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Market Study Pharmaceutical Sector in Mauritius

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Market Study Pharmaceutical Sector in Mauritius MARKET STUDY PHARMACEUTICAL SECTOR IN MAURITIUS MS/004 Report of the Executive Director 08 June 2021 1 Table of Contents List of Figures ...................................................................................................................................... i List of Tables ....................................................................................................................................... i Executive Summary ............................................................................................................... 1 1. Introduction ...................................................................................................................... 4 A. Motivation and Scope of the Study ..................................................................................... 4 B. Structure of the Report ....................................................................................................... 5 2. Overview of healthcare sector and pharmaceutical sector in Mauritius ............................. 6 A. Healthcare sector ............................................................................................................... 6 B. The pharmaceutical sector .................................................................................................. 8 3. The Regulatory framework for the pharmaceutical industry ............................................ 12 A. Enabling Legislations ........................................................................................................ 12 B. Registration Framework of Pharmaceutical Products ......................................................... 14 C. Import of Pharmaceutical Products Under the Current Intellectual Property Regime .......... 19 D. Licensing Framework of Economic Operators .................................................................... 21 E. Price Regulation of Pharmaceutical Products ..................................................................... 25 4. Conditions of Competition .............................................................................................. 28 A. Market structure and concentration ................................................................................. 28 B. Regulatory Framework ..................................................................................................... 36 C. The Pricing of Pharmaceutical Products ............................................................................. 49 5. Conclusion and Recommendations ................................................................................. 59 Annex A: Written submissions from stakeholders with consent for publication of views ...... 62 i List of Figures Figure 1: Simplified Pharmaceutical Supply Chain ................................................................................ 8 Figure 2: Imports of pharmaceutical products, 2017-2019 ................................................................. 11 Figure 3: Imports of pharmaceutical products in 2019, by country of origin..................................... 11 Figure 4: Evolution of number of wholesale pharmacies, 2010-2019 ................................................ 30 Figure 5: Evolution of number of retail pharmacies, 2010-2019 ........................................................ 33 Figure 6: Number of retail outlets owned by wholesale pharmacies ................................................ 35 Figure 7: National Single Window ....................................................................................................... 41 Figure 8: Evolution of number of drugs registered, 2015-2019 .......................................................... 43 Figure 9: Registration/Renewal fees paid for registered products, 2016-2019 ................................ 44 Figure 10: Breakdown of Registrations approved by the Board, 2013 – June 2019 .......................... 45 List of Tables Table 1: Health professionals and infrastructure, 2011 and 2018........................................................ 7 Table 2: Healthcare Expenditure, 2008 – 2017 (Rs billion) ................................................................... 7 Table 3: Importers of pharmaceutical products, 2017-2019 .............................................................. 10 Table 4: Overview of registration-related fees of pharmaceutical products ..................................... 19 Table 5: Evolution of Licensing Fees in Pharmaceutical Trade, 1985 - 2020 ...................................... 25 Table 6: Evolution of mark-up system from 1998 to date .................................................................. 26 Table 7: Illustrative Price Mark-Up system in Mauritius .................................................................... 26 Table 8: Share of supply of wholesale pharmacies for the period 2017-2019 ................................... 30 Table 9: Evolution of concentration ratios .......................................................................................... 31 Table 10: Distributors of top international pharmaceutical companies ............................................ 32 Table 11: Retail pharmacy to population ratio ................................................................................... 34 Table 12: Reasons for not approving pharmaceutical products registrations, 2013-2019 ................ 38 Table 13: Median Price Ratio, 2008 and 2020 ..................................................................................... 50 i Executive Summary The role and significance of the pharmaceutical industry in Mauritius are immense in the efficient provision of healthcare services. It is an integral part of the health sector that contributes to the well-being of people. The health sector, which comprises both public and private healthcare institutions, is equally important for the economy. In 2017, for instance, some Rs 26 billion or around 5.7% of the Gross Domestic Product (GDP) were spent on healthcare.1 Of this amount, around Rs 15 billion or 60% relates to private healthcare expenditure, which were met mainly from ‘out-of-pocket’ and to a lesser but increasing extent through private health insurance and corporate schemes. The remaining Rs 11 billion were spent by the government for healthcare services provided free of charge in all public healthcare institutions. Mauritius is heavily dependent on importation of pharmaceutical products for supply to both public and private healthcare institutions. In 2019, the market value of pharmaceutical products imported and distributed in the country was estimated to be over Rs 5 billion or 20% of the total healthcare expenditure. Government expenditure on pharmaceutical products amounted to around Rs 1 billion whereas some Rs 4 billion or 80% of the total pharmaceutical expenditure were private, financed mainly from ‘out-of-pocket’. The bulk of pharmaceutical products available in both public and private channels of distribution are imported and supplied by registered wholesale pharmacies. As of July 2020, there were 40 registered wholesale pharmacies. Of these, 4 are found to be the major ones with a combined share of supply exceeding 60% and being representatives and/or appointed distributors of 14 top international pharmaceutical companies. While an assessment of the broader wholesale pharmaceutical market does not indicate such a high degree of concentration, a more in-depth analysis of the market would inevitably reveal several concentrated sub or relevant markets. This is because, unlike other commodities, substitution between pharmaceutical products is very limited, even for molecules with equivalent therapeutic value. Amongst other factors, this can be attributed to, for instance, doctors’ prescription patterns and inertia to switch products on account of risks of provoking side effects or patient intolerance. In public healthcare institutions, pharmaceutical products are distributed at various points of healthcare delivery. In the private channel of distribution, there are presently 354 retail pharmacies across the island. 43 of these retail pharmacies are owned by 8 wholesale pharmacies. In this regard, it has been submitted that vertical linkages between retail and wholesale pharmacies could provide strong incentives for those retail pharmacies to promote their own products to the detriment of other non-integrated wholesale pharmacies. This issue, however, does not appear to raise major concern in so far as prescription medicines are concerned. This is so because doctors are the ones who decide on the choice of medicines rather than users or pharmacies. Retail pharmacies cannot promote their own products unless doctors are incentivised to do so. It should, however, be noted that advertising of pharmaceutical products is not allowed by law. The market for pharmaceutical products in Mauritius is a highly regulated one. The principal legislations and their various revisions provide for a formal process for the registration and commercialisation of pharmaceutical products; licensing of operators across the supply chain; and pricing of pharmaceutical products. 1 See WHO Global Observatory Database. Available at: http://apps.who.int/gho/data/node.main.HEALTHFINANCING?lang=en 1 In relation to the registration of pharmaceutical products, concerns have been raised by several stakeholders about the lack of transparency and predictability of the process. The guidelines of the Pharmacy Board on the registration process are not publicly available.
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