Local Pharma Production Presents Strategic Opportunity for Ethiopia
The Ethiopian Government is offering tax incentives to increase in-country production of medicines in order to improve the quality of its healthcare, finds Frost & Sullivan
The Government of Ethiopia is offering tax and loan incentives to encourage local pharmaceutical production that will ultimately reduce the cost of drugs, increase job opportunities, improve economic growth and enhance foreign exchange inflow. Ethiopia has previously relied heavily on pharmaceutical imports - or international manufacturers with a footprint in the country - to meet a growing consumer demand for medicine. As a result, several initiatives will be rolled out to improve the quality of healthcare in the country, owing to a large gap in the supply and demand of drugs.
“The Government has encouraged local pharmaceutical production with tax-free loans for up to five years and a 100 percent exemption on custom duty for imports on capital goods,” said Frost & Sullivan Industry Analyst for Transformational Health, Aditi Bhalla. “Furthermore, an income tax exemption for five years is provided to manufacturers exporting 50 percent of their products, or supplying 75 percent of their products or services as production or services input. The time for production registration has also been reduced to a month for local manufacturers.”
A new study from Frost & Sullivan, Analysis of the Ethiopian Pharmaceutical Market, finds that the market earned revenues of US$620 million in 2015 and estimates this to reach $1.01 billion in 2020.
Ethiopia has an increasing requirement of antibiotics, as well as anti-infective drugs, given the high incidences of communicable diseases in the country and an ever-growing population. This in turn is fuelling the need for chronic care medication.
“In recent years, Ethiopia has increased its healthcare investments, resulting in a remarkable improvement in health indicators and achievement of health-related Millennium Development Goals,” observed Bhalla. “By delivering a host of incentives, the Government is addressing the needs of citizens, as well as encouraging trade across borders to bring in foreign exchange.”
In addition to rolling out programmes like the Growth and Transformational Plans (GTP-I, GTP-II) and Health Sector Development Plan, the Government has also partnered with the World Health Organisation. This collaboration has led to the launch of the National Strategy and Plan of Action for Pharmaceutical Manufacturing Development, which will urge domestic production and strengthen the national medicine regulatory system.
Analysis of the Ethiopian Pharmaceutical Market is part of the Life Sciences Growth Partnership Service programme. Frost & Sullivan’s related studies include: Healthcare System Development in Tanzania and Ethiopia, An Overview of the South African National Development Plan 2030 and the Industrial Policy Action Plan, Global Next-generation Sequencing Trends, and Pharmaceutical Industry in Ghana and Nigeria. All studies included provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.