Ailing govt-run drug company in dire need of healing

Laxmi Maharjan

KATHMANDU: Nepal Aushadhi Limited (NAL) is on the verge of collapse with the drug manufacturer looking to the Finance Ministry for immediate clearance of Rs 110 million to upgrade facilities and repay its bank loan to avert auctioning scheduled for April 18.

According to NAL management, part of that amount-Rs 10 million-will go to pay Nepal Credit and Commerce Bank. NAL has to pay the bank Rs 40 million.

The remaining amount will be used to upgrade basic facilities to meet WHO's Good Manufacturing Practice guidelines and the codes on manufacturing of drugs 2004, NAL chairperson Shashi Kant Mishra said.

For the last two months, the Department of Drugs Administration has barred pioneering manufacturers from producing drugs for failing to meet the guidelines and codes. The company once manufactured 140 drugs and enjoyed virtual monopoly of the country's pharmaceutical industry.

NAL's top management says the company needs to inject Rs 530 million to meet the GMP deadline by Mid April 2011. "We have asked NAL at least 10 times to upgrade the quality of its drugs by adopting GMP" said Radha Raman Prasad, director of DDA. With NAL failing to comply, the Ministry of Health and Population (MoHP) stopped purchasing NAL medicines three years ago after the government introduced the Public Procurement Act in 2007.

"We will purchase medicine only if DDA recommends," Health Secretary Dr Praveen Mishra said. NAL sources, however, disputed the secretary's version. "The ministry stopped purchasing NAL drugs because officials get commission from private companies," said a senior manager. "We had asked the ministry to purchase our medicines, but they refused citing our failure to comply with GMP guidelines."

NAL may be able to improve the quality of its production if it upgrades technology and infrastructure and adds expertise.

NAL, whose daily operational loss is estimated at Rs 1.5 lakh, has suffered a cumulative loss to the tune of of Rs 290 million. This amount is expected to increase to Rs 400 million by mid-July when the fiscal year ends. In addition, it has to repay a loan of Rs 300 million, including Rs. 170 million to the Finance Ministry.

"We don't have adequate financial support from the government to meet the WHO GMP," said Mishra, explaining why the state-owned company had failed to compete with private manufacturers.

According to him, NAL needs Rs 120 million just to meet the GMP guidelines.