An overview of Kenya’s pharmaceuticals sector

By Charles Aminga: CAminga@brand.ke

Kenya’s pharmaceutical sector plays a pivotal role in the country’s healthcare system and economy, contributing to the availability of essential medicines and boosting local manufacturing Over the years, the sector has evolved, and today, it is regarded as one of the most dynamic in East Africa, with Kenya emerging as a pharmaceutical hub for the region. This growth is driven by a combination of government initiatives, private sector investments, and the rising demand for healthcare solutions.

Production

The pharmaceutical sector’s contribution to Kenya’s GDP is relatively modest but growing, accounting for about 0.3% of GDP (World bank). In recent years, production quantities of pharmaceutical products declined by 0 1 per cent in 2023 compared to an increase of 1 6 per cent in 2022 (Economic Survey 2024) Between 2020/21 and 2022/23, KEMSA reported an average order fill rate of 51% for capital essential Health Pharmaceuticals and Technologies (HPTs) and 80% for program Better Medication Management System (BMMS) products, underscoring the ongoing efforts to improve access to essential medicines These fulfillment rates highlight the importance of bolstering local production to meet growing health demands across the country

To counter harmful use of non- pharmaceutical drugs in the past five years (2019-2023) there was significant fluctuation in the quantity of prohibited harmful non-pharmaceutical narcotic drugs and psychotropic substances seized in Kenya. The amount increased from 6,533 kg in 2019 to 10,909 kg in 2020 and further to 13,080 kg in 2021 However, there was a sharp decline in 2022, with seizures dropping to 5,850 kg, before rising again in 2023 to a high of 14,259 kg (National Police Service, 2023)

These variations reflect ongoing efforts by law enforcement to curb drug trafficking, though challenges in consistency remain

Export statistics

Kenya’s exports of medicinal and pharmaceutical products have shown notable changes in both quantity and value In terms of quantities, exports fluctuated from 32,377.70 tonnes in 2019 to 37,078.90 tonnes in 2023. The highest export quantity was recorded in 2020 at 39,389.10 tonnes, while the lowest was in 2021 at 30,182.20 tonnes On average, Kenya exported approximately 34,770 tonnes of medicinal and pharmaceutical products per year during this period

In terms of value, exports increased steadily from Ksh 10,326.70 million in 2019 to Ksh 17,683.50 million in 2023 The largest growth in value occurred between 2022 and 2023, with exports rising from Ksh 12,210.60 million to Ksh 17,683.50 million, representing a 44 8% increase in export value. This sharp increase in 2023 indicates growing demand and possibly better pricing or an increase in high-value pharmaceutical exports

Market opportunities in Africa

Kenya primarily exports its pharmaceutical products to several neighboring countries within the East African Community (EAC) and beyond Key export markets include Uganda, Tanzania, Rwanda, Burundi, Ethiopia, and the Democratic Republic of Congo (DRC) The country also exports to other parts of Africa, such as the Comoros and Malawi, benefiting from trade agreements and regional market access programs Kenya is positioned as a significant player in the regional pharmaceutical market, supplying 50% of the pharmaceutical products within the Common Market for Eastern and Southern Africa (COMESA) regionGrowth Potential in AfCFTA “With the implementation of

Support and investment

The Kenyan government does provide tax incentives on imported pharmaceutical inputs to encourage local pharmaceutical manufacturing This is part of the broader strategy to reduce dependency on imports Additionally, Kenya’s National Medicines Policy aims to strengthen the local pharmaceutical industry by encouraging domestic production, which aligns with the government’s “BottomUp Economic Transformation Agenda.” The policy focuses on reducing import dependency while ensuring affordable and accessible healthcare through enhanced local production capacity (Pharmacy Board Kenya)

Key challenges facing the pharmaceuticals sector

Kenya’s pharmaceutical sector, while poised for growth, faces several challenges that could hinder its development and global competitiveness Some of the challenges the sector faces include:

Cost of Production:

Kenyan pharmaceutical manufacturers face high costs due to importing active ingredients from countries like India and China, while local production in these countries keeps their costs lower This affects Kenya’s competitiveness

AfCFTA, Kenya’s pharmaceutical industry is projected to grow exports by 20-30% annually, opening access to markets worth over USD 25 billion across Africa starting with west Africa

Counterfeit Medicines:

The presence of counterfeit and substandard drugs poses health risks and damages the credibility of Kenya’s pharmaceutical industry

High Dependence on Imports:

Kenya’s reliance on imported pharmaceuticals makes it vulnerable to supply chain issues, currency fluctuations, and global market changes, impacting medicine affordability

Intellectual Property Rights (IPR):

Balancing IPR with the need for affordable generics is challenging, as it requires fostering innovation while ensuring access to essential medicines

Lack of Research and Development:

Limited research and development capabilities in Kenya hinder the creation of new and innovative pharmaceutical

Constraints to the export of pharmaceuticals

Major effort is needed to translate pharmaceutical export potential to a reality The following constraints, which in the past, have acted as an impediment to export performance will need to be addressed:

• Quality and Regulatory Compliance: Meeting international quality standards and regulatory requirements for pharmaceutical products is essential for exports Some Kenyan pharmaceutical companies faced challenges in consistently adhering to these standards, which could limit their access to global markets

• Infrastructure and Technology: Inadequate infrastructure and technological capabilities in terms of manufacturing, quality control, and research and development can hinder the production of high-quality pharmaceutical products that meet international standards

• Intellectual Property Rights (IPR) Issues: Intellectual property rights can be complex when it comes to pharmaceutical products. Balancing the need to protect intellectual property with the goal of making medicines affordable and accessible in export markets can be challenging

• Limited Research and Innovation: The lack of significant research and development initiatives within the Kenyan pharmaceutical sector could limit the creation of innovative and competitive products for the global market

• Supply Chain Challenges: Reliable and efficient supply chain management is crucial for exporting pharmaceuticals. Issues such as transportation, storage, and distribution can impact the quality and availability of products in export markets

• Market Access and Trade Barriers: Exporting pharmaceuticals often involves dealing with trade barriers, tariffs, and complex regulatory procedures in target markets These barriers can limit access to certain markets or increase the cost of doing business

• Lack of Information and Market Knowledge: Limited awareness of international market trends, customer preferences, and regulatory requirements in target export markets can hamper effective market entry and expansion

• Competitive Landscape: The global pharmaceutical market is highly competitive Kenyan companies need to compete with well-established multinational pharmaceutical companies that have strong brand recognition and distribution networks.

• Quality Perception: Some international buyers may have concerns about the quality and authenticity of pharmaceutical products from developing countries Establishing a reputation for consistent quality is important for building trust in export markets

• Trade Agreements and Partnerships: The absence of favourable trade agreements or partnerships between Kenya and potential export markets can impact the ease of access and competitiveness of Kenyan pharmaceutical products

• Market Entry Strategy: Developing a suitable market entry strategy, including marketing, distribution, and pricing strategies, is crucial for successful pharmaceutical exports Lack of expertise in this area can be a constraint

• Political and Economic Factors: Political instability and economic fluctuations in either Kenya or the target export markets can impact trade relations and export opportunities.