Source: Pharmaceutical industry raises red flag over forex shortages – The Standard June 3, 2018
THE country’s pharmaceutical sector is in a crisis. Players in the industry say the future looks uncertain as the Reserve bank of Zimbabwe [RBZ]is failing to clear many outstanding invoices for drugs amounting to over $50 million backdating to last year.
BY MTHANDAZO NYONI
In separate interviews with Standardbusiness last week, different sub-sectors under the pharmaceutical industry said if the problem was not addressed, many companies would close shop resulting in massive unemployment.
“The pharmaceutical industry in Zimbabwe is heavily dependent on imported products. Most raw materials for local production are also sourced externally. There is, therefore, great need for foreign currency to put medicines and other medical sundries on the shelves,” Pharmaceutical Wholesalers’ Association chairperson Valerie Musere said.
“Due to the foreign currency shortages, our sector is characterised by shortages and rationing. We have to make do with what is available, which is not necessarily the best. Patients are being turned away from health facilities to source medicines on their own, including some basic requirements which are expected to be readily available,” she said.
According to Musere, from last year up to the first quarter of 2018, wholesalers were sitting on outstanding invoices amounting to $32 million.
The central bank only managed to process payments amounting to $11 million in the first quarter of the year out of a possible $44 million it had promised.
She said for them to operate at full throttle, their monthly requirements should stand at $8 million.
“Due to these forex challenges, relationships have gone sour with our foreign suppliers resulting in us being forced to prepay for supplies. Should this
trend continue, companies will close resulting in critical shortages of medicines and unemployment,” Musere said.
“There will be fatalities as well due to unavailability of essential medicines such as antibiotics, cancer treatment drugs and equipment etc.”
Pharmaceutical Manufacturers’ Association of Zimbabwe chairperson Emmanuel Mujuru confirmed the crisis.
“We are an industry that is very much affected by shortages of foreign currency. We have not been getting enough foreign currency,” Mujuru said.
He said they required about $2 million per month but they were getting about 10% to 20% of that.
“But when we engaged the RBZ in January with the assistance of the Ministry of Health and Pharmaceutical Society we managed to get our full monthly allocation of $2 million, but since then we haven’t been getting enough,” he said.
“For us to be able to produce at competitive cost we need to run at almost full capacity, but when there is a shortage of raw materials it basically means you cannot (do that). Given our overheads and the capacity of industry, it increases the cost of the medicines that we produce making us uncompetitive,” he said.
The sub-sector is currently employing about 1 000 people.
“If we get more foreign currency, the numbers will go up,” Mujuru said.
Incoming president of the Pharmaceutical Society of Zimbabwe (PSZ), Portifa Mwendera, said the sector was struggling to keep afloat. The industry was characterised by low capacity utilisation at the manufacturing units and consistent shortages at distributors and pharmacy units both in the public and private sectors.
“We are witnessing unavailability of critical and essential medicines for the health management of our population,” he said.
“Our wholesalers had an outstanding bill for imports into the country of $15 million as at October 2017 and this has only been reduced to $12 million as of March 2018. Part of this debt stretches to September 2016 and this has made it difficult for new stocks to be released to importers,” Mwendera said.
“The shortage of foreign currency has made it impossible to clear these arrears in order to get required medicines. The same is obtaining in the manufacturing industry which also owes suppliers and badly needs forex.”
Mwendera said the PSZ had engaged the RBZ with a view to getting commitment for the $4 million a week requirement.
“These engagements involve all the industry players and it is sad to report that in Q1 the sector only received 30% of our requirements. This allocation is too little to make a meaningful impact on the availability of medicines as it is spread throughout the health sector procurement,” he said.
Mwendera said the PSZ would continue to advocate for increased availability of foreign currency and transparency in the allocation of forex from the central bank.
He said the pharmaceutical sector was a key player in ensuring the health of the nation as well as a foreign currency earner.
“The industry is incapacitated as there is need for approximately $45 million for retooling and a monthly allocation of $2 million for continued production now,” he said.
The public sector in Zimbabwe is heavily dependent on donated drugs funded by humanitarian agencies, such as the United Nations Children’s Fund, Global Fund, United States’ President’s Emergency Plan for Aids Relief and the United Kingdom’s Department for International Development, among others.
More than 90% of drugs in public hospitals are supplied by donors.