Increased investment in pharmaceutical manufacturing could offset trade deficit

A staffer at PharmaLab at the Special Economic Zone in Kigali. File.

In the Kigali Special Economic Zone, an area the Government has reserved for manufacturing companies, sits a local firm that specialises in manufacturing of medical and laboratory consumables like medical plastic tubes and containers.

Although it has not gained attention such as the likes of big foreign companies, this firm’s capacity can help the country that currently relies heavily on imported pharmaceutical products. This is PharmaLab Ltd.

PharmaLab is the first locally owned pharmaceutical manufacturing firm in Rwanda. It has the potential to produce over 20 million of medical plastic tubes.

Yet, the country has been importing between 8 to 10 million of the same products from China and European countries.

“When we were starting out in 2016, the big plan was to produce 25 million tubes to supply the East African market. But until now we haven’t achieved that as we have failed to secure the local market,” Cyriaque Rugwizangonga, the Commercial Directors of PharmaLab says.

Currently, the market is dominated by medical imports from India, Belgium, Kenya, France, China, Germany and the United States, which contributes to the country’s trade imbalance.

Rwanda’s trade deficit stood at $352.3 million in the first quarter of this year, according to the National Bank of Rwanda.

PharmaLab began its operations with an eye on the regional market. Its tubes are supplied to Uganda, Congo and Burundi.

Competition in Rwanda’s pharmaceutical sector is growing steadily as more international companies continue to bet big on the nascent industry.

Late last year, Cooper Pharma, a Moroccan pharmaceutical player, entered the market, laying a foundation stone to the site whose construction activities were expected to last for about 18 months.

Investors claimed the first phase of manufacturing, including production of antibiotics could trim Rwanda’s drug import bill by 10 and 20 per cent.

By then, Rwanda had spent a staggering $100 million (about Rwf85 billion) on the importation of drugs in 2016, according to Rwanda Development Board (RDB).

According to Ayman Cheikh Lahlou, the company’s Chief Executive Officer, Cooper Pharma will be making essential injectable medicine used in clinics and hospitals, including and sterile products, sterile antibiotics, sterile painkillers, sterile analgesics and sterile anti-fever.

Just this year, Apex Biotech Ltd started construction works on an $18 million pharmaceutical manufacturing plant in the industrial zone.

Construction works on the plant, which will be manufacturing generic pharmaceutical formulations in all major therapeutics in a variety of dosage forms, is expected to be complete in nine months.

It will have annual capacity to produce 800 million packets of tablets, 200 million capsules, 8 million bottles and 5 million Oral Rehydration Therapy (ORT) sachets at optimum capacity utilisation.

Apex Biotech’s products will be used to prevent and treat a wide range of medical conditions, including malaria, HIV/AIDS, TB, Hepatitis as well as non-communicable diseases like heart diseases, diabetes, malnutrition, women’s and children’s health and chronic pain conditions.

Herbeton Madari, the Managing Director of Apex Biotech Pharmaceutical-Rwanda believes having more players coming in the market will make medical products more affordable.

“At times business people take it for granted when they are the only solo players in the market and you find products are very expensive and they are not of good quality,” he notes.

He adds that more players mean more competition and that more competition means affordability.

The hype is high that these players’ decision to invest in Rwanda will help the country’s pharmaceutical industry advance, provide jobs for the country’s unemployed section and significantly contribute to the economy.

Clare Akamanzi, the Chief Executive Officer of Rwanda Development Board (RDB), confidently states that they see the major impact on reduction of importation of drugs and other medications.

“This will as well develop the pharmaceutical value chain in Rwanda, while creating new jobs in these facilities,” she says.

Francois Kanimba, an economist and expert in International Trade, says that there is increasing demand for pharmaceutical products, which attracts more players to open shop in the country.

“As this country sets itself as a regional trade hub, these companies generally look for [strategic] regional location where they can fix their production facilities, taking advantage of extended regional market,” he says.

Kanimba who is also Rwanda’s former Minister of Trade and Industry and the country’s Central bank Governor added; “Those coming to Rwanda are targeting markets in neighbouring countries such as Burundi, Uganda and the Democratic Republic of Congo. I know Kenya is more advanced with many pharmaceutical industries established there. But there is competition in these industries”.

Winning and losing proportion

For an economy like Rwanda’s to considerably benefit from the growing number of pharmaceutical manufacturing activities, Kanimba says, it will depend on how much value addition these players will focus on.

In several instances, he indicates that there are companies that will only bring in 99 per cent finished products and just put cover on them. In this case, the value addition of the country is almost zero.

Experts, however, believe that the local market has a skills gap to accommodate advanced manufacturing activities.

Kanimba agrees that the there is an issue of the skills gap, and says companies coming will have to import the labour in the medium-term, arguing that government will have to be very deliberate to enable the skills transfer.

“What I know, on the other hand, is that most of these companies include a very strong training component in their operations to make sure after a certain period of time they can have a critical mass of skilled labour in their factories,” he notes.

Earlier this year, Doctor Clet Niyikiza, a Rwandan American-based scientist and businessman who runs LEAF Pharmaceuticals told The New Times that the plan to build a manufacturing plant for medical products was underway.

He announced that the firm had secured land in the same industrial area to build a state-of-the-art manufacturing facility for medicines, especially newly discovered drugs.

Niyikiza’s company is a US-based global pharmaceutical firm valued at half a billion dollar, specialised in discovering, developing and commercialising innovative and safe therapies for cancer.

His plan to start a manufacturing plant in his home-country is based on the fact that Rwanda has no access to most of the new drugs, like Alimta and Gemzar that treats solid cancer.

“The fundamental idea about starting this whole thing is to have advanced medicines here. Because these medicines even those that I discovered like Alimta and Gemzar don’t exist here,” he said in a previous interview.

editorial@newtimes.co.rw

 

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