13 and not amenable to **easy** solutions. In many cases, countries decided to proceed with Oshowpiece pharmaceuticals production, while continuing to import even basic goods such as soap, canned fruit and preserves, bottles and plastic packaging materials, bicycles, and so on. Pharmaceutical production was expected to provide a stimulus to development of ancillary industries, such as chemicals, glasswae, packaging, etc. Foreign exchange savingp were also expected to be significant and this alone was taken to be justication enough. These views were encouraged by a number of development agencies and financing was relatively easy to arrange; the result is a number of uneconomic factories in need of rehabilitation or closure.

A number of key assumptions were made about lcal production of pharmaceuticals which need to be reexamined in the light of experience and changes in the world market for pharmceuticals, Fhlt, the economic and financal analyses which were carried out often used the prices of the brand-name drug which the oally produced ones were expected to replace. But in the last seven or so years, the international trade in generic drugs has increased substantially and the prices have fallen significantly. Febility studies carried out in 1980, therefore could not have predicted that drug prices would fail to a half or lss of then current prices But now, gtven budget constraints when faced with procurement decisions, goverments have to prefer the lss expensive international generics to localy-made equivalentsL The locally-made products were rarely able to compete with imported brand-name drugs and therefore the private market was also losed to them, unless there was heavy tariff protection or an outright ban on import of products made loally. (Foster, 1989) A second assumption was that foreign exchange savings would be considerable. It appears that raw materials and interuediates would be cheaper imported in bulk. However, even raw materials are not necessarily cheaper than the finished product; often the manufacturers ignore very small orders or charge the price of their smallest packing unit (often 100 kg or more) even if the order is for less than 10 kg; opening and breaking down the package is simply not interesting for them. Large manufacturers order tons of a given material at a time, and enter into long-term contracts; they therefore benefit from significant price discounts, which are not available to small African manufacturers. Payment terms are often not advantageous, since foreign exchange shortages often cause delays in payments which the suppliers factor into their prices. Another problem was the lack of price information for most pharmaceutical raw materials and intermediates, which suppliers were quick to take advantage oL The recent establishment of the Pharmaceuticals Market Intelligence System by WHO should help improve the availability of price information for a limited range of basic intermediates used in production of essential drugs Other foreign exchange expenditures need to be taken into accounL In many countries, packing materials are imported, as is the machinery used in production and quality assurance; spare parts, repair, etc. must be paid for in foreign exchange. Elecricity production and water purification may require imported fueL Training of staff and expatriate management staff are often provided from abroad and paid for in foreign exchange. Technology