Common External Tariff will cripple Nigeria pharma industry –PMG

• ‘Impose 20 % Import Adjustment Tax, 0% raw materials imports to save us’

The ailing Nigerian health sector may be heading for another brouhaha if the Economic Community of West African States (ECOWAS)) and the Nigerian government do not jettison the recently adopted Common External Tariff (CET), the Pharmaceutical Manufacturers Group, an affiliate of the Manufacturers Association of Nigeria (PMG-MAN) has warned.

In view of this, the PMG-MAN weekend raised an alarm over what it perceived as the dangerous implications of CET among other government policies, which it also said has dire consequences for the industry, national security and access to essential medicine.

Fidson Healthcare Plc, Fidelis Ayebae, Managing Director/CEO; Sam Pharm Ltd, Ashwin Sagir; Former Managing Director, NEIMETH Pharm Plc, Sam Ohuabunwa; Chairman, Pharmaceutical Manufacturers group (PMG) Manufacturer Association of Nigeria (MAN) and MD, SKG Pharm, Okey Akpa and Vice President, PMG-MAN as well as MD, NEIMETH, Emmanuel Okunno, during PMG-MAN Press conference held in Lagos, recently.

Specifically, PMG-MAN has warned that the combination of the Common External Tariff (CET) and a wholesale implementation of the National Drug Distribution Guidelines (NDDG) will lead to over a million job cuts in the Nigerian pharmaceutical industry.

Insisting that the policies are potential threat to the pharmaceutical industry that is already gasping for breath, the chairman of the group, Okey Akpan, explained that the CET was adopted as a policy in the West African region at the Heads of States Summit in October 2013, in Dakar, Senegal. This policy places zero tariff on finished imported medicine while essential raw and packaging materials required by the industry for local medicine production attracts five per cent to 20 per cent.

Essential medicines are critical to healthcare delivery in any country, and Nigeria is no exception. With a population above 160 million people growing at an average rate of three per cent, a robust and efficient healthcare delivery system is essential for the country.

A vibrant local pharmaceutical manufacturing industry is both critical to the nation’s march towards self-sufficiency in essential medicine needs, providing gainful employment and boosting the economy.
However, Akpa who was briefing journalists, at Ikeja, Lagos, lamented that the implementation of the CET policy reverses the gains made towards the nation’s self-sufficiency in essential medicine and opens all doors for total importation of finished medicine.

The PMG-MAN boss said: “It is regrettable that the damaging consequences of the policy on the local pharmaceutical manufacturing sector were not considered despite our desperate attempts to draw attention to this. “This policy undoubtedly, spells doom for the local industry as imported medicines will become far cheaper than locally produced ones. This situation is inimical to the survival of the local   pharmaceutical manufacturing sector, and there is a need for urgent review,” he added.

The laudable achievement of having four World Health Organisation (WHO) certified manufacturing companies, was earned through the initiative of the National Agency for Food and Drug Administration and Control (NAFDAC) and individual investment efforts of individual involved. These companies are May&Baker, Evans, CHI and Swipha.

The PMG-MAN Chairman said that there are ten other pharmaceutical companies on the line for same WHO pre-qualification who have invested heavily towards this. The industry has invested an estimated 100 billion naira in various facility upgrades over the last five years, he added, regretting: “These investments have not brought about the desired benefits largely due to neglect by successive governments and lack of patronage.”

He said that the CET if implemented as it is will have far-reaching implications on the industry and the country such as unemployment, idle capacity and loss of investment, increase in fake and sub-standard products and skills stagnation. Others are considerable depletion of scarce foreign exchange due to continued dependence on imports and no contribution to GDP growth.

The industry currently employs directly and indirectly over one million persons. “A significant number of these stand the risk of losing their jobs if the local manufacturing sector is unable to sustain this current physical situation following the adoption of the CET. The lack of demand for locally manufactured medicines as a result of cheap imports will lead to idle capacities and negatively impact previous investment in the sector worth over N300 billion naira. A weak local manufacturing sector will inevitably lead to an influx of cheap imported medicines of doubtful quality,” PMG-MAN warned.

The group therefore recommended that an Import Adjustment Tax of 20 per cent on imported finished pharmaceutical products should be imposed immediately as applied to other sectors where Nigeria has capacity as allowed by CET. In addition, under the National list within the CET, input into pharmaceutical manufacturing (raw materials, excipients and packaging) should be allowed to be imported at zero per cent by bonfire pharmaceutical manufacturers.

Contributing, former President and Chief Executive Officer, Niemeth Pharmaceuticals Plc, Mazi Sam Ohuabunwa, warned that implementation of CET as it is will work against government’s present policy of industrialisation. He said it does not make sense to say people should not pay tariffs on finished imported products and ask local producers to pay tariffs on raw materials.

On Mega Drug Distribution Centre (MDDC), Ohuabunwa who was also former Chairman of Nigeria Economic Summit Group (NESG), said that the coming in of MDDC should not hinder wholesalers from having access to PMG-MAN members and retailers.

On his part, Chairman and Managing Director, Fidson Health care Plc, Dr Fidelis
Ayabae, advised that Nigeria should follow the current world trend of diversification and inclusiveness rather than reversing to monopoly which will give rise to cartels and syndicates. He therefore condemned a situation where the MDDC will hijack the entire distribution network.

This story was published in Newswatch Times on July 9, 2015.


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