An import friendly drug market and a host of government policies unfavourable to the domestic pharmaceutical industry are making survival difficult for the drug units in Sri Lanka.

According to Prof. Tuley De Silva, president of Pharmaceutical Society of Sri Lanka, drug manufacturing in Sri Lanka is becoming increasingly unviable due to factors like low productivity, high labour costs, government policies favouring imported drugs especially in case of government tenders, stringent GMP rules for manufacturing etc.

The locally manufactured medicines are very limited and most are formulations in dosage forms. Usually they are costlier than imported generics as the bulk drugs have to be imported, though tax-free. Besides, the country does not have units manufacturing many exicipients. Most of the excipients are taxed and the high cost of packaging materials add to the costs. Though branded generics are gaining popularity in Sri Lanka, their sales are not adequately profitable to the units as compared to the prices of imports from countries like India.

He said that the local drug manufacturers were also finding it difficult to obtain government orders. The healthcare institutions in Sri Lanka procure drugs through the State Pharmaceutical Corporation (SPC) and State Trading Corporation (STC), which purchase quality drugs at the lowest possible prices through global tenders. Majority of these drugs are branded generics and only a limited amount of special drugs can be locally purchased. Procurement is based on the funds granted by the government and those requisitioned by the hospitals and dispensaries. Hence, funds to purchase high priced and specialty drugs are insufficient when the hospitals ask for more supplies. The only concession for the local manufacturers is to consider them with an additional 25 per cent of the lowest tendered price provided the product uses 25 per cent of local materials. This was a rare possibility, as these drugs have to compete with the branded generics and generics in the private pharmacies, said Prof. Tuley De Silva, who explained that STC and SPC run a network of pharmacies offering subsidized drugs in Sri Lanka.

Elaborating on the drug market in Sri Lanka, he said only 8000 registered drugs were available in the country and most of them are imported. The drugs have to be registered in accordance to the stringent norms of the Drug Regulatory Authority, with provision to register any number of branded generics or generics. Full registration is for as period of five years and provisional registration is given for one year. If the registration samples of a drug fail the quality tests, that drug cannot be registered for a year. The drugs are mainly imported by STC and SPC, agents of multinational companies, local manufacturers and individuals for private use. Registered medicines are tax free and the open market competition dictates prices as the Sri Lankan Government deregulated the drug market about one and half year ago. Due to this, prices vary in different areas, often causing high prices due to limited availability of certain drugs, though the government has promulgated an essential drug list based on 27 categories.

In the case of drug distribution, private hospitals generally charge high prices and general practitioners include consultation fees together with medicines and hence cost more than from a private pharmacy. Most of the consultants prescribe only branded drugs and the patient has no choice on alternatives, said Prof. De Silva.