Drug firm downsizes, may move to SA | Tuesday Issue

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Drug firm downsizes, may move to SA

Written by Staff Reporter

Monday, 08 February 2010 16:58

HARARE – Generic drug maker Varichem Pharmaceuticals has closed one of its two plants in Zimbabwe and is considering relocating the remaining operation to South Africa to avert further job cuts, a new report published last week said.
According to the Zimbabwe Pharmaceuticals and Healthcare Report First Quarter 2010 published by Business Monitor International, Varichem is one of two local drug makers currently struggling to achieve sustainable production. “Generic drug maker Varichem, the sole manufacturer of a combination antiretroviral (ARV) treatment, has closed one its two plants in
Zimbabwe. A move to South Africa is likely imminent to protect further cuts,” said the report. Another Zimbabwean pharmaceutical company Graniteside Chemicals is said to be facing similar problems.
Staff shortages and a lack of adequate funding or “credit-lines” from the government were highlighted as a major part of the viability crisis facing the pharmaceutical industry. No comment could be obtained from both Varichem and Graniteside Chemicals. The reported downsizing by Varichem comes just over a year after the company resume production of the life-prolonging ARVs following the 2008 upgrading of its ARV drug manufacturing plant in Harare. The upgrading was done with assistance from the United Nations Development Programme.
The Business Monitor International report said long-term government loans would significantly reform Zimbabwe’s existing pharmaceutical plants to improve viability in the sector. “With nine drug makers in Zimbabwe, government support would make a significant contribution to retention and long-term economic growth,” it said. Government support is desperately needed after efforts to attract foreign investors failed over fears by the foreigners about Zimbabwe’s unresolved political crisis and the government’s controversial indigenisation policy.
The report said Zimbabwean pharmaceutical firms were turning to South Africa in search of a significantly better operating environment with improved long-term outlooks to develop their business strategies for growth.
“Interest in South Africa is not unexpected, particularly since it has the most developed sub-Saharan African market, with infrastructure and a regulatory environment in place that is attractive to pharmaceutical firms.” The Zimbabwe government has given mixed signals over its policy on foreign participation in local firms, with some elements from President Robert Mugabe's Zanu (PF) insisting on pursuing a controversial plan to give 51 percent of foreign businesses to indigenous black businesspeople. Prime Minister Morgan Tsvangirai's MDC-T, which is the other half of the Harare administration, has, however shot down such a policy.

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