The buy-back agreement entered into with the government and the pharmaceutical industry is a positive move towards sectoral development and the industry expects it will be further extended to continuously derive the benefits for local manufacturers, Managing Director Astron Limited, Marise Deckker said.
Local manufacturers need encouragement and the Government should work to create a level playing field as imported pharmaceutical products dominate the market. The industry also needs technology infusion and to scale up capital investment. To enable this, joint ventures with foreign collaboration will pave the way forward, she said in an interview with Business Observer.
“The business environment should advance to support industrialists. In this regard, the Ease of Doing Business needs much improvement. The current systems are cumbersome and very time consuming,” she said.
Excerpts:
Q. Give us an overview of your company
A Astron Limited is a fully Sri Lankan owned company which develops, manufactures, imports and markets quality healthcare products. The company was incorporated in 1956 creating a milestone in the pharmaceutical industry by setting up the first pharmaceutical manufacturing facility in the country.
Astron completes its 63rd years of operations in 2019. Over the years the company has progressed to be one of the most reliable healthcare companies in the country, winning the respect and admiration of consumers and all other stakeholders. Astron is a company dedicated to quality healthcare solutions in the field of pharmaceuticals, nutritional supplements, nutraceuticals, cosmecueticals, herbals and animal healthcare.
The company operated under the name Dumex Limited Ceylon in 1956 to Pfizer Limited in 1963 and the name was changed as Astron Limited Sri Lanka in 1993. In the same year, the company created history by successfully carrying out the first leveraged management buyout in Sri Lanka.
Since then, Astron has been providing many quality healthcare solutions covering a wide range of healthcare products. All Astron products are manufactured using high quality raw materials sourced from reputable suppliers around the world including USA, Brazil, UK, Spain, France and Belgium. The manufacturing plant is located in Ratmalana.
The production facility has infrastructure to manufacture tablets, capsules, liquids, suspensions, powders, ornaments and creams. All products are locally manufactured using internationally sourced raw materials of highest quality and under the required standards of Good Manufacturing Practices (GMP) of the World Health Organisation and the Ministry of Health. All pharmaceutical products meet British/US pharmacopoeia standards. The company has a staff strength of 450 employees.
Q. How has the company progress over the years in the field of pharmaceutical manufacturing?
A Astron Limited has become the leading Sri Lankan pharmaceutical company and has won multiple accolades at a recently held SPC Supplier Convention. The best suppliers to State Pharmaceutical Corporation (SPC) were selected based on quality of products, speed of delivery and other criteria.
Astron has won three awards for best supplier for 2016, 2017 and first runner-up for 2018. As a Sri Lankan manufacturer and marketer of high quality pharmaceutical products since 1956, we are delighted to have been recognized by the SPC, which is the premier supplier of pharmaceutical products to consumers as well as the government and private sector healthcare institutions.
Q. What is the current situation of the pharmaceutical industry in Sri Lanka?
A The pharmaceutical industry in Sri Lanka is dominated by imported products. The local component is 20 percent of the total which is the private sector markets. Four years ago, Sri Lanka Pharmaceutical Manufacturing Association (SLPMA) negotiated with the Ministry of Health and successfully entered in to a buy-back agreement to supply locally manufactured pharmaceutical products.
The products were supplied through the Medical Supply Division to the government hospitals. As a result, locally manufactured pharmaceutical products contributed to 8 percent in 2014 increased up to 20 percent in 2019. The SLPMA originally had 8 members and it has increased up to 15 members at present.
Q. What quantity of the medicine supplied locally? How much of medicine are imported?
A The percentage of locally supplied pharmaceutical products are 20 percent at present, whereas the bulk of the 80 percent are imported. The government sector buys approximately 40 to 45 percent of pharmaceutical products through the State Pharmaceutical Company (SPC) and Medical Supply Division (MSD).
Q. Can the industry encourage more companies to produce medicine locally or is there any possibility of setting up joint facilities by your company to support local production?
A Encouraging more companies to produce locally is a possibility as there is the buy-back agreement. However, the production should be of the highest standard and in conformity to required international quality standards.
We should look into the possibility of entering into joint ventures with countries such as India to ensure capital infusion and technology transfer which in the long run will benefit our country. This will also help to expand facilities to produce more products locally.
There were 17 locally produced pharmaceutical products before the buy-back agreement and now it has increased to nearly 80 products. We need to seek outside help for technological advancements and capital investment. To this end, foreign collaborations to set up joint ventures to expand production is necessary.
Q. What are the challenges faced by the industry at present?
A The biggest challenge is the competition from imported products. The pharmaceutical product importers are given facilities by the government and they are encouraged to import these products. We have to compete with them. There is also the challenge with regard to the mindset of people as to believing that imported products are superior to locally manufactured products.
We need to change this. We are also faced with high cost of production which in turn reflects on the product cost. We are at a disadvantage here as we do not have the advantage of economies of scale as many countries such as India has.
Q. What is the way forward for the industry?
A The imported pharmaceutical products are free of government chargers such as VAT, NBT and PAL. This has created an unfavourable situation for the local manufacturers and we emphasis the government to have a level playing field. It is important to have a mechanism to give us these facilities as well for the local pharmaceutical industry to grow. The country needs a bigger quality testing laboratory to ensure the quality and standards of the pharmaceutical products both imported and locally produced.
Q. What is the role played by the Sri Lanka Pharmaceutical Manufacturing Association?
A The SLPMA was set up in 1963 by a handful of local pharmaceutical manufacturers to promote the efficiency and value of the industry, to build a renowned globally competitive sector that can save and earn foreign exchange and contribute to the economic and social development of the country inline with the health policy.
Until 2004, the Association had eight members. However, the number of members has gone up to 15 at present. They liaise with the government to negotiate favourable terms for the industry and was instrumental in entering in to the buy-back agreement which the industry benefits immensely. The Association while voice their concerns also ensures efficacies, safety and quality of pharmaceutical products. It works towards promoting local pharmaceutical manufacturers.
Q. Is the regulatory framework conducive for the industry to move forward?
A The Maximum Retail Price (MRP) is beneficial for the consumers as well as the manufactures. The price of drugs is at a competitive rate in Sri Lanka. The local manufacturers are considerate of the quality of the raw material use in the production process and its shelf life.
The National Medicines Regulatory Authority (NMRA) plays a leading role in protecting and improving public health by ensuring medicinal products available in the country meet applicable standards of safety, quality and efficacy. We seek their support for the duty waiver letters and registration of new products.
We received favourable response from them. If the medicinal drugs are related to MSD requirements, the process is faster. Our market is too small for large scale production and we are too late to enter the export market. On the other hand, India has entered at the right time to capture the global demand.
There are stringent regulations to meet to enable the country to export. Astron has been exporting to the Maldives for many years and also to Mauritius and the Seychelles where there are more lenient regulations. We need a lot of support from the government and the Ministry of Health to get exemption from the two country registration.
We are advocating a new regulation from the World Health Organization in the form of a certification to assist exporters in meeting the required standards. The business environment should advance to support the industrialist of the country. The Ease of doing business needs much improvement. In this regard. The current systems are cumbersome and very time consuming.
Q.What policy action do you propose for the benefit of the industry? What role should the government play to support the pharmaceutical industry growth?
A The Sri Lanka Pharmaceutical manufacturing Association is working on obtaining relief on VAT and NBT in the form of a waiver for the raw material and packaging material. It is also highlighted the need to grant waivers on capital investment and expenditure by pharmaceutical companies to encourage them to expand and upgrade technology.
The inputs of the pharmaceutical products are mostly imported from raw materials to packaging materials and the industrialists seek assistance from the government by way of duty waiver to be competitive in the sector. This will also facilitate the companies to be export oriented.
Q.What will be the future of the country’s pharmaceutical industry in terms of production and growth?
A The pharmaceutical industry expects more products to be included in the buy-back agreement. The percentage of quantity at present is 20 and we request the government to purchase more to bring it to the 40 percent mark. An initiative is necessary to fuel the export drive which could bring in foreign exchange into the country.