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Indian pharma firms see tremendous scope for growth in African nations

Nandita Vijay June 14 , 2013


The India pharmaceutical industry is now seen as steadily increasing its footprint on the
African continent, which comprises 54 countries and is the world's second-largest and secondmost-populous. The continent is recognised as the second-fastest-growing after Asia. The focus
on pharmaceuticals is, in fact, among the drivers of Africa's economic growth.
The growing population and increasing lack of immunity to disease are the factors that have
led to the increasing demand for drugs and nutraceuticals in allopathy and ayurveda, and
therefore Indian herbal pharmaceutical players cannot ignore Africa in their international
forays, stated industry observers.
According to a report by healthcare information provider IMS Health, the expanding presence
of Asian manufacturers in Africa has seen the proportion of pharmaceuticals being imported
from India and China more than double in terms of value in recent years. The global import
and export data indicates that India accounted for 17.7 per cent of pharmaceutical imports to
Africa in 2011 (up from 8.5 per cent in 2002), and China's share was 4.1 per cent (up from
around two per cent in 2002).
The leading pharmaceutical manufacturing industries are located in East Africa. The Kenyan
pharmaceutical and healthcare market opens ample revenue generation opportunities.
Moreover, East Africa is a free-pricing pharmaceutical environment with no import tariffs.
There is a huge reliance on imported raw materials like active pharmaceutical ingredients
(APIs), excipients and intermediates.
IMS Health stated, The success of local pharmaceutical companies is the ability to attract
global pharma majors into research and development (R&D) licensing arrangements, a strategy
which endorses their production capabilities.
Local companies in South and northern Africa have been leaders in their domestic markets.
For example, Aspen (South Africa), Adcock Ingram (South Africa), EIPICO (Egypt), Saidal
(Algeria) and Cipla Medpro (South Africa) have combined licensed originator brands and their
own branded generic products, the healthcare information provider said.
Aspen is now Africas largest domestic pharmaceutical company with a strong reputation for
quality products. Aspens maturity in the domestic market resulted from a strong partnership
with GSK, which included product licensing arrangements as well as skills and equity transfer.
Cipla Medpro, a local company in South Africa, is the third largest pharmaceutical company in
South Africa by value, and is expanding to Botswana and Namibia, IMS added.
According to Mahaveer Bafna, chairman and managing director, Bafna Pharmaceuticals, The
African market scenario is very encouraging and throws open ample growth prospects for

Indian companies. The market is expected to register 10.6 per cent compound annual growth
rate (CAGR) through 2016, and the spending from Africa would be to the tune of $30 billion.
India's share may be approximately 25 per cent.
We see Africa as the major driver of growth for small and medium manufacturing enterprises
like ours. There is a huge population, which requires medication across all age-groups and the
country is also driving its strategy to economies of scale to outsource pharmaceutical
manufacture from India. Therefore, we are extremely bullish about Africa, stated Harish K
Jain, director, Embiotic Laboratories Pvt Ltd.
It is the growing population and increasing incidence of diseases which help generating the
revenues from this sizeable African market, stated Arun Kumar, vice-chairman and managing
director, Strides Arcolab.
The African continent offers good business to the foreign pharmaceutical players as the
continent carries 25 per cent of the world's diseases and is importing 70 per cent of the drugs
from overseas, Peeyush Jain, deputy managing director, Venus Remedies Limited, said.
The changing economic profile of Africa is also linked to an increased demand for chronic care
drugs, reflecting a marked shift in the burden of illness towards non-communicable diseases
(NCDs) and the continued impact of the human immunodeficiency virus and acquired immune
deficiency syndrome (HIV/AIDS) on the continent.
According to the IMS Health report, The NCD proportional contribution to the healthcare
burden is forecast to rise by 21 per cent through 2030. While continuing to struggle with
infectious and parasitic illnesses, Africa is expected to experience the largest increase in death
rates from cardiovascular (CV) diseases, cancer, respiratory disease and diabetes over the next
ten years, resulting in greater demand for healthcare services and appropriate medicines.
The value of pharmaceutical expenditure is second only to the Asia-Pacific (12.5 per cent) and
in line with Latin America (10.5 per cent). The demand for medicines in Sub-Saharan Africa
(excluding South Africa) is expected to reflect rapid economic growth that is outpacing any
other region of the world.
The middle-class in Africa is continuously rising and now accounts for 34 per cent of the
population. The urban population in Africa is expected to exceed that of Chinas and Indias by
2050.
Ten major African cities are expected to represent between 20 and 30 per cent of the total
pharmaceutical market opportunity by 2016. Since 2000, healthcare spending has grown at the
compound annual growth rate of 9.6 per cent across 49 African countries.
In fact, in 2010 South Africa joined the four nations that comprised BRIC namely Brazil,
Russia, India and China. The group is now known as BRICS. At the BRICS Summit Africa
Dialogue Four, held in Durban, South Africa, earlier this year, India's prime minister
Manmohan Singh said that India remained committed to supporting Africa's rise, and would

continue to assist and work with the vast continent, as its 54 countries develop their institutions
and build infrastructure.
India will assist Africa in charting its own course through institution-building, infrastructure
development and technical and vocational skill development. These include the pan-Africa enetwork for tele-medicine and tele-education in 47 countries in Africa. Among the initiatives
on the cards are providing education to over 15,000 African students in India each year and
setting up the institution of scientific fellowships specially designed for African scholars. There
are also plans to extend assistance with vocational and entrepreneurial skill development,
especially for smaller firms besides offer concessional assistance for the development of
industry, the Indian prime minister stated.
India would review the terms and conditions of credit extended to African countries so that
they meet their requirements in line with their own development priorities. India's enterprising
private sector was one of the key drivers of the Indo-African partnership. The India-Africa
conclave in New Delhi, held earlier this year, generated interest in about 500 projects in Africa
worth $70 billion, Singh added.
The importance of BRICS, when emphasised from the South African perspective, has seen a
significant growth in trade and economic relations. Trade between South Africa and other
BRICS countries has grown from 11.6 per cent to 27 per cent. We are currently having 31
projects by 25 companies located in BRICS countries totalling Rand 12.6 billion, said Rob
Davies, South Africa's minister of trade and industries.
The benefits of South Africa's partnerships with the other BRICS countries were poised to
lead to more industrialisation and integration on the African continent, Davies added.
The Pharmaceuticals Export Promotion Council of India (Pharmexcil) too has done a
tremendous job in building Brand India, but much more needs to be done. Earlier a lot of
companies in Africa would opt for Europe to undertake contract manufacturing. Now, they are
looking at India, their neighbour, which is known for its production prowess and high-quality
standards. India has been recognised for cost-effective manufacturing efforts too. Africa is also
aware of Indias educated workforce which now wields a significant clout in the knowledgedriven segment of pharmaceutical research and manufacture, said Jain of Venus Remedies
Limited.
As opportunities continue to move away from the traditional pharma markets, most multinational companies (MNCs) are now focussing on regions like Africa.
Earlier this month, the Chennai-based Bafna Pharmaceuticals engaged in the manufacturing
of pharmaceutical formulations of Betalactum and NonBetalactum received approval from
the Ghana Food and Drug Administration (FDA) to market Omeran-20 capsules (i.e. 20mg
Gastroresistant Omeprazole capsules), a proton pump inhibitor used in the treatment of reflux
oesophagitis, peptic ulcer disease (PUD), gastroesophageal reflux disease (GORD/GERD) and
Zollinger-Ellison syndrome.
We already are present in Nigeria, Ghana and Ethiopia, and are awaiting approval from

Tanzania. We have a focussed strategy for Africa, and once the product approval is through,
Africa will be the preferred continent for us to increase our presence, said Bafna.
The African pharmaceutical market challenges range from stiff competition and varied options
of generic drugs, which dilutes the profit margins for many companies. Moreover, there are
also innovator products, which many medical practitioners have a inclination to prescribe.
One cannot ignore the fragmentation of the market, the regulatory clearances and the
payments to be expected, industry experts stated, adding that there was the need for increasing
the Brand India image. Now Pharmexcil was making its best effort to ensure that Indian
pharmaceutical products would be the main choice for the population.
The IMS Health Report pointed out that the appeal of Africa lay not in its size (as the continent
accounts for just three per cent of the global economy, but in the dynamics that drive
sustainable growth at a time when the major established pharmaceutical markets have been
facing a more uncertain future.
Underpinning these prospects are a series of positive economic trends greater political and
fiscal stability and improvements in pro-business legislation have led the United Nations (UN)
to forecast that foreign direct investment (FDI) in Africa could more than double by 2014,
despite speculative money leaving the continent following the collapse of Lehman Brothers,
and the Arab Spring restricting investment in North Africa, it added.
The report further stated that FDI is fuelling macro-economic growth and vastly improving
access to new technology. The recent boom in mobile subscribers reflects this trend As of
mid-2012, there were more than 600 million mobile subscribers on the continent, surpassing
American and European figures.
At the same time, major demographic shifts show an increasing number of working-age
Africans, a rising middle class which accounts for 34 per cent of the continents inhabitants,
and an urban population expected to exceed that of Chinas and Indias by 2050, the IMS
Health report said.
Most of the major pharmaceutical MNCs have had a presence in Africa for a number of years.
Among the first companies to enter the country were Abbott (South Africa, 1930s); SanofiAventis (Morocco, 1953); Novartis (Egypt, 1962); Pfizer (Morocco, 1963) and GSK (Nigeria,
1971).
Eleven MNCs have predominantly focussed on, and succeeded in marketing branded
innovative and generic drugs to the private sector in urban areas. Products have typically
targeted in-demand therapy areas, such as vaccines, anti-infectives and anti-diabetics, with
sales mainly concentrated in northern and South Africa. IMS Health stated that only a few
opportunities have been realised in the public sector, although MNCs have had some success
through tendering, particularly in the more established markets such as South Africa.
There is considerable support by governmental, non-governmental organisations (NGOs) and

private sector investment. This has largely focussed on strengthening the health system
infrastructure, capacity-building, treatment provision and specialised services.
There is no doubt that Africa is beckoning small-medium and large players, stated Jatish N
Seth, vice-chairman, Confederation of Indian Pharmaceutical Industry (CIPI); member,
Karnataka Drugs and Pharmaceuticals Manufacturers' Association (KDPMA), and director,
Srushti Pharmaceuticals.