With Nepal graduating to a developing country in the next five years and with it trying to achieve the sustainable development goals (SDGs) by 2030, Nepal will be on course to lose Gavi – a global vaccine alliance – support of the WHO-recommended immunisation programme
The world some weeks ago woke up to the news of the Biden Administration announcing temporary vaccine patent waiver to increase global access to COVID-19 vaccines. At first it was perceived as remarkable news, but later it came to light that mere patent waiver is not enough to increase vaccine production, the major bottleneck being technology transfer to the countries that have the infrastructure to manufacture vaccines. But what about those countries that do not have such infrastructure? The pharmaceutical industry of Nepal has surpassed fifty years. However, the pharmaceutical sector is yet to develop innovation.
There are around a hundred such industries in Nepal, and all of them vie to manufacture generic versions only, with none involved in vaccine manufacturing for human use. A 'generic' version is something where we emulate the dosage form and formulation from an established brandname medicine that is already in the market domain for years.
Our pharmaceutical industry limits itself to generic manufacturing due to lack of investment in research and development (R&D). Major companies with revenues worth billions of dollars invest as much as 20 percent of their income on R&D. A brand remains in the market without competition for years, exercising its right to exemption period, to recoup the massive investment in the making. Upon the elapse of the exemption period, other industries can copy the brand medicines to produce them at significantly lower price.
India is the largest manufacturer of generic medicines in the world, supplying medicines to even the US and Europe. However, India also manufactures brand medicines, with the multinational companies helping in the transfer of technological knowhow.
The vaccine, COVAXIN, developed by India's "Bharat Biotech" is an example of its prime innovation. But why is it that Nepal has so far not been able to achieve innovation in the sector? Nepal's pharmaceutical market is valued at around Rs 55 billion, but this has failed to lure multinational companies to set up their manufacturing plants and transfer technology to Nepal as part of foreign direct investment (FDI). We do not need to look far to see what FDI does for industrialisation.
China and India speak volumes, both of which have become global hubs of multinational companies.
Nepal organises biennial investment summits where investment promises worth billions of dollars are made, and this could be the forum to call for FDI in the pharmaceutical sector, too.
If we succeed in attracting pharmaceutical mam-moths to Nepal, at least for doing research and innovation which are done in the initial phases of drug development, that can kick start our goal of manufacturing 'brands' in Nepal that could be a potential export item.
With trade and global financial activities set to reboot after a series of regional and global political furors, if we succeed in landing the multinational pharmaceutical companies here, that will revamp the pharmaceutical industry in Nepal. These companies will not only bring foreign exchange, but also technological knowhow and research ideas along with the much-needed investment culture in the R&D sector. This will also give some respite to the dire need of FDI in Nepal, which received a mere 0.2 percent of its gross domestic product as foreign direct investment over the last decade, which accounted for one of the lowest in the world. With Nepali manufacturers being able to fulfill only around 50 percent of the domestic demand for pharmaceutical products, the remaining gap should lure foreign companies to do business here, which will help increase significant job opportunities in Nepal and reduce our reliance on imports.
Foreign investment can come in different forms.
The new Foreign Investment and Technology Transfer Act, 2019 has, apart from direct establishment of industry, also made way for technology transfer. The mode of making foreign investment or establishing a branch here or doing contract manufacturing all make sense for FDI in the pharmaceutical sector. The Act also makes provision fora one stop service centre that aims to facilitate foreign direct investment.
Apart from this, a draft of the National Medicines Policy-2007 also envisages collaboration between Nepali and foreign pharmaceutical companies to facilitate technology transfer in Nepal. But Nepal has so far failed to capitalise on these provisions in the pharmaceutical sector.
With Nepal graduating to a developing country in the next five years and with it trying to achieve the sustainable development goals (SDGs) by 2030, Nepal will be on course to lose Gavi– a global vaccine alliance – support of the WHO-recommended immunisation programme, with sustained increase in the per capita income. Gavi currently finances almost 60-70 per cent of Nepal's vaccine purchase. For a country to be eligible for Gavi support for immunisation, the gross national income per capita must be less than or equal to $1,630 over the past three years.
If a child can be immunised with all 11 WHO-recommended childhood vaccines for a mere $28 with Gavi support, it will cost a whopping $1,200 without Gavi support as in the US, which is close to the current per capita income of the Nepalis. That sums up why we must start bringing in vaccine manufacturing technologies for human use in Nepal. This again necessitates the need for innovation which at present seems only possible when foreign players join in.
Diplomacy surrounding COVID-19 vaccine rollouts and global distribution order has shown how health commodities can influence regional and global politics.
Hence, to stand tall in that aspect as well, we should develop technological prowess in scientific research and innovation.
Nobody is expected to attain self-sufficiency in every need of today's, but to fall far short in health sector innovation might prove detrimental in the years to come.
Baral is technical advisor in the health sector
A version of this article appears in the print on July 8 2021, of The Himalayan Times.