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Foreign currency shortage hampers essential medicine supply

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Smuggled tablets unaffordable for poor patients

Shortage of essential medicine supply including that of diabetes, TB and cancer hits the market hard due to lack of foreign currency as patients who suffer from the same lay in anguish.
Sources from the agency indicated that due to lack of foreign currency is challenging to supply medicine continuously
“The availability and affordability of medicine has reached a critical point. Following this scarcity of medicine in the formal market, people are forced to take smuggled tablets which are unaffordable especially to the low income consumers.” Sources from the pharmaceutical government agency that Capital spoke to said, adding, “The situation is worse in areas outside of Addis Ababa.”
The forex crunch has been the major challenge of the nation for the past couple of years, but in recent times it has become chronic. The depreciation of the Birr against the major foreign currencies has resulted in significant price increases for domestic users.
“As there is huge shortage of foreign currency in the country most of the importers are turning their face on engaging the export sector and also local producers are cutting their production due to shortage of input supply,” Sources say, adding, “Even Kenema pharmacies which are consider to be affordable with high availability of medicines, also suffering with the shortage.”
On October, in a letter to Ethiopia’s central bank, the Ministry of Finance said it had become necessary to restrict the use of foreign currency to importing food, medicine and medical equipment, and raw materials for manufacturing and ordered banks to deny foreign currency to businesses importing non-priority goods, in an effort to shore up dwindling foreign reserves.
The annual pharmaceutical market in Ethiopia is estimated to be worth of 1.1 billion birr, according to the national bank in the first 4 months of the current fiscal year, the bank has allocated 300 million dollars. Through there is a growing demand with the supply of pharmaceutical products.
Speaking to the parliament on December, former governor of the national bank of Ethiopia, Yinager Dessie said that, medicines are usually supplied in two ways, one is by the governmental agency, Ethiopian pharmaceutical supply agency and the other is by private suppliers.
As Yinager indicated, medicine and medicine related inputs are priorities in forex allocation in both private and the government. However banks are faced with the shortage of currency. He said that in order to solve this, there is need to facilitate the suppliers credit option for both local and foreign importers indicating that the issue of getting forex for private suppliers is not weighty as the governmental agency is the most supplier, “With all the situation that the bank has, it will be difficult for the national bank to allocate forex for the private importers and suppliers.”
More than 80 percent of the annual demand for the pharmaceutical products is satisfied through imports and around 70 percent of imported medicines enter the country through the state owned pharmaceutical supply agency.
In recent times, due to the increased demand for foreign currencies, the dollar exchange rate at the parallel market skyrocketed making the official and parallel markets to drift exponentially apart.
In some parts of the city where parallel market trading takes place, during the week, one US Dollar was selling between 103 to 107 birr.
Also the commission demanded from private banks a forex of 55 to 60 birr for one US dollar, which is greater than the exchange rate making the total selling price of one US dollar to 110 to 115 birr greater than the parallel market.
Additionally, there are several reasons for the medicine shortages. COVID-19 lockdowns limited the normal circulation of seasonal bugs. This then weakened our immune systems and led to higher-than-normal outbreaks of seasonal illnesses, which has increased the annual average demand for medicines that should alleviate them. Pharmaceutical companies could not quickly meet these unexpected demands, as excess capacity is limited to control costs.
Meanwhile, the war in Ukraine continues to impact supply chains and the knock-on effect of high inflation and energy prices have hit generic drug manufacturers, who are sometimes subjected to pricing regulations, particularly hard.
Furthermore, to protect their limited medicine supplies, some countries have temporarily blocked the parallel trade of medicines to other countries. And, once an over-the-counter drug shortage is announced on the news, consumers begin stockpiling.
It has well been noted that increasing disease prevalence, lack of dependable healthcare financing, weak local manufacturing, heavy reliance on import with inefficient logistics management system still create demand-supply imbalances that restrict access to essential medicines in Ethiopia.

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