Up And Up - Long known for its struggles with infectious diseases and poverty, the continent of Africa is experiencing widespread economic growth. An increasing middle class and changes in lifestyle now drive demand for medicines to treat chronic, non-communicable diseases, such as diabetes. 

The African Union is comprised of over 50 countries and can be loosely divided into three regions; North Africa (NA), Sub-Saharan Africa (SSA) and South Africa (SA). Africa holds 15% of the world's population at 1.1 billion, and that number is growing. Pharmaceutical spending, according to IMS, is expected to reach $30 billion by 2016 and could potentially hit $45 billion by 2020.  Meanwhile, Africa is dependent on importation of essential medicines.

On The Ground

Big Pharma has had a presence in Africa for decades having established supply, marketing and distribution agreements with domestic pharmaceutical companies such as Aspen PharmaCare and Adcock Ingram. Finished dose (FD) manufacturers exist throughout the continent; however with only a handful of active pharmaceutical ingredient (API) manufacturers, FD production also heavily relies on importation of raw materials. Further, many domestic FD manufacturers are not yet capable of qualifying for World Health Organization (WHO) good manufacturing practices (GMP) status and consistent quality is a concern.

Infectious disease remains one of the greatest challenges facing the African population. Africa carries almost one quarter of the global disease burden rife with malaria and tuberculosis. Further, 75% of the global population with HIV/AIDs is in Africa. Opportunities exist in these markets and a growing number of foreign companies are seeking access to the continent.

Investment and Partnering in Africa

Various approaches to investment in Africa have been employed to enter these markets. If companies focus on building relationships with non-government organizations (NGOs) and governments; they may find these alliances can help with market access and patient outreach. Through alliances in Africa, Ranbaxy and Dr Reddy's have provided affordable medicines; which has allowed these companies to enter the continent and become familiar brands among patients and caregivers.  In 2001, responding to a call from  Médecins Sans Frontières for cheaper medicines to treat HIV/AIDS; Cipla announced it would sell a triple combination of antiretroviral (ARV) medications for $350 per person per year (PPY)-far below the estimated $10,000-$15,000 PPY ARV combination offered by Innovators.

Partnering with local manufacturers, establishing licensing agreements and providing technology and raw materials requires a low level of investment and may be a successful route to entry.  In 2012, 1A Pharma, a subsidiary of Sandoz International, partnered with Cinpharm in Cameroon for production of generic drugs. Raw materials and technology would be supplied by 1A Pharma for manufacture of generic drugs in addition to providing guidance to help Cinpharm integrate cGMPs into a facility built in 2010.

Of course, building or acquiring facilities to manufacture locally requires much higher levels of financial investment and strategic planning. In the SSA region a number of partnerships have emerged. Hikma recently announced a partnership with MIDROC Group to build a FD manufacturing and distribution center in Ethiopia. Cipla and their Ugandan partner, Quality Chemical Industries, plan to expand their operations in Uganda and build a new plant to triple production of HIV drugs. To assist its members with logistical costs associated with exporting to African countries, Pharma Export Council of India (Pharmexcil) has plans to build a warehouse facility in Nigeria.

In North Africa, Recordati has completed the acquisition of FD manufacturer Opalia Pharma in Tunisia.  Increasing their stake in NA, Sanofi has announced plans to expand manufacturing capacity in Algeria with construction of a third plant which will produce dry and liquid FD and house a distribution center.

Spotlight On South Africa

South Africa has seen a number of developments in the pharmaceutical sector. South Africa's pharmaceutical industry is more established than those of NA and SSA. Doing business in South Africa is more clearly defined; regulatory and intellectual property systems are evolving and road and railway systems are more established. Chile's CFR Pharmaceuticals is currently working to negotiate takeover of Adcock Ingram while Adcock moves ahead with plans to expand into other African markets. Missing from the African pharmaceutical investment landscape is domestic API manufacturing.

Challenges Ahead

Although pharma interest in this region has increased, many challenges remain. Vast improvements to all aspects of infrastructure including transportation and reliable electricity are necessary in Africa.  The World Bank recently announced Africa is in need of $93 billion annually until 2020 for infrastructure development.  These issues have been outlined and a long term strategic plan called the Programme for Infrastructure Development in Africa has been formulated by the African Union Commission (AUC) in partnership with the African Development Bank and the United Nations Economic Commission for Africa and NEPAD Planning and Coordinating Agency. 

However, the continent faces other hurdles in attracting industry including a lack of information for doing business in African countries, lack of regulatory control, skilled labor, political stability and market data. Companies interested in entering markets in NA and SSA will find NGOs, foundations and governments working on a number of initiatives to facilitate doing business in these areas.

Pharmaceutical Manufacturing Plan for Africa

The AUC and the United Nations Industrial Development Organization has developed the Pharmaceutical Manufacturing Plan for Africa (PMPA). The PMPA cites roadblocks facing the development of the pharmaceutical industry on the continent, such as human resource development and defines steps that need to be taken to build a foundation for the industry. The goal of the PMPA is to expand the pharma industry in Africa to improve access to affordable, quality medicines as well as to become less dependent on imports of APIs and FD thereby improving Africa's self-reliance.

Despite the challenges presented by these emerging markets, Africa holds a wealth of opportunities for the pharmaceutical industry from innovation to generic penetration. Innovators will find research and development prospects with an estimated 80% of the natural raw materials in Africa have not yet been subject to standard scientific testing. Additionally, generics may find options to expand their markets by reaching growing populations on the continent.