The pharmaceutical industry is to get an autonomous safeguard, Ethiopian Pharmaceutical Development Institute, which will split from the Food, Beverage & Pharmaceutical Industry Development Institute (FBPIDI) of the Ministry of Industry (MoI).
To establish the institute, a group of experts from the Ministry of Health (MoH), MoI, Ethiopian Investment Commission (EIC) and World Health Organization (WHO), have been drafting a regulation for the past one year.
The rise in importance of pharmaceutical products was the main reason for the split, according to Mebrahatu Meles (PhD), state minister of Industry. The draft was approved by the Ethiopian Investment Board on June 14, 2017, and it is to send the draft to the Council of Ministers (CoM) for final approval.
"We plan on setting the new institute in motion by the beginning of October," said Mebrahatu.
Upon its establishment, the Institute will be directly accountable to MoI, having its own head, employees, and administration. Its budget for the current fiscal year will be allocated from the FBPIDI.
The annual pharmaceutical market in Ethiopia is estimated to be worth around half a billion dollars, according to the Pharmaceutical Fund & Supply Agency (PFSA).
The group of experts that drafted the establishment regulation, designed and launched a strategic plan for the pharmaceuticals industry in 2015. A year after the group conducted a study on how to boost the industry, the findings lead to splitting the industry from FBPIDI and providing incentives to the industry players.
Following the recommendations of the studies, the Ethiopian Investment Board (EIB) approved incentives for the industry in July 2017. The incentives are intended to be implemented on domestic investors mainly with the close supervision of the newly established Institute.
Accordingly, the eight year long tax holiday was one of the privilege given to pharmaceutical industries that were newly approved by the board. The holiday, according to the new incentive package, is to be granted to those pharmaceutical manufacturers which can manage to export 30pc of their total products for three consecutive years.
The tax holiday might reach as high as 10 years, if the pharma manufacturers manage to export 60pc of their products for three consecutive years.
Apart from the tax holidays, the newly established institute will facilitate permanent working capital for the manufacturers. It is expected to arrange loans as high as 75pc of their capital without a collateral.
"We [manufacturers] pushed for the establishment of a new independent institute, as the industry has to be administered by its own experts," said Mohammed Nuri (MD), board chairperson of Ethiopian Medicine Factories and CEO of Meditec Ethiopia, one of the 22 pharmaceutical manufacturers in the country.
"Intermingling pharmaceutical laws with food and beverage could lead to irreversible damages."
Besides the incentives, with the aim of overhauling the pharmaceutical industry, the government is currently constructing an industrial park at the outskirts of Addis Abeba with a cost of 125 million dollars. Lying on 275ha, it will be operational in the coming year.
The incentive packages also include privileges aimed at attracting the manufacturers into the park, according to Mebrahatu. There will be tax exemption for anyone who joins the Industrial park. "Our short term plan is to enhance the export and substitute import in the long run."