Ethiopian Pharmaceutical Supply Service (EPSS): An Overview

Dec 12, 2025 0

The Ethiopian Pharmaceutical Supply Service (EPSS), formerly known as the Ethiopian Pharmaceutical Supply Agency (EPSA), is a legal entity established under the law of the Federal Democratic Republic of Ethiopia Government. Its primary mission is to overcome challenges and ensure an uninterrupted supply of pharmaceuticals to the public at an affordable price.

The Pharmaceuticals Fund and Supply Agency was established in September 2007 by Proclamation No. 553/2007 with the following objectives:

To enable public health institutions to supply quality-assured essential pharmaceuticals at affordable prices in a sustainable manner to the public.
To play a complementary role in developmental efforts for health service expansion and strengthening by ensuring enhanced and sustainable supply of pharmaceuticals.

The EPSS operates as a government agency under the Ministry of Health, tasked with centralizing the procurement and distribution of pharmaceuticals and medical supplies for the public health sector. The EPSS is entrusted with procuring pharmaceutical products and medical supplies through competitive bidding processes, aiming to secure high-quality products at reasonable prices. It maintains central medical stores strategically positioned throughout the country, acting as warehouses that manage and distribute the procured pharmaceuticals to regional and district health facilities.

Furthermore, the EPSS collaborates with the Ethiopian Food and Drug Authority (EFDA) to ensure that all procured medicines and medical supplies meet the required quality standards. The agency actively works towards enhancing access to essential medicines, particularly in underserved and remote areas, through its distribution networks and partnerships with health authorities and stakeholders. Additionally, the EPSS engages in collaboration with international organizations, donors, and development partners to strengthen its capacity and continually improve pharmaceutical supply chain practices.

Since 2019, the R4D-led Ethiopia Market Shaping Capacity Improvement Program (EMSCIP) project has partnered with the Ethiopian Pharmaceutical Supply Service to support the development and capacity of QMSD to play the market manager role. R4D and the Ethiopian Pharmaceutical Supply Service conducted a comprehensive market shortcomings assessment in 2020 to better understand critical market shortcomings and inform the market shaping strategy, actions, and capacity building. Based on the findings of the assessment, key market interventions were co-developed and implemented.

Challenges Faced by EPSS

EPSS operates in a challenging environment characterized by:

Industry Complexity: The pharmaceutical supply industry demands rigorous regulatory compliance, stringent inventory management, and effective distribution networks to ensure the availability of medicines across the nation.
Operational Efficiency: Manual processes and disparate legacy systems hindered EPSS's ability to optimize procurement, inventory control, and distribution, leading to inefficiencies and delays.
Resource Management: With a vast network of suppliers, warehouses, and healthcare facilities to manage, EPSS faced challenges in resource allocation, tracking, and utilization.

However, critical gaps remain that impede full access to health and nutrition products. These include critical barriers across financing, pharmaceutical procurement list, product registration, forecasting, tender and contract management processes.

Solutions Implemented

To address these challenges, EPSS embarked on a transformative journey with the implementation of SAP S/4HANA solutions in partnership with our implementation team. The team at SEIDOR undertook a comprehensive implementation approach:

Solution Design and Configuration: Tailored SAP S/4HANA modules including Enterprise Management, Finance, Business Warehouse, HCM, Fleet Management, and Asset Management to meet EPSS’s specific requirements.
Integration and Data Migration: Ensured seamless integration with existing systems and migrated data from legacy systems to SAP S/4HANA for continuity and data accuracy.
Training and Change Management: Conducted extensive training sessions for EPSS staff to facilitate smooth adoption of new processes and technologies.
Go-Live and Support: Successfully deployed the SAP solution with minimal disruption to EPSS operations, followed by ongoing support to ensure system stability and user satisfaction.

This aimed to:

Enhance Operational Efficiency Streamline procurement, inventory management, and distribution processes to ensure timely availability of pharmaceuticals.
Improve Financial Management: Optimize cash management, budgeting, and financial reporting through integrated SAP Finance modules.
Strengthen Human Capital Management (HCM): Modernize HR processes with core HCM modules to efficiently manage workforce operations and payroll and more.

The number of products with adequate registered suppliers in country (i.e. Using findings from the baseline assessment, R4D developed market shaping training materials, including a facilitator’s guide and a trainee’s manual. A total of 112 central and hub staff completed the standard market shaping courses. And of the 112 trainees who completed the training, 106 scored above the minimum acceptable score and were certified.

Read also: Authentic Ethiopian Cuisine

Results Achieved

The SAP S/4HANA implementation has yielded significant outcomes for EPSS:

Operational Efficiency: Streamlined procurement processes, reduced inventory holding costs, and improved distribution accuracy resulting in enhanced service delivery.
Financial Management: Improved cash flow management, real-time financial reporting, and compliance with regulatory requirements.
Human Capital Management: Enhanced workforce management, payroll accuracy, and employee satisfaction through streamlined HR processes.
Business Intelligence: Enabled data-driven decision-making with comprehensive analytics and reporting capabilities from SAP Business Warehouse.
Asset and Fleet Management: Optimized utilization and maintenance of assets and fleet, resulting in cost savings and improved operational reliability.

The SAP S/4HANA implementation has positioned EPSS as a leader in pharmaceutical supply chain management in Ethiopia, leveraging modern ERP capabilities to overcome industry challenges and achieve operational excellence. The partnership with our implementation team has been instrumental in delivering a robust solution that meets EPSS’s current needs and supports its future growth and sustainability goals.

Customer Satisfaction and Pharmaceutical Logistics

Customer satisfaction is one of the most important factors to consider when assessing the quality of healthcare services. In pharmaceutical logistics management, customer satisfaction is described as a key performance indicator that measures the extent to which an organization’s goods, services, and capabilities meet or exceed the expectations of its customers.

Customers may be pleased when service delivery processes meet their expectations and requirements; otherwise, they may be dissatisfied. Most service providers are looking for methods to determine whether or not their customers are satisfied with their products or services.

The Ethiopian pharmaceuticals supply agency (EPSA) provides customer service in addition to a physical product, and to the best of our knowledge, no proof of customer satisfaction with pharmaceutical logistics service exists in Ethiopia. Our findings have implications for prioritizing pharmaceutical logistics service attributes that are essential to improving service delivery in EPSA hubs.

Key Findings on Customer Satisfaction

In this study, about 60%, 36%, and 48% of respondents expressed satisfaction with pre-transaction, during-transaction, and post-transaction pharmaceutical service delivery processes. More than two-thirds (68%) of customers were satisfied with the hubs’ overall pharmaceutical logistics services. According to the study, a notable proportion of customers (12%) feel dissatisfied with the pharmaceutical services they receive.

The study shows information quality (β=0.067), ordering procedure (β=0.075), and personnel contact quality (β=0.189) had positive effects with customer satisfaction. Most importantly, among pre-transaction PLSAs, personnel contact quality contributed the most (18.9%).

In this study, product availability (β=0.206), and timeliness (β=0.190) had a significant (p < 0.001) positive effects with customer satisfaction. As expected, significant effects were obtained for order discrepancy handling (β=0.225), order accuracy (β=0.190), and complaint handling (β=0.177) with customer satisfaction.

According to the findings, order discrepancy handling accounted for the highest proportion of all PLSAs, followed by product availability and timeliness. Thus, dealing with order discrepancies had a significant positive impact on customer satisfaction.

Addressing Drug Shortages: Strategies and Mitigation

Ethiopian public health facilities have faced frequent stockouts of crucial medications, highlighting systemic challenges such as inadequate forecasting, prolonged procurement processes, a disjointed distribution system, suboptimal data quality, and a shortage of trained professionals. The Ethiopian Pharmaceutical Supply Services (EPSS) is known for its highly unstable and volatile supply chain.

Drug shortages occur when the total supply of all clinically interchangeable versions of a regulated drug falls short of demand. The global rise in essential medicine shortages poses a significant challenge. Unpredictable demand, limited planning resources, and organizational constraints exacerbate this issue.

The EPSS faces multifaceted challenges that hinder its ability to effectively manage drug shortages and ensure drug availability. Addressing these challenges requires a comprehensive and coordinated effort to improve forecasting, streamline procurement processes, enhance data quality, and bolster the overall pharmaceutical supply chain management system.

A study conducted within the EPSS revealed that the mean percentage forecast error for program commodities stood at 27.8%. In addition, poor data quality and inaccurate and incomplete consumption reports from service delivery points have led to unacceptable forecasting errors. Coupled with communication and coordination challenges within the EPSS, these further exacerbate supply chain problems.

Proactive measures such as communication, stock assessment, supervision, and streamlined procurement are emphasized as vital in mitigating disruptions, while reactive strategies like safety stock may lack long-term efficacy. The study highlights the importance of aligning supply chain strategies with product uncertainties, fostering collaboration, and employing flexible designs for resilience.

Effective communication among regulatory bodies, harmonization, and robust reporting systems are essential for mitigating drug shortages. Supply chain strategies must account for demand and supply uncertainties.

The Ethiopian Pharmaceutical Supply Services (EPSS) falls under the Ministry of Health, which is responsible for the forecasting, procurement, warehousing, and distribution of pharmaceuticals throughout the country. It has 19 branches, which are found in all regions of Ethiopia.

Recent Achievements and Recognition

EPSS

The Ethiopian Pharmaceutical Supply Service (EPSS) has made remarkable strides in revolutionizing the country’s pharmaceutical supply chain, culminating in its recognition as the Grand Prize winner at the 2024 Global Health Supply Chain Summit held in Lagos, Nigeria.

One of the most significant achievements during this transformation has been the dramatic improvement in inventory accuracy, which surged from 90% to an impressive 99.8%. The reduction in order processing lead times has been particularly noteworthy, with some hubs experiencing a decrease from six days to just eight hours. By redesigning storage spaces and implementing advanced racking systems, EPSS achieved full utilization of its facilities, freeing up approximately 744 square meters of valuable space.

By leveraging advanced digital dashboards and data visualization tools, EPSS has revolutionized its decision-making processes, providing real-time insights into supply chain performance. For instance, the introduction of innovative near-expiry visualization systems has helped reduce wastage rates from 1.8% to under 0.8%.

By training over 1,500 employees in Lean and KAIZEN principles as well as supply chain fundamentals, EPSS has built a culture characterized by accountability, teamwork, and continuous learning. The establishment of an Improvement and Skilling Center at EPSS headquarters and selected hubs has further institutionalized this culture of continuous improvement.

Assessment of Public Sector Pharmaceutical Distribution System

This study aimed to assess the public sector pharmaceutical distribution system and its challenges in central Ethiopian Pharmaceuticals Supply Service and selected branches. The study was conducted at the Central Ethiopian Pharmaceuticals Supply Service and four regional branches between December 2021 and February 2022, utilizing a concurrent parallel mixed-methods design.

Warehouse management was performed relatively well compared to inventory management and delivery practices, with overall mean scores of 3.22, 3.14, and 3.08, respectively.

The primary goal of pharmaceutical distribution is to ensure a consistent supply of quality-assured pharmaceuticals to service delivery points in a cost-effective manner. Factors such as temperature and humidity restrictions, product value, complexity, and the need for professional personnel limit the transportation and delivery of pharmaceuticals.

The organization has significantly expanded by increasing product volumes and establishing regional branches. EPSS delivers program and some revolving drug fund pharmaceuticals to woreda health offices and health facilities, which are primarily located along major roads. However, the rapid growth in EPSS operations has been accompanied by minimal improvements in its underlying systems and processes. This has resulted in inefficiencies such as wastage, quality defect, delayed deliveries, frequent emergency requests, stockouts, and overstocking.

Globally, one-third of the population lacks access to essential medicines. This figure rises to 50% in the lowest-income countries of Africa and Asia. A reliable health supply chain is a vital component of the WHO's four-part framework for improving access to essential medicines. Consequently, it is critical to evaluate key elements of the health commodities supply chain, such as warehousing, inventory management, and delivery practices within EPSS, to improve access to essential medicines.

In Ethiopia, limited research has been conducted on pharmaceutical distribution. Existing studies have primarily focused on warehousing, inventory management, and delivery practices within the central EPSS. This study aimed to evaluate warehousing, inventory management, delivery practices, pharmaceutical distribution effectiveness, and the associated challenges in the central EPSS and selected branches.

Pharmaceutical warehousing in low- and middle-income countries faces numerous challenges. Available storage space is often insufficient to handle the flow of products into, within, and out of warehouses. Most warehouses are designed without considering the efficient use of available space and maintaining the quality of products. Pharmaceutical inventory management includes all activities involved in developing and managing inventory levels of pharmaceuticals with the goal of improving availability and service level with optimal cost.

Transportation is one of the less reliable links in the pharmaceutical distribution system. It requires a well-functioning transport management system in addition to network design and allocation of the required resources. Insufficient product availability and delivery of near expiry products are major concerns in many low- and middle-income countries’ pharmaceutical distribution systems.

The study was conducted in Ethiopia at the central EPSS and four regional branches, specifically the Addis Ababa 2, Bahir Dar, Gondar, and Dessie hubs. Data collection was conducted on-site following a prior telephone call to the respective supply agencies. Quantitative data was collected by two pharmacists using a self-administered questionnaire.

A total of 104 participants completed and returned the questionnaires, yielding a response rate of 96.3%. The majority of respondents (76.0%) were male, and most (72.1%) were aged between 30 and 39 years. Regarding education, over half (55.8%) of the participants held a first-degree qualification. Thirty-seven participants (35.6%) were working at the central EPSS, while the majority (78.8%) assigned within the warehouses and inventory management units.

A majority of respondents (69.2%) confirmed adherence to temperature specifications for pharmaceutical storage, achieving a mean score of 3.68 ± 0.73. Conversely, 66.3% of respondents disagreed with the practice of separate storage room for specific commodities, resulting in the lowest mean score (2.4 ± 0.74). Over half (57.7%) of respondents indicated insufficiently available materials handling equipment for routine warehouse operations, leading to a mean score of 2.54 ± 0.76.

Nearly half of the respondents (48.1%) agreed that accurate inventory records were maintained, with a mean response score of 3.27 ± 0.8. Almost all (94.2%) of respondents agreed with utilization of first expire first out (FEFO) principle during issuing pharmaceuticals, with an overall mean response score of 4.13 ± 0.52.