Crisis at Osusala shops
Sri Lanka’s state-owned pharmacy retailer – Osusala drug stores – is currently operating at a loss due to thin margins, market competition and rising inflation despite an increase in demand for medicines, latest official data showed.
Some 19 out of the 37 Osusala stores were running at losses and some original drugs were no longer available at those outlets forcing patients to buy drugs from other pharmacies,
These 19 outlets have incurred a loss of Rs. 41.29 million, a government audit inspection revealed.
Seven Osusala stores in Avissawella, Minuwangoda, Diyatalawa, Tangalle, Hambantota, Jaffna, and Ratmalana, had sustained losses continuously from the year 2013 up to the year under review (2017/18).
No methodology had been put in place to minimise the losses, and 37.54 per cent of the total loss for the year under review had been sustained by the said seven Osusala stores, official sources said.
The State Pharmaceuticals Corporation (SPC) engages with open market operations through Osusala outlets, franchised Osusala outlets and registered distributers covering the entire island.
The Treasury has directed the SPC to compensate those outlets for losses but no action has been taken so far, a senior official said.
SPC has entered into a Corporate Intent (agreement) with the Ministries of Finance and Health in June this year to update performance targets to streamline the corporation management and its activities.
Under this agreement the Treasury will have to intervene to prevent the closure of the loss making Osusala outlets, he said.
Measures have been taken to recover the expenses from the suppliers relating to poor quality drugs, and the short supply of drugs to the Medical Supplies Division.
In addition administrative charges thereon and the expenses on the disposal of such stocks will also have to be recovered from suppliers.
Debit notes (invoices) had been issued by December 31, 2017 to the value of Rs. 1,303.74 million to suppliers.
The SPC had failed even to further recover a sum of Rs.580 million, the audit inspection observed.
Of those debit notes, Rs.104.80 million worth debit notes had been issued to suppliers who had been blacklisted, and hence, the recovery thereof remained doubtful, the report revealed.
Sri Lanka’s pharmaceutical market is estimated at Rs.80 billion with 50 per cent coming from private sector imports, 10 per cent from domestic manufacturers and state pharmaceutical chains, and the rest accounted for by sales to state hospitals.