In recent times, Ghana is seen as the pharmaceutical hub in West Africa. This is by no coincidence as governments, especially in the Fourth Republic, have made this pathway a reality. The policies implemented, especially flexible tax regime, have resulted in massive influx of foreign direct investments. As Ghana aims to reduce the percentage of the imported drugs from 70 percent to 40 percent in the short term, all efforts are needed from both the civil society and industry players to make this a reality.
The Pharmaceutical Society of Ghana (PSGH) will be having their annual AGM from 5th -10th September, 2023 under the theme ‘The Pharmacist for National Development’. This theme resonates a renewed sense of hope as we celebrate the milestone achieved so far and an eye into the future to cement Ghana’s pharmaceutical industry as the hub in Africa. There is, therefore, a need for investors to take advantage of the huge potentials government has made available, especially in the area of tax concessions.
The major incentives provided in the tax laws in Ghana for pharmaceuticals include:
- Exemption from VAT on the supply of pharmaceuticals in Ghana
- Exemption from VAT on the supply or import of the active ingredients and selected inputs for the manufacture of pharmaceuticals.
- Exemption from VAT on import of selected drugs or pharmaceuticals.
Other general incentives as enshrined are as follows:
- Young entrepreneurs who engage in manufacturing are exempt from income tax for a period of 5 years
- Companies who subscribe to the free zones regime are exempt from income tax for a period of 10 years. After the 10 years concessionary period, export chargeable incomes are tax at a rate 15 percent
- Pharmaceutical manufacturing companies situated outside Accra and Tema are taxed at reduced rate on their chargeable income depending on the location.
- Losses made during a year of assessment are allowed to be carried forward for a period of five years.
According to Asoko Insight 2019 report, prescription drugs – which account for 74 percent of the total pharmaceutical sales of about US$300million – are mostly imported since most local industries are predominantly engaged in the production of over-the-counter drugs. More local investors are needed in the prescription drugs production despite great strides made by Ernest Chemist Ltd. and Tobinco Group to bridge this gap as we envisage to increase pharmaceutical industry contribution to GDP from the current 0.6 percent to 2 percent.
With the influx of experienced medical researchers in pharmacology, plant medicine, etc., focused on generic drugs, Ghana stands a great deal to benefit from over a billion dollar market in Africa, especially with the full implementation of African Continental Free Trade Area (AfCFTA). The NHIA approval of more prescription drugs to be added the already approved drugs make the prospect of this industry fertile; hence, the need to take advantage of government policies to expand the frontiers.
In conclusion, Ghana’s prospect of being a global player in pharmaceuticals can be achieve with strong commitment from both government and industry players. There is much pool of capable human capital at disposals for investors to utilise.
>>>David Afriyie Osei holds MSc Economic Policy and is a member of CITG, Big Data Analyst with specialty in Predictive Analytics and a staff of GRA. Joana Dawutey holds MSc Health Informatics, BPharm (Legon) and is a member of PSGH and staff of Ernest Chemist Ltd.