How Africa Pharmaceuticals Industry is Reforming? | Goldstein Market Intelligence

AUGUST 2020

HOW AFRICA PHARMACEUTICALS INDUSTRY IS REFORMING? Goldstein Market Intelligence

WRITTEN BY: Dennis Abraham Vice President Goldstein Market Intelligence

INTRODUCTION Africa’s pharmaceutical market is expanding across every sector. During 2017 and 2025, the generic drugs segment are anticipated to grow at a compound annual growth rate (CAGR) of 9.1%, prescription drugs at 6.6% and over-thecounter (OTC) medicines at 5.9%. As per our analysis, Africa total pharmaceutical market is valued at USD 28.56 billion in 2017, which is anticipated to reach a market size of USD 56 billion by the end of 2025.

The present scenario of Africa healthcare industry is still lacks the effective penetration of healthcare system and thus opens up opportunities to the both global & local players set their foot in Africa. Despite the government & global organizations efforts done over the past decade, nearly 2 million Africans still have limited or no access to most essential medicines. Around 73% of HIV/AIDS treatment drugs supplied across Africa is still under the monopoly of top pharmaceutical companies from across the world and 75% of Africans still do not have access to medical treatment. Therefore, there are high number of cases of tuberculosis, AIDS and malaria which are responsible for more than 6 million people deaths on the continent each year. Hence, multiple solutions are brought forward by the concerned authorities and the most effective possible solution would be the production & supply of generic drugs which are 70-90% cheaper for the Africans to afford than the brand name drugs.

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The present scenario of Africa healthcare industry is still lacks the effective penetration of healthcare system and thus opens up opportunities to the both global & local players set their foot in Africa. Despite the government & global organizations efforts done over the past decade, nearly 2 million Africans still have limited or no access to most essential medicines. Around 73% of HIV/AIDS treatment drugs supplied across Africa is still under the monopoly of top pharmaceutical companies from across the world and 75% of Africans still do not have access to medical treatment. Therefore, there are high number of cases of tuberculosis, AIDS and malaria which are responsible for more than 6 million people deaths on the continent each year. Hence, multiple solutions are brought forward by the concerned authorities and the most effective possible solution would be the production & supply of generic drugs which are 70-90% cheaper for the Africans to afford than the brand name drugs.

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CONSUMER PSYCHOLOGY As drug prices rise, consumer healthcare expenditure is increasing worldwide. The situation in Algeria is no exception. However, the Algerian reimbursement system is one of the most generous in Africa and Middle East as 90% (38 million people) of the entire population are insured.

According to the analysis, 37% of African consumers are concerted in 30 cities, which will have more consuming households than Australia and the Netherlands combined by 2025. Addressing supply and distribution challenges, building stronger team and forging partnerships are the “to win strategies” as global pharmaceutical companies need local business partners like manufacturers, packaging companies, and distributor in order to help them navigate the continent’s many markets, with their widely varying consumer preferences, price points, manufacturing, and distribution infrastructures.

The unstable socio-political atmosphere generated by crime and corruption in most developing countries, the economy still tends to show characteristic features of extreme capitalism and is still much consumer-oriented.

Therefore, it has been clearly observed that indigenous industries in Nigeria whether pharmaceutical or otherwise have the same characteristics that can be summarized as follows:

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The analysis depicts an opportunity that varies from country to country. In some countries, a manufacturing hub is unlikely to be economical. In a half dozen or so others, such a hub could be viable if it can overcome structural obstacles—a relatively small, if growing, market; a global excess of manufacturing capability for some kinds of drugs; unreliable infrastructure; and an underdeveloped talent base. For those countries, a local industry might make drugs modestly more affordable—an important factor in an area where out-of-pocket drug costs can be a significant impediment for all but the wealthy consumers.

It could also improve public health, enhancing access to drugs at a time when the donor programs that have long provided drugs in some countries are facing flat or declining budgets. Even there, however, the effect of local production on jobs and GDP would likely be minimal relative to the size of these economies overall.

The private sector wholesalers are clearly an important part of the supply chain from the pharmaceutical producers to the ultimate consumers of drugs and other pharmaceutical products. Given the considerable gap in the knowledge of the critical role played by private wholesaler, MeTA has commissioned a study to examine pharmaceutical wholesalers‟ incentives to engage in responsible business practices which include assurance of quality of medicines and enhanced transparency dealing with their operations. This component of the study deals with a description of the structure of pharmaceutical wholesale market in Ghana.

The other main challenges are regional cooperation and human resource development. The regional market of the East African Community (EAC) is potentially big.

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AFRICA PHARMACEUTICALS TRADE OUTLOOK South Africa

1911.22

Morocco

588.26

Kenya

477.92

Tunisia

573.06

Uganda

356.13

Nigeria

320.13

Ethiopia

311.32

Algeria

2613.00

Ghana

207.25

Sudan

380.25

0

1,000

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2,000

3,000

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FUTURE OF AFRICA PHARMACEUTICALS MARKET The African Pharmaceutical sector by service type is highest in property services with 39.67% in 2017 and lowest being 5.42% in support services. The African Pharmaceutical market by providers type has the highest CAGR in 2017 with Integrated FM Service provider being 50.19 % .

The changing demographics also help the African Pharmaceutical sector to increase in every sector . With increase in population there is increase in different kind of diseases and growth of different kinds of drugs. During 2017 and 2025, the generic drugs segment are anticipated to grow at a compound annual growth rate (CAGR) of 9.1%, prescription drugs at 6.6% and over-the-counter (OTC) medicines at 5.9%. As per our analysis, Africa total pharmaceutical market is valued at USD 5.52 billion in 2017, which is anticipated to reach a market size of USD 9.48 billion by the end of 2025.

The continent accounts for 14% of global population but it has only 3% production of world medicines. Africa pharmaceutical manufacturing sector contributes only 25% - 30% of total needs. Moreover the life-saving drugs production is even more concentrated in only a few African countries i.e. 70% of pharmaceutical manufacturing is in South Africa and the remaining in Ghana, Nigeria and Kenya.

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Further, of the total supply of drugs in Africa, more than 85% is imported and Senegal imports 80% of these medicines. Major import of generic drugs are directed from India. Although they are cheap but still the high transportation cost adds up the price of drugs that reaches to end consumer. Which thus makes it difficult to provide effective healthcare system & treatment. Thus in present scenario, no African country, irrespective of their its size and level of economic development is entirely self sufficient for pharmaceuticals.

The entry of major players in the market have lead to a rise in competition in the market . The stiff competition may lead to production of low cost medicines .As the population rises the hotel Industry also grows and expands with rising population. The growth of the hotel industry has also shown significant rise in the country .

This rapid increase in population has lead to massive increase in the hospitality industry . The opening up of hotels and hospitals have played a major role in the development of the economy. As per the analysis there is still a stiff competition between the economy .

Scan the QR code or click the link below for our study on future of African pharmaceutical industry. bit.ly/3kpjE77

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About the author Dennis Abraham Ph.D, senior vice president at Goldstein Market Intelligence (GMI), leads GMI's syndicated health and wellness resaerch. Before joining GMI, Dennis held a variety of senior leadership positions in global and regional consulting roles covering consumer and retail insights across a broad range of healthcare categories. Dennis has been providing cross-category strategic insights to healthcare brands for over 12 years on topics including digital disruption, ecommerce, and healthcare technology. Dennis holds a Ph.d from Brown University.

About Goldstein Market Intelligence Goldstein Market Intelligence helping businesses to be successful at strategy and take informed decisions to grow the business in future.

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