‘Multinationals cannot squeeze indigenous pharmaceutical companies’
Lekan Asuni is the president of Association of Nigerian Representatives of Overseas Pharmaceutical Manufacturers (NIROPHARM), a group made up of multinationals driven by research and development. In this interview with ODINAKA ANUDU, the managing director of GlaxoSmithkline Pharmaceutical Nigeria Limited bares his mind on critical issues in the industry, ranging from tariff to drug distribution guidelines. Excerpt:
The ongoing ECOWAS Common External Tariff (CET) has made drug importation 100 percent tariff-free. But then, players who are doing more of local manufacturing have called for imposition of 20 percent tariff on imported drugs. You know there is a provision in the CET that says countries can impose Import Adjustment Taxes where necessary. Do you not consider this call a legitimate one
This will seriously affect the consumers. Local manufacturers are already being protected in areas where they have expertise and capacity. Already, the Import Prohibition List contains basic/essential medicines. For the other ones, we do not have the capacity and technology to produce them right now. These are life-saving drugs for asthma, liver, kidney and cancer diseases. If the tariff goes up, it means patients who need these drugs will have to pay more. We believe that zero duty on these life-saving drugs will enhance affordability for patients who need them.
At the same time, we equally subscribe that government should look into inputs for local manufacturers. The tariff for inputs should be put on a par with finished imported products.
Since you no longer pay duty, have you reduced prices of your products
Price adjustment cannot come overnight because some already have products in their warehouses and will need to sell them. When you now import new ones, you will begin to look at how you can transfer the benefits to consumers. But I can tell you for sure that some of our members with low inventory have started transferring these benefits to patients. Mind you, before now, those importing life-saving drugs have been under severe pressure from the foreign exchange (forex) market. Local manufacturers source their forex at the Central Bank, but others have to go through other markets.
The goods you buy now, by the time you are replacing them, you will be paying more in naira. Of course I know government is trying to save the naira, which is important. For our members who are not on Window 1 because they are not local manufacturers, it is a long way.
But why are they not making efforts to establish local plants
They are. The multinational strategy is very clear. Some are more into importation but still do some local manufacturing. For hi-tech life-saving products, you need to be sure that your cost of production will still deliver the price that is affordable for the patient. So optimisation of the factory also depends on volumes and patronage. Where there is local capacity and the volume is not enough to set up a line and deliver good prices, multinationals align with someone with a standard line to produce for them. This was how the pharma industry in India evolved.
Your group recently proposed an amendment to the federal government’s new drug distribution guidelines. Have you had any feedback from the government since then?
A committee, being driven by the Pharmaceutical Council of Nigeria, has been set up. A meeting will be called soon. We believe it is good to have a drug distribution guideline in Nigeria. We cannot continue to have an unstructured distribution guideline where you cannot trace and track drugs and those that go through that channel.
The government came up with a guideline which was to become effective 4th of July last year but was pushed back to 4th of July this year. We feel that, looking at the readiness of take-off, government should slow down on enforcement so that we do not have chaos in the system. We proposed a slight amendment to reduce bureaucracy. The current distribution guidelines which the government wants to go ahead with has four levels. The first level is where you have importers and local manufacturers. The second level is where you have mega distributors, while the third level is where you have wholesalers and retailers. The fourth level is for the consumers and hospitals. You realise that at each level, every player will charge a margin. We are advocating that the mid level between manufacturers and importers can be where you have drug distributors that can either be mega distribution companies, which can operate nationally, regionally or at the state level. Those distribution companies will now sell to retailers, who will in turn sell to consumers. This will create affordability of drugs because you have reduced the middle-men. In addition, we prescribe that there should be opportunity for importers and manufacturers to participate in tenders. We believe that we should define and establish standards and requirements to register and operate as drug distributors at national, regional and state levels. We believe that the drug distributors that will emerge should carry all products registered by NAFDAC. For this to be accomplished, we need to develop a comprehensive product list with unique identifications of quote for all products registered by NAFDAC. We recommend that the relationship between the importers, local manufacturers and drug distributors be standardised. We recommend a model of engagement between manufacturers/ importers and drug distributors. We believe we are in the 21st Century, where information technology (IT) is important. The IT will drive efficiency and enable ‘track and trade’ within the system. Also, this model is capital intensive, so there should be an intervention fund to support those who wish to become drug distributors. The support can come from the federal government or international grants/aids. Lastly, we believe there is the need to carry out a mapping exercise to ascertain the number and spread of the current wholesalers, retailers and hospitals, as against the population, so that we have a clear idea of how many of them we need.
Being multinationals and large corporations, you seem to have some competitive edge over medium-sized indigenous firms
(Interrupts) Let me clarify one thing, there is no rivalry between NIROPHARM and PMG-MAN. The majority of members of NIROPHARM are equally members of PMG-MAN and vice versa. About 60 to 70 percent of pharmaceuticals have some form of import and also do some local manufacturing. Some do more of local manufacturing and less of imports. So it is a mixed basket, but each leans more to one side. Coming to big multinationals and indigenous companies, we should not entertain any fear that big multinationals will squeeze indigenous companies. As a matter of fact, multinationals are looking for means of supporting indigenous companies to acquire global manufacturing standards, ensure they have good lines and the kind of manufacturing facilities that can make good products. Invariably, it is not all products by multinationals that can be manufactured locally or imported. The strategy is always to ensure that where there is local capacity, if a multinational cannot set up a factory to manufacture due to low volume that cannot deliver good price for the consumer, it will transfer the technology to a local manufacturer to do the production on its behalf. It is already happening in the antiretroviral medicines (ARVs). So we work hand in hand. Multinationals usually focus on innovative medicines that are new to the world and are still under patent rights. These are medicines that come out of research and development.
How will you assess the Nigerian regulatory environment
A lot of things are changing. The pharmaceutical industry is largely governed by the National Agency for Food and Drug Administration and Control (NAFDAC), which has oversight for food and drugs in Nigeria. Of course there is an overlap with the Standards Organisation of Nigeria (SON) when it comes to some medical devices and so on. The world is a global village and the regulators are looking at what is happening in other geographies to see how they can domesticate them to save patients’ lives.
Generally, we have certain challenges: the challenge of counterfeiting of our products and issues regarding getting our goods out of the ports. We equally face stringent requirements in terms of registration of our products. It is a highly regulated industry and we subscribe to high standards.
How do you deal with issues relating to fake and substandard drugs
For one, because we are multinationals or representatives of multinational companies, such an incident is very rare. We subscribe to a code of practice which is in line with the International Federation of Pharmaceutical Marketing Association’s code. There is a clear guidance on what we can do if this happens. First, our members subscribe to how to secure their supply chain to ensure our products are effective till they get to consumers. If we find out that any of our members is involved, there is a prescribed process to follow, whether it is counterfeiting or any improper conduct. As we have the association locally, there are also similar layers at the global and regional levels. So first is to establish the case locally. When this happens, we report the company in Nigeria to the parent company and to the regional body. We have zero tolerance to that. However, this is very rare.
ODINAKA ANUDU