Ethiopian Government Offers Incentives to Encourage Pharmaceutical Production

According to an April 6, 2016 press release from Frost & Sullivan, the government of Ethiopia is offering tax and loan incentives to encourage local pharmaceutical production. These incentives, the release says, may ultimately reduce the cost of drugs, increase job opportunities, improve economic growth, and enhance foreign exchange inflow.

According to Frost & Sullivan, Ethiopia has previously relied heavily on pharmaceutical imports-or international manufacturers with a footprint in the country-to meet a growing consumer demand for medicine. As a result, several initiatives will be rolled out to improve the quality of healthcare in the country, owing to a large gap in the supply and demand of drugs.

“The government has encouraged local pharmaceutical production with tax-free loans for up to five years and a 100% exemption on custom duty for imports on capital goods,” said Aditi Bhalla, industry analyst for transformational health at Frost & Sullivan, in a press announcement. “Furthermore, an income tax exemption for five years is provided to manufacturers exporting 50% of their products, or supplying 75% of their products or services as production or services input. The time for production registration has also been reduced to a month for local manufacturers.”

A new study from Frost & Sullivan, titled “Analysis of the Ethiopian Pharmaceutical Market,” finds that the market earned revenues of $620 million in 2015 and estimates this to reach $1.01 billion in 2020. The study covers prescription medicines and over-the-counter medicines.

In a preview of the study, Frost & Sullivan cite several key companies to watch in the Ethiopian pharmaceutical market. Among these companies are GlaxoSmithKline (GSK), Cadila, and Julphar. According to the summary, GSK has been active in Ethiopia for 30 years and has invested approximately 20% of its profits in the capacity building of health extension workers. Cadila, an Indian pharmaceutical company, was the first pharmaceutical company to receive a cGMP certificate from World Health Organization (WHO). Julphar, a United Arab Emirates-based pharmaceutical company, established a GMP certified plant in association with Medtech and recently declared plans for constructing another plan in Ethiopia to produce injectable medicine.

The Ethiopian government has also partnered with the WHO. This collaboration has led to the launch of the National Strategy and Plan of Action for Pharmaceutical Manufacturing Development, which Frost & Sullivan says will urge domestic production and strengthen the national medicine regulatory system.

Source: Frost & Sullivan