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Synopsis of the Literature Review for WG 1:

Production and/or Acquisition


Production and acquisition of medicines in India, South Africa and Uganda

Access to medicines by the population of any country is dependent on the presence of a well-regulated and integrated pharmaceutical supply chain that ensures that quality medicines are readily available at affordable prices and in acceptable dosage forms. Sadly, most communities in developing and least developed countries lack access to essential medicines because of one or more gaps or inefficiencies in their supply chains. Some of the common gaps in these countries include insufficient distribution infrastructure, shortage of healthcare personnel, trade and fiscal barriers, inadequate healthcare systems and prices that are unaffordable to the public. As a result of their reliance on imported medicines coupled with poor medicine regulatory systems, many of the pharmaceutical products in their markets may be substandard and/or fake. Since communicable diseases prevail in third world countries, such poor quality medicines increase the potential for resistance development. The dependence of countries on imported medicines may also impact the supply of needed drugs. In fact, the security of drug supply has been identified as one of the causes of stock-outs, a frequent occurrence at health facilities in developing countries.

Local production

Many developing country governments have begun to advocate local pharmaceutical production as a mechanism to address the lack of access to quality medicines, and to ensure supply capacities. It is also seen as a means of stimulating employment, reducing imports and loss of foreign exchange, gaining foreign exchange earnings through exports, as well as increasing national prestige. However, opponents of local pharmaceutical production contend that it may result in less access to medicines, since economies of scale may be lost if more countries start manufacturing their own medicines.

In this study the pharmaceutical production capacities of India, South Africa and Uganda have been evaluated to determine their effectiveness in promoting local access to medicines. Although all three countries are classified as developing countries, the pharmaceutical industry in each is at a different stage of development.

India is one of the world’s biggest manufacturers and exporters of active pharmaceutical ingredients (APIs) and finished products. With over 24,000 companies licensed to produce pharmaceuticals, the country is entirely self-sufficient with respect to its medicines needs. Uganda and South Africa, on the other hand, have limited production capacity and are net importers of medicines. The medicines regulatory system in South Africa is, however, more effective than in Uganda and India. Consequently, the incidence of fake and substandard medicines in its market is less than in the other two countries. Notwithstanding the size of the industry in India, its future expansion and that of the other two countries, is constrained by one or more major factors, which are different for each country.

India 

Since 2005 India has recognised product patents and is compliant with the TRIPS agreement. Consequently, companies are now unable to manufacture generic versions of new drugs by simply altering the process by which these new drugs are produced. The recognition of product patents, not merely process patents, by the Indian government is expected to lead to a contraction of local industry. Smaller companies that have remained competitive by being amongst the first to introduce generic versions of new drugs still under patent in developed countries may be forced to close down. This is because they do not have the economies of scale of the larger more established companies, such as Cipla, Dr Reddy’s, Aurobindo, etc.

South Africa 

South Africa has considerable production capacity compared to other African states and has the largest pharmaceutical market in Africa ($3.3 billion). However, it still imports 80% of its finished dosage forms and almost all (95%) of its active pharmaceutical ingredients (APIs). The absence ../literature-review-wg1/of__/span__span_class_.css"apple-style-span">API manufacturing capacity has been identified as the “Achilles’ heel” of the domestic pharmaceutical manufacturing sector and is the main reason why the local industry has been shrinking. Another reason is lack of skills. The shortage of skilled labour compared to India, China and Brazil has contributed to South Africa not being recognised as a potential “centre of excellence” by big pharmaceutical companies during their global restructuring. The distorted structure of the domestic pharmaceutical industry -- i.e., having sufficient capacity in formulation but being highly dependent on imports ../literature-review-wg1/of__/span__span_class_.css"apple-style-span">APIs – poses a threat to the security of supply, particularly for antiretrovirals for which South Africa is the world’s biggest market.

Uganda 

Uganda has a relatively small pharmaceutical manufacturing sector, with only 12 companies, compared to South Africa (more than 50) and India (more than 24 000). In spite of the limited capacity, the Uganda Pharmaceutical Manufacturers’ Association (UPMA) claims that the sector can meet Uganda’s need for many of its essential medicines. Currently the industry is operating at only 50-60% capacity due to the high cost of capital, high energy costs, frequent interruptions in electricity supply and competition from cheap imports ../css/_for_suppliers__stipulated_by_the_international_donor_agencies_who_fund_the_Ugandan_government_rsquo_66gda6gs2axm6uxvawmu6w.css;s purchases of medicines. Obtaining WHO GMP accreditation requires significant investment on the part of companies. However, acquiring accreditation is essential for producers’ future viability because it will enable them to sell to government, and expand into the markets of neighbouring countries. As long as the industry falls short of meeting international standards of quality in manufacturing, the pharmaceutical manufacturing sector is likely to remain small.

 

This synopsis is a result of the collaboration within WG1, under the coordination of the WG1 coordinators: Petra Sevcikova and Henry Leng.

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