Why are Zambian-Owned Pharmaceutical companies not competing with foreign based firms?

Citizen-owned pharmaceutical companies in Zambia are facing […]

Citizen-owned pharmaceutical companies in Zambia are facing challenges accessing financing and competing fairly in government procurement, according to the Association of Citizen Owned Pharmaceutical Companies ACPC.

 Speaking in an exclusive interview with Zambian Business Times (ZBT), Watson Mtonga, current ACPC chairperson, said one of the main challenges facing citizen-owned pharmaceutical businesses is the lack of a level playing field, particularly when competing for government contracts.

“The most common challenge that we have is an uneven level playing field,” Mtonga said. He said although procurement laws provide opportunities for citizen businesses to participate in public procurement, new entrants can struggle to compete with established companies.

Mtonga said another major challenge is access to capital, particularly because most pharmaceutical products supplied by local companies are imported. “The biggest challenge that one would face as a citizen company is capital because these products are expensive,” he said.

“Most of our products are imported, more than 90% of the products that we supply are imported. So we have less than 10% of products being manufactured locally.”

According to Mtonga, the high level of imports means pharmaceutical companies need significant capital to purchase products from suppliers, with some requiring payment upfront. He said this becomes particularly difficult when a citizen-owned company wins a government contract but does not have sufficient working capital to fulfil the order.

 “Most suppliers require payment upfront,” Mtonga said, describing this as “a huge burden” for local pharmaceutical businesses. He proposed that Government and financial institutions consider mechanisms such as advance payments and letters of credit to help citizen companies execute contracts.

“When a local citizen company is given such an opportunity to supply the government, they are helped with either advance payments or indeed having arrangements for capital ventures, or where letters of credit could be given by financial institutions,” he said.

Mtonga said such arrangements could allow companies to use confirmed government business to access financing and source pharmaceutical products. He also pointed to regulatory and procurement requirements as another area that has historically affected citizen participation.

 Mtonga said some established companies held marketing authorisations for pharmaceutical products, which could make it difficult for local distributors and newer citizen-owned businesses to participate in tenders.

 He explained that marketing authorisation is required for a manufacturer’s product to be supplied on the Zambian market. Mtonga highlighted that there has been some relaxation of requirements by the Zambia Medicines Regulatory Authority (ZAMRA) and the Zambia Medicines and Medical Supplies Agency (ZAMSA), allowing greater participation by citizen suppliers in some public tenders.

“There’s been quite a lot of discussions and work done by the chairmanship led by Sichilima,” he said, adding that “there’s quite some progress in that area.” Mtonga said product registration also remains an issue that businesses are monitoring.

He said ZAMRA had previously faced inadequate staffing to process product registration dossiers, although recruitment had increased.

 “I think there has been an increase in the employment of staff under ZAMRA to be able to expedite the process of registration of products,” he said.

However, Mtonga said it was too early to determine whether the additional staff would significantly reduce registration turnaround times.

“We have to see how well that time moves as we go forward,” he said. He further said weak consumer purchasing power was affecting pharmaceutical businesses, particularly companies that depend on retail sales when government business is limited.

 “If you don’t have an uptick of a government business for supply, then now you’re depending on the local market for the uptake of your products,” Mtonga said. He said the slow economy and limited consumer cash flow had affected businesses beyond the pharmaceutical sector. “It seems to be affecting every body else,” he said.

 Mtonga urged Government and its agencies to continue supporting citizen-owned companies across different sectors. “What I would put up is that business for citizens of any nature, for me, is a priority,” he said. He said the association’s objective is to provide a voice for citizen businesses and help create opportunities for Zambians to participate in economic activities.

 “I think that is how, with this association, it’s mainly to be a voice to enable citizens to create wealth through their own country,” Mtonga said.

Article by Karen Ngulube.