Pharmaceutical firms appeal to government to settle debt with bonds
Issac Osei said stakeholders in the pharmaceutical industry are in negotiations with the government to use bonds to settle debt owed to players in the sector
Isaac Osei, board chairman of Intravenous Infusion Ltd (IIL), a manufacturer of pharmaceutical products, has appealed to the government to consider using bonds or other financial instruments to settle National Health Insurance Scheme (NHIS) arrears to pharmaceutical suppliers.
Osei said the Chamber of Pharmacy Ghana (CoPG) and Pharmaceutical Manufacturers Association of Ghana (PMAG) have come to a common agreement on the idea and are in negotiations with the government to use bonds or securities to settle receivables.
“The negotiations are still going on. If you are given a bond it means that you are given a government paper which enables you to either discount it now and collect cash from a financial institution, or wait and collect it at the end of the tenure of the bond.
“Another point is that we all know what the inflation rate is now in the country: therefore, it is always better to get cash now than tomorrow.
“So, if you have a financial instrument in the form of a bond, you can always trade it and get some cash to operate your business,” he said.
Stimulus package
He said that PMAG, however, is yet to receive an official response from the government, which will elaborate on the structure within which the bond will operate. “But whatever it is, if you have that paper, you can access cash, maybe at a discount,” he said.
Isaac Osei made these remarks while speaking at the fourth annual general meeting of Intravenous Infusion Ltd, in Accra.
Osei said the company, under the Government of Ghana’s stimulus package, secured a medium-term loan of US$3.2 million from Ecobank Ghana to procure equipment and expand the factory physically so it could house new equipment.
He said despite an increase in domestic competition at the local tender level, the management was able to leverage the brand and customer loyalty to drive revenue growth, leading to the accomplishment of a revenue increment of 14.2% year on year.
Value creation
The company’s acting managing director, Moukhtar M Soalihu, said the cost of sales is rising as the world supply chain is affecting global prices of raw materials. Second, he said the coronavirus pandemic has slowed down sales as hospitals record a reduction in attendance at outpatient departments and the postponement of elective surgery.
Soalihu said that to tackle challenges efficiently and sustain revenue growth for shareholders, management has put in place mitigating measures. These include plans to develop new products in the market, expansion of plant size to increase production and entry into new markets, specifically Côte d’Ivoire and Burkina Faso.
Briefing shareholders, the board chairman of Intravenous Infusion Ltd said the company has realised a 10% profit before tax margin even though selling prices across all product lines declined by 16.7% during the year under review. This was due to a downward review of essential medicines on the NHIA scheme by setting a ceiling.
“The board of directors are highly committed to shareholder value creation and will pursue policies to ensure the generation of adequate returns to shareholders. Once again, I have the pleasure to recommend a dividend of GHC0.0044 per ordinary share for the financial year 2019,” Osei said.
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