Cure the whole healthcare system

SRI Lanka’s medical sphere has always been beset with problems, largely stemming from corruption and inefficiency within the system. The Government seems to have decided that the best way to handle this — and make an extra income — is to establish an industrial zone for pharmaceutical companies in Sri Lanka.

Cabinet approval has been granted to establish an industrial zone in Sri Lanka exclusively for investment from pharmaceutical companies so that the Government can save money by purchasing drugs locally.

The idea is to create a preferential buying system so that the State Pharmaceutical Corporation can source drugs from the local manufacturers rather than importing them. This might in fact prevent the Government from having to shelve out taxpayers’ money on paying Rs. 30 million on Customs duty for delaying the clearance of drugs, as was reported by the Attorney General’s Department.

Cabinet Spokesman and Media Minister Keheliya Rambukwella has stated that the Cabinet has approved a plan by the Industry and Commerce Ministry to allocate 48 acres of land in Kurunegala for the project.

In 2010 the estimated size of the local pharmaceutical market was Rs. 40 billion but local contribution was only about 10 per cent, leaving huge potential for investment. Government consumption alone was Rs. 15 billion, which is around 35 per cent of the local market. The annual growth of the local pharmaceutical industry is expected to be around 15 per cent for the next four years. Already 10 companies have expressed interest in investing in this specialised industrial zone, provided that strong policy support is provided by the Government to promote local production.

The Cabinet paper stated that the Industry and Commerce Ministry is regularly consulting with local producers and an advisory committee has been established to formalise the consultative process. In response to industry requests, laboratory facilities have already been provided by Colombo University.

The dedicated industrial zone is another request from the industry, which now needs an Environment Impact Assessment (EIA) to ascertain the suitability of the venture. The Industrial Technology Institute has already been selected for this task without calling of tenders at a cost of Rs. 2.5 million.

The commitment of the Government is needed to procure drugs for the local industry on the same basis as that applied to the State Pharmaceutical Corporation. If such an arrangement is made, the industry is confident that the Government as the largest consumer can improve the efficiency of its supply chain as well as reduce the cost of wastage. It would also promote the local pharmaceutical industry, which is positive indeed.

Nonetheless, the Government has to think of the bigger picture and increase efficiency in the overall healthcare system as well. The special industrial zone could well take several more years to take off and there will always be a component of medicines that will have to be imported. Ensuring the quality of the locally-produced drugs is another challenge, for cheaper drugs could also mean reduced standards.

In addition to all this, the Government has to look into how the State-run health network functions and use Budget allocations wisely to both cure patients and nurture the industry. An industrial zone alone will not cure the inefficiencies, mismanagement and corruption within the system. How this is tackled will be the pill that finally cures the system.