Pharmaceuticals have been hailed ‘the next big thing’ in African business, with the industry expected to be worth about US$30 billion in 2016 (it’s worth around US$18 billion now). This is thanks to an expanding middle class, according to Kofi Amegashie, managing executive for Africa at Adcock Ingram. ‘They have jobs, they have more disposable income, they are a lot more aware of the maladies that affect them, as well as the remedies,’ he said in an interview with CNN. ‘So, whereas you may have had people in rural areas relying on traditional means of curing illness … as people move into more urban areas, they have access to better drugs at lower prices – thanks to the advent of generics – and they consume more.’
In particular, the continued rise in the spread of HIV/Aids means that opportunistic infections such as TB and pneumonia increasingly require treatment. While traditional healers are still widely consulted, many pharmacies throughout Africa are working in conjunction with them to cure illnesses. And, in Nigeria, for example, a rapid increase in incidents of non-communicable diseases such as diabetes, heart disease and cancer have also had a markedly positive effect on drug manufacturers’ bottom line.
An estimated 70% of essential medicines used in Africa are imported. This doesn’t leave the continent in a very good position in terms of supply security, so there’s a huge focus on developing the means to manufacture generic medicines. The name of the game is providing quality drugs at competitive prices.
The rapid growth of many big cities in Africa (Lagos, Luanda, Lusaka) make them attractive to those international pharmaceutical industries looking to boost future profit. Many developed countries, such as the US, have reached saturation point and possibly face declining pharmaceutical sales. However, Amegashie warns that ‘you’ve got to be on the ground now to be able to win’ in Africa’s burgeoning pharma sector.
This is no secret, and many, many investors are manoeuvring themselves into position to capitalise on the imminent boom.
South African company Imperial Logistics recently acquired a 53% interest in leading Nigerian pharmaceutical distributor Eco Health, which handles around 30% of all of the pharmaceuticals sold and distributed throughout Nigeria, and has an 80% market share of the branded products market.
‘Imperial can now offer customers the huge competitive advantage of an end-to-end capability that encompasses warehousing, logistics, distribution and brand building in this high-growth industry and region,’ says outgoing Imperial CEO Hubert Brody. ‘In one move, we have become a full service provider in one of the world’s fastest growing economies in terms of pharmaceuticals.’ Imperial now has an impressive base from which to access the French West African market, in particular.
African governments are also doing their best to facilitate the development of the pharmaceutical industry
In Nigeria, Indian company Pharmaceuticals Export Promotion Council of India (Pharmexcil) is set to start a warehouse facility in Lagos, which is expected to reduce logistics costs to Indian exporters.
Swiss pharma company Novartis has invested substantially in Africa’s medical infrastructure, particularly its research capacity. Besides having sponsored training programmes in several African countries, it is also partnering with academic institutions to build drug discovery and development capabilities.
African governments are also doing their best to facilitate the development of the pharmaceutical industry. In Ghana, the Centre for Bio-equivalent and Bio-pharmaceutical Research (CBBR) is soon to be established to help pharmaceutical manufacturers, importers and wholesalers improve the quality of their products. In Zambia the ministries of finance and commerce have embarked on a groundbreaking venture that promises to ease the process and cost of doing business in the country with a Multi-Facility Economic Zone.
‘Over 400 enterprises and establishments are expected to set up base in the zone in the next few years and create thousands of jobs for Zambians,’ Minister of Commerce, Trade and Industry Emmanuel Chenda told Commerce Gazette. NRB Pharma Zambia is already investing US$10 million to construct the first World Health Organisation-certified pharmaceutical plant in Zambia that will initially employ 110 people.
The plants will manufacture drugs to treat malaria and HIV/Aids, with future plans to include pharmaceuticals that will be in demand in the sub-Saharan Africa.
While the increased consumption of medicines is a huge boon for the African economy, distributors and manufacturers need to be aware of the challenges involved in developing the market.
‘Access to medicines is about getting the most appropriate good quality medicines to patients to address their needs, where they need them and when they need them,’ says Val Beaumont, executive director of Innovative Medicines South Africa. ‘It is about the correct choice of medicines by the health care practitioner, the availability of medicines at dispensaries where patients are treated and about having professional advice available for patients when they are dispensed to ensure they are used correctly. Price is only one of these factors and in fact intellectual property per se is not a barrier to access. There is an entire medicines supply chain needed to be in place to improve access to medicines.’
‘The responsibility of any national regulator is to enhance access while ensuring quality through regulation and enforcement’
Quality, logistic and manufacturing issues aside, how important is it for Africa to innovate its own medicines? Not very, according to Dr Iain Barton, MD at Imperial Health Sciences. ‘Our primary goal and responsibility in African health care is to drive secure and sustainable access to affordable quality medicines. In the medium term, the impact achieved will be far greater in delivering generic medicines than in developing the capacity to innovate new products. Our focus should be on the development of API [active pharmaceutical ingredient] production and product formulation at a competitive price and with assured quality.’
Regulation is perhaps the trickiest aspect of getting – and keeping – the pharmaceutical ball rolling. And when it comes to medicine regulation, all eyes are on South Africa, which has the most sophisticated pharmaceutical infrastructure on the continent. Unfortunately, it still takes longer to register a new medicine in South Africa than it does in the US or UK.
‘The responsibility of any national regulator is to enhance access while ensuring quality, through regulation and enforcement,’ says Barton. ‘In the developing world, the greatest driver of access is affordability and there is clear evidence that multiple generic registrations per molecule [drug] drives down price, with maximal impact at around seven registrations.
‘If South Africa were to take a leading role in achieving regulatory harmonisation, even just within SADC, it would allow the smaller, emerging markets to leverage the economies of scale of the South African market to enhance access. Regarding standards and enforcement, again the South African regulator could be providing a leading role in the harmonisation of these efforts, reducing the costs of servicing the nascent markets.’
One of the chief reasons that regulatory control is so essential is the prevalence of counterfeit drugs that have opportunistically sprung up to further supply the demand for cheap medicine in Africa.
According to Business Day, one third of all malaria medications are probably fake, and about one in five adults or members of their household in many African countries have been victims of fake drugs.
Leaving aside the impact on unsuspecting consumers – which is potentially lethal – the prognosis for economic development is also not good. Not only is a substantial portion of the market taken up by illegal trade that harms each country’s local economy, but consumers of fake drugs lose faith in their doctor, pharmacist and medicine in general.
‘We can’t eradicate [counterfeit drugs] completely, but we’ve got to stay on top of finding them and bringing their presence to the awareness of authorities,’ says Amegashie.
