Effective Government Strategies for Enhancing the Private Pharmaceutical Manufacturing Sector in Kenya

Abstract

The objective of the study is to determine effective government strategies to spur growth in the pharmaceutical manufacturing company. The gaps identified in the industry are high cost of production, unfavorable taxation policies, counterfeits, parallel importation and high cost of labor. The research objectives are to determine the steps government can take to promote research and development, to reduce the cost of production and enable favorable legal framework. The research methodology used by the researcher in conducting the study was descriptive design. The population of the study are 400 industrial pharmacists in Nairobi, Kenya comprising of both distributors and manufacturers. Primary and Secondary data was used in the collection of data in this study. The sampling frame for this study was 120 pharmacists who practice in the pharmaceutical manufacturing industry. Stratified random sampling technique was used in the study which is the probability sampling procedure was the target population is divided into a number of strata and a sample drawn from each stratum. The sample size was 40 pharmacists drawn from both multinational and local manufacturing companies. The analysis will done using the Statistical Package for the Social Sciences (SPSS). The data collection was successful with 100% response rate through an online questionnaire. Market demand was the major driver of product portfolio for the companies with 90% of respondents working in companies that deal in tender business. The average annual sales turnover range was KES 500M to KES 1Bn. For the first research objective of steps by government to promote research indicates that only 2.5 % of the respondents work in a company that conducts only R&D of new products while 42.5% conducted product development. Thirty percent of the respondents work in companies that conduct both types of research while 10% conducted neither of the two; with only 5% having institutional collaboration. For the second research objective of government interventions to reduce production costs it was found the major contributors of high costs was materials, energy and taxes. For the third research objective on government interventions to create a favorable legal framework, a majority of the respondents pointed out parallel importation, counterfeits, insignificance of KIPI and taxation to be of concern. From the study it can be concluded that there are incentives that the government can undertake both short term and long-term to enable the pharmaceutical manufacturing industry in Kenya targeting research, reduce costs on materials, energy and taxes. Key recommendations to the government they are partnerships with NGO agencies such as WHO, UNIDO and both local and international universities that are centers of excellence on research to provide technical support. The government should allocate adequate land for manufacturing and zone them out accurately through ministry of lands and planning. The government should ensure that there is genuine public participation of all stakeholders while developing laws and to curb corrupt practices in government institutions in-depth audits should be conducted on both systems and finances.