Monday, June 17, 2024

Multinational pharmaceutical companies closing their office as forex crunch continues


Big pharmaceutical representation offices are closing their offices after the country is hit with severe shortage of foreign currency. These offices are said to be hit hard by the lack of foreign currency they are forced to downsize their employment forces in the last two years.
Sources told Capital that GlaxoSmithKline Plc, (GSK) which is one of the companies involved in the pharmaceuticals sector is going to close its office by the end of this month. Moreover Bayer AG, a German multinational pharmaceutical company and Sandoz a subsidiary of Novatris a global healthcare company based in Switzerland, are also having difficulty due to the shortage of forex.
Christian Hartel, Head of Corporate Media Relations at Bayer declined to comment to Capital about their current status in Ethiopia. “We ask for your understanding that we cannot comment on your questions” Hartel replied to an emailed questions. GSK also declined to comment until we went to the printing press.
Another company Sanofi S.A. a French multinational pharmaceutical company is also in the brink of closing if the situation continues to persist.
Kassahun Tesfaye Country Manager of Sanofi said that his office is in grave danger of survival because of the shortage of the foreign currency.
“It has been over a year since we requested for a foreign currency and nothing has come up until now. We import some basic medicines for diabetics and epileptic patients. However due to the shortage it is become very difficult to continue our operation” Kassahun told Capital.
He further said that if it continues like this for the next two or three months our fate is to close down our office. “We cannot continue like this. Operational cost of the office is now higher that that we trade. So how can we go on like this? Our only choice is to close down our office” he added.
“Last year in February we applied for USD 800,000 worth of LC but we only get USD 70,000, which is a mere 10 percent of the total money we want, I have to distribute lifesaving children epileptics medicine with a ration to pharmacies” kassahun said.
“I receive calls daily from desperate parents of patients about the children epileptics’ medicine, which we solely supply, it is personally very hard for me to answer these calls” he said.
The local pharmaceuticals industry is also facing a serious shortage of raw materials, as well as serious financial difficulties, as a result of the ongoing foreign currency crisis.
The prevailing foreign currency shortage was impacting negatively on the importation of critical medicines and ingredients used for manufacturing various drugs as well as packaging material. These factories are also producing way below capacity.
Some of these multinational were also planning to open up pharmaceutical plants in the country.
Dr Allan Pamba, GSK’s Vice-President, Pharmaceuticals, East Africa and Government Affairs, back 2015 said that GSK had completed its investment plans to set up a pharmaceuticals factory in Ethiopia and partner with Addis Ababa University in the areas of pharmaceuticals, manufacturing and healthcare delivery.
Total demand for the pharmaceuticals industry is estimated to stand between 400 million dollars and 500 million dollars a year.
In its report published in January 2018, the IMF signaled that the forex problem is far from being resolved, indicating that the international currency reserve has dwindled to the level of only being able to cover 1.8 months of the import bill of the nation.
The shortage of the foreign currency started to be seen starting in early 2017, the situation seriously deteriorated after mid – 2017. Measures such as the devaluation of the birr by 15 percent against major foreign currencies were also introduced to curb the shortage but to no avail.
The devaluation was followed by a couple of directives issued by the National Bank of Ethiopia (NBE), including ordering private banks to transfer 30 percent of their forex earnings to the accounts of NBE and allowing exporters to retain 30 percent of the forex they generate, up from 10 percent.
The NBE also increased the list of items which are prioritized for foreign currency allocation. Petroleum, agricultural machines, fertilizer, medicines and supplement food were the items which received priority.
The government has also collaborated with the World Health Organization (WHO) and launched the National Strategy and Plan of Action for Pharmaceutical Manufacturing Development in Ethiopia. This plan was expected to increase pharmaceutical production in the country, improve medicine quality, and strengthen the national medicine regulatory system.
There is a plethora of Ethiopian and non-Ethiopian pharmaceutical companies offering generic and branded medication.

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