Investment Opportunities in the Pharmaceutical sector

The pharmaceutical industry in Sri Lanka is estimated at USD 400 million annually. Regulating these medicines pricing has a significant effect on the population's health. The revised drug price formula implemented in 2016 guarantees that essential drugs should always be sold below the maximum recommended retail price.

Due to a very aging population, the demand for healthcare facilities is increasing in Sri Lanka. At the end of 2017, nearly 10% of the population was 65 years, and this figure is expected to double by 2030. The government remains its policy of offering public hospitals with free health care. In 2018, government spending on the health industry amounted to about $1.3 billion. Increasing access to private health services is also a government focus, as meeting the demand for healthcare services is hard for the public sector alone.

The private sector has made significant investments in health care, particularly in Colombo and some of the main towns, which has eased some of the state's burden. With higher revenue rates and shifting preferences, demand for healthcare in the private sector has risen. Health insurance provision has also backed development in the private healthcare industry.

There are 612 public hospitals in Sri Lanka, approximately 200 variable size private hospitals, 5,000 private pharmacies, and 1,000 laboratories. The healthcare industry offers U.S. medical equipment suppliers and pharmaceutical companies with excellent possibilities. The local pharmaceutical industry has risen at a pace of about 15 percent over the previous five years, according to specialists in the pharmaceutical industry, and the sector has excellent opportunities for future high-volume development.

The government is promoting investment to produce drugs locally in the pharmaceutical industry. In 2019, the government released laws establishing maximum retail rates for 60 formulations of medicinal products. The Regulatory Authority for Cosmetic Drugs and Devices regulates the pharmaceutical industry to guarantee drug and medical equipment quality, security and effectiveness. Although many pharmaceutical imports come from regional sources, medical practitioners and customers commonly recognize the greater variety and efficacy of Western produced drugs.

Drug registration can be time-consuming with the authorities requiring comprehensive information. It is also complicated to dismiss local officers based on universal values, as the officer must provide the authorities with a no objection letter to appoint a fresh officer. Private hospitals in Colombo are fitted with state-of-the-art machinery, providing excellent possibilities for U.S. providers.

OSL Take: U.S. exports of medical and pharmaceutical machinery to Sri Lanka were estimated at $25 million in 2018. Other possibilities for U.S. businesses in health care are government tenders for machinery, pharmaceutical products, and initiatives. Medical equipment manufacturers need to succeed to engage local officials with medical industry experience and to maintain active contacts with both government and private sector health providers. Well-known brands around the world order a premium. Diagnostic equipment, operational theater equipment, intensive care equipment, clinical analyzers, and hematology equipment continue to give U.S. companies the most significant sales opportunities.
VBS/AT/15102019/TB2