Government offers tax incentives to increase in-country production of medicines and improve healthcare, finds report by Frost & Sullivan
The Ethiopian government is offering tax and loan incentives to encourage local pharmaceutical production that should ultimately reduce the cost of drugs, increase job opportunities, improve economic growth and enhance foreign exchange inflow, finds a new report from Frost & Sullivan.
The country has previously relied heavily on pharmaceutical imports – or international manufacturers with a presence in the country – to meet growing consumer demand for medicines, but several new initiatives will be rolled out to improve the quality of healthcare in Ethiopia, owing to a large gap in the supply and demand of drugs.
'The Government has encouraged local pharmaceutical production with tax-free loans for up to five years and a 100% exemption on custom duty for imports on capital goods,' said Frost & Sullivan's Industry Analyst for Transformational Health Aditi Bhalla.
'Furthermore, an income tax exemption for five years is provided to manufacturers exporting 50% of their products, or supplying 75% of their products or services as production or services input. The time for production registration has also been reduced to a month for local manufacturers.'
The Government has encouraged local pharmaceutical production with tax-free loans for up to five years
The study, Analysis of the Ethiopian Pharmaceutical Market, finds that the market earned revenue of US$620m in 2015 and estimates that this will reach $1.01bn in 2020. It covers prescription medicines and non-prescription, or over-the-counter (OTC), medicines. Prescription medicines are then further divided into generic and branded medicines.
Ethiopia has an increasing requirement for antibiotics, as well as anti-infective drugs, given the high incidences of communicable diseases and an ever-growing population. This in turn is fuelling the need for chronic care medication.
'In recent years, Ethiopia has increased its healthcare investments, resulting in a remarkable improvement in health indicators and achievement of health-related Millennium Development Goals,' said Bhalla. 'By delivering a host of incentives, the government is addressing the needs of citizens, as well as encouraging trade across borders to bring in foreign exchange.'
In addition to rolling out Growth and Transformational Plans (GTP-I, GTP-II) and a Health Sector Development Plan, the Ethiopian government has also formed a partnership with the World Health Organisation. This collaboration has led to the launch of a National Strategy and Plan of Action for Pharmaceutical Manufacturing Development, which will urge domestic production and strengthen the national medicine regulatory system.