Pharmaceutical trade, supply and distribution on the African continent.
The ongoing battle against disease and health conditions is one of the major issues in developing countries.
Many diseases have been eradicated from most of the rest of the world, yet many developing countries still don’t receive the required international support to do the same. Instead, they have to rely on themselves, the open market, pharmaceutical trade companies and NGOs.
An unfortunate juxtaposition is the fact that those who require help either can’t afford it, or don’t have the necessary facilities for treatments in their localities.
So how are pharmaceuticals being trade, imported and distributed in Africa?
Currently the majority of pharmaceuticals arrive through Governments tenders and NGOs. Whilst Multinational Pharmaceutical Manufacturers and pharmaceutical trade companies play a small role in Africa right now, it is expected that their presence will grow significantly in the near future.
- The future of the pharmaceutical trade in Africa.
- Multinational pharmaceutical companies in Africa.
- Asian manufacturers’ presence in Africa.
- African Market increase and focus.
- Major challenges of pharmaceutical trade and distribution in Africa.
- Challenges in Marketing of products.
- Market purchase.
- NGO purchase force.
- Basic Statistics of Schedule 3004 (pharmaceutical) from India to African countries.
The future of the pharmaceutical trade and market in Africa:
- Improving healthcare systems are driving a rising demand for drugs for chronic diseases which is expected to reach US$30 billion in sales by 2016 and potentially US$45 billion by 2020.
- An increasing number of working-age Africans is leading to a rising middle class of more than 30% of the population.
- By 2050 the African urban population is expected to exceed that of China and India.
- Changes in Africa’s economic profile show an increased demand for Chronic care drugs and a shift towards treatments for non-communicable diseases (NCDs) and HIV/AIDS.
Multinational pharmaceutical companies present in Africa:
- Abbott in South Africa since the 1930s
- Sanofi-Aventis in Morocco since 1953
- Novartis in Egypt since the 1960s
- Pfizer also in Morocco from 1963
- GSK arrived in Nigeria in the 1970s
Asian manufacturers’ presence in Africa:
Asian Manufacturers active in Africa mainly originate in India and China and have in the last few years almost doubled their volume of exports to the continent. According to trade statistics data, India accounted for 17.7% of African pharmaceutical imports in 2011 (Over 1666 million USD) whilst China accounted for 4.1%.
The focus of Indian and Chinese manufacturers:
Indian and Chinese manufacturers focus on competitive prices and, by acknowledging the potential for generics, have gained a significant market share and enjoyed strong growth. This understanding of the market encouraged some of the larger Indian manufacturers such as Ranbaxy, Cipla and Dr Reddy to invest mainly in the East Africa area. The Indian manufacturers’ and pharmaceutical trade companies strategies have some key points-
- Working through NGOs and Government tenders.
- Integrating local personnel into the operations.
- Quality of their medicines: World Health Organisation certificated.
- Affordable HIV medicine.
African Market increase and focus:
Since 2011 health system infrastructure increases in Northern and Southern Africa increased the pharmaceutical trade and sales in countries such South Africa, Egypt, Algeria and Morocco.
In South Africa a new focus on chronic diseases was the major change, whilst in Algeria the overall political and economic changes created improvement in public health policies.
In Nigeria healthy GDP growth and a large population created a strong demand for pharmaceuticals:
- HIV and malaria which remain the leading causes of death.
- NCDs which are rapidly appearing to be a major public health challenge, particularly in the urban slums in which are over half of Nigeria’s population reside.
- Rapid increase in diabetes.
All of this brings new opportunities to market treatments for malaria, HIV and NCDs, and diabetes.
In the South, the small nation of Botswana (population 2 million) is experiencing economic growth and political stability. The focus on quality health care and services is reflected by large expenses in the pharmaceuticals sector. For example tenders are checked for quality, not just price.
The major markets in Botswana (expected to reach to $100 million by 2016):
- HIV/AIDS as well as hypertension,
- Cancer products.
- Women’s health issues.
Major challenges of pharmaceutical trade and distribution in Africa:
- Inadequate regulatory oversight.
- Risk of the entry of substandard and counterfeit medicines.
- Weak infrastructure in cold chain.
- Lack of expertise in stock management.
- Poor education and irregular energy supply are major contributors.
- Fragmented wholesale and distribution channels.
- Credit issues and quality of operation among local distributors.
Challenges in Marketing of products:
- Lack of knowledge among physicians regarding disease states and medicine needs.
- Weak education and insufficient numbers of pharmacies and clinics to distribute medicines.
- Limited business experience and talent among staff.
Given the lack of doctors and trained nurses, especially in rural areas, community health workers and pharmacists may be the most relevant professionals involved in prescribing and dispensing medicines. They can be essential in the education of the patient and the follow up. Strategic partnerships with locally-trusted stakeholders can help companies access the market, as they can use proven channels to enter the market, help companies to reach target patient groups and understand the actual necessity.
High price products:
- Under Publicly purchased drugs including donations and NGOs:
Oncology, non-essential vaccines, size of market dependent upon government healthcare spend. Mostly low volumes with medium margins.
- Under Privately purchased drugs:
Oncology, non-essential vaccines, aesthetic medicines. Being financed by insurance or direct client purchase. Size of market is dependent on the private market. Mostly low volumes with high margins.
Low price products:
- Privately purchased drugs:
OTC, anti-malaria, common affordable formulations which are mostly large volumes and low margins.
- Publicly purchased drugs including donations and NGO purchased:
Common drugs, vaccines on Essential Medicines List which are mostly large volumes and low margins.
NGO purchase force:
NGOs purchasing high volumes with low margins have a few advantages that pharmaceutical trade companies and manufacturers should consider:
- They have access to multiple stakeholders across patients, healthcare professionals and government.
- They play a key role in accessing rural areas, in which in some cases they are the only healthcare service provider.
- Many have an existing distribution supply chain and are able to monitor medicine uses, which is particularly important for government and multi-national organizations.
- They help in controlling the spread of diseases and conditions such as AIDS, Malaria and Tuberculosis.
- Due to low margin, complex infrastructure and scattered patients the private sector can’t compete with the NGO’s abilities.
Note: An NGO’s creative operation and dedication gives them the ability to offer a wide range of medicine using an existing system which is mainly set up for the treatment of more common diseases, and helps prevent and monitor other conditions and rarer diseases.
For example, diabetics are more likely to contract tuberculosis, and HIV patients on ARVs carry a higher risk of developing diabetes and cancer.Overcoming existing barriers to collaboration with NGOs is worth trying given their advantages.
Currently, most medicines for infectious diseases like HIV are provided by Indian suppliers due to low prices and high quality generics.
The growing middle class is increasingly able to afford branded products, and their rising demand for higher quality products and care creates a lucrative opportunity for pharmaceutical companies with high standards and a multinational operation.
For example the middle class in Libya, Tanzania, Mozambique and Zimbabwe are showing strong interest in higher quality treatments in private specialist hospitals. This in turn creates opportunities for large companies and investors to create a high quality as well as profitable supply.
Contact us for detailed statistics, opportunities and leads.
Basic Statistics of Schedule 3004 (pharmaceutical) from India to African countries:
1. Angola- India export pharmaceutical:
- Worth USD 131,941,791
- Total quantity: 540,948,262
2. Botswana- India export pharmaceutical:
- Worth USD 69,628,855
- Total quantity: 83,363,078
3. Ethiopia- India export pharmaceutical:
- Worth USD 144,215,767
- Total quantity: 548,286,464
4. Ghana- India export pharmaceutical:
- Worth USD 354,333,069
- Total quantity: 2,166,263,061
5. Kenya- India export pharmaceutical:
- Worth USD 607,173,
- Total quantity: 2,343,805,650
6. Mozambique- India export pharmaceutical:
- Worth USD 110,484,322
- Total quantity: 382,487,173
7. Nigeria- India export pharmaceutical:
- Worth USD 225,679,496
- Total quantity: 867,142,231
8. Zambia- India export pharmaceutical:
- Worth USD 180,931,054
- Total quantity: 477,489,938
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