Nepal's Medicine Industry Faces a Tough Future as It Looks Forward to Graduate to A Developing Country Status

Have you ever heard someone say they’ve got good news and bad news? Well, we come bearing both in one delightful package!?

In 2026, Nepal is gearing up to wave goodbye to the Least Developed Countries (LDC) group, as recognized by the United Nations (UN) and graduate to a developing country status. That’s definitely a reason to celebrate, right? But let’s not pop the champagne yet!

While this news is a big win for our nation, it’s also stirring up some worries in Nepal’s pharmaceutical industry, among others. Why the frown amidst the cheers? Moving out of the LDC category might mean we will be losing some privileges. For example, we will lose the ability to produce cheaper versions of essential medicines. This could lead to pricier medications, making it tougher for many to access the treatments they need.?

Let’s dive more into this issue, and try to understand what it means for Nepal's pharmaceutical industry and the country as a whole.

What Benefits Does Nepal Have as an LDC?

As an LDC, Nepal enjoys some major benefits when it comes to medicines. Currently, Nepali pharmaceutical companies can produce low-cost versions of patented medicines without having to pay fees or ask for permission from the patent holders (usually large, foreign companies). This has allowed local companies to make generic medicines—affordable copies of expensive drugs—so that more people in Nepal can get the treatment they need at a reasonable price.?

What Will Change in 2026?

When Nepal graduates from the LDC list in 2026, it will have to follow international patent laws under the World Trade Organization’s rules (specifically under the TRIPS agreement). This means that local companies will no longer be able to make generic versions of medicines that are still under patent without paying extra fees or getting direct permission from the patent holders. Losing this benefit could mean medicines will become much more expensive in Nepal and the country will have to deal with limited access to important treatments.

How This Could Impact Medicine Prices

Most of the medicines made in Nepal today are generic drugs used to treat non-communicable diseases (NCDs) like diabetes and high blood pressure, which are on the rise in the country. Many Nepalis depend on these affordable medicines to manage their health. After 2026, if local companies can no longer produce copied versions of these types of essential drugs, they may become too expensive for the public due to added costs of importing these medicines or for acquiring the patent rights from larger pharmaceutical companies that own the patents. This could severely affect public health, inviting a disastrous healthcare crisis.

Concerns in the Industry

Currently, local drug producers hold about 50% of the pharmaceutical market, and this number will shrink if Nepalese companies are forced to stop producing low-cost generic medicines. This means graduating from LDC status might do more harm than good, especially for the health of everyday Nepalis. Without access to affordable medicines, we could face a healthcare crisis and the very medicines that people depend on might become too expensive for them to afford.”

Heavy Reliance on Imports

Nepal’s pharmaceutical industry heavily relies on imported raw materials to make medicines. According to the Department of Drug Administration (DDA), around 80% of the ingredients used by Nepali pharmaceutical companies come from India. Other supplies come from countries like China (10%) and even places like Australia, South Korea, and Thailand. Packaging materials, like bottles and labels, are also mostly imported from India.

This dependency on foreign materials adds another layer of complexity. If the new patent laws prevent Nepal from producing generic medicines, the country may have to rely even more on imported drugs. This would drive up the price of medicines, making it even harder for people to afford the treatments they need.

How Can Nepal Prepare?

Both the government and the private sector are being urged to take action now. A recent study by the South Asia Watch on Trade, Economics, and Environment (SAWTEE) stressed the need for Nepal to have a clear plan to deal with these changes. Policymakers need to find ways to support the pharmaceutical industry during this transition, such as negotiating special terms or longer transition periods with the World Trade Organization to keep medicine prices affordable.

Dr. Anil Bikram Karki, President of the Nepal Medical Association, highlighted the importance of ensuring continued access to affordable medicines in a recent article by the Kathmandu Post signaling that any delay in addressing this issue could lead to a public health disaster.?

What Needs to Be Done?

To reduce the negative impacts of losing LDC status, Nepal needs to focus on policies that protect its pharmaceutical industry and ensure that medicines remain affordable. One solution could be to negotiate for more time under the TRIPS agreement so that local companies can keep producing affordable generics. Another important step is to invest in research and development (R&D) to help local companies innovate and create new drugs that don’t fall under international patents.

The stakes are high for Nepal’s medicine industry. If the government, pharmaceutical companies, and public health advocates don’t work together, graduating from the LDC list could make life-saving medicines too expensive for many people. Careful planning is needed to ensure that Nepal’s progress as a country doesn’t come at the cost of its public health.

So, what do you think? How should the Government prepare itself for this healthcare crisis that seems to be knocking on our door??