CHITWAN: Nepali pharmaceutical manufacturers have urged the government to tighten controls on imported medicines, saying the domestic industry is under severe pressure due to foreign competition.
They have called for policies that prioritize internal production and restrict imports to raw materials for medicines that are already produced locally.
There are around 100 pharmaceutical industries in Nepal. According to industry representatives, 10 factories have already shut down, while nearly 50 others are on the verge of closure. They further claim that even operating industries are running at only 30–40 percent of their capacity and have urged the government to take measures to protect the sector.
Former central president of the Association of Pharmaceutical Producers of Nepal (APPON), Jinarayan Bahadur Chhetri, said the main challenge for domestic manufacturers is their inability to compete with imported medicines.
He said the industry has developed over the past three decades, growing from just three or four companies in the early years. However, he added that most factories are now operating far below capacity.
“Currently, only about 30 percent of capacity is being utilized. The main reason is competition from imported medicines,” he said, noting that around 200 pharmaceutical products are imported into Nepal, mainly from India and other countries.
Chhetri explained that large-scale production in India lowers costs significantly, making imports cheaper. He said Nepali producers face higher costs due to limited production volumes and added tax burdens. “Imported finished medicines have lower duty, while domestic industries must pay customs and VAT on packaging materials, equipment, and raw materials, which increases production costs,” he said.
He further suggested discouraging imports of medicines that are already produced domestically and allowing imports only for raw materials needed for local production. He also called for customs exemptions on packaging materials, machinery, and technology required for industry development.
Chhetri said the Nepali pharmaceutical sector has the potential to meet up to 80 percent of domestic demand. “Except for some vaccines and patented medicines, almost all essential drugs can be produced in Nepal,” he said.
He added that most factories are currently operating a single shift at 20–40 percent capacity, whereas operating two shifts could significantly increase domestic supply.
Nepal Pharmaceutical Manufacturers Association (NPMA) President Biplav Adhikari said more than Rs 40 billion has been invested in the sector, with 50–60 percent financed through banks. He warned that around 50 industries are in a critical condition, with only about 10 operating effectively.
“Many companies are unable to pay workers and repay bank loans,” he said, adding that earlier government decisions to restrict imports of 30 domestically produced medicines were not implemented.
Adhikari argued that restricting imports of locally produced drugs would help revive the industry and increase government revenue, while also attracting more domestic investment. He also pointed to high setup costs due to taxes on machinery and raw materials, and complained about delays in licensing processes.
He said Nepal spends an estimated Rs 7 billion annually on medicines, with locally produced drugs accounting for only about half of total consumption. Despite challenges, he claimed that some Nepali products meet quality standards and are even being exported.
NPMA Vice President Santosh Baral also called for stricter import regulation to support domestic manufacturers. He suggested interest rate subsidies and greater government facilitation for technology transfer and exports, saying the sector could become sustainable with proper policy support.
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