EFFECTIVE SOLUTIONS

Zambia 2015 | HEALTH & EDUCATION | INTERVIEW

TBY talks to Harish J.N. de Silva, Managing Director of Sterelin Medical & Diagnostics, on the state of national pharmaceutical regulations, challenges facing importers, and the importance of a diversified customer base.

 Harish J.N. de Silva
BIOGRAPHY
Harish J.N. de Silva, founder and CEO of Sterelin, is from Sri Lanka and has made Zambia his home since arriving here in 1989 as an accountant to work in a large parastatal organization. A Chartered Management Accountant by profession, he had set up and managed two successful pharmaceutical companies in Zambia before founding Sterelin in 2004. He is also the Chairman of the Board of Directors.

How would you describe the pharmaceutical market in Zambia?

About 20 years ago, the pharmaceutical market was not very well organized. Today, as you can imagine, the pharmaceutical industry is highly regulated. Every product imported and brought to Zambia has to be registered and that is a long process, requiring clinical studies that conduct trial runs and look at bioequalancy, side effects and other the scientific data. We are regulated by the Zambia Medicines Regulatory Authority (ZAMRA), which has been successful in cutting down illegal imports of medicines to a large extent, which in turn has benefited the formal sector. Zambians have also benefited, knowing that most medicines they procure from a registered pharmacy/hospital or Ccinic are registered, legitimate, and safe to use.

More than 90% of the country's pharmaceuticals are supplied through imports. What is your company's market share of these imports?

Almost all medicine is imported into Zambia because our manufacturing sector is still very small. The government is the primary importer, because most people rely on government hospitals and public medical services in Zambia. As a result, our share at macro level is relatively small. However, out of the private market, we control a considerable share. Our core business at Sterelin is international branded medicines; we do not focus on generic medicines. Admittedly, branded medicines are more expensive, but they come from the original inventors of those products and carry a high quality standard. Over the years, we have made these international branded medicines more affordable to a wider segment of the Zambian population. People who could not even consider buying an international brand before are now able to afford it. We have a high share of the branded international medicines on the private market. There are between 30 and 50 registered pharmaceutical import companies, of which about ten are active key importers distributors, although all mainly deal with generics. We are the only company in Zambia that specializes in a wide portfolio of international brands in the fields of medicine, hospital equipment, diagnostics, and laboratory reagents and consumables and nutritionals.

Sterelin is working with the government, NGOs and the private sector. What is the balance of your clients?

We have four main customer categories. The first is the government, namely the Ministry of Health, which is our single largest customer; the private sector comprises mainly retail pharmacies, private hospitals and clinics, various institutions, organizations, and companies. Another sector comprises NGOs, and mission hospitals and donor agencies. I would say the government accounts for about 30% of our business, 60% is private, and the remainder are various NGOs and mission hospitals. These customers are located all over the country, and we have the additional challenge of distributing across these different regions. Transportation is a major challenge, because when fuel costs go up, this affects the overall delivery costs of medicines. The aim of setting up a new branch in the Copperbelt was partly to mitigate these transportation challenges. We successfully cover and serve the whole country with our own fleet of vehicles and also through the outsourcing of transportation services to specialized pharmaceutical distribution companies. Added to this are our non-pharmaceutical products, which I mentioned earlier, as all of those have to be distributed to the major supermarket outlets throughout the country.

As an importer, how has the fluctuation of the kwacha impacted your operations?

We are going through some of the toughest times an import company can face. The kwacha has depreciated by about 30% over the past five or six months. Even today, some of the payments being recovered from our customers are for goods supplied when the exchange rate was at 6 to the US dollar, and with that money we have to pay suppliers at 7.9 to the dollar. It is an extremely difficult situation, but we will survive, and hopefully it will be temporary.