Intervew: ‘Nepal’s pharmaceutical market is worth Rs 10b’

Intervew: ‘Nepal’s pharmaceutical market is worth Rs 10b’
eKantipur.com, 17-Feb-08

Umesh Lal Shrestha is managing director of Quest Pharmaceutical, one of the leading drug producing companies in Nepal. A science graduate, Shrestha has been involved in this sector for more than three decades. He is also the current president of the Association of Pharmaceutical Producers of Nepal (APPON). In an interview with the Post, Shrestha talked about the present status of the pharmaceutical sector and its prospects in Nepal. Excerpts:

Tell us about Quest's performance.

Quest is one of the leading pharmaceutical companies in the country. It is growing at an annual rate of 15 percent. Quest is also a pioneer producer of specialized products in Nepal like drugs used to treat heart disease, blood pressure and diabetes. The company was established seven years ago, and presently employs a staff of more than 150 persons. We believe in innovation and ethical marketing. Over the last seven years, our investment has doubled from Rs 50 million to Rs 100 million.

How is the sector expanding in Nepal?

There are 40 pharmaceutical companies in Nepal at present. Likewise, the size of the pharmaceutical market has crossed Rs 10 billion. This sector has made a huge leap forward over the period of the last two decades, but we still depend on imports to fulfill more than 60 percent of the total national drug requirement. Investments in the pharmaceutical industry have swelled to around Rs 5 billion. The overall market for pharmaceutical products is growing by around 13 percent annually. However, competition among the producers is very intense, and that has depressed the rate of return for the companies.

How does APPON assess the government's policies?

The government's Drug Act has become obsolete. It should be amended as per the changing situation in order to encourage Nepali pharmaceutical producers. The government should provide different incentives like tax exemptions and other rebates to indigenous producers. The government should learn from the success of Bangladesh, which has emerged as one of the leading exporters of pharmaceutical products by expanding its market to more than 92 countries. We can also reach international markets like Bangladesh has done, but developing this sector does not figure in our government's list of priorities. The government should establish a Special Economic Zone for the pharmaceutical sector and provide electricity and water at concessionary rates.

Can Nepal really export pharmaceutical products to the international market?

Yes, it can. Our labor cost is low, and the customs duty imposed on raw materials is less than in other countries. That places us in an advantageous position. There are 100 countries in the world that do not manufacture any medicinal drugs. That market represents a huge potential for our industry to tap. Of course, we need modern technology and skilled manpower to increase our competitiveness in the international market. But with the right mix of policy support and investment and technology, we can overcome this constraint. If we realign our focus and garner state priority, Nepal has ample scope to export medicines.

How sensitive are domestic producers about making medicines more accessible to poor people?

We are providing more than 20 medicines, which are used to treat common diseases, at nominal rates. Our efforts so far have remained insufficient because imported medicines are mostly sold at higher prices. Our efforts alone will not be sufficient if the government continues to turn a deaf ear to this issue. Government support is crucial to bring down the cost of production.

APPON organized the second Pharma Expo 2008 on Saturday and Sunday. How did the event go?

It was successful in terms of meeting the objectives, which was to inform entrepreneurs and the public about the latest technologies and products available in the international market. A total of 43 foreign and 32 local companies were active participants in the two-day fair. Products worth Rs 100 million were traded. More than 5,000 people visited the expo, which was far more than our initial estimate of 3,000 visitors.

What are your future plans?

As a leading pharmaceutical producer, we will continue to focus on innovation and come up with new products in the future. We have recently introduced Methyl Cobalimine, a vitamin which is a specialized product. We are penetrating South Asian markets and countries of the former Soviet Union as part of our plan to explore international markets. We are also developing skilled manpower through different training and specialized courses in and outside the country.