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Pharmaceutical Sector

Uganda’s Pharmaceutical and Medical products sector has witnessed steady growth trends since the 1990s. There are currently 12 manufacturers  engaged in the production of medicinal products and supplies such as tablets, hard gelatin capsules, injectables, liquid mixtures and surgical gauze among others. The number of pharmacies and drug shops has grown in the last five years from 216 and 2,700 in 2004 to 425 and 4,370 respectively in 2008.

 

Table 1: Pharmacies & Drug Shops in Uganda, 2004 to 2008


Changes in Industrial Production
The Annual Index of production for the Chemical and Pharmaceutical sector indicates general positive growth trends in the sector with a slight decline (4.7%) from 190 in 2007 to 181 in 2008.

Figure 1: Chemical & Pharmaceutical Production, 2004 – 2008


Performance of the Sector
The percentage growth in the Chemical sector (Comprising Pharmaceuticals among others), has been 5.1%, 8.6% and -4.5% in the Financial Years 2005/06, 2006/07 and 2007/08 respectively. Projected Investment and Employment in the sector is estimated at US $ 68 million and 1,778 jobs respectively (UIA Database).

Volume of exports by September 2008 stood at 357,321 kgs, translating into US$ 3.2 million in export revenues. Main export markets for Uganda’ pharmaceutical products are Rwanda, Democratic Republic of Congo, Tanzania and Southern Sudan.

Table 2: Pharmaceutical and Medical Products Exports by quantity, 2003 – Sept. 2008


Figure 2: Pharmaceutical & Medical Products Exports by Value (US$), 2003 – Sept 2008

90 percent of the pharmaceuticals, sundries and medical products are imported accounting for 5.4 percent of Uganda’s total imports. By 2008 imports in the sector stood at an estimated US$ 246 million (Figure 2), an increase from approximately US$ 176 million in 2007.

Figure 3: Pharmaceutical and Medical Products Imports by Value, 2004– 2008


The major sources of Pharmaceuticals products are India, China, Pakistan, United Kingdom, Switzerland, Germany and France among others. By December 2008, 431 foreign facilities had been licensed to export drugs to Uganda. The largest distributor of pharmaceuticals in Uganda is National Medical Stores (NMS)  which supplies majority of the medicines and equipment to government health units. The second largest distributor is Joint Medical Stores whose functions are similar to those of NMS.

Employment trends in sector
The Human Resources in this sector can be classified into pharmacists and pharmacy technicians/dispensers. In the absence of dispensers, nurses and midwifes are an alternative. By December 2008, there were 330 pharmacists and it’s forecasted that by 2012, the number will have increased to at least 1,000 pharmacists. The number of dispensers on the other hand is 450.

Availability of Special Skills
Uganda currently has three Universities that provide Bachelors degrees in Pharmacy. These include Mbarara University of Science & Technology, Makerere University Kampala (MUK) and Kampala International University. In addition there is a training institution for Pharmacy Technicians at the Mulago Paramedical School in Kampala. MUK is now providing a degree course for Industrial Chemists.

Key strengths (competitive factors)
•    Quality Control: The Sector is regulated by the National Drug Policy and Authority Act of Parliament 1993 which ensures that high quality, efficacious and cost effective medicine (both human and veterinary) are availed to consumers.
•    Uganda’s strategic location provides market access to neighboring countries such as Rwanda, D.R. Congo and Sudan.
•    Imports of Pharmaceuticals and Medical equipment are duty free.

Wages
Wages per month for Pharmacists are about Uganda Shillings 2 million ($ 1,200) while dispensers earn about Uganda Shillings 700,000 (US $ 600). Salaries for the semi skilled and unskilled in the sector range between $400 and $150 respectively.

Licenses required for operation in the sector
Pharmacies, Drug shops, large scale Manufacturers and Small/Medium Scale manufacturers require operating licenses before they commence business in the sector. The different categories include license to operate a pharmacy/drug outlet, Import and export licenses for drugs/raw materials, license of Pharmaceutical Manufacturing and certificate of suitability of premises (pharmacy/manufacturer).

Investment Incentives
The major beneficiaries of incentives in this sector are the manufactures and exporters of drugs manufactured in Uganda.
a) Investment Capital Allowances
•    Initial Allowance on plant and machinery        50-75%
•    Start up cost spread over 4 years        25% p.a.
•    Scientific research expenditure            100%
•    Training expenditure                100%
•    Mineral exploration expenditure            100%

Initial Allowance on Industrial Buildings        20%
Deductible annual Allowances (depreciable assets)
Depreciation rates of assets range            20-40%
Depreciation rate for Industrial Buildings        5%

b)    Investors who register as investment traders are entitled to VAT refund on building materials for industrial/commercial buildings
c)    Duty and Tax free import of Plant & Machinery
d)    First Arrival Privileges in the form of duty exemptions for personal effects and motor vehicle (previously owned for at least 12 months) to all investors and expatriates coming to Uganda
e)    Withholding Tax Exemptions for suppliers or importers of human or animal drugs

f)     Export Zones (Provisional)
•    A ten year corporation tax holiday
•    Duty exemption on raw materials, plant and machinery and other inputs
•    Stamp duty exemption
•    Duty draw back to apply on input of goods from domestic tariff area
•    No export tax
•    Exemption of with holding tax on interest on external loans
•    Dividends repatriated to get relief from double taxation

Sector Value Chain

Quality standards in the sector
Quality standards in the sector are guaranteed by the National Drug Authority (NDA). NDA is the drug regulatory body which was established to ensure that quality, efficacious and cost effective medicine (both human and veterinary) are availed to the population. NDA has a National Drug Quality Control Laboratory which carries out inspections of premises for their suitability in terms of location, size, structure and fittings prior to starting business and during operation of the business Drugs imported in the country are inspected at points of entry such as Malaba, Busia, Nakawa and Entebbe Airport. In 2008 for instance, 135 consignments were rejected. NDA also undertakes spot checks in drug shops, pharmacies and clinics for the presence of expired and other unusable drugs. In 2007 84 spot checks were made. Uganda is in the process of amending the National Drug Policy and Authority Act 1993 to harmonize it with international best practice.

Table 3: Pharmaceutical Manufacturers in Uganda, 2009

Investment Opportunities in the Sector
The sector provides numerous opportunities with an assured internal market and external market given that 90% of pharmaceuticals, sundries and medical equipment are imported in to the country. The opportunities which range from small scale to large scale include:
•    Production of Human Liquid formulations;
•    Manufacturing of Diagnostic material and equipment;
•    Production of Human Parenteral Drugs;
•    Production of Human vaccines;
•    Processing of Herbal medicines from the neem tree and aloe vera;
•    Manufacturing of veterinary pharmaceuticals;
•    Production of Human Solid dosage forms such as tablets , capsules, etc;
•    Processing of medical sundries (Cotton wool, syringes, sanitary pads, bandages, glucose, water for injections, infusions syrups and oxygen etc and;
•    Manufacture of Medical Equipment.

References
o    National Drug Authority (NDA)
o    Uganda Bureau of Statistics (UBOS)
2009 Uganda Investment Authority