totally imported
III.2 Import
Ethiopian imports include products falling under Chapter HS No. 30;
antibiotics vaccines, penicillin, medicaments of other hormones,
anesthetics medicament, medicaments of alkaloids or derivatives,
vitamins, adhesive dressings for medical purposes, wadding, gauze,
materials for surgical suture, absorbable haemostatic, blood-grouping
reagents, dental cements and other dental filling and first aid boxes
and kits. (see Annex 1)
There has been considerable growth in import of pharmaceutical
products and raw materials to Ethiopia. The import market is growing
on average by 36% per annum.
Ethiopia Pharmaceutical Product Import
Year Value in USD
Growth Rate
200240,834,200.
91
200356,914,903.
3439.4%
2004 79,677,179. 40.0%
Pharmaceutical Industry Page 8
28
2005112,838,290
.9441.6%
2006136,564,765
.9421.0%
2007172,875,359
.0726.6%
Average99,950,78
3.2533.7%
Source: Ethiopia Custom Authority
During the last three years, there has been considerable growth in
import of pharmaceutical products and raw materials to Ethiopia.
Ethiopia imports US$77.8 million worth of pharmaceuticals and
drugs. About 21% of the total import into Ethiopia is from India. (see
Annex 2)
The value of import drug constitutes 85% of the total drug
expenditure and local production covers only 15% of the total drug
expenditure per annum.
The total drug expenditure of the health institution of the country in
the year 2003/04 to 2005/06 was 4.53 billion Birr which is one
average 1.5 billion birr per year.
Pharmaceutical Industry Page 9
S upply of P harmac eutic als P roduc ts in E thiopia ('000 dollar)
0
50000
100000
150000
200000
250000
2003/04 2004/05 2005/06
Imports
L oc al P roduc tion
During the same period the import figure increased by 194 % while
the local production showed insignificant changes which shows the
low contribution of local production.
Assuming total demand is equal to locally manufactured and imported
drugs, the country need to spend over 123 million dollars in order to
satisfy the drug needs of the people.
The major products importers are government body ministry of health
(MOH), non government organizations (NGOs), Pharmaceutical Fund
and Supply Agency (PFSA) and the private sectors.
Currently there are about 48 private drug importers in Ethiopia.
III.3 Export Currently only three drug manufacturers of produce i.e. Sino Ethiopia
Associate Africa, East African Pharmaceuticals and National
Veterinary Institute have made huge strides and are engaged in
export activities.
The country exports insignificant amount of pharmaceutical products
mainly to African countries. The foreign exchange earning through
Pharmaceutical Industry Page 10
export showed a considerable growth. The country’s import on
average increased by 46%.
Table Export of pharmaceutical Products Year Value in
USD2003 106,9552004 145,7842005 171,2472006 361,9082007 433,632
Source: Ethiopia Custom Authority
IV. Government Incentives
Currently the government has recognized the importance of the sub
sector. Local manufacturers deserve close policy support and follow
up and also decided that the sub sector to be as one of the five top
priority area that require major focus and support.
Thus, a strategic plan has been developed which makes the sector
more attractive for new investor to fill the gap as well as for the
existing ones to promote capacity utilization.
The local manufacturers will receive up to ten years tax holiday for
special investment in pharmaceuticals, and no tax on locally produced
pharmaceuticals for export.
The Federal Government Investment Commission’s new directive in
which all technologies for manufacturing and for R & D activities will
be exempt from paying duty and related taxes.
V. Opportunity & Treat
V.1 Industry wide opportunity
Huge demand for the products: - great market potential for 77
million people in Ethiopia and 320 million people in East Africa, as
well as substantial efforts by the Ethiopian Government and the
Pharmaceutical Industry Page 11
international donor community to reach Millennium Development
Goals make Ethiopia interesting investment location.
Access to regional market:- export from Ethiopia enjoy preferential
access to regional and world markets under a number of special
access and duty reduction (export promotion programmes)
Strategic location: - Ethiopia is strategically located for investors
who want to access the East and Central Africa market.
Stable Political Climate: - the country is stable and peaceful which
could be evidenced by the large flow of investors from all over the
world and also the county hosts many international organization and
foreign embassies.
The current government focus to the sector: it is expected that
once the government finalizes formulating the strategic plan, different
incentives will be presented in order to attract the coming investors
allowing the public to be the beneficiary.
Existence of untapped market for product with large market
potential in Eastern Africa:- Ethiopia didn’t start producing anti-
retroviral, anti-malarial and anti-tubercular which are highly
demanded locally as well as by neighboring countries.
Opportunities exist in the industry in the field of
o Production of medicine:- there is a huge demand and supply
gap for most of the essential listed by DACA
o Production of raw materials: - almost all of the local
manufactures fully depend on imported raw material. So there
is an opportunity to invest on manufacturing of raw material for
local as well as export.
o Production of medial supplies: - large amount of medical
supplies are imported in the county since there is no industry in
Pharmaceutical Industry Page 12
the country that produce surgical gloves, disposable syringe,
latex gloves and condoms.
V.2 Industry wide Constraints
Inadequate working capital: working capital requirement to
purchase raw material for pharmaceutical and medical supply
industries is large which couldn’t not be meet by the local
manufacturers.
Highly dependence on import of raw material product: since
there are no companies who are able to produce pharmaceutical
grade input, the industry is highly dependent on imported raw
material. The chemical industry in the country is not yet developed
enough to provide raw material to these industries. These however
have a negative impact on the price.
High duty tax on imported inputs:- the tariff rate for significant
numbers of active ingredients, vital pharmaceutical additives and
pharmaceutical packaging materials is high which makes the products
not to be competitive with imported products mainly from China and
India.
Short pay back period & stringent collateral requirement
Limitation of skill and low level of technology
Inability to comply with Good Manufacturing Practice (GMP)
Lack of supporting procurement system
Absence of interest of NGOs to purchase medicines from the local
manufactures
Pharmaceutical Industry Page 13
Annex 1: Total Import
H.S Code Description
2002 2003 2004 2005 2006 2007
Value Value Value Value Value Value
30012000
Extracts of glands or other organs or of their secretions
7,258,085.37 - -
30022000
Vaccines for human medicine
58,791,347.83
47,799,845.98
51,405,707.74144,408,861.8
6194,972,597.24 319,730,806.54
30023000
Vaccines for veterinary medicine
1,327,100.38 436,448.51 521,413.60 1,072,476.24 1,941,668.05 964,687.96
30029000
Human and animal blood; microbial cultures; toxins, etc, nes
1,826,242.171,767,856.0
52,088,483.04 53,533.85 - 0
30031000
Medicaments ofpenicillins... Or streptomycins..., not for retail sale
6,698,921.58 109,196.88 207,440.60 420,435.19 331,404.16 336,695.93
30032000
Medicaments of other antibiotics, not for retail sale
1,953,797.762,105,718.0
328,577,935.67 3,078,455.14 2,919,694.68
30033100
Medicaments of insulin, not for retail sale
1,037,420.12 219,395.46 173,697.08 3,501.73 22,032.24
30033900
Medicaments of other hormones, not for retail sale, nes
1,267,998.8712,551,845.
3519,355,838.09 1,195,547.45 2,544,482.12 2,617,371.34
30039010
--- anesthetics medicam.with >=constituents,not for retail sale
27,142.14 299,619.23 622,861.38 28,849.29 155,898.85 2,231,900.74
30039090
--- other medicaments with..>=2 constituents,not frs,nes(exc.anaesthetic
973,455.672,714,743.3
3717,532.46 1,919,095.64 892,976.56 4,950,964.43
30041000
Medicaments of penicillins... Or streptomycins..., for retail sale
17,240,959.77
29,021,949.41
19,435,613.21 7,401,894.82 13,546,394.14 10,210,732.05
30042000
Medicaments of other antibiotics, for retail sale
32,019,587.59
52,314,808.59
53,493,005.15 22,460,720.47 146,659,849.28 44,159,912.88
3004310 Medicaments of insulin, for 2,374,121.20 9,700,440.5 4,504,564.62 37,359.87 3,938,792.30 991,479.17
Pharmaceutical Industry Page 14
0 retail sale 7
30043200
Medicaments containing adrenal cortical hormones, for retail sale
3,680,618.69 - 1,974,523.86 1,917,686.08 4,124,464.13 3,170,366.75
30043900
Medicaments of other hormones, for retail sale, nes
73,478,171.80
56,716,429.74
287,935,489.67
527,524,243.41
546,206,931.37 330,337,688.40
30044000
Medicaments of alkaloids or derivatives thereof, for retail sale
2,149,894.748,897,693.8
98,470,285.16 9,232,020.46 10,236,271.92 6,658,149.85
30045000
Other medicaments of vitamins or other products of 29.36 for retail sale
5,101,477.3415,293,319.
4613,176,574.69 16,775,742.31 8,262,635.08 13,160,539.29
30049010
--- anaestuetics medicaments of mixed/unmixed product frs,nes
767,445.621,299,261.0
3147,255,450.7
37,474,080.36 14,951,045.01 18,615,608.90
30049090
--- other medicaments of mixed/unmexed products,frs,(exc.anaesthetics)
91,087,313.29
221,819,750.32
-124,530,323.9
8164,028,085.67 801,438,583.94
30051000
Adhesive dressings..., for medical... Purposes
1,230,781.223,738,600.5
14,570,339.76 3,565,063.06 2,511,060.21 4,589,689.70
30059000
Wadding, gauze, etc with pharmaceutical substances for retail sale, nes
4,913,247.534,163,919.0
58,115,729.94 3,352,433.02 9,284,926.49 7,747,387.53
30061000
Materials for surgical sutures; laminaria ; absorbable haemostatics
4,018,285.815,817,012.5
86,361,957.47 3,032,508.14 3,815,080.24 2,242,588.73
30062000
Blood-grouping reagents 1,008,163.97 869,717.78 771,216.70 448,702.66 36,520.80 368,705.67
30063000
Opacifying preparations for x-ray examinations; diagnostic reagents...
88,953.97 706,091.48 1,921,478.77 1,396,236.38 173,802.75 656,556.34
30064000
Dental cements and other dental fillings; bone reconstruction cements
65,339.21 38,629.96 840.74 1,736.85
30065000
First-aid boxes and kits 8,007,836.992,650,401.0
11,890,532.33 1,613,514.38 21,179,505.30 22,119,694.97
3006600 Chemical contraceptive 21,992,317.1 4,978,149.0 24,793,190.80 95,938,510.97 47,970,271.94
Pharmaceutical Industry Page 15
0preparations based on hormones or spermicides
6 5
30019000
782.91 1,206.45 14,626.17 24,962.49
30021000
4,557,766.12
1,008,950.71 652,780.70 284,289.85 750,296.29
Total350,386,027
.79490,589,39
2.28689,351,019.
68979,549,203.
631,200,991,521.
121,598,077,10
6.74
Pharmaceutical Industry Page 16
Annex 2 Market Share in Ethiopian Imports Exporters 2003 % 2004 % 2005 % 2006 % 2007 %
Belgium 12024473.82.5
%
21,671,794.03
3.1%
39,869,160.55
4.1%
127,445,482.53
10.6%
466,242,605.04
29.2%
China 11458051.342.3
%
16,735,962.60
2.4%
14,157,560.23
1.4%
18,121,024.36
1.5%
29,970,460.46
1.9%
Cyprus 10779222.232.2
%
10,610,269.43
1.5%
16,633,851.19
1.7%
13,282,807.48
1.1%
16,446,640.64
1.0%
Denmark 7943490416.2
%
104,008,100.00
15.1%
140,657,525.68
14.4%
95,443,354.30
7.9%
245,059,766.79
15.3%
Egypt 7889764.11.6
% 7,423,064.65
1.1%
11,009,860.72
1.1%
21,575,144.93
1.8%
11,103,244.62
0.7%
France 50689741.910.3
%
66,887,454.15
9.7%
25,435,558.11
2.6%
46,005,114.26
3.8%
43,544,023.35
2.7%
Great Britain 34199989.547.0
%
20,733,855.83
3.0%
1,074,300.49
0.1%
30,989,993.65
2.6%
32,234,641.62
2.0%
Greece 11376424.162.3
%
12,827,180.59
1.9%
19,262,105.33
2.0%
10,526,556.78
0.9%
211,263,597.56
13.2%
India97925428.3
420.0
%
146,409,134.56
21.2%
158,761,609.43
16.2%
308,761,336.90
25.7%
211,263,597.56
13.2%
Korea, Republic Of 13158259.53
2.7%
12,982,330.69
1.9%
9,175,383.31
0.9%
124,057,472.80
10.3%
175,339,271.71
11.0%
Netherlands 29010469.115.9
%
43,789,116.73
6.4%
90,539,548.93
9.2%
29,911,534.60
2.5%
26,184,637.83
1.6%
Pharmaceutical Industry Page 17
Pakistan 10445503.612.1
% 6,195,811.75
0.9%
8,644,420.27
0.9%
4,170,837.96
0.3%
30,141,354.05
1.9%
Saudi Arabia 2105305.960.4
% 887,977.73
0.1%
656,090.04
0.1%
6,843,930.51
0.6%
40,765,068.85
2.6%
Switzerland 18437139.333.8
%
25,047,209.93
3.6%
24,937,443.45
2.5%
184,929.58
0.0%
80,995,644.29
5.1%
United Germany 33252815.09
6.8%
31,904,928.48
4.6%
77,565,441.95
7.9%
58,651,880.43
4.9%
36,502,243.72
2.3%
United States 15655402.83.2
%
53,050,164.33
7.7%
216,017,722.12
22.1%
146,378,105.08
12.2%
22,813,858.64
1.4%
Total Import
490,589,392.28
689,351,019.68
979,549,203.63
1,200,991,521.12
1,598,077,106.74
Pharmaceutical Industry Page 18