Oxford Business Group sees increase in investments in Sri Lanka’s pharmaceuticals industry boosting output
The Oxford Business Group (OBG) has reportedly said in its recent Sri Lanka economic update that the efforts to increase domestic and foreign investment in Sri Lanka’s pharmaceuticals industry are set to boost the output of pharmaceuticals manufactured in the country.
The OBG has stated in the report that latest measures will also broaden the sector’s product range, bringing the country closer to the government’s goal of self-sufficiency in medical production.
In early January it was reported in the media that the State Pharmaceuticals Manufacturing Corporation (SPMC) was joining up with Malaysian investment firm Pharma Zone to develop a dedicated industrial centre for the manufacture of pharmaceuticals.
Pharma Zone, which is a partnership of the Sultan of Johor and Malaysian property development company Equine Capital, will provide US$ 10 million for the construction of infrastructure necessary for pharmaceuticals production.
To attract investment to the 50 hectare site, to be located in the Kalutara District, south of the country’s commercial capital, Colombo, the Sri Lankan government has reportedly offered a 15-year buyback guarantee to purchase pharmaceuticals from manufacturers operating within the zone at 20 percent above unit cost.
President of the National Chamber of Pharmaceutical Manufacturers of Sri Lanka (NCPM), Lohitha Samarawickrema has been quoted as saying that at least 17 local producers had signed MOUs with the SPMC to establish manufacturing facilities within the zone, with each committing a minimum of US$ 4 million to secure blocks of 2-4 hectares for development.
The initial facilities in the zone are scheduled to come into operation in the first half of 2019, and by 2020 total output is expected to meet around 60 percent of domestic requirements, according to the NCPM.
According to reports, locally manufactured pharmaceuticals presently account for just 12 percent of the market.
The increase in local production is expected to significantly reduce the sector’s annual import bill, which currently stands at US$ 400 million to 500 million.
The strategy is also being supported by other investments in the sector.
Meanwhile, the government in early February signed an agreement to construct a new Rs. 1.4 billion (US$ 9 million) facility for the production of cancer-treating drugs using nanotechnology.
The plant, to be located in Payagala’s Malegoda area, is a joint venture between the SPMC and two Indian pharma companies, and aims to bring down the cost of cancer drugs, most of which are currently imported at prices of around Rs. 150,000 (US$ 960) per item.
The news report above has shown the many investment opportunities in Sri Lanka’s health sector, especially in the area of manufacturing pharmaceuticals. The setting up of a dedicated industrial center for the manufacture of pharmaceuticals has opened avenues for foreign businesses to set up operations in the country or form joint ventures with Sri Lankan companies.
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