Nhlanhla Dube Business Reporter
The Pharmaceutical Manufacturers Association has called on the Government to remove duty and Value Added Tax on imported raw materials and packaging used by the pharmaceutical industry. The call was made during a tour of pharmaceutical companies by the Parliamentary Portfolio Committee on Industry and Commerce.
Customs duties and VAT create an uneven playing field in the pharmaceutical sector as foreign manufacturers who import medicines are not charged duty.
Statutory Instrument 220 of 2000 classifies medicines as zero rated which means they are exempted from either duty or VAT. However the law does not protect pharmaceutical manufacturers when they import raw materials.
The association said that the local pharmaceutical industry has capacity to supply at least 70 percent of the essential drugs required in the country.
“The local pharmaceutical industry is in dire need of policy measures that can resuscitate it after capacity utilisation fell to 20 percent in 2013 from 58 percent in 2012,” said the Confederation of Zimbabwe Industries 2013 Manufacturing Sector Survey.
The pharmaceutical industry’s capacity is cost intensive because machinery and hygiene systems have to constantly run even when there is no production.
Speaking during a presentation to the Parliamentary Portfolio Committee on Industry and Commerce, Varichem sales and marketing manager Mr Dennis Choguya called for import restrictions to help the local industry.
“Let us create employment and revive our industry by restricting imports on products that our local manufacturers can make. Huge investments have been made in equipment and product development and to support this, Government needs to restrict foreign products,” he said.
Pharmaceutical products that are available locally are being imported and this has adversely impacted on local manufacturers. The restriction of imports has proven to be an effective method of boosting pharmaceuticals manufacturing in countries such as Ghana and Nigeria.
In Ghana, after import restrictions were imposed the number of manufacturers increased to above 30 from 5.
The association also called on the Government to give preference to local manufacturers when it comes to State tenders. A 10 percent price preference is awarded to local firms but there is no distinction between local manufacturers and local importers.
Local importers can end up representing foreign entities during the tender process.
The tour of the pharmaceutical industry was organized by the Confederation of Zimbabwe Industries and the Parliamentary Portfolio Committee visited Graniteside Chemicals, CAPS and Varichem.