Pharm. Samuel Kow Donkoh
Manufacturers and importers of pharmaceutical products have announced a no credit policy for all buyers in the industry, in the face of what they termed as “the turbulent economic challenges” in the country.
According to them, all transactions, with immediate effect, shall be on cash basis until the economy of Ghana stabilises.
The Ghana National Chamber of Pharmacy (The Chamber), the Pharmaceutical Manufacturers Association of Ghana (PMAG) and the Pharmaceutical Importers & Wholesalers Association of Ghana (PIWA), in a joint statement issued yesterday, said there is the need for them to review payment terms to save the pharmaceutical industry.
The statement, which was jointly signed by Pharm Harrison Abuiate, Pharm Kofi Nsiah-Poku and Pharm William Addo, said the decision was taken after an emergency meeting on October 10, 2022 to discuss strategies needed to “stem the tide” and save the industry from collapse.
It noted that the developments at the macro-economic front and their negative impact on pharmaceutical products and services required the drastic decisions taken, and pointed out that interest in continuous investment in official and approved pharmaceutical business was waning.
The statement said over the past year, the exchange rate of the cedi to the dollar has risen from GH¢5.80 to GH¢13.90, with the potential to rise further, arguing, “This means that importers of finished pharmaceutical products, manufacturing inputs and equipment for pharma operations will need more cedis for their operations.”
“For example, if GH¢580,000 was needed to import a consignment of medicines which costs $100,000 as at the end of 2021, a GH¢1,390,000 will be needed to buy the same consignment of medicines today,” the statement indicated.
The pharmacists said an extra amount of GH¢810,000 is required as top up over last year’s money, intimating, “This confirms the ravaging nature of the cedi devaluation and its direct impact on pharmaceutical operations.”
“Very soon, a sizable number of industry players may be forced to fold up or lay off staff. This becomes a dangerous recipe for criminals to engage in their nefarious activities and flood the market with fake and substandard products, which eventually tends to compromise quality and efficacy of such medicines, thereby putting the health of all Ghanaians at risk,” the statement pointed out.
It explained that the pharmaceutical industry is credit driven, and that the public sector pays on the average of 6 to 12months because of delayed payments from the National Health Insurance Scheme (NHIS).
“Majority of the private sector facilities make payments for all supplies within three to four months. In the current circumstances of daily devaluation of the cedi, it is imperative to state that pharmaceutical supplies on credit under these terms has led to erosion of operational capital of pharmaceutical importers and manufacturers,” the statement stressed.
The pharmacists also pointed to the current inflation rate of 37.2%, interest rates on loan amortisation, fuel price, reversal of benchmark values and utilities cost as additional factors for the decision taken.
“Interestingly, all these statutory taxes paid to government agencies are all paid in cash. It is also important to state that the reversal of the discount on benchmark values has negatively impacted the cost of doing pharmaceutical business in Ghana,” the statement said.
“Much as the above-mentioned economic indicators affect prices of general goods and services, the effect on medicines prices will not only result in challenges with medicines availability and accessibility, but most importantly the quality of life of Ghanaians because they cannot afford the resultant high cost of medicines,” the statement added.
They implored all stakeholders and the general public to understand and support this initiative to save pharmaceutical businesses.
BY Ernest Kofi Adu