The Sunday News
ZIMBABWE lost out on an opportunity to make billions of dollars through the manufacture of antiretrovirals and other drugs for both the local and regional markets after turning down a World Health Organisation request to manufacture antiretrovirals and other drugs for both local and Sadc markets, Sunday News can reveal.
Despite having been given the green light to manufacture antiretrovirals and other drugs by the WHO under the Doha Declaration of 2001, the country failed to take up the opportunity citing capital constraints.
In 2002, the Ministry of Justice issued a notice declaring a period of emergency on HIV/Aids for the purpose of enabling the State or a person authorised in writing by the Minister to make or use any patented drug, including any antiretroviral drugs. This enabled the issuing of a compulsory licence in 2003 which permitted the country to manufacture 75 percent of ARVs for domestic use and 25 percent for export.
According to the Pharmaceutical Manufacturers Association of Zimbabwe, the Sadc market for pharmaceuticals is valued at about $4 billion and Zimbabwe could have become a powerhouse as the region has the highest uptake of ARVs in the world.
Varichem Pharmaceuticals, a local company, in 2010 became the third company in sub-Saharan Africa to achieve WHO pre-qualification for medicine products. The company was considered among other companies in Netherlands and India but did not manage to venture into manufacturing the much-needed ARVs at competitive prices, a situation which has seen the country losing billions in potential revenue.
The list of pre-qualified medicinal products used for HIV/Aids, malaria, tuberculosis and for reproductive health produced by the programme is used principally by United Nations agencies including Unaids and Unicef to guide their procurement decisions.
“The Government of Zimbabwe is permitted in terms of the World Trade Organisation (WTO) Trade-Related Aspects of Intellectual Property Rights (Trips) Agreement, to take such measures as are necessary to further its public health interests. Article 31 of the Trips agreement permits the issuing of compulsory licences for the production of patented drugs without the authority of the patent holder.
“So in 2002, the Government declared a period of emergency due to HIV and Aids, for an initial period of six months, and later extended to six years, in order to justify the issuing of a compulsory licence for the domestic production of ARVs. The Government authorised Varichem to produce ARVs to support its antiretroviral therapy roll-out programme,” intellectual property attorney Mr Moses Nkomo explained.
The issuing of the compulsory licence was meant to ensure easy and affordable access to life-saving ARVs on the assumption that locally produced ARVs would be cheaper than the brand name ARVs, and even cheaper than the generic ARVs made in foreign markets such as India.
Varichem was granted authority to “make, use or exercise any invention disclosed in any specification lodged at the Patent Office for the purposes of achieving the objectives of Statutory Instrument 32 of 2003”.
Under the terms of the authorisation, Varichem was directed to produce antiretrovirals or HIV/Aids-related drugs and to supply three-quarters of its produced drugs to State-owned health institutions with the option of also supplying Sadc countries.
The opportunity was taken but it lacked strategic alignment in that there were no support systems to optimise its effectiveness.
“The assumption was that the mere issuing of a licence would be a panacea for access to medicines, without any thought being applied to the practical challenges like the need for foreign currency, the issue of taxes and duties, the procurement landscape among other key factors,” said Mr Nkomo.
The failure to optimise domestic manufacturing has left the country depending only on donated drugs procured by non-governmental organisations and most of these are tied to specific programmes and projects.
This limits access to these life-saving drugs by the majority of the people who need them because if one is not on a donor funded project, they have to buy their own drugs which are expensive.
The Global Fund is the biggest organisation that funds Zimbabwe in the procurement for ARVs and related services to the tune of about $60 million annually.
According to Mr Tavengwa Mkhuhlani, the director of Zimbabwe Pharmaceuticals (ZimPharm), Zimbabwe did, to some extent, take advantage of the compulsory licence and produced ARVs but the regimens and guidelines which keep changing made the business non-viable.
“Varichem did and still does manufacture ARVs but you have to follow certain guidelines that are issued by WHO. To be able to adapt to the guidelines at the rate at which they change, a company has to be financially strong,” he said.
Mr Mkhuhlani said ZimPharm was in no position to start manufacturing ARV’s.
“We cannot start manufacturing ARVs today and three years later the guidelines change. We are not capable of investing money into that rate of change. Most of the ARVs are patented so they are not like generic drugs. By its nature, HIV is a public health disaster which a lot of governments are relying on donor funds,” he said.
Another major challenge that was mentioned was that WHO only buys drugs from pre-qualified facilities.
“It is a huge expense to have your facility pre-qualified so that WHO can buy from you. So you not only manufacture ARV’s and WHO buys from you but you have to be WHO pre-qualified for them to buy from you.
“We do not have the capacity to be pre-qualified too as it is a very costly exercise. After pre-qualification of your factory you have to also manufacture other products from a pre-qualified facility and your processes are now expensive so there is an effect on other products so that you sustain the pre-qualification status. Looking at our economy in Zimbabwe we are better off not pre-qualified and our products will be competitive on the market,” he said.
He added that not many pharmaceutical companies would venture into ARV manufacturing soon because of the associated costs and also because of the competition that exists with multinationals.
“Competition is very stiff as you will be competing with giant multi nationals such as Cipla Limited in India that are involved in ARV production, they have global tenders and they can manufacture at very low costs because they benefit from the economies of scale while we cannot,” he said.
Mr Mkhuhlani said in as much as there has been noise made on the removal of import duty on raw materials for the local manufacture of ARVs; it would spell disaster if implemented.
“We cannot request the government to put restrictions on importation of ARVs given the nature of HIV, people will die as we cannot cope with demand readily. Even if the Government removes duty for the raw materials it will be hard to compete in that area because of the other requirements to manufacture them, unless the issue of pre-qualification is waivered. If Government can lobby WHO to waiver pre-qualification then we may manufacture the drugs,” he added.
Analysts say it would be noble for local pharmaceutical companies to manufacture ARVs as Zimbabwe was hard-hit in terms of the virus with over one million people that are infected and in need of the drugs.
The disease’s burden is especially high in Africa and the effects on the economy are damaging. While it would make sense to manufacture locally, the practicalities are difficult.
HIV also comes with opportunistic infections whose medication does not require pre-qualification and the local industry was being advised to venture into that area.
“We can capitalise on that we can produce our own anti TB drugs, cotrimoxazole and other drugs; we do not necessarily need to focus on ARV production but we need to focus on HIV and what comes along with it in its totality. HIV comes along with cancers, meningitis, pneumonia etc. One can find where to fit in,” suggested the ZimPharm director.
Zimbabwe has, however, not signed the protocol amending the Trips agreement which has been justified by those in the industry saying it would bring about unnecessary competition.
“With protocols and agreements, we are at different stages of development of industry and we sign with countries that have a fully developed industry so we hinder development of our own industry. We sign and then we are bringing competition to our doorstep. Are we prepared for that?” Mr Mkhuhlani said.
“If we are not prepared for that we must not sign anything that brings in competition to us when we do not have the capacity to compete, we have to allow time to grow and get to a level where we can compete and then we can sign some of these protocols when the playing field is equal.”
Experts say Zimbabwe does not have to compete in every sector of the pharmaceutical industry. It is cheaper to manufacture capsules, tablets, granules for suspension, and creams in India but not cheaper to bring liquids to Zimbabwe.
“This is our area (liquid pharmaceuticals) and we can do it in the country so we can focus on that and do it well. If we talk of cough mixtures we can manufacture and compete as it is made here. Surely we cannot have liquids coming in from India as it is very bulky and expensive,” one expert said.
“At times it is not an issue of companies not being competitive enough or having a market but the government is not buying from them. They are getting materials from outside. So whether the locals are cheaper or not there is no support from government as it is actually importing. Datlabs and CAPS holdings can supply some products at a good price but there is no uptake.”
According to Mr Nkomo, under the compulsory licence, Varichem was bound to supply 75 percent of its drugs to Government health institutions which were poorly funded, so the company was facing challenges with payments, and the hyper-inflation did not help matters.
The duty on raw materials significantly raised the cost of production such that Varichem’s drugs ended up being more expensive than the generics which were being imported, and the 25 percent which could have been supplied to the private sector ended up with no takers as the private sector opted to import.
The fact that NGOs could easily import cheaper generics also stifled the market for Varichem.
