Why Africa’s Pharmaceutical Market Is Attracting Big Drug Firms

Why Africa’s Pharmaceutical Market Is Attracting Big Drug Firms

Africa’s fast growing pharmaceutical market is attracting big drug manufactures who are faced with thinning profits in tough developed countries markets.

In just 10 years – between 2003 and 2013 — Africa’s pharmaceutical industry grew from $4.7 billion in to over $20.8 billion, according to a Quartz Africa report, and was expected to grow at between six and 11 percent over the next five years driven by a growing middle class demanding more prescription medicines, generics, over-the-counter medicines and medical devices.

“By 2016, pharmaceutical spending in Africa is expected to reach US $30 billion,” a popular study published by IMS Health Solutions in 2013 said.

As many African economies experience a steadily growing middle class, the disease burden of sub-Saharan Africa has shifted from infectious diseases to the chronic, non-communicable diseases experienced by Western populations, Foreign Policy reported.

With the rise of the middle class across Africa non-communicable diseases such as cardiovascular disease and diabetes are growing and are expected to account 60 percent of illness and 65 percent of death on the 2020, according to the World Health Organization.

The same diseases were only responsible for 28 percent of illnesses and 35 percent of deaths on the continent in the 1990s.

As a result local drug manufacturers are integrating with bigger foreign players to be able to address these growing demand for lifestyle change medications.

While challenges, like lack specialists to manage cancer and other non-communicable diseases, still stand in the way of Africa’s burgeoning medicines industry, a good mark up on investment for foreign companies investing in the industry has seen several global manufacturers set up on the continent.

On of them is Merck Serono, the world’s oldest pharmaceutical, chemical and life sciences company.  The company is seeking partnerships and training medical personnel in Kenya, Uganda, Tanzania, Ethiopia and South Africa in oncology, The East African reported.

Merck is not alone in this. For the third year running, the Swedish government and drug manufacturers have held a medical exhibition in Kampala, showcasing the latest technologies in medical supplies targeting non-communicable diseases.

The Ethical Question

In 2011, GlaxoSmithKline employed a lower margin-high volume business model to drive sales in African markets. That model saw the company slash prices of antibiotics and dewormers, which are meant to treat common tropical diseases, by half.

GlaxoSmithKline also worked with Unicef to sell vaccines in East Africa and other parts of the continent

The question has always been as to whether or not global pharma producers can profit from the same populations they once made large in-kind drug contributions to?

In the past, talk of pharmaceuticals in Africa often centred on potentially fatal illnesses like malaria and HIV/AIDS. The emphasis was on saving those at risk of death.

But now, even with the disease burden still big on the continent, its growing middle class who can afford to treat chronic illness is worthy getting more attention from profit making companies.

Africa offers many opportunities for profitable investment in a range of sectors and pharmaceuticals is just one of them.

While poor infrastructure, instability and corruption continue to inhibit short-term growth in some African countries, the continent remains an attractive destination for local and foreign drug companies, especially those willing to take risks in the search of greater returns.

Also read: Trends To Look Out For In The African Pharmaceutical Industry