Revival of Nepal Drugs
Jeevan Jal, the one-time signature product of Nepal Drugs Limited (NDL), has hit domestic markets again. The sachets of the Oral Rehydration Salts (ORS) will be available in pharmacies across the country at Rs 9 a pop, a rupee less than the price of similar products in the market. The daily demand of ORS in Nepal is around 100,000 sachets a day. In the first phase NDL will produce 10,000 sachets a day; the production will be scaled up to 20,000 sachets by September. The goal of the state-owned company is not to completely displace competing products of private producers, but to make enough of quality products like Jeevan Jal so that other producers are also forced to cut prices to stay competitive. The other goal is to be able to supply vital medicines like Jeevan Jal and antihelminthics to all parts of the country. Private products are available mostly in easily-accessible urban hubs; selling in remote regions with few people is deemed unprofitable. This is where the state-owned NDL can fill the vacuum and which is why it eventually plans to produce all 70 types of vital medicines the government will distribute to all its citizens free of cost.
This, however, does not mean that the company cannot (or should not) turn a profit. In fact, it would not be healthy for it to continue to seek government help in perpetuity; ultimately, it has to be made a self-sustaining entity. The reason NDL had to be shut down in 2009 was because it was proving to be a big drain on the exchequer. Even when it was operational, its products were substandard. But instead of working to improve the quality of its machinery and manpower, the government of the day thought it fit to shut it down altogether. Any ensuing shortage of medicine, it was felt, would be removed by private producers, some domestic, but most of them Indian ones. Yet instead of the private drug-makers competing on quality and price, they soon established a kind of cartel and started arbitrarily fixing the price of their products. The local drug retailers, which mostly relied on imported Indian drugs, started charging multiple times what the same drugs cost in India. With lax monitoring and supervision, few of these unscrupulous drug sellers were punished, and with this the constituency for the revival of NDL started to gradually build.
Now that is has once again started production, there are ways to ensure NDL’s long-term viability. Currently, the government procures all vital drugs that are to be supplied free of cost from private drug makers. It often has to pay highly inflated prices to procure them.
There is no reason the same drugs cannot be procured from the state-owned company at cheaper rates. NDL should be able to do this profitably, even at lower selling prices, as most private drug makers are offering their drugs to the government at highly inflated prices. But producing more drugs is only part of the solution. Higher domestic production must go hand in hand with a strict monitoring mechanism to keep close tab on both quality and price of drugs in the market. Yet a wonderful start has been made towards Nepal’s self-sufficiency in vital drugs. Now this noble initiative needs to be carefully nurtured.
OFF THE BLOCKS
