By Tsion Tadesse
A decision from officials at the Ministry of Finance to prohibit the import of medicines and medical devices that have locally manufactured substitutes has raised concerns among medical professionals and pharmacists, who fear domestic manufacturers are not capable of stepping up to meet demand.
The new Ministry directive prevents the state-owned Ethiopian Pharmaceuticals Supply Service (EPSS) from issuing international bids for pharmaceutical products that are readily supplied by local manufacturers.
It also places restrictions on international bidding even in the case where the medicines or medical devices are not available locally, limiting procurement costs to three billion Birr.
The directive allows for exceptions in the event that local manufacturers are determined to be incapable, or when foreign procurement through international competitive bidding offers “clear economic or social advantages.”
The Ministry has moved to establish a three-member committee chaired by the EPSS Director-General to review and approve bid evaluation reports. Committee members may serve for a maximum of three years, according to the directive.
In September, Solomon Nigussie, EPSS deputy head, estimated the Service would spend 28 billion birr on medicine imports for commercial distribution this year.
Officials hope the new rules will help save foreign currency and lower costs, but insiders say the efforts are misguided.
“Most raw materials come from abroad, and that directly affects prices even if we try to produce medicines locally,” says pharmacist Kidist Mekasha.
Reports indicate that domestic manufacturers cover less than a third of Ethiopia’s demand for pharmaceutical products.
Kidist argues officials should focus on improving local manufacturing capacity before moving to cut reliance on imports. She sees a lot of room for improvement, beginning with improving the quality of packaging, which she observes consumer perception and product competitiveness.
The Ministry’s latest directive follows an August 2024 amendment to the Value Added Tax (VAT) Proclamation, levying the 15 percent tax on imported raw materials utilized by local pharma manufacturers.
At the time, Daniel Waktole, president of Ethiopian Pharmaceuticals and Medical Supplies Manufacturers Association (EPMSMA), said the new tax laws incentivize imports and discourage local production, describing the new proclamation as “very damaging” for domestic manufacturers.
Officials say they have allocated 9.8 billion Birr towards pharmaceutical subsidies for the fiscal year in a bid to ease costs for consumers.
