Bhairahawa in south-central Nepal is rapidly developing as a pharmaceutical hub, aided by its large population, high income levels, rapid urbanization and favorable environmental conditions.
Industry insiders say drug production in Bhairahawa has swelled due to an increase in demand and an aging population. As the pharmaceutical sector booms, greedy investors are flocking in droves, they say.
Rupandehi district in Lumbini province is now home to 14 major pharmaceutical factories, half of which manufacture allopathic medicines and the other half Ayurvedic medicines. Most of their products are sold nationwide.
Ganesh Pathak, coordinator of Pharmaceutical Producers Association of Nepal in Lumbini, said Lumbini leads all provinces in terms of pharmaceutical production and investment.
“As the pharmaceutical sector grows, so too does the flow of investment and employment opportunities,” he said. The pharmaceutical industry in Lumbini has invested more than Rs 7 billion over the past few years.
According to the association, pharmaceutical factories in Lumbini produce drugs worth Rs 15 billion a year and provide 2,500 jobs.
Most of the factories today employ local workers whereas a few years ago they depended on Indian employees.
“Almost all the employees, from laborers to technicians, are Nepalese,” Pathak said, adding that the number of Nepalese joining the pharmaceutical industry workforce is increasing due to benefits and facilities.
One of Nepal’s largest pharmaceutical companies, Asian Pharmaceuticals, is based in Rupandehi. Its factory is located in the rural municipality of Omasatiya-8. The company started manufacturing drugs in 1998 and currently produces 280 different types of drugs.
Hutananda Khanal, chairman and managing director of Asian Pharmaceuticals, said the company’s production stands at 2.75 billion rupees a year.
The company employs 250 workers in its factory while another 375 workers are engaged in marketing and distribution, he said.
“Our drugs are reaching markets across the country. We have so far invested Rs 1.25 billion in the plant,” Khanal said.
“Investment has increased and the product range has expanded as the demand for drugs has increased. Sales and profits are good in the drug business.”
There are also challenges. “There is tough price competition due to imports,” Khanal said.
Nepal imported medicines worth Rs 30.66 billion in the fiscal year 2020-21 ending mid-July 2021.
Ayurvedic medicine factories are also proliferating in Rupandehi. Grace Pharmaceuticals, located in Tilottama, is one of the largest Ayurvedic medicine producing companies in the country.
The company produces Ayurvedic medicine tablets, ointments, syrups and oils. Its product range consists of 54 types of drugs.
Founded in 2013, Grace Pharmaceuticals has so far spent Rs 200 million. The factory employs 110 people.
Suraj Bhattarai, chief executive of Grace Pharmaceuticals, said production could be doubled if the plant were to operate at full capacity. “The demand for Ayurvedic medicines has just started to increase,” he said.
Pharmaceutical companies have invested in upgrading their factories to achieve breakthroughs in the development of domestic products and increase their competitive advantage over imports.
Investments and production have increased, but the supply of raw materials remains a major challenge.
Companies producing allopathic medicines are totally dependent on imported raw materials. Nearly 80% of their needs come from India and the rest from China and Europe.
Even in the production of Ayurvedic medicines, Nepalese factories have to import 40% of their raw materials.
Drugmakers say the lack of self-sufficiency in raw materials is the biggest hurdle for the pharmaceutical industry.
“Importing raw materials is a difficult task, and a spike in prices has compounded the problems,” said Bhattarai, who is also the central adviser of the Ayurveda Medicine Producers Association of Nepal.
“We export herbs from Nepal and we import the same herbs after they are processed by weighing them in grams,” Bhattarai said. He said the supply of raw materials should be increased if the country is to become self-sufficient in drug production.
Pharmaceutical production started in Nepal in 1972. According to the Department of Drug Administration, 63 companies are currently producing allopathic drugs. Of the 140 registered Ayurvedic hospitals, 55 are in operation. They have a combined investment of around 26 billion rupees.
Nepal currently produces 7,727 brands of medicines. The 1995 National Drug Policy set itself the goal of producing 80% of the country’s drug needs within 10 years, but half of its annual consumption is still met by neighboring India.