The Covid-19 pandemic outbreak has increased Africa’s disease burden on one hand while opening up possible trade opportunities for global drug originators such as those from China and India especially for the supply of pharmaceutical products for the control and treatment of underlying medical conditions such as diabetes, heart disease, asthma and heart related ailments.
Although data on Africa’s pharmaceutical trade trends after the Covid-19 pandemic outbreak could still be in the compilation phase, it is likely safe to predict an increased uptake of prescribed drugs by people with existing medical problems as they battle effects of the new communicable respiratory disease associated with the new strain of coronavirus.
Even before the Covid-19 outbreak, the drug market in Sub-Saharan Africa for example, was already ripe for a restructured investment model that encourages more of a combination of local production of active pharmaceutical ingredients (APIs) as well as finished drugs to meet the demand of the continent’s 1.2 billion people.
A previous survey by McKinsey & Company says only three companies- two in South Africa and one in Ghana- are involved in production of APIs but none of them has an established research and development component.
Africa’s has an estimated 375 drug manufacturers and nearly all of them are engaged in “purchasing of active pharmaceutical ingredients from other manufacturers and formulate them into finished pills, syrups, creams, capsules and other finished drugs.”
Nevertheless, the region’s pharmaceutical market appears to have potential for growth as the increasing burden of disease forces governments, private sector and not-for-profit organizations in the continent to focus on delaying progress to full-blown sickness of those with underlying medical conditions and the number of fatalities.
For example, the continent has steadily increased its healthcare expenditure to an estimated average of 5.18% of the region’s gross domestic product (GDP) with countries such as Sierra Leone spending an equivalent of 13.42% of its GDP on the sector.
Other countries such as Lesotho, Namibia, Liberia and South Africa are spending in excess of 8% of their GDP on health care according to GBCHealth, a coalition of companies and organizations supporting private sector activities and investments in the global health sector.
The current healthcare sector’s expenditure in many African countries is likely to be sustained or even increased because of the rising population, currently standing at more than 1.2 billion people and the expanding urbanization in Africa. It is estimated that seven of the 10 countries with highest urbanization rates in the world are found in Sub-Saharan Africa.
Moreover, some of the emerging trends in Africa’s healthcare sector are helping clarify which segments are in need of private sector investments including manufacturing and distribution of pharmaceutical products by companies from leading global pharmaceutical markets such as China and India.
For example, the International Finance Corporation (IFC), a World Bank member, says the four major trends that have shaped Africa’s healthcare sector are “the push for universal health coverage, the consolidation of health care providers, the arrival of large-scale private equity investors and the deployment of emerging technologies.”
Notably, as IFC observed, is the emerging trend of healthcare “market consolidators in several countries” including stakeholders in the retail pharma business riding on the progress towards addressing “the scarcity of institutional equity capital—and the expertise that typically comes with it.”
Furthermore, some of Africa’s 10 top pharmaceutical markets of South Africa, Sudan, Tunisia, Morocco, Nigeria, Kenya, Algeria, Cote d’Ivoire, Egypt and Libya, which account for nearly 70% of the continent’s total revenue from pharmaceutical industry, are keen on improving the regulatory framework to woo more private sector investors in drug manufacturing and distribution.
A good example in Ethiopia and Nigeria where public private partnerships are taking root in the pharmaceutical industry. In Ethiopia, a new industry regulator has been established and generics included in the approved list of drugs for public health facilities according to McKinsey.
In Nigeria, local pharma companies are allowed to both manufacture and import drugs with more opportunities in partnering with global drug originators to address demands of the country’s pharmaceutical market.
The improved regulatory framework includes initiatives on tackling presence of counterfeit drugs in the African market, which was earlier projected could reach US$50 billion by end of 2020, and streamlining the licensing process for setting up operations for the manufacturing and distribution of generic pharmaceutical products.
African countries need to incentivize pharmaceutical industry investors by simplifying the licensing process for big pharma companies keen on setting up operations in the continent. The recent launch of the African Continental Free Trade Area should also be a catalyst to boost harmonization of the region’s policies and regulations to support full integration of the pharmaceutical industry for ease of investment by international firms especially global drug originators.