Can the local industry do more for less?
Sri Lanka’s pharmaceutical sector has stepped up to the plate during the past two years working tirelessly to cater to the national demand for drugs in the midst of import restrictions compelled by the global pandemic. The industry revival is a result of the Memorandum of Understanding followed by a Joint-Venture Agreement signed between State Pharmaceutical Manufacturing Corporation (SPMC) & the members of the National Chamber of Pharmaceutical Manufacturers of Sri Lanka (NCPM) in 2017. At present, 15- 20% of the total local drug requirement is fulfilled by SPMC, joint venture partners of SPMC – under strict adherence to quality standards stipulated by the SPMC and other homegrown manufacturers.
Pharmaceutical self-sufficiency falls in line with the national priority of retaining foreign currency in the country. Empowering local pharma is a win-win for all parties involved because it gives citizens better access to Government (SPMC) approved high quality medicine for affordable prices while generating occupational opportunities for local youth. In order to achieve self-sustainability local industry would require FDIs which would in turn bring international technology & know-how to Sri Lanka paving the way for the country to emerge as a ‘pharma hub’ capitalizing on the country’s strategic location in the Indian Ocean. The construction of three ‘pharma zones’ has already commenced in Anuradhapura, Hambantota & Millawa intending to attract such investments. The Millawa SPMC zone, largest of the three, is slated to house four state-of-the-art factories within it. The President of NCPM Dr. Lohitha Samarawickrema in a letter to media dated August 4 however said that the biggest impediment for yielding the optimum benefit from this joint venture is misinformation. He went on to say that contradictory reports create a sense of anxiety among the Sri Lankan public as well as demotivate potential local & foreign investors. According to NCPM President, up to 80-85% of the local production catering to ~15% of the total demand is supplied by SPMC joint venture stakeholders. The stakeholders collectively manufacture over 300 varieties of drugs which are then quality-tested and distributed through the state manufacturer (SPMC). He said the success of this Public-Private Partnership could augur well for the country’s economy as well as the general wellbeing of citizens and thus should not be stigmatized without a fair assessment. Given the strategic location of Sri Lanka, Dr. Samarawickrema went on to add that Sri Lanka was being seriously considered to be developed as a hub for vaccine manufacturing with Asian and African markets in mind. In that regard, a feasibility study is already underway to establish a vaccine manufacturing enterprise as a joint venture between Sri Lanka’s Kelun Life Sciences and China’s Sinovac Biotech Ltd. The local partner of this venture is the first homegrown manufacturer of saline & is credited with propelling Sri Lanka to full self-sufficiency in same. It has been reported that since the beginning of Covid-19, 200 new vaccine manufacturers have joined the production pipeline. The United States of America, Canada, Brazil and Mexico are considered the top vaccine manufacturers while some Latin American countries are among the Top 20 ranked vaccine manufacturers with self-sufficiency up to about 72%.
This NCPM-SPMC venture is especially meaningful considering that it served to positively disrupt the state monopoly on pharmaceutical drugs thereby ushering in new possibilities and opportunities for private sector stakeholders for productive collaboration. The Chamber firmly believes Pharma Industry’s initiative to work closely with the private sector sets a welcome precedent for other state sector enterprises, too, to follow suit. Combining the State sector’s integrity and welfare-mindedness with the Private sector’s efficiency and ingenuity can elevate the local pharma sector from self-sufficiency to unprecedented heights from a trade standpoint. Pharma has immense potential to become one of the top foreign revenue earners for Sri Lanka in the ensuing years with due patronage from the State.
Seven factors of concern at upcoming Monetary Policy Review
by Sanath Nanayakkare
The Central Bank of Sri Lanka (CBSL) is scheduled to announce its latest monetary policy review on 20th January 2022, with all eyes on dwindling foreign reserves and foreign currency exchange in the country.
In this context, First Capital Research has named 7 factors of concern that could be taken into account at the upcoming monetary policy review. They are as follows.
* Foreign Reserves USD 3.1 billion – Dec 2021
* Inflation CCPI 12.1% – Dec 2021
* GDP Growth -1.5% – 3Q2021
* Private Credit LKR 60.5 billion – Nov 2021
* 03M T-Bill rate 8.38% as at 12.01.22
Liquidity and CBSL Holdings LKR -364.0 billion and LKR 1.42 trillion
Balance of Trade (BOT) and Balance of Payment (BOP) USD -6.5 billion and USD -3.3 billion for Jan-Oct 21
First Capital Research’s Policy Rate Forecast – Jan 2022-Apr 2022 notes that they believe the CBSL may highly consider tightening the monetary policy rates in this policy review but given the concerns over economic growth, there is a probability of 40% for CBSL to maintain its policy stance at current levels.
“With high frequent indicators improving in line with expectations, we have eliminated any probability of a rate cut. We expect a continued increase in probability for a rate hike in order to prevent overheating of the economy amidst the given fiscal and monetary stimulus,” they said.
As per First Capital’s view, CBSL either can choose to hike policy rates by 50bps or 100bps or hold policy rates steady, while a rate cut is off the table due to the high debt repayment and the high domestic borrowing requirement.
First Capital believes that there is a 60% probability for a rate hike due to the remedial actions required in achieving external stability.
However, there is also a 40% probability to maintain the policy rates at its current level in order to further improve the high frequency indicators.30%, they noted.
Sri Lanka’s dash brand enters international markets
Multichemi International Ltd, which manufactures and distributes a wide range of products under dash, one of Sri Lanka’s leading detergent and household care brands, has begun exporting its products to several international markets in Asia and Oceania, with plans also to enter Africa. The dash brand includes a wide range of products in car care, household care, home fragrances and laundry care sectors. Multichemi International Ltd, which has been awarded ISO 9001:2015 certification, is a Sri Lankan pioneer in environment-friendly cleaning products, having launched the country’s first biodegradable, safe cleaning products over 28 years ago.
Amila Wijesinghe, General Manager of the Company said,”Having conquered the domestic market, we are now ready to capture the international market. We are confident that our products which are of high quality will receive a good demand overseas as well. The feedback we have received so far from our overseas customers is extremely encouraging. We are dedicated to taking our products to the international market, to bring in foreign currency to the country and help uplift the economy”,
Janaka Abeysinghe appointed SLT CEO
Sri Lanka Telecom PLC has announced the appointment of Janaka Abeysinghe as its Chief Executive Officer (CEO) with effect from February 1, 2022.
The incumbent CEO Kiththi Perera will be overseas on leave for a period of two years to pursue higher studies, according to a stock market filing by the company.
Abeysinghe joined SLT in 1991. In his present role, he leads the enterprise and wholesale business of SLT that provides integrated voice and data solutions to enterprises, government institutions, domestic telco operators and global wholesale carriers.
In his career at SLT spanning 29 years, he has held a number of senior positions, including general manager Enterprise and International Sales and has extensive experience in the areas of Enterprise Digital Services, Enterprise Communications Solutions, Data Communications, Business Development, Domestic and International Switching Operations and Global Wholesale Voice & Data Business.
He holds a Master’s Degree in Electrical and Computer Engineering from the University of Kansas, USA and a BSc degree in Electronics and Telecommunications Engineering with a First Class Honours from the University of Moratuwa.
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