When it comes to the pharmaceutical market, Africa may be the only area where high growth is still achievable.
Due to its tropical climate, areas of Africa has one of the largest reservoirs of infectious disease. With the increasing adoption of Western lifestyle in Africa, there has been a paradigm shift that’s driving the demand for chronic prescription drugs.
Due to the factors the value of Africa’s pharmaceutical industry jumped to $20.8 billion in 2013 (compared to just $4.7 billion in 2003), and it is expected to reach a business opportunity of $45 billion by 2020.
So what’s making Africa the hotspot for pharmaceutical growth? There are three main factors contributing to this exciting growth:
Urbanization: Cities enjoy better logistics infrastructures and healthcare capabilities, and Africa’s population is undergoing a massive shift.
By 2025, two-fifths of economic growth will come from 30 cities of two million people or more. These urban households will have more purchasing power will be quicker to adopt modern medicines.
Healthcare Capacity: Healthcare provision is becoming more efficient through new initiatives – and the introduction of innovative delivery models is increasing capacity even further.
Business Environment: To create a more supportive environment for business, governments are introducing price controls and import restrictions to encourage domestic drug manufacturing – causing the pharma industry to expand.
How Investors Can Get Involved
As one of the last markets that is showing genuinely high growth in the pharmaceutical industry, Africa is a great place for early investors to gain competitive advantage. If you’re looking to become involved, there are a few things to keep in mind to secure success within the market.
First, focus on pockets of growth. Due to Africa’s wide gaps between countries in terms of market size, growth trajectory and legal structure, it’s important for investors to focus on where the growth is happening, which at the moment appears to be Kenya and Nigeria.
However, investors shouldn’t just focus on countries, but also in the cities themselves. As mentioned above, the increase in urbanisation is key to the pharmaceutical market growth within Africa. As more citizens in urban areas adapt to modern medicines faster than those in the rural areas, the opportunity continues to grow.
It’s also important to forge partnerships. Global pharmaceutical companies need local business partners – from manufacturers, to distributors – to help them navigate the continent’s many markets.
Additionally, partnerships with government are equally important, whether they involve working with medical opinion leaders to guide research priorities and secure funding, or collaborating with health ministries and non-governmental organizations to provide public-awareness campaigns. Johnson & Johnson, for example, has partnered with the South African government to introduce an education program for maternal, newborn, and child health that operates via mobile-phone messaging.
Lastly, look at options that address supply and distribution challenges. In parts of Africa, supply and distribution mechanisms still pose some of the biggest challenges within the market. The ability to innovate the distribution channel and set up effective operations against this challenging backdrop is critical to capturing growth opportunities.
Overall, Africa is in a transition phase, and is quickly on its way to achieving adherence to global standards. While South Africa remains the best established region for pharmaceutical manufacturing in sub-Saharan Africa, the local manufacturing markets in East and West Africa are relatively well developed and positioned to grow.
Local production is regarded as a key strategy for sustained access to quality-assured medicines for the long term. With healthcare coverage expected to expand to a greater proportion of the population through National Health Insurance (NHI) initiatives, it seems there will continue to be more and more opportunities within the pharmaceutical market within Africa.