Developing SL pharmaceutical industry:

Concentrate on research and producing

biomedical scientists
A worthwhile suggestion that has been ignoredDecember 15, 2014
At the pre-Budget meeting which the Treasury Secretary P.B. Jayasundera
had with business leaders, an important proposal to take Sri Lanka to the
future was made by Hemas Holdings Chairman Husein Esufally (available
at:

http://www.ft.lk/2014/10/15/business-leaders-brainstorm-budget-2015-withfinance-ministry/). He said that local pharmaceutical companies today

account for only 10% of the pharmaceutics used in the country. He
suggested to the Government that the facilities at the National Science Park
in close proximity to the Sri Lanka Institute of Nanotechnology should be
used to create an ecosystem conducive for the development of a
pharmaceutical industry in the country.
His suggestion was that the Government should develop the infrastructure
to facilitate the industry players to invest in plant and machinery and
relocate their existing facilities to the National Science Park. This includes
the manufacture of not only the Western medicines but also the other
healthcare products. Esufallys suggestion was to develop the existing
industry to meet the local demand and therefore it is narrow in scope. But,
he has indeed presented a viable policy proposal for Sri Lanka to venture
into a new industry by expanding its objective, scope and coverage.

What is needed is Greenfield and not Brownfield strategies

Though the Treasury Secretary had given an undertaking to business
leaders that the Government will duly recognise all the proposals put
forward, the Budget 2015 does not have evidence that the undertaking
has duly been fulfilled. In the policy proposals for realising
development goals set for 2020 and beyond, there is passing
reference to the National Science Park and the formulation of
a National Drug Policy to regulate the usage of drugs, clinical
trials and research activities in specialised hospitals (p 17).
Sri Lanka is planning to become, according to the
development goals in the Budget 2015, a higher middle
income country by 2020 by reaching an average income,
known as Per Capita Income or PCI, of $ 7500 (p 19). In a
separate public address delivered at the Defence Seminar
2014, Treasury Secretary had pronounced the Governments
plans to make Sri Lanka a $ 100 billion economy by 2016 and
become a rich country by 2035 (available at:
http://www.ft.lk/2014/08/19/pb-outlines-challenges-facing-srilanka/).
However, the proposals made are to make marginal improvements in the
existing production system known as brownfield strategies. But what is
needed is to get into new fields, called greenfield strategies, so that Sri
Lanka could sustain its economic growth efforts in the next five to 20 years.
What was proposed by Esufally has provided seeds for this latter strategy.

The need for long-term planning

A country cannot establish a viable and strong pharma industry overnight.
That is because this industry is in high-tech category and a country cannot
gain high-tech capability overnight. It requires years of intensive and
extensive planning for developing the necessary human skills, research
infrastructure and local and global marketing channels. It is the physicians
and marketing reps who decide the demand for various drugs
distinguished by their brand names and not by their generic names. Hence,
the consumers are at the mercy of these two economic agents who cannot

be expected to function in the best interest of the consumers at all times.

In addition, the long term effects of newly developed drugs will have to be
ascertained before they are released for consumption by consumers.
Because of these requirements, the pharma industry has to be effectively
regulated and therefore appropriate regulatory mechanisms have to be
established simultaneously with the development of the pharma industry. It
is the trust, confidence and credibility which the regulatory mechanism has
earned from the consumers and governmental bodies throughout the world
which will eventually decide on the long term sustainability of the industry.
If the regulatory bodies are governed by political interests as in the case of
many public regulatory bodies in Sri Lanka today, the pharma regulatory
mechanism will fail to earn this essential requirement.

National Science Park

Long-term commitment of the Government a must
Hence, the Government has two important roles to play if it is interested in
establishing a viable pharma industry in the country. One is that it has to
facilitate research by establishing the needed research infrastructure in the
country. The other is to establish an effective and credible regulatory
mechanism which is free from politics to win confidence of consumers and
governmental bodies throughout the globe.
Both these roles need money to be allocated by the Government today as

well as for many more years into the future. For that, a Government should
have a firm commitment to developing the sector no matter which political
party is in power. But a common problem faced by many countries,
especially the developing countries, is that politicians, irrespective of the
colour of their political affiliation, will love to allocate money for projects
that will not generate adequate social returns but serve only to boost the
personal egos of the politicians.
Singapore built a regional hub for research
A good example is provided by Singapore as to how the city-state managed
to build a viable and strong pharmaceutical and biotechnology industry in
that country within some 25 years (available at:
http://www.edb.gov.sg/content/edb/en/industries/industries/pharmabiotech.html ). In making Singapore a regional hub for research, it built a
strong scientific foundation with seven research institutes and five research
consortia in key fields. These fields included clinical sciences, genomics,
bioengineering, molecular/cell biology, medical biology, bio-imaging and
immunology.
Under this program, more than 50 private companies were engaged to do
research alongside with these research institutions in drug discovery and
translational and clinical research. The translational and clinical research is
essential for the discovery of new drugs by testing the drug in clinical use
and thereby helping it to go through the process of getting translated into
commercial production.
It serves two purposes. One is the testing of the drug in long term trials
before its acceptance. The other is the development of the scientific base of
the country through the process. Hospitals in Singapore play two roles:
treating patients and conducting clinical research. The outcome of clinical
research is made available to industry and other hospitals in the form of
new therapies and technologies in treating patients. The biomedical
research institutes in Singapore which are affiliated to many of the worldclass such institutes constantly provide important leads to new therapies.
Government should support research and not unproductive capital
investments
A large, constantly growing base of clinician scientists is a must for the

development of a viable pharma industry. The Singaporean Government has

supported this by several initiatives it has introduced.
First, it is necessary to build a platform that facilitates the researchers and
clinician scientists to collaborate with each other in solving scientific
problems involved in translating research into quality healthcare solutions
for patients, a process known as bench-to-bed solution. For this, the
Singaporean Government has funded an initiative known as flagship
program. Second, to broadbase research ideas, a competitive research
program has been designed and funded. Research ideas normally generate
at individual levels and then they are passed onto the top.
This important feature in a broadbased scientific community was ensured
by the competitive research program. It thus helped Singapore to identify
new potential strategic research areas in which Singaporean industries
could excel in the future. They covered both biomedical science and
translational and clinician research. Third, to encourage health services
related research and translate the outcome of such research, a competitive
research grant was also established targeting the health sector.
Fourth, a biopharmaceutical manufacturers council was established to link
the manufacturers with Government agencies. Its task was to develop a
skilled biomanufacturing workforce and ensure quality and process
development capabilities by upgrading skills, providing training and
establishing best practices. Every dollar spent by Singapore Government in
this enterprise helped the country to become a leading pharma
manufacturer and researcher in the world.
Biomedical science is the backbone of pharma industry
Biomedical science is the backbone of the pharma industry. Scientists who
are developed by this field of study help medical practitioners to diagnose
diseases and identify curative procedures by analysing human cells and
tissues. Though Sri Lanka has an expanded medical education system at
the university level, its attention to develop the needed biomedical
scientists has been far from satisfactory.
One reason for large pharma companies to shun Sri Lanka as a suitable
place for locating their manufacturing facilities has been the non-availability
of a sufficient pool of biomedical scientists on a continuous basis within the
country. A very small number of such scientists who had acquired their

qualification from universities in India, UK, Australia, Canada or USA has left
the country since the countrys industrial base has not been able to absorb
them. However, these scientists are in a position to return to Sri Lanka for a
brief period with their rich experience provided they are paid an attractive
remuneration to work in Sri Lanka.
Since a dollar earned in Sri Lanka could on average buy two dollars worth
of goods which he could have bought in USA as per the Purchasing Power
Parity or PPP income numbers, it is not necessary to pay the same high
salaries which they would get in a developed country once they are in Sri
Lanka. This option should be seriously considered until Sri Lanka has been
able to produce its own biomedical scientists in required numbers.
Singapore set up a large number of biomedical science institutes
In this regard, Singapore has shown a remarkable foresight which none of
the countries in the region has shown. It encouraged its universities to
produce biomedical scientists in large numbers. In addition, it has
established seven biomedical science related institutes to conduct research
in the area (available at:
http://www.edb.gov.sg/content/edb/en/industries/industries/pharmabiotech.html).
These institutes cover a wide range of areas coming under the broad
biomedical science field. A quick run-through of these institutes will show
the enormous importance which Singapore Government has given to the
development of biomedical science in the country. The Institute of
Bioinformatics will do research on computational biology a system that
enables researchers to use the data to understand the underlying
relationships. The bioprocessing technology institute will come up with
cutting edge technologies to improve human life more. The genome
institute will develop systems to come up with new theories.
The bioengineering and nano technology institute will ensure the delivery of
drugs and genes, undertake tissue and cell developmental work, develop
biosensors and devices for use by consumers to improve their own life.
The medical biology institute is to conduct research on different aspects of
human body. The molecular and cell biology institute is to enhance the
biomedical research and development in Singapore. The clinical sciences
institute has been established to develop methodologies for clinical and

translational research.
Singapore has become the envy of its neighbours mainly due to the far
reaching institutional structure to deal with issues relating to biomedical
science. These institutes are required to lay foundation for continued
development research.
Regulatory system should facilitate research and good practices
Singapore also has developed an effective regulatory system free from
political interferences to regulate the drug industry by establishing
Singapore Health Sciences Authority. Regulations have to be introduced to
the pharma industry without killing its spirit for innovation.
Therefore, the objective of the regulatory mechanism has been to enforce
global standards of safety, quality and efficacy on the pharma industry. To
maintain international standards, this authority had embarked on
collaborative projects with leading regulatory agencies in the world.
Sri Lankas aim should be to get into the export market
Sri Lankas aim of developing a pharma industry should be to penetrate the
global market since the internal market is not sufficient for any big firm to
operate at optimum levels. According to a report published by Indian
Council on International Relations in December 2014, the global market of
pharmaceuticals is about $ 1 trillion today. Indias export of pharmaceutical
products in 2013 amounted to $ 13 billion about 30% more than Sri
Lankas total exports.
Pakistan, an up and coming drug manufacturer, has shown its presence in
the global market by exporting pharmaceuticals to a value of $ 844 million
in the same year. Hence, pharma industry offers a very valuable
opportunity for Sri Lanka to diversify its manufacturing and export base and
thereby reach the goal of upper middle income country by 2020 and a rich
country by 2035.
No need for reinventing the wheel; just follow the success stories
To develop a viable pharma industry, Sri Lanka does not have to reinvent
the wheel. It can learn from the experiences of other countries, especially
Singapore. By creating a sufficient pool of biomedical scientists and
investing in research infrastructure, it can create the ground conditions

necessary to attract pharmaceutical giants to Sri Lanka.

The objective of this enterprise should not be just to supply the local
market. It should aim at penetrating the global market and thereby enjoy
the economies of scale.
These are some thoughts that have to be taken into account by whatever
the Government that will come to power in January next year when it plans
the countrys long term growth in a sustainable manner.
(W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri
Lanka, could be reached at waw1949@gmail.com.)