SPC defaults massive dues of pharma suppliers

State Pharmaceutical Corporation (SPC) is now not in a position to procure medicinal drugs from local and foreign companies and suppliers following its failure to settle import bills regularly since January this year

Foreign companies are taking steps to black list the SPC due to nonsettlement of import bills for a long period accumulating massive arrears of dollar payments, high official sources revealed.

The dollar shortage has also compelled it to suspend imports of medicines including some essential and lifesaving drugs and default the payment of previous drug procurements.

This has created a severe shortage of a number of medicines including drugs required for heart disease as well as surgical equipment in government hospitals.

Around 14000 drugs are being imported in to the country per annum at a cost of US$380 million and one third of it were non-essential, Finance Ministry data shows.

Payments have not been made for ten months to suppliers of medicine and, medical equipment, for hospitals and countrywide pharmacies including Osusala branches.

Private Pharma importers claimed that a total debt of Rs. 10 billion is owed by the SPC R Under for their supply of pharmaceuticals.

Under this set up Medical Supplies Division (MSD) of the Health Ministry is unable to procure even 14 essential medicines that the country currently needed from its registered suppliers, a senior official of the Health Ministry disclosed.

The present shortage of medicinal drugs cannot be settled until the settlement of Rs.16 billion overdraft taken from two state banks, Bank of Ceylon and the Peoples Bank under a treasury guarantee and the dues of Rs 10 billion owed to local companies and suppliers from the SPC, several leading members of Sri Lanka Chamber of the Pharmaceutical Industry (SLCPI).said.

SPC is currently facing financial crisis as it has to service the bank overdraft of Rs 16 billion arranged by the former chairman of the corporation persuading the Finance Ministry to grant a treasury guarantee without the board approval, an internal audit query revealed.

According to observations of the government audit, before the obtaining of bank guarantee, the SPC has been able to settle bills of suppliers and salaries of employees from the revenue of Osusala sales network without burdening the treasury.

However Osusala branches countywide are on the verge of closing down due to shortage of pharmaceuticals as a direct result of the SPC’s inability to procure drugs, audit inspection report highlighted.

At present there is a shortage of 200 essential drugs in government hospitals and pharmacies due to SPC’s procurement difficulties and inability of local companies to import it due to dollar crisis.

Osusala branches countywide are on the verge of closing down due to shortage of pharmaceuticals as a direct result of the SPC’s inability to procure drugs, audit inspection report highlighted.