The pharmaceutical industry in Kenya

Abstract

Kenya's Pharmaceutical sector has grown significantly since 1936. Most of the manufacturing units were established in the 1970's. Currently, the sector is dominated by foreign firms. This study investigates various issues that have proven significant in the development of the Pharmaceutical sector in other less Developed Countries (LDCs). These issues relate to technology transfer, capacity utilisation, transfer pricing, use of generic and brandnames, bulk purchasing, and protection of local manufacturers. This study demonstrates that, whereas the rate of capacity utilisation is only 2l%,.the local manufacturers are not protected by the tariff structure when competing against imports. Through restrictive technology transfers, Kenya has lost a lot of foreign exchange. In addition, many pharmaceutical raw materials and finished drugs imported into Kenya are highly overpriced, especially by Multinational.Corporations (MNCs). This raises the strong suspicion that some MNCs could be involved in transfer pricing. Also, the investigation reveals wide price differences between generic and branded drugs distributed in Kenya. Thus,the consumers who buy drugs under brandnames are burdened.