Business News of 2017-12-07

Trade ministry urges GSK to re-engage local distributors

The Ministry of Trade and Industry has indicated its resolve to ensure that there is a level playing field for both local and foreign companies doing business in the country.

It said as an agency of government with the oversight responsibility for the production, distribution and consumption of good and services, “we will ensure that these activities are done in a competitive environment devoid of discrimination.”

The position of the ministry follows the decision of a an international pharmaceutical giant, GlaxoSmithKline (GSK) Export Ltd, UK, to terminate its contracts with four Ghanaian pharmaceutical companies in favour of Worldwide Health Ltd (WHL), a wholly-owned Indian company operating in Ghana.

Information available to the Daily Graphic indicates that the ministry had earlier written to the pharmaceutical company insisting that the action of GSK to terminate the contracts was untenable and should be reversed.

The company reiterated its position in its response, which the ministry found unacceptable.

Meeting to settle matters

The ministry, consequently, arranged a meeting on October 13, 2017 between GSK and local parties. The Food and Drugs Authority (FDA), the Ghana Standards Authority (GSA), the Pharmaceutical Society of Ghana and the Ghana Union of Traders Association (GUTA) were present at the meeting chaired by the Minister of Trade and Industry, Mr Alan Kyerematen.

The deputy trade ministers, the chief director, sectional directors and representatives of interested parties were also present at the meeting.

Mr Kyerematen made it clear that the government was not against the company’s decision to modify its operational strategies but that should happen within local content considerations.

The ministry gave GSK a month from October 13, 2017 to respond to requests to reverse the termination of the contracts.

Affected local companies

The affected local pharmaceutical companies are Ernest Chemists Ltd, Unicom Chemists Ltd, Gokals Laborex and Parkenstein Ltd.

Visibility of companies

While WHL has been operating in the country for a little over four years, with visibility only in Accra, Kumasi and Tamale, the four local companies have over 25 years experience in the local pharmaceutical business and a nationwide presence.

The Daily Graphic gathered that the Ghanaian companies together distribute over 85 per cent of the products, with WHL distributing 15 per cent.

Monopoly

Some participants in the meeting are questioning why the modification of GKS’s business strategy sought to create a monopoly for WHL at the expense of “your better performing local Ghanaian companies.”

Data and market intelligence available indicate that the local distributors are far advanced in terms of the level of investment, geographic reach as well as other considerations.

“For example, Ernest Chemist, Unicom Chemist and Gokals Laborex operate from their own purpose-built warehouses in Accra and Kumasi and have a strong presence in all 10 regions of Ghana.

“GSK’s own sales data indicate that WHL, over the last four years, has not been among the top three performing distributors in Ghana,” information showed.

Position of government

A source at the trade ministry said the government’s position was for GSK to re-engage the local distributors in a mutually beneficial relationship based on respect and fairness.

“GSK must consider the potential impact of their decision on access to medicines, prices, loss of jobs and investments, anti-competition and loss of trust.

“We also expect GSK to be sensitive to the dynamics of the local environment, such as our free market policy and local participation,” the source added.

Source: graphic.com.gh
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