“There isn’t much difference between local and Imported drugs.”

Daniel Waktole President, EPMSMA

Daniel Waktole is President of the Ethiopian Pharmaceuticals and Medical Supplies Manufacturers Association (EPMSMA). The PhD candidate in pharmacy is also author of Guide to Pharmaceutical Manufacturing and Marketing in Ethiopia and co-author of the first international edition of the Book-master Guide for Medical Representatives. In 2020, Daniel founded Kilitich Estro Biotech PLC—a joint venture with an Indian pharmaceutical manufacturer. His academic background, coupled with his preeminent role in the sector—both as a Businessman and President of his sector’s trade association—affords him quite an insight into the sphere. With the firm belief in the potential to make Ethiopia the hub of Africa’s pharmaceutical and medical supplies manufacturing, Daniel shares his outlook on the challenges, prospects, and overall investment climate in his line of business in this interview with EBR’s Addisu Deresse.

Tell us about your new joint venture and its activities since inception.
Kilitich Estro Biotech PLC was licensed in 2015 and has been working on setting up the plant and other groundworks to make the manufacturing operation a reality. We began production in October 2021 and we manufacture tablets, capsules, injectables, and dry powder for suspension syrups. With the kinds of pharmaceuticals and medical supplies we manufacture, we are pioneers in East Africa, and not just in Ethiopia. There are only two manufacturers of our kind in Africa—in Egypt and South Africa—and the type of supplies which we manufacture are currently all imported. Our operation requires very sophisticated technology. Our plan is to avail 30Pct of our output to the local market while exporting the balance. We are a company with the biggest capacity in that regard.

What is your association’s role in supporting sectoral actors?
We are inputs for policy betterment. In different instances, we have conducted, compiled, and delivered studies on the challenges and potentials of the sector. We collaborate with all stakeholders to recommend directions, advise on practical procedures, and create awareness on various issues. We are witnessing changes in the sector following our years of engaging the government and private sector to pay due attention. We are now seeing reinvigorated efforts to recognize the role of the industry in the economy.

How do you evaluate Ethiopia in terms of the market and resources for manufacturing pharmaceuticals?
I believe Ethiopia is a very comfortable place for industry. The first element in this potential is human resources; Ethiopia now has more educated easily trainable people. Other than that, the country itself is a huge market. Local demand in Ethiopia is growing by an annual average of 15Pct. Just a few years back, locally manufactured supplies covered 15 to 20Pct of demand. Now, that coverage has dwindled down to less than 10Pct. Ethiopia also has very good policies though implementation is full of challenges. The full enactment of policies has the potential to make the nation the hub of pharmaceutical manufacturing. Air transport is another positive; there is a conducive environment to transport supplies to the region and to the rest of the world. You can also take the weather.

The pharmaceuticals market is said to be full of sabotaging acts. What is your view on that?
I would not say it is especially an industry full of sabotage. The pharmaceutical manufacturing industry is one that requires a well-educated workforce and very sophisticated technologies and working processes. These things make it vulnerable to small problems. About six years ago, a policy was crafted that sought to reduce the sector’s troubles and help it grow out of its challenges. However, this policy is yet to be enacted and has been a source of so many challenges. Not implementing an already prepared policy for so long is something that is against the will of the people who have given time and energy for the undertaking.

It is not sabotaging. This is an industry that requires highly informed decisions. You can treat people or kill people with pharmaceuticals. So, the level of attention it requires makes it vulnerable to such views. Everyone agrees in principle that it requires that attention. However, the understanding is not reciprocated in practice and that results in what appears to be sabotage.

Technology is one of the challenges of the sector. What should be done and who do you believe is responsible for that?
Most countries copy technologies from others that are well-developed in the sector and Ethiopia has that option as well. In the past, it was difficult to copy technologies but now, that is increasingly becoming easier. But copying technology still requires human resources and finances. Towards this, there was a scheme that involved the Development Bank of Ethiopia, and even the Commercial Bank of Ethiopia. Now, we can say that that support is unavailable. So, the sector can bring in technology. What is hurting it is the lack of financing and close governmental support and follow-up.

It is believed that only four of the 15 operational pharmaceutical manufacturers are Good Manufacturing Practices (GMP) compliant. What is the challenge in that regard?
Even the first medicine maker in Ethiopia, established decades ago, is not GMP compliant. Most manufacturers do not have that approval. Technological requirements, documentation, human resources, and operational standards are areas where issues are found. GMPs are a tough set of standards to meet.

Almost all inputs required to manufacture pharmaceuticals are imported. How do you assess the comparative advantages in manufacturing them locally?
If you take India, for example, most inputs are imported from China and yet it is probably the third leading manufacturer globally. Importing materials required to make medicines is common practice in other nations, too. You obviously cannot have all that it takes to manufacture such medications and supplies. In Ethiopia, most manufactured pharmaceuticals have a value addition of about 30 to 50Pct. That has value on its own regarding foreign exchange usage, even if other resources are imported.

But it is also worth mentioning that some of the imports can be replaced with local production. For example, we import pharma-grade sugar, starch, and packing materials. We also import bottles to pack syrups. All these can be made locally. Of course, inputs for the production and packing of treatments must be of the highest standard. There is a great potential for auxiliary industries to tap into that potential and curb the number of items which are imported from abroad.

Following the Covid outbreak, India stopped importing inputs from China. They have started manufacturing the resources themselves with great support from the government. There is no country that manufactures pharmaceuticals by using its own resources only; you have to import at some point but you must cut out those which you can make locally.

What impact do you expect from Kilinto Industrial Park (KIP) which is reserved for pharmaceutical manufacturers?
It is a commendable move by the government but investors have more than 200 countries to choose from. The construction of industrial parks is only one thing; it is not everything. Investors are wise and they calculate everything including taxation, customs, transportation barriers, and other factors. The government must ease the entry barrier and make it difficult to exit; not the other way around.

The park will take a very long time to be fully occupied by investors, unlike others which are already full. The huge investment in the park by the administration is great in itself but other issues must be resolved, however, to attract investors who are comparing prospects in numerous countries.

There already are GMP standards which pharmaceutical manufacturers have to fulfill. Thus, there is no need to scrutinize them every step of the way with locally-prepared standards. So, it will take a while before investors are excited by just the availability of the industrial park.

Public awareness about locally manufactured drugs is not the most positive. What is your experience here?
That is a challenge in many other sectors, I believe. Yet, even in my lifetime, I remember there was once more trust in drugs manufactured by EPHARM than imports from London. That trust is being lost. What the public does not understand is that drugs are manufactured under the continuous scrutiny of authorities. Compare that to India or China and how our authorities visit those manufacturers perhaps once in five years. The awareness challenge should collaboratively be solved by our association and the government. We are working on activities towards that.
There is not much difference between drugs that are manufactured locally and those that are imported from abroad. Awareness is the problem.

What is your message to policymakers, industry players, and the general public?
For the government, I want to say that we have a very good policy that is put in place. The policy states the need to pay attention to manufacturers both within and outside of industrial parks. But it only arranges for manufacturers that might come in the future and there are currently more than 14 manufacturers outside of industrial parks. Such an approach abandons the already existing factories and gives more priority and attention to those that might join the parks in the future. Such an approach must improve to give equal attention to both. In fact, I would advise even greater attention to those already operating even if they are outside of the parks.

We also want to advise caution towards the bureaucratic procedures that are not fast enough to respond to the needs of investors. This is a sector with only a handful of manufacturers which require greater attention given the kind of products they make. We don’t have to queue in lines everywhere we go. The industry has many regulatory stakeholders including the Ministry of Health, [the Ethiopian Food and Drug Authority], GMP, and others. In other countries, things are easier if you are a pharmaceutical manufacturer. Hence, the government should loosen-up unneeded regulations for easy operations and success. There is also a tendency to favor importers over manufacturers.

Taxation and clearance with customs are other areas we would like the government’s further attention on. Hiring professionals from abroad is yet another challenge. These professionals cannot be treated in the same way as expatriates of other sectors.

For investors, we want to advise that Ethiopia is suitable for pharmaceutical production. Finally, for the public, I would like to say again that there is no difference between locally manufactured drugs and those imported from abroad. I want to urge the public to build that awareness and support the sector and the nation at large.

EBR 10th Year • Apr 2022 • No. 106