When the Indian drug company that his family’s business Citihealth Imports distributed in Sri Lanka, decided in 2014 to shift their distribution in-house, it came as a complete surprise to Sanjaya Jayaratne. With one email, “It was like the world came crashing down on us”. For 18 years, Citihealth had been marketing and distributing this particular brand, and they had grown to be one of the top five pharmaceutical importers in the country.
Within a year, the company’s Rs3 billion turnover was down to Rs250 million because it lost that one client. The experience taught Jayaratne the uncertainty of relying on another’s products and the importance of owning your brand.
Shortly after, in 2015, the national drug policy was introduced, which detailed that if any Sri Lanka company manufactures pharmaceuticals locally, the government will buy the entire country requirement. This timing, coupled with his brand building revelation, led Jayaratne to found Navesta Pharmaceuticals.
“It was a difficult decision, and a lot of people were against the idea. People said Sri Lanka didn’t have the technical capability to manufacture the kind of pharmaceuticals I wanted to make.”
“I wanted to show other budding entrepreneurs that it can be done; although many people said manufacturing complicated medicine is not feasible in Sri Lanka. “I’m always a believer that Sri Lanka can and must”
Jayaratne, however, was convinced that Sri Lanka had the capability, and he was proved right. He made a tactical decision to manufacture sterile dry powder injectables – a type of pharmaceutical for which the technology did not yet exist in Sri Lanka. While a more complicated option than what other pharma companies were producing, the choice guaranteed he wouldn’t be competing in the market.
With an investment of Rs1.4 billion, construction began on Navesta’s first factory, which became operational two years later. Today, Navesta Pharmaceuticals employs over 160 people and has a turnover of Rs1.5 billion, up 50% from the first year of operation. The 12 million vials produced are distributed to private and government hospitals by Citihealth, which Jayaratne took over as managing director of in 2018. Jayaratne credits his self-belief to his late father, a self-taught man who started the pharmaceutical distribution business in 1996 following retirement.
He recalls as a teenager being embarrassed to invite friends over to the house as the rooms were piled high with inventory, his mother was writing invoices and his father was driving the delivery vehicle. Seeing his parent’s hard work and determination inspired him to follow their footsteps, departing from his dream of being a pilot.
Proving the sceptics wrong – and there were a lot of them Jayaratne says – Navesta’s Horana factory was inaugurated at a ceremony attended by the President in 2017. “I wanted to show other budding entrepreneurs that it can be done; although many people said manufacturing complicated medicine is not feasible in Sri Lanka. “I’m always a believer that Sri Lanka can and must” he adds.
Sri Lanka’s pharmaceutical manufacturing industry is far behind regional competitors. Bangladesh, Pakistan and Nepal are all self-sufficient. India has been self-sufficient since the 1980s and exporting since the 1990s. In comparison, only 15% of Sri Lanka’s pharmaceuticals are locally manufactured.
As well as having an economic impact, import reliance drives brain drain because of poor prospects for technical jobs. Many science graduates have better job prospects overseas, while those who remain must find work in unrelated fields. This is a loss for both private industry and the country.
Jayaratne believes graduates from local universities should contribute back to the country and is proud to have contributed to reducing brain drain by creating science-based jobs at Navesta. Over 40% of Navesta’s employees are graduates of Sri Lankan universities. A second factory, expected to be operational mid-2020, will double the workforce. This plant will manufacture completely different pharmaceuticals, requiring new technology.
Within five years, with both plants at full capacity, Jayaratne expects annual revenue to be around Rs10 billion. Navesta is the only EU GMP compliant plant in Sri Lanka. Once the auditing process is complete, this will open doors to export to Europe. A second PIC/S certificate will provide access to multiple other markets including Australia, Canada and countries in Asia and Africa.
Jayaratne expects around 60% of the production will be exported in the future. The immediate business goal is to begin exporting by 2021. In the long term, Jayaratne is aiming to construct three more factories certified by the U.S. FDA – bringing the “ultimate pharmaceutical technology” to Sri Lanka.