More than three months since the start of the blockade by India, the import of life saving drugs and ingredients required for their production has virtually come to a halt. The Nepali pharmaceutical industry has suffered a heavy loss due to the shortage of ingredients leading to a reduced production of medicines. Pharmacies are running out of drugs for chronic diseases like hypertension and diabetes and other essential medicines required in hospitals.

High imports

According to the Association of Pharmaceutical Producers, Nepal’s pharmaceutical industry fulfils 40 percent of the domestic requirement of medicines. The rest is met though imports, mainly from India. As per a 2011 report entitled ‘Nepal Pharmaceutical Country Profile’ published by the Ministry of Health and Population and the World Health Organisation (WHO), 41 pharmaceutical companies are listed by the Department of Drug Administration (DDA). According to a 2001 estimate by the DDA, the medicine industry’s consumption was roughly $56 million with an annual growth rate of almost 19 percent, which has significantly grown over the years both in the volume of production and sales. The production process ranges from semi-automatic to automatic for a variety of products including tablet, capsule, liquid, dry syrup, powder and injectable drugs. The industry, however, is characterised by low investment in research and development, which is only limited to pharmaceutical formulations

and testing.

Furthermore, a 2005 study entitled ‘Study of the Nepali pharmaceutical industry in the context of Nepal’s newly acquired World Trade Organisation (WTO) membership’ states that the country has unfavourable provisions for its own pharmaceutical companies. Only five percent customs duty is levied on imported drugs while domestic manufacturers have to pay up to 17 percent in duty and value added tax on imports of packaging and other auxiliary inputs. The same study mentions that Nepal’s industry lacks competitiveness in the domestic and foreign markets due to higher transport costs, lack of access to international markets and high registration costs in export markets. Also, Nepali people prefer drugs made in India or third countries over drugs produced locally.

Possible opportunities

Iran has endured US-led sanctions since 1979, however, the supply and distribution of medicines in its market has never been interrupted because of a flourishing domestic pharmaceutical industry. In contrast to Iran, Nepal has low production capacity and domestically produced medicines are mostly low-cost generic drugs. For drugs required in specialised care like in the treatment of cancer, heart diseases and HIV, the country has to import heavily from India and elsewhere.

Can Nepal ever be self-reliant in medicines? The answer is a big yes. For low-cost generic medicines, Nepal can be self-sufficient in a relatively short period of time. If the government provides much-needed support in terms of easing policies to create an encouraging environment for production and investment, Nepali pharmaceutical companies can make the country self-sufficient in medicines. However, for specialised medicines including patent drugs, which need a greater technical capacity for production and quality control, we need to take a longer vision.

Technology transfer and collaboration with foreign companies to introduce new technologies in the industry should be promoted as well. However, the current political scenario is a significant impediment to any investment in the pharmaceutical industry. Therefore, the government has to accord priority to local production of drugs, not just for low-cost generics but also for specialised drugs including those required for non-communicable diseases. Many countries give local pharmaceutical companies ‘compulsory licensing’ for generic production of patent drugs without the consent of the patent owner.

According to the WHO, there are several opportunities under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and flexibilities in the Doha Ministerial Declaration on TRIPS and Public Health in 2001. The second document stresses the local production of medicines for increasing access to medicines in low- and middle-income countries through technology transfer. However, the implementation of the TRIPS agreement will strengthen patent protection. Nepal’s Health Ministry asserts that even though the country has not fully implemented its commitment to protect intellectual property, it has not been able to exercise the flexibilities it could provide.

Attaining self-reliance

The WTO  has extended the transition period to protect intellectual property under TRIPS for the least developed countries until 2021 from 2016. So, Nepal can potentially benefit from this extension if the local production of medicines is given priority. For public health emergencies and calamities, the TRIPS agreement has also specified some fast-track measures that domestic pharmaceutical companies can exploit to start producing. Also, learning from countries like India and China, which have significant built-up capacity in local manufacturing, can help.

India was one of the biggest importers of drugs and intermediaries at the time of its independence in 1947. This trend continued until the 1960s, after which the government introduced policies to increase self-reliance in medicines through local production by launching state-owned pharmaceutical companies. Within 60 years after independence, India has become one of the world’s leading pharmaceutical producers, fourth in terms of production volume and 13th in terms of domestic consumption. According to a study published by the US International Trade Commission, India imported medicines and intermediaries worth $985 million, and exported $3.7 billion in 2005, making it the largest supplier of low-cost generic medication in Asia and Africa.

In conclusion, Nepal’s over-dependence on imports should move towards self-reliance by encouraging domestic production of drugs and its formulation through short- and long-term measures. Also, equal focus should be paid to increasing the quality of production, competitiveness and efficiency. The present increased sense of urgency among the public and polity for self-sufficiency in the production of alternative energy including medicines should be given continuity by improving the policies and investment scenario. This will definitely boost the confidence of the pharmaceutical industry to invest more.

The flexibilities provided by the WTO agreements on intellectual property should be utilised to enhance the production capacity of Nepal’s pharmaceutical industry. In the context of the extension of Nepal’s transition to the WTO agreement on trade and intellectual property, the concerned stakeholders really need to think about how not to increase prices while ensuring access to essential medicines. The local production of medicines should be put on the national development agenda and made a priority for the future. For that, increased commitment and patronage from the government is necessary.

Mishra is a student of public health at the University of Western Australia