A senior official at the Ministry of Finance (MoF) told myrepublica.com that the government is making a special arrangement through upcoming budget to buy drugs manufactured by NAL, keeping in view the deteriorating sales volume amid tough competition from private companies. [break]
Babu Lal Sah, general manager of NAL, said the MoF has assured him that the government would allocate special budget for procuring NAL´s products through the Ministry of Health (MoH).
The MoH will distribute NAL´s products through different heath institutions under it.
“If the plan materializes, we expect our financial problems to ease significantly as the government-run health institutions are a huge market for us,” Sah said.
In the absence of effective marketing initiatives, the state-owned drug producer has failed to clear the stock of different medicines such as Acitrasol, RDZ, Ephedrine, Dentaik, ear drops and eye drops worth over Rs 3 million.
NAL´s sales have plummeted by more than 60 percent over the past four years. Its annual turnover plunged to Rs 20.6 million in 2008/09, down from Rs 50.3 million recorded in 2005/06. Despite stiff competition in the market, the company has a lone staff to look after the promotion of NAL´s entire products range.
NAL management has recently submitted short-term and long-term strategic plans to MoF to bail it out of financial problems. It is suffering a loss of around Rs 150,000 per day and has overall liability of Rs 270 million to different financial institutions.
In its short-term strategic plan estimated to cost Rs 117.2 million, the company has proposed to clear salary of its employees and purchase necessary raw materials. The ailing company needs an operating cost of Rs 4 million every month - more than half of which is spent as salary for the employees.
In its long-term strategy that is estimated to cost Rs 650 million, the company plans to adopt Good Manufacturing Practice (GMP) by embracing development production standard as specified by World Health Organization. It also plans to reduce its workforce to 100 from around 300 employees and hire around 30 technical as well as marketing experts. MoF had sanctioned Rs 50 million for the company about a couple of months before.
Meanwhile, MoH has rejected a proposal to bring NAL under its jurisdiction. MoF had proposed to put NAL under MoH, keeping in view the nature of NAL´s operation and enable the state-owned drug company to expand its market through MoH.
MoF is preparing to float shares of NAL to public in a bid to help make the ailing drug maker a profit making entity.
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