ECONOMYNEXT – Sri Lankan pharmaceutical firms are finding it difficult to bid for tenders as billions of rupees in arrears have undermined their finances, according to an industry official.
“There was an outstanding payment of about 30 billion rupees to the industry that was due since 2020 onwards,” M. Prathaban, the president of the SLCPI, told EconomyNext.
“Even when there is a trend, the suppliers, meaning us, are not geared to participate because of the uncertainty on how fast we will get the money.”
The government has settled around 50 percent of the 30 billion rupees in arrears through cash bonds earlier this year.
“So after that, there are due payments for about eight to nine months,” Prathaban said.
He added that lower profit margins when supplying for government tenders are also a recurring issue for the pharmaceutical company’s survival.
“When we are bidding, the lowest bid gets the tender, and that means we have to have a thin mark up,” Prathaban said.
“It is difficult for the pharma companies to survive with this mark up, because outside, the interest rate was around 20-25 percent last year, and when it is like that it is hard for the companies to survive.”
Meanwhile, Health Minister Keheliya Rambukwella said the government has given priority to settling the due payments under the difficult circumstances the country is going through.
“Outstanding dues to member companies of your organization have been a long-standing concern,” Rambukwella said at the SLCPI Annual General Meeting.
“Let me once again take this opportunity to assure you that the government places the highest priority on this matter, and we are doing the best we can, given the extremely difficult circumstances we are in.”
Addressing the parliament on the 22, the minister alleged that certain court decisions also keep the ministry from procuring medicines.
“We made a decision to amend the procurement process of medicines and also obtained Cabinet approval,” Rambukwella said.
“However, a case has been filed at the Supreme Court seeking an order to suspend the purchasing of medicines through this process and the case is being heard. Such moves delay the Ministry’s actions to resolve issues.”
Earlier this year the Supreme Court granted leave-to-proceed in the Fundamental Rights petition filed by Transparency International Sri Lanka (TISL), which stated serious doubts regarding the quality, safety, and efficacy of the pharmaceuticals purchased under the Indian Credit Line.
The Supreme Court ordered the suspension of further importation of pharmaceuticals without obtaining a further order from the Court after proving that the quality and safety requirements and the procurement was lawful.
The case in question had challenged the role of the ministers in procuring the medical supplies through unregistered private suppliers; the role of the NMRA in providing a Waiver of Registration to procure medical supplies from unregistered suppliers; non-compliance with procurement guidelines including the emergency procurement process, and abuse of process by the Minister of Health and the previous Chief Executive Officer of the NMRA.
(Colombo/June 26, 2023)