PharmExec Blog

The African Markets Pharma Can't Ignore

In its new study on pharma market growth in Africa, IMS Health highlights three ‘rising star’ countries from the continent’s sub-Saharan region.

According to Africa: A Ripe Opportunity, Nigeria, Botswana, and Kenya are set to join the more established markets of South Africa, Algeria, Egypt, and Morocco as major countries to watch in the next five to 10 years.

Speaking to Pharm Exec, Daniel Rosen and Sarah Rickwood, of IMS’ Thought Leadership division, pointed to Nigeria as ‘the one country that pharma companies can’t ignore.’ Within a decade, they explain, Nigeria could be one of the world’s 20 largest economies. Its population of 160 million means it is already larger than Morocco in terms of market size.

However, says Rosen, ‘companies have a tendency to get a bit to fixated on Nigeria. Potentially, if they were to spread their investments, they could also see really good returns across the other fast-growing economies.’ As well as Botswana and Kenya, there is opportunity with the East African Community — Kenya, Tanzania, Uganda, Rwanda — especially if, Rosen adds, these countries harmonize regulations on pharmaceuticals, which is mooted. ‘If this was to happen we could start looking at the East African Community as a single hub, and it would stand a chance of overtaking some of the other markets in terms of size.’

Africa isn’t just an opportunity for pharma. ‘At its very heart,’ says Rosen, ‘it is a macro economic opportunity. Next year, it will have seven of the 10 fastest growing economies in the world.’ But as far as pharma is concerned, he adds, ‘you have to look at rise of the African middle class consumer, the ability to pay for more drugs, and the willingness to spend money on healthcare.’ Indeed, 10 major African cities are expected to represent between 20 and 30 percent of the total pharmaceutical market opportunity by 2016. Since 2000, healthcare spending has grown at a 9.6 percent pace (CAGR) across 49 African countries.

And if it seems something of an oversimplification to condense a vast continent of 53 countries into one ‘ripe opportunity’, Rickwood argues that, so far, the argument has been that Africa is a continent ‘where only the north and the extreme south has really mattered to pharmaceutical companies.’ Indeed, these regions have seen a recent, rapid increase in public healthcare spending: South Africa is moving towards a national health insurance scheme, Algeria and Egypt are investing heavily in public healthcare, and Morocco is now looking at introducing a new healthcare scheme.

But the new report points to the fact that ‘growth is definitely coming from the middle,’ says Rickwood. ‘Africa is a long-term growth opportunity that will probably be going strong when some of the current big ‘pharmerging’ markets will be starting to moderate their growth levels. The challenge that companies have is deciding which of Africa’s countries to invest in.’

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    Posted January 3, 2013 at 10:21 am | Permalink

    I wonder how a country like TUNISIA has been forgotten in this analysis. I think that this country has a very large and efficient basis of production. Maybe the problem is about financial access to medicines?

  2. Posted January 3, 2013 at 12:49 pm | Permalink

    The absence of mention about French West Africa – particularly Cote D’Ivoire – is glaring. Abidjan is poised to be a major hub for FWA. The civil war that still seems top of mind as a caution to pharma companies is no longer valid and the country is very stable. The President of the country has made healthcare one of his top three initiatives, and there are continuous visible, public efforts to wipe out counterfeits and corruption. The head of the social security system (right hand to the President) has already progressed to privatize and modernize healthcare, and 60% of the nation’s healthcare industry value is centralized in Abidjan. When the African Development Bank returns its HQ to Abidjan from Tunis, which they have already announced will be happening this year, further economic and infrastructure development will follow. The major pharma companies that had relocated FWA regional offices to Senegal during the Civil War have returned to Abidjan last year or are doing so this year (except for Sanofi, which is the largest company, but which also has an operation based in Abidjan). Finally, regulatory harmonization is more advanced and progressing well in FWA, compared to other parts of Sub-Saharan Africa. If companies can supply products from and registered in France, this process is even faster/easier.

  3. Ait-Allah MEJRI
    Posted January 3, 2013 at 11:27 pm | Permalink

    There remain significant obstacles ahead before Africa offers any serious long-term growth prospects for Pharma. Overcoming them will require unprecedented new commitment by African governments and other stakeholders. More than 10 years ago African governments pledged to increase health care spending to a minimum of 15% to meet the United Nations’ MDGs. None of the countries mentioned by IMS (except perhaps Botswana) is at or near this figure in 2012. The low level of spending on healthcare, as a % of national expenses, is only the tip of the iceberg. Infrastructure in tatters, lack of basic healthcare for all, shortage of qualified personnel and invasion by fake pills are some of the massive issues African heads of state have to address. With almost half of the population lacking access to safe water and adequate sanitation services, the vulnerability to the spread of infectious diseases still constitutes the greatest challenge to health in Africa. Emerging middle-class in Ghana, Kenya or Nigeria, the rise of out-of pocket spending and the privatization of health care will do very little to increase access to new and effective treatments.

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