The economic crisis took its toll on Sri Lanka’s consumer health industry during 2022 as price controls combined with scarcity in foreign exchange reserves to hamper imports of essential medicines. This led to supply shortages across the industry whilst putting pressure on profits for key players.
Throughout 2022, Sri Lanka was experiencing a deep economic crisis and this resulted in a shortage of medicines in the country. The specific cause of the situation was diminishing access to foreign currency, coupled with severe restrictions on foreign trade, which hampered access to imports of a wide range of products, including medicines.
Among the general population in Sri Lanka, a clear majority have the opinion that self-medication is enough to cure common ailments. Even though it is a common practice among Sri Lankans to practice both OTC drugs and herbal/traditional medicines, the usage of herbal/traditional medicines is preferred by many people, including those living in both urban and rural areas of the country.
As the economic crisis continue to build in 300 2022, the panic buying of various OTC products was seen in many parts of the country. Consumers flocked pharmacies to stock up on a wide range of essential OTC medicines, despite the advice of the authorities not to engage in panic buying.
The impact of the economic crisis on the consumer health industry has been seen mainly in terms of limited access to foreign exchange and various other supply chains issues that have hit the pharmaceutical industry and their logistics systems. Companies that rely on imports have faced serious problems because many cargo ships have stopped coming to Sri Lanka, while those imports that have made it into the country have been subject to substantial price increases, with some imported consumer health products now ten times the price that they were previously.
In March 2022, the Sri Lankan Government started to consider approving new locally manufactured medical products even without proper registration over a period of six months and up to one year. The aim of this is to support local industry and navigate a way through the current economic crisis, The cabinet of the Sri Lankan government also approved a new mechanism for purchases of manufactured pharmaceuticals and medical devices instead of the rather haphazard mechanisms which are currently in place.
The NMRA Act of 2015 classifies vitamins and dietary supplements as borderline products, indicating that these combine the characteristics of foods and medicines. These items also need to be registered with the National Medicinal Regulatory Authority (NMRA), although restrictions are considerably more limited than for OTC products.
Consumer health is expected to register negative value growth in constant 2022 terms over the forecast period and this is set to be due to the adverse influence of the ongoing economic crisis. The challenges mentioned above that have flowed from exchange rate fluctuations and the unavailability of foreign currency, among other negative aspects of the economic crisis, have made it difficult and unprofitable for companies to operate in the consumer health industry.
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It is the aggregation of OTC, Vitamins and Dietary Supplements (VDS), Sports Nutrition, and Weight Management and WellbeingSee All of Our Definitions
This report originates from Passport, our Consumer Health research and analysis database.
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