Regionally, South Asia is a formidable force in pharmaceutical manufacturing. India and Bangladesh especially have risen tremendously in the last few decades in the international arena. The International Trade Center published that global sales from exported drugs and medicines totalled $318.6 billion in 2016. India alone accounted for 3.6% of the world’s pharmaceutical exports, raking in $11.6 billion for the country.
Although the region has built a growing momentum in pharmaceutical manufacturing, Sri Lanka has lagged behind its neighbours. Pharmaceutical manufacturing in Sri Lanka is in its infancy with only a handful of manufacturers currently in operation; making the country dependent on imports. Annually, Sri Lanka spends approximately $ 800 million to import over 4,000 types of pharmaceuticals into the country. In 2012, initiatives to entice more pharma plants to be in operation came to light. Due to these Government incentives, more manufacturers have come up in the last few years.
Navesta Pharmaceuticals, which held its inauguration on 30 August this year, is already changing the newly-established pharmaceutical manufacturing industry. Navesta is Sri Lanka’s first European Union-Good Manufacturing Practices compliant, sterile plant. Sterile plants adhere to extremely strict regulations as the environment within the facility is controlled to the point of how many microorganisms are allowed per cubic foot of air.
“People told me that Sri Lanka doesn’t have the capacity and the knowhow to start a sterile pharmaceutical plant,” Sanjaya Jayaratne, Navesta’s Chairman, explained. “Even the specialists in the industry told us that it was not going to be possible for us to do it in Sri Lanka. People told us that it cannot be done. And look where we’re at today, the company is operational, and we did it.”
In an exclusive interview with Daily FT, Sanjaya reviews what Sri Lanka needs to first become self-sufficient in pharmaceuticals, and what the industry needs to do to catch up with its regional neighbours.
Following are excerpts:
Q: You’re the second generation and Managing Director of Citihealth Imports Ltd. What motivated you to start Navesta Pharmaceuticals Ltd.?
A: Citihealth was started by my father in 1996 in the aim of importing pharmaceuticals to the country, marketing, and distribution. At that time in 1996 that was the main thing because there weren’t any health subsidies from government for the pharmaceutical industry. When all of our neighbours like India, Pakistan and Bangladesh were being highly developed in producing pharmaceuticals to be self-sufficient and exporting, we were highly dependent on them.
While being at Citihealth, in 2013 I started thinking of getting into pharmaceutical manufacturing. So I first spoke with some of our existing principals about doing a joint-venture for manufacturing; they were not interested because they were fine with producing the pharmaceuticals in India and exporting it to Sri Lanka. Nothing motivated them to move a plant here. Then in the end of 2014 I thought if no one is willing, let me go and start this on my own.
In 2012 a scheme was introduced by the current President and then Health Minister, to give a five-year buyback guarantee for those who can produce in Sri Lanka, which was further strengthened in 2015 by the National Drug Policy. With that in mind, I didn’t know how to start, I didn’t know the A-B-C of pharmaceutical manufacturing, only pharmaceutical marketing and distribution. I met with a few consultants, put a plan together, and finalised things by January 2015.
With that Navesta came into the picture. The entire point of starting this for me was that at Citihealth we build brands for everyone else. We are building market for brands from Pakistan, India, Bangladesh, Vietnam, and everywhere else. Whereas, with that strength, why aren’t we building our own brand?
Q: Sri Lanka isn’t known for manufacturing pharmaceuticals, there’s the State-owned Pharmaceutical Corporation and a few other manufacturers who are into the manufacturing of capsules, tablets and syrups. Navesta went a completely different route with being a sterile plant. What are some challenges of paving a new industry in the country?
A: There were four major challenges. First of all it was the talent. We don’t have experienced people. Yet, still we managed to do it. We sent our staff abroad for training. We even brought down trainers into the country to train the staff. Then we hired a few expat industry experts to be on Navesta’s payroll to ensure that everything was in line with international standards. With all that we managed to pave for a new industry by educating our staff and suppliers.
The second challenge was the environment authority. Convincing them that we were not releasing any hazardous materials into the environment because this was the first time this type of industry had come to Sri Lanka. Convincing them that we were not, was the biggest challenge because without their clearance, we couldn’t operate the plant.
Third was the sourcing of materials. Sourcing of raw materials, including the packing materials, all had to depend on imports in order for us to meet regulatory standards. None of the raw or primary packing materials Navesta needs are available in Sri Lanka because it’s specialised. More general products such as corrugated boxes we were able to source locally, however, majority of our components are all imported. Other industries are able to obtain support services and source materials directly from Sri Lanka itself, however we are not able to. As the industry progresses, we hope to source more materials here locally.
The fourth was the construction of the plant. Pharmaceutical plant construction is different from normal engineering and construction. Designing of the plant, pharma specific materials needed for the construction, and even fixing the machinery we had to depend all on foreign assistance.
Overall though, the industry will grow. All these challenges were there because pharmaceutical manufacturing is in its infancy in Sri Lanka. As pharmaceutical manufacturing develops more, the country won’t have some of these challenges anymore.
Q: Do you see Sri Lanka becoming a hub for pharmaceutical manufacturing?
A: Absolutely. We’re late, but we’re not too late. We have missed the bus but we have not missed the footboard. Why I say we have missed the bus is because our regional neighbours did this 42 years ago. In 1975, the Indian Government appointed a committee which was headed by Jaisukhlal Hathi, an eminent parliamentarian during the time, to look into what needed to be done for India to do local pharmaceutical manufacturing for the country to edge closer in becoming self-sufficient.
The Hathi Committee published a report in 1975 detailing these necessary steps. India’s parliament followed the report’s recommendations and began implementing harsh measures against international imports of pharmaceuticals in order to create opportunity for local entrepreneurs to manufacture. This allowed companies to begin to supply locally so that India became self-sufficient while enabling them to look towards exporting once the local demand was met. The Government of India paved the way 42 years ago and Bangladesh did the same in the ’90s.
For Sri Lanka to catch up, the country has to begin to stop the import of some pharmaceuticals in order to create an opportunity gap for local entrepreneurs to meet the local demand. Allow local companies to supply to the local market. Our regional neighbours did this and that’s why they’re so successful right now. When it comes to formulations, they’re even far ahead of China. Bangladesh did this about 35 years ago so now they’re self-sufficient and export. Pakistan is self-sufficient. So in the region, it’s just Sri Lanka which is left. This is why I say we have missed the bus but we have not missed the footboard. We can still get onto the footboard.
Q: In terms of the future for pharmaceuticals in general in Sri Lanka, what are the:
A: There are three challenges which I foresee facing the industry as a whole. First, prices of raw materials. Manufacturing of pharma raw materials is highly environmental polluting. Mainly done in China, however since China’s new government has stepped in, they have tightened regulations. Due to this, some companies have closed down. Prices of raw materials will keep going up for the industry as a whole internationally.
Secondly, Sri Lanka is a small country with only 20 million people here. If all manufacturers aim to supply Sri Lanka only, we will have an excess.
Thirdly, Sri Lanka doesn’t have the reputation as a pharmaceutical manufacturing country. We, as in the government as well as the private sector, have to promote Sri Lanka as a hub. Country branding has to be done for us to move on in the world.
A: In 2012 then Minister of Health (now the President) passed a cabinet paper to issue a five-year buyback guarantee to local manufacturers. It was further strengthened by 2015 National Drug Policy which was passed in Parliament. This was the top and number one advantage to start a pharmaceutical manufacturing facility in Sri Lanka because of the subsidies that the Government provides for pharmaceutical manufacturers. The other advantage is our location. Shipping is very easy. We’re next to the world’s busiest shipping line. The strategic location is a key advantage for the industry.
Although I said that people were a challenge, they are also the advantage. Sri Lankan Universities, specifically University of Colombo, University of Sri Jayawadenapura, University of Peradeniya, and University of Ruhana started a bachelor of pharmacy degree course a few years back. So now, we will have the talent which we require in time to come, and that will be a huge advantage. So we have to thank these universities for starting this. Finally, Government policies for BOI companies to have tax holidays which encourages investors to start.
c. And what do you hope
to see changed in order to propel
A: Less Government red tape. There needs to be a way to assist investors. Establishing a streamlined, functioning one-stop-shop for investors to get everything done rather than going through to 10 different Government institutions. Also, tougher regulations by the National Medicinal Regulatory Authority so that low quality medicine will not be in the market.
Q: Navesta aims to export its products in the next year or so. In the company’s profile, it states that “Accessibility of high-quality pharmaceuticals for anyone, anywhere, is vital for communities to be built, economies to be developed, and the world to progress… Navesta’s commitment is to assure that anyone, anywhere, has access to the pharmaceuticals they need”; can you elaborate on this?
A: What I have always believed in is, what’s the point in producing high quality life-saving medicine if people can’t afford it? Basically it builds around that. Obviously, we have to give a high quality product to people, otherwise what’s the point in what we’re doing? At the same time, it has to be affordable to people. We cannot be a premium price where only a certain class of people can afford the medicine. Accessibility has to be there. We are not saying we are giving low quality cheap medicine to the masses. We are an EU-GMP compliant company. We will be a high quality company which produces high quality pharmaceuticals but at the same time, it’s affordable to our citizens.
Q: What has been the most important lesson which you’ve learnt while setting up Navesta?
A: Power of the Sri Lankan talent. People told me that Sri Lanka doesn’t have the capacity and the knowhow to start a sterile pharmaceutical plant. Specifically, a penicillin category as it’s one of the most challenging. There are a few expats which we hired with industry experience, however, 98% of our staff are individuals who are educated through the Sri Lankan free education system. The staff was able to preserver to learn, and learn fast, an industry that’s new. At the end of the day, we did it.
There’s another important lesson which I have learnt through this entire process. Being able to stay focused and not lose patience was so critical. Two-and-a-half years is a long time to wait to see a Navesta injectable vial finally being produced. Things take time. Being patient and constantly monitoring and controlling as much as you can, what all is happening, will always produce a good result.
Q: What do you envision for Navesta in the next 20 years?
A: In the short term, Navesta aims to become a global pharmaceutical company in five years. By our 20th anniversary, I hope we will be compliant with all pharmaceutical certifications, even strict ones such as US-FDA (United States-Food and Drug Administration), so that Navesta will be able to ship our products anywhere in the world.
We have a lot of ambitions, however we will not be just a company that has overseas operations that deviates from where we started. Rather, Navesta will be a company that continually keeps our roots no matter how much we grow. Our core focus of giving value to patients, our responsibility to all our stake holders, giving back to the communities and countries in which we’re operating in and as well as continually reduce our impact to the environment. This is our core now, and will continue to be our core in the next 20 years. That won’t change.
Q: Can you elaborate on this?
A: Sure. Navesta will become a strong player regionally. This will allow us opportunities to become a global company that supplies to many countries. In order for us to even reach this regional benchmark, we will continue to assist in any way we can to build the industry knowledge in the country to reverse the brain drain. As a company, Navesta will continue to provide great job opportunities and empower our employees to develop so that they obtain international experience working at a Sri Lankan grown company. This is our direct impact, however there are numerous indirect impact as well due to all of this.
Take where we’re located as a prime example. With industrial development coming up in a village like Millewa, the town will continue to grow in terms of support services for Navesta. Transportation and meal service providers to meet the growing demand of our staff all the way to establishing producers of factory supplies which are important to our operation.
All of these efforts now, in turn will establish Sri Lanka in pharmaceutical manufacturing. As the industry locally develops, other support services and industries which will complement pharma manufacturing will also arise. These are ways which will propel Sri Lanka’s economy and develop the country as a whole.
Development is a great thing for the country, however it should never be at the expense of our beautiful environment. We will continually try and improve our processes in reducing our carbon footprint in every aspect of the company and push our suppliers to have the same mindset.
Q: What advice would you give to the youth of Sri Lanka who might want to become an entrepreneur but are unsure of how to?
A: Just follow your dreams. The only thing that prevents you from even attempting to go after your dreams, is fear. Fear is just a mental battle that you have to overcome. Believe in yourself. Believe in your abilities. Fight the fear with confidence that you will succeed despite what others say.
Once you’ve overcome the fear of trying, you need perseverance, commitment, and the right attitude towards building a business. It’s like raising a child or getting a pet. You have to give your attention to your dream if you want to see it succeed. You have to give it the care and love even on the toughest months where the world feels like it’s against you. At the same time, you must be selfless in thinking about the socio-economic impact of your dreams.
With all of that, you need to continually be your biggest fan and cheerleader. For others to believe in your vision, you must believe in it, without a wavering doubt. There will be obstacles, lots of them. But, the biggest definer of entrepreneurs who fail and who succeed is how they face the adversity and move forward or if they allow it to drown them.
Always keep in mind that the human mind is so powerful. If you put your heart and soul unconditionally into your dream, there’s really nothing that is impossible.
Q: Looking back at the last two years, what has made you the proudest in terms of seeing Navesta derive from an idea to a fully functioning company?
A: That I managed to set it up. Even with all the challenges. There were so many internal and external challenges which we had to overcome. Looking back, these challenges were a blessing in disguise. Three years ago, I wouldn’t have ever imagined some of the things which the company had to face even before we were operational. When you start moving forward with the right attitude and mindset, whatever challenges which come your way, you will learn to manage them and move forward. No success has come without any challenges and the best learning experience is mishaps.
Navesta is the first European Union-Good Manufacturing Practices Compliant plant in Sri Lanka. Even the specialists in the industry told us that it was not going to be possible for us to do it in Sri Lanka. People told us that it cannot be done. And look where we’re at today, the company is operational, and we did it.