June 2020 Africa: the Final Frontier For
Total Page：16
File Type：pdf, Size：1020Kb
AFRICA: THE FINAL FRONTIER FOR PHARMACEUTICALS COMPLIMENTARY UPDATES AND INTELLIGENCE BRIEFINGS JUNE 2020 1 TABLE OF CONTENTS Africa INSIGHTS P. 03 UNDERSTANDING AFRICA’S PLACE IN THE GLOBAL PHARMA INDUSTRY Improvements & Innovations in African pharma ........................................................................ 4 Africa’s urban middle trigger post-millennium pharma growth ................................................. 4 Regional hubs increase access, but drive growth in counterfeit goods ................................... 4 Asian, European companies and local start-ups are the key players ....................................... 5 Opportunities to consider .............................................................................................................. 6 Establishing regional manufacturing hubs in key locations ........................................................ 6 Closing gaps in existing supply chains ........................................................................................... 7 Consolidating the industry .............................................................................................................. 7 Concluding remarks and key considerations ............................................................................. 8 Playing the long game .................................................................................................................... 8 Africa’s top 10 stories P. 09 Digital healthcare and health insurance on the rise in East Africa ........................................... 9 International fintech firm enters South Africa, SA firm expands into Africa .............................. 9 Equatorial Guinea sets course for economic recovery ............................................................. 10 US voices displeasure over South Africa Copyright Amendment Bill ....................................... 10 Sasol, City of Cape Town seek legal recourse on South Africa’s IPP market ........................... 11 MTN, Vodacom expand service offerings in Southern Africa .................................................... 11 Internet infrastructure to expand in Angola, East Africa ............................................................ 12 African agriculture forges ahead with digitalisation .................................................................. 12 Zambia moves ahead with energy mix diversification .............................................................. 12 Uganda launches factory for Africa’s first smartphone .............................................................. 13 Other notable stories ...................................................................................................................... 13 Africa INSIGHTS UNDERSTANDING AFRICA’S PLACE IN THE GLOBAL PHARMA INDUSTRY Africa is arguably the world’s last frontier market for pharmaceutical products – owing to its vast population and persistent health challenges, particularly surrounding various communicable diseases such as Ebola, HIV/AIDS, malaria and tuberculosis. Despite efforts by governments across Africa, the continent’s pharmaceutical industry still lags behind other regions. While the sector has expanded significantly in other emerging markets, such as China and India, African pharmaceutical investments have struggled. Outside of Kenya, Morocco, Nigeria and South Africa, limited industry takes place. There is some local manufacturing, plus certain foreign imported pharma products are packaged and sold on to continental supply chains. Overall, there is minimal development of the sector across the rest of the continent. Growing African incomes and medical spending, along with increased interest from foreign investors, suggests that this may begin to change in the near future. Poor infrastructure, lack of funding and lack of policy harmonisation among African countries have contributed to weak growth. States have attempted to address these issues at a regional level, with initiatives like the Pharmaceutical Manufacturing Plan for Africa (2007), the African Pharmaceuticals Regulatory Harmonisation (APRH) Plan (2009). Also, most recently, through the establishment of the Federation of African Pharmaceutical Manufacturers Associations (FAPMA) in 2013. These have all helped construct the necessary policy framework for the industry to thrive. World Economic Forum session on Ebola in Africa, 2019. Tackling major communicable diseases such as malaria, Ebola, and most recently Covid-19, requires a cohesive continental framework for addressing Africa’s pharmaceutical needs. Key to this framework is the ability to stimulate local manufacturing capacity in lowering costs, particularly for generic drugs. Image courtesy: World Economic Forum/Flickr 3 AFRICA INSIGHTS IMPROVEMENTS AND INNOVATIONS IN AFRICAN PHARMA Africa’s urban-middle trigger post-millennium pharma growth Despite its challenges, the growth in the overall value of the industry over the last two decades has been remarkable. It has risen from US$4.7 billion in 2003 to US$20.8 billion in 2013, and then practically doubling in the run-up to 2020. Estimates are that the African pharmaceutical market will reach US$160.7 billion by 2024. This growth has occurred due to a confluence of factors, including: the expansion of local healthcare services, increased urbanisation, and higher disposable incomes amongst Africa’s growing middle class. Local policymaking has also done much to support these growth rates. Economic liberalisation since the 1990’s has opened up local economies for foreign investment and regional pharma policy harmonisation has allowed for those investments to more easily expand their distribution networks among local economic regions. Regional hubs increase access, but drive growth in counterfeit goods The capital-intensive nature of pharmaceutical production processes however, means that its growth has not been as widespread as compared to value chains in other consumer goods. Pharma production centres in Africa have tended to congregate around specific countries that can cater towards industrial growth and offer fairly easy access to regional and overseas export markets. Prominent examples of this include Morocco and South Africa which produce 70%-80% of their pharmaceuticals locally, compared to Kenya which only produces around 30%. Though the majority of African countries can provide consumers access to medicines, the heavily segmented nature of their supply chains means that these pharmaceuticals may receive mark-ups of anywhere between 50%-90% before they reach the end user. Heightened consumer costs have as a result created a thriving black market for counterfeit medicines. A 2018 World Health Organisation (WHO) report found that no less than 60% of medicines purchased in the Gulf of Guinea region were “substandard and falsified”. Investing in local production centres and supply chains could however do much to address these problems. Research from Ethiopia and Nigeria has shown that the local production of generics has brought costs in their respective regional supply chains down by 15% compared to when those same products needed to be imported from abroad. Further consolidation and integration of supply chains could assist to drive costs down further. Counterfeit vs real drugs. As demand for affordable medicine, has increased so has the illicit trade in counterfeit pharmaceuticals. For this reason, the US Food and Drugs Administration (FDA) has developed the CD-3 mobile device which uses wavelengths of light in order to show differences between authentic and counterfeit drugs which otherwise look identical. The technology is being employed in combatting fake malaria drugs in Sub-Saharan Africa. Image courtesy: US FDA/Flickr 4 AFRICA INSIGHTS Asian, European companies and local start-ups are the key players For the most part pharmaceutical companies which have set up local African enterprises can be categorised under four types of business entities. The first are multinationals who have set up local subsidiaries which manufacture and/or trade patented medicines locally. Second are foreign generics manufacturers who utilise lower local inputs and production costs to produce and export generics to markets in Europe, North America and Asia. Third are local generics manufacturers who produce for the local and regional market, followed by local small-scale manufacturers that utilise indigenous traditional medicines and remedies for export. Some prominent examples of each of these entities include Fosun Pharma, a Shanghai-based manufacturer which has partnered with Tridem Pharma, a French-based distributor, to operate pharmaceutical supply chains and sales forces in 35 African countries. Indian generics manufacturers Codilla and Cipla have been equally active in building local manufacturing facilities with the former investing in South Africa and Uganda and the latter in Ethiopia. Their involvement is particularly vital for Africa’s supply of antiretroviral drugs for the treatment of HIV/AIDS. In March 2020, Field Intelligence, a Nigerian-based logistics start-up, secured US$3.6 million in its latest start-up funding round for ShelfLife, a digital product which helps local pharmacies secure better access to price stabilised medicines. A SNAPSHOT OF AFRICA’S PHARMACEUTICALS MARKET Sources: McKinsey, Goldstein Research, African Business Central, IQVIA; 2016-2019 5 AFRICA INSIGHTS OPPORTUNITIES TO CONSIDER Africa is in a unique position as far as the pharmaceutical industry is concerned.