Assessment of Operational Challenges for Capacity Utilization for the Pharmaceutical Manufacturing Industries in Ethiopia

Abstract

Degefa Uma Banti and Abdulkedir Gelgelo Boru

Background The Ethiopian pharmaceutical manufacturing industry is vital for public health and economic development, offering essential, affordable medicines and decreasing dependence on expensive imports. However, it faces significant challenges, such as financial constraints, reliance on imported raw materials, outdated technology, and operational inefficiencies. These issues result in higher costs, production delays, and lower product quality. Overcoming these challenges is essential for enhancing capacity, ensuring a consistent supply of essential medicines, and increasing the industry’s competitiveness and contribution to Ethiopia’s economic growth.

Objective To assess the operational challenges faced by the Ethiopian pharmaceutical manufacturing industry and propose strategies to enhance its capacity utilization and competitiveness.

Methods An institution-based cross-sectional study was conducted from 1th January to 0th June – 2024 on 256 pharmaceutical industries employees. Systematic sampling technique was used and data were collected using a pretested self-administered structured ques- tionnaire. The collected data were entered into excel sheet, and transformed and analysed with SPSS version 23. Binary logistic regression analysis was performed to estimate the crude odds ratios for capacity utilization performance for the industries. In the multivariate model, a significant level at a p-value of < 0.05 and Adjusted Odds Ratio with 95%CI was used to determine the statistical association between the capacity utilization and explanatory variables.

Result A total of 256 employees responded to the questionnaire, making a 92.1% response rate. The average capacity utilization for local pharmaceutical manufacturers in Ethiopia was below 30% for 202 (78.9%) and 54(21.1%) reported capacity utilization ranging from 31-50%. Importing raw materials for their consumption [AOR = 0.02; 95% CI (0.003, 0.037)], firms’ internal operational inefficiency [AOR = 0.05; 95% CI (0.001, 0.071)], inadequate infrastructure [AOR = 0.039; 95% CI (0.003, 0.063)], and lack of skilled labor and experts in the market made [AOR = 0.028; 95% CI (0.001, 0.049)] showed significant negative association with the capacity utilization of the industries, while working collaboratively with local pharmaceutical manufacturers [AOR= 3.02; 95% CI (1.31, 6.98)] and trusts on government’s initiative and strategies [(AOR = 2.82; 95% CI (1.23, 6.38) are associated positively for capacity utilization by local pharmaceutical manufacturing industries. Conclusions: Ethiopian local pharmaceuti- cal industries are operating below their capacity. Key factors contributing to this low capacity utilization include limited access to foreign exchange, reliance on imported raw materials, a shortage of skilled labor, and significant operational challenges. Addressing these issues along with supportive regulatory frameworks and collaboration with local manufacturers could enhance their capacity utilization.

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