Why local pharmaceuticals should be prioritised in disbursement of N100bn intervention fund

How govt policies discourage local production, encourage importation of drugs, by PMG-MAN

Dr. Fidelis Akhagboso Ayebae is Chairman, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN) and Chief Executive Officer (CEO)/Managing Director at Fidson Healthcare PLC. Ayebae in this interview with CHUKWUMA MUANYA reveals the many challenges of local drug manufacturers and makes recommendations on how the country can meet the target of producing 70 per cent of its drug needs and how indigenous firms can appropriate the over $1 billion the Global Funds for AIDS, TB and Malaria spend yearly in procuring medicines used for programmes in the country from foreign pharmaceutical companies.

How far with the N100 billion intervention fund/palliative for the healthcare sector from the Federal Government (FG)? How many local pharmaceutical manufacturers have accessed it?
We have been on this for a while and we are not losing faith in government to support the sector for a sustainable development with the intervention fund.

The last we checked only 20 per cent of members that expressed interest to access the fund accessed the fund, and approximately 15 per cent, of member’s application process are ongoing. In other words they applied through their bank to Central Bank of Nigeria (CBN) and they are yet to get approval from the apex bank; in principle their own commercial bank has approved the loan. We are thankful for those that they have disbursed to, and we urge the apex bank to give life to the good intention as was pronounced.

We understand that many sectors are competing for these funds, but the question is why should local pharmaceutical be prioritised in the intervention fund disbursement first? COVID-19 lockdown should be a quick reminder on why this sector should be paid uttermost attention to, you are aware some countries are on second wave of the pandemic, access to raw materials in the lockdown was near impossible as countries placed restrictions on the basic raw materials exportation. Many countries have learnt in a hard way and came up with policies to strengthen this sector to mitigate such risk in the nearest future.

Imagine if the lockdown prolonged for a year, what do you think will be the fate of those that have health challenges that are dependent on routine medicine to live, like hypertension, malaria, diabetes etc. God forbid! We will always say as a very religious nation, but countries that fail to plan, will surely be in for a failure that is the hard truth and should be told to leaders and policy makers. India that are producers of Medicine for the world, but are dependent on Active Pharmaceutical Ingredient (API) from China due the cost effectiveness of China’s API and economic of scale -is reviewing their policies as it concerns API dependent on China, owing to the hard lessons learnt in the wake of the pandemic. They look forward to incentivise those that produce API in country and discourage being import dependent on China, notwithstanding the cost effectiveness of China’s API. That is the way to put a country first in policy making.

Here, is a sector that acts as a patriot in closing the gap in access to medicine; here, is a sector contributing to national development paying tariff, creating Jobs, working towards self-sufficiency and self-reliance in producing safe, quality and affordable medicines for Nigerians to reduce health the widening inequality gap.

The question is how has policymakers coordinated these policies, have we reflected on the pandemic to mitigate future risk. Anyway, member companies are looking forward to use the fund, ramp up production, repurpose their facilities, add new product lines and scale up their facilities to meet the Current Good Manufacturing practice (CGMP) and some are even targeting the World Health Organisation (WHO) certification. I will like to once again plead with the apex bank to give as many as have applied for this intervention fund access, let us not miss this once in a lifetime opportunity to reposition this sector for the real economic growth and development to be the pharmaceutical hub of Africa.

You are aware that by January 2021 the Africa Continental Free Trade Agreement (AfCFTA) regime takes off, the Federal Executive Council just ratified same November 11, 2020. You can imagine what will be the fate of the industry on our competitiveness, if we do not move up with speed on access to finance, fixing basic infrastructures and reduce the many bureaucratic activities at the port by regulators, putting in the best fit policies that will make us competitive, we will only be another country at the receiving end of the AfCFTA, countries will only take advantage our demography that should be our own advantage. I think the CBN should look at it from the perspective that the sector is highly specialised, the returns in investment in this sector is not like other sectors, it is dependent on the high level of pharmaceutical quality management systems you put in place, which comes with highly regulated periodic quality assessment and certification.

Remember in pharmacy, when you make mistake you can wipe a generation, unlike when a doctor makes mistake only a patient is lost. It is important to state this because that is the reason members are upgrading facilities, building new facilities, and we are going to ensure these facilities meet the gold standard benchmarking in the industry. This is a huge investment. The intelligence I gathered is that banks prefer to give importers as against local pharmaceutical manufacturing companies that are patriots and the reason may not be far-fetched, you cannot compare returns on investment on importation of finished products, the value chain is different, and it starts with facility certification. You are quite aware of the access to foreign exchange (forex) challenge that also compounds the issue that, those that have accessed the fund -to buy machineries and raw materials are wondering what next, where do they get forex from and so on and so forth.

What have been the challenges towards optimising local production of medicines?
Industry challenges are enormous. Members take each day challenge as they come. Ease of doing business is still a tall order: from clearing your goods from the ports you encounter many charges that is beginning to look like extortion from those that should know better that this stiffens investment in Nigeria, makes us uncompetitive- for every marginal kobo added is transferred to the end user, and this becomes a burden when transferred to the patient who is already paying catastrophic out –of-pocket expenses to access medicine in a country where health burden is huge and poverty level all-time high. The other day a member company informed us that their container was tampered with, antibiotics raw materials (114 drums x 25kgs) =(2850kgs) were stolen at our gateway with the many regulators on duty every now and then. The implication from health and economic perspective is unbearable; it is a huge financial loss. What of basic infrastructure? Power is still a challenge you are spending so much to power your facility, the other day, a member company informed us that one of the DISCOS came with humongous charge for their facility, which is unbelievable and they came and cut their light. As we talk, they are running non-stop on other source of power.

Members since June 2020, complained of pharmaceutical raw materials which before now are not VAT able but Federal Inland Revenue Service (FIRS) boss made a publication that it is VAT able, since the publication, some members part with payment on VAT to Nigeria Customs Service (NCS), we have written to Federal Ministry of Finance Budget and National Planning on the implication, if allowed to continue. In a simple language ‘they are saying we all should be importers’ that is a policy summersault. How can you be paying for VAT on raw materials, and finished products are VAT Free? Yes! The Ministry of Finance Budget and National Planning (FBNP) recently communicated to us that it is just a little tweak of the modification order 2, which is work in progress, to be put in gazette. That the status quo remains-Pharma Raw Materials Are Not VAT able, Federal Ministry of Industry Trade and Investment through the Ministers office communicated this to us also stating the same officially, that the Pharma Raw materials are not VAT able.

What are your recommendations on how to boost local drug production?
Whilst we are waiting, members are in pains each time they go that route of VAT payment on pharmaceutical raw materials, as they are yet to get official publication in this regards. I want to use this medium once again to appeal to the Honorable Minister for Finance, Budget and National Planning to use her good office to expedite action on the Modification order and put the publication out to the implementers of the policy so that the good intentions of President Muhammad Buhari, who we applaud for the Intervention fund of CBN, who advocates for us to produce what we consume and consume what we produce will not just be another rhetoric.

How far with plans to get some local pharmaceutical manufacturers pre-qualified by the WHO?
As mentioned earlier member companies are already positioning their facility for WHO certification and the intervention funds may accelerate that process, but note by, a company goes into WHO certification only and only if it makes a business case, often they do not. You invest so much, you get returns that are not commensurate with the huge investment, this is as evidenced in some companies that got the WHO certification but were out of business having focused on WHO certification only. They went under having followed that route without critical analysis if it makes a business case. The National Agency for Food and Drug Administration and Control (NAFDAC) under the leadership of Prof. Moji Adeyeye is working tirelessly to meet the global benchmarking. According to her, when they are strong, we as manufacturers are strong. Government should fund the institution to be well positioned to be a world class regulator, to do their work seamlessly and time bound to avoid some delays in carrying out their mandate due to lack of basic facilities; this is very important as AfCFTA kick starts.

You said governments at all levels owe your members for drugs supplied and are not patronising you enough. What is the true situation now and how could this be better addressed?
On the debt, this is being handled the best we can. I am aware that the leadership of Pharmaceutical Society of Nigeria (PSN) the other day engaged the leadership of National Assembly (NASS) on the subject. Governments owe the industry to the tune of more than N20 billion and this is not a healthy for business. With the devaluation and inflation your guess is as good as mine on the implication of this on the industry. Anyway this is work in progress; I want to believe the Government of Nigeria will do the needful.

How far with the PMG-MAN’s mandate on ensuring medicine security?
You know that PMG-MAN has been in the vanguard advocating for medicine security, which in simple terms argues that unless we exert sufficient input on how the medicines we consume are produced, access to medicine will continue to elude us as a nation. Peradventure, in time of crisis or war or pandemic as we are in right now, we can take care of our country essential medicine needs.

This pandemic vindicated all our shouting in the wilderness all these years, advocating that Government should look inwards to pay attention to the sector that is very fragile and very critical from national, public and economic security perspective.

I am glad to say that the campaign is getting traction amongst the development partners and donor agencies as the discussion just started on “the journey towards self-reliance” to produce locally those products that we have capacity to produce in Nigeria by the local pharmaceutical manufacturing companies that meet the gold standard. You can imagine what economic impact these will have in the sector if we close this gap, where almost $1 billion from Global Funds and other donors gets to circulate in the Nigeria space, manufacturing medicines for public health intervention programmes, malaria elimination programmes, tuberculosis and AIDS prevention programmes. This will transform the sector, create Jobs build local capacity, lead to research and development and make the industry competitive. There will be technology transfer -until then we are still an import dependent country and donor dependent nation, but the journey of one thousand miles starts with one, we will get there some day but the thinking beyond donor support should resonate with us.

If donors are looking inwards to procure from us, that is an affirmation that we are on the right path and the reason our government should follow through faithfully on their own policies that are already existing -Executive Order 003, National Drug Policy which emphasis is on local content, buy made in Nigeria medicine, by ensuring that about 70 per cent medicine need of the country are produced from local pharmaceutical manufacturing companies. When you buy from us, pay us timely; we must change the narrative of being import dependent nation. A lot is dependent on the policy of the Government of Nigeria. If the Federal Government keeps being a lip service pronunciations or declarations then the journey towards self-sufficiency and self-reliance will continue to elude us. PMG-MAN as a group will continue to advocate to government to create an enabling environment for the industry to live out its inherent potentials in closing the widening gap in access to medicine.