Nepali Drug Manufacturers Demand Protection Against Imports

Chitwan. Nepali drug manufacturers have demanded that the government curb external competition, stating that domestic industries are under pressure from imports. They have urged for stricter import controls, promising to provide medicines in Nepal through domestic competition. They emphasized that the government should adopt a policy of importing only raw materials for medicines in which Nepal is self-sufficient.<

There are about 100 drug industries in Nepal. Of these, 10 have already closed down, and the remaining 50 are on the verge of closure, according to industrialists. Stating that the operating industries are functioning at only 30 to 40 percent capacity, they have urged the government to save the industries.<

Former central president of the Association of Pharmaceutical Producers of Nepal (APPON), Jinarayan Bahadur Kshetri, said that the main problem for Nepali drug manufacturing companies is the difficulty in competing with imported foreign medicines.<

He stated that the development of the drug industry in Nepal has been gradually progressing for about three decades, starting with three to four companies in the initial years. He added that the existing industries are not operating at full capacity, saying, "Currently, only 30 percent of the industry's capacity is being utilized. The main reason for this is the inability to compete with imported medicines." He mentioned that medicines from about 200 foreign industries, including India, are imported into Nepal.<

He further added, "This leads to lower production costs in India, where a large volume of medicines is produced. When we produce only a small quantity for the Nepali market, the cost becomes higher." He also stated that there is a low customs duty on the import of finished medicines, while Nepali drug industries have to pay customs duty and VAT on imported packaging, glass, and other materials. He said, "This increases the production cost of Nepali industries."<

He emphasized that the import of medicines that are produced in sufficient quantities in Nepal should be discouraged, stating, "The government policy should be to import only the raw materials for medicines that are produced abundantly in Nepal." He demanded that the state provide customs duty exemption on packaging, equipment, and other necessary materials required for establishing industries by Nepali drug manufacturers.<

He also stressed the need for customs duty exemption on new technologies brought into the pharmaceutical industry. Kshetri stated that Nepali drug industries have the capacity to meet 80 percent of Nepal's demand, adding, "Except for some vaccines and medicines produced with new molecules (patented), all others are produced in Nepal."<

Kshetri said that currently, Nepali industries are operating at 20 to 40 percent capacity for only one shift, and if they were to operate for two shifts, Nepali industries could produce 80 percent of Nepal's demand for medicines domestically.<

Biplav Adhikari, central president of the Association of Pharmaceutical Producers of Nepal, stated that more than Rs 40 billion has been invested in the Nepali drug industry, with 50 to 60 percent of it being bank investment. He mentioned that about 50 of the existing industries are on the verge of closure. He said, "Only about 10 of the industries are operating well. The rest are in a difficult situation (have become sick industries). Some are unable to pay salaries to workers or bank installments."<

He stated that although the then government decided in 2074 BS to ban the import of 30 medicines produced in Nepal, it could not be implemented. He said, "If the import of medicines produced here is stopped, the industries here will run, and the government's revenue will increase." He added that this would also circulate a large amount of money that goes abroad within the domestic market. He suggested that the government should adopt a policy of collecting taxes only after production begins, citing that customs duty and value-added tax (VAT) on establishing industries increase the cost of production.<

He complained that businesses face delays in obtaining drug licenses. He said, "The state seems to believe in controlling rather than facilitating industries; this needs to stop."<

It is estimated that about Rs 7 billion worth of medicines are consumed annually in Nepal. Only half of this is sold as Nepali medicines. He mentioned that Nepali products are of good quality and some industries even export them abroad.<

Santosh Baral, vice-president of APPON, said that the government should tighten restrictions on medicine imports from abroad to save Nepali drug industries. He urged for subsidies on bank interest and called for state facilitation in bringing in technology and exporting medicines. He expressed confidence that Nepali drug industries can be operated sustainably with government support.<

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