Sri Lanka Chamber of the Pharmaceutical Industry (SLCPI) Chairman V. Govindasamy said that priced control mechanisms to be imposed by the government next month would drive away foreign investors to an investment zone designed to encourage local production and bring down costs.
Cabinet approval was given in October to establish an industrial zone in Sri Lanka exclusively for investment from pharmaceutical companies so that the Government can save money by purchasing drugs locally.
"Once price controls are imposed foreign and local companies will be reluctant to invest as they will not have the freedom to earn profits," he said.
The government is the largest consumer of drugs in Sri Lanka due to a state sponsored health policy that ensures largely free healthcare for the people.
In 2010, the estimated size of the local pharmaceutical market was 40 billion rupees (350 million U.S. dollars) but local contribution was only about 10 percent, leaving huge potential for investment. Government consumption alone was 15 billion rupees ( 133 million U.S. dollars