Capturing a Growth Market
The African continent boats a population of more than 1.1 billion and is experiencing a demographic shift, which makes it particularly attractive to international pharma. A rise in employment opportunities has contributed to a growing middle-class, and with it, an increase in non-communicable diseases linked to lifestyle choices, such as diabetes, hypertension and cancer. Increased health insurance coverage for citizens has also improved access to medicines, creating the need for a sustainable pipeline of trusted pharmaceutical products.
A growing prevalence of certain disease profiles and the need for access to quality, safe and effective medicines have led African Governments to look for ways to reduce reliability on imports and encourage local development - according to Infomineo Analysis, the share covered by imported products ranges from 85% to 95% of the local market in SSA countries.
Panel member Emmanuel Mujuru, Chairman of the Federation of African Pharmaceutical Manufacturers Association, described the African market as ‘one of the fastest growing pharma markets globally’, enjoying ‘double digit growth’ each year. Mujuru added that by 2020, the market’s projected value will be approximately US$45 billion, having almost doubled in the past five years. Based on this growth trajectory, he anticipates the market to be worth over US$100 billion in the next 10 years.
A More Favourable Environment
With such a demand for affordable and accessible products, what is being done to facilitate domestic production and attract outside investment? Moderator Olukayode Afolabi, Co-Founder & Executive Director of DFS Africa, a platform for fostering development in Africa through attracting foreign investment and expertise, pointed to the African Union’s Pharmaceutical Manufacturing Plan for Africa (PMPA) as a catalyst for stimulating local production and multinational collaboration.
The PMPA aims to address current hurdles to local pharma production, including introducing reforms to unfavourable policies around tax, financing and utilities. Mujuru shared the example of raw materials, which were previously heavily taxed, and when combined with the high costs of utilities made African production financially unfeasible.
Fellow panellist Shailesh Kapadia, Director of Generics at OPHAM SA added to this by sharing the example of Mauritius, where many incentives and tax benefits are being introduced to make the region more attractive to multinationals, moving towards developing a ‘trade zone’ for local pharmaceutical development.
Harmonisation on the Horizon
One of the challenges faced by pharma companies looking to register and supply medicines across the African continent is that this is not a unified market. However, African nations and development agencies such as NEPAD and the African Union, are looking at ways to harmonise registration requirements for medicines.
Mujuru described the establishment of the African Medicines Agency earlier this year as a crucial step towards regulatory harmonisation – the AMA represents a single, continental regulatory agency, acting as an umbrella body for continent-wide regulation, and is similar in its framework to the EMA.For international players, these steps towards creating regulatory harmonisation across the continent means the process for the approval of new drugs will be centralised, opening and expanding African markets.
An Investment Opportunity
One of the biggest challenges in building local production capacity is funding. Many companies in Africa do not have access to affordable long-term financing and as such are looking to international partners for investment.So, what’s in it for the investors?
The discussion closed with panellists sharing how they would convince multinationals to invest in Africa. Kapadia describes Africa as a ‘future continent’ with ripe opportunities for private equity firms and foreign investors, while Hitesh Upreti, CEO & Managing Director of Zenufa Laboratories Tanzania Ltd echoed this sentiment, saying ‘Africa is the future’ and offers ‘long-term business opportunities’. Himanshu Patel, Director of Yash Pharmaceuticals, accepted that market entry may be a risky prospect for investors, but is ultimately a decision that would pay off.
Furthermore, Mujuru endorsed Africa as ‘the pharma market of the moment’ and one which is ‘opening up, with harmonisation taking place’. He noted that investing in Africa gives access to a huge population – almost double that of Europe, and with a GDP of more than US$3.3 million. This volume, combined with the efforts of African nations to make doing business on the continent easier, means the Sub-Saharan Africa market is an attractive option for internationals seeking long-term growth opportunities.
Interested in learning more?
Sub-Saharan Africa will be a key focus to the content programme at CPhI Middle East & Africa 2020 in Abu Dhabi. This event gathers together key pharmaceutical stakeholders from across the entire Middle East & Africa region to meet and do business in pharma. To find out more about how to capitalise on the fastest growing pharma market, join us in Abu Dhabi from 14-15 September 2020.