Pharma manufacturers withdraw credit deals

Local pharmaceutical manufacturers and other major industry players have withdrawn credit deals with some regional medical stores and service providers funded by the National Health Insurance Authority (NHIA) who have not paid for supplies up to December 2019.

The Pharmaceutical Manufacturers Association of Ghana (PMAG) and the Chamber of Pharmacy Ghana (COPG) — whose membership include pharmaceutical importers and wholesalers, and over-the-counter medicine sellers — are now operating a cash-and-carry system with defaulting clients who remain indebted to its members beyond the current year’s six months.

Alternatively, members of the two bodies are willing to transact with clients that owe them beyond the first six months of the year if those clients can provide bank guarantees for such transactions.

The new arrangement comes to enforce the notice the groups served in the past month.

Unavoidable action

The Executive Secretary of the PMAG, Ms Lucia Addae, said the withdrawal of credit deals had become unavoidable because of the inability of their members to recover outstanding debts for supplies, some of which date back to 2016.

She said the mounting debts were crippling businesses of the pharmaceutical industry, and their members had been compelled to take the tough measure to have a chance of surviving the difficult period.

“Our members are suffering because of the huge debts from clients, mainly the NHIA-funded service providers and the medical stores. It appears some have not given a thought to the debt they owe our members at all,” Ms Addae said.

“We think it is fair that we alter our arrangements with the service providers and other clients who have not shown any signs of servicing their indebtedness with our members,” she added.

“The measure has become even more necessary because of the difficulties imposed by COVID-19 around the world.

These days pharmaceutical manufacturers need to buy active pharmaceutical ingredients on cash-and-carry basis from China and elsewhere; there are no credits,” she said.

Huge debts

Ms Addae said the huge indebtedness of service providers and the regional medical stores had taken a toll on the operations of their members, particularly in the midst of the global health crisis.

“We have many challenges already, including financing constraints and difficulties with access to moderately softer loan terms.

Beyond these we are also battling challenges brought on by the new clearing regime at the ports where we are incurring high demurrages because of the failure of the system and through no fault of our members.

“Added to all of these, the failure of our clients to pay for old supplies is now biting us hard,” she lamented.

Ms Addae explained that some of their clients, particularly in the big cities and towns, had cooperated in the effort to recoup the debts, and encouraged the others to show similar good faith to sustain the relationship and the business climate.

Meanwhile, the Ministry of Health has asked both the PMAG and the COPG to furnish the ministry with details of institutions that are indebted to members of the groups.