We have a winner for our first competition. The winner of the first competition is Ayomide Adefemi. Ayomide is a Pharmacology student at Afe Babalola University in Nigeria’s Ekiti state. Here is his entry.
What is the pharmaceutical industry?
The pharmaceutical industry conducts research, develops, manufactures, and markets drugs or pharmaceutical drugs for use as medications to be administered to patients (or self-administered). They do this to cure, vaccinate, or alleviate patients’ symptoms. Pharmaceutical companies may deal in generic or brand medications and medical devices. They are subject to various laws and regulations that govern the patenting, testing, safety, efficacy using drug testing and marketing of drugs.
What is the market size of the African pharmaceutical industry market?
According to Brookings, Africa is heavily dependent on imported pharmaceutical goods to support its needs. As of 2019, as much as 70 to 90 per cent of the drugs consumed in sub-Saharan Africa were imported. Moreover, the size of the pharmaceutical market goods had an estimated value of $14 billion.
Goldstein Research suggests that “Africa is the only pharmaceutical market where genuinely high growth is still achievable”. They predict the market will be worth approx—$ 56 billion by 2030. Besides, Africa represents nearly 25 per cent of the global demand for vaccines but produces only 0.1 per cent of vaccines worldwide.
As of 2019, Africa had roughly 375 pharmaceutical manufacturers, compared to about 5,000 and 10,500, respectively, in China and India. Over 75 per cent of pharmaceutical imports are from the EU, India, and China. Although the U.S. is the world’s third-largest exporter of pharmaceuticals by value, the U.S. represents only 4.4 per cent of drug imports to Africa.
Regarding exports, Africa’s pharmaceuticals tend to stay within the region. As shown below, more than half of exported pharmaceutical goods are destined for East and Southern Africa. In Addition, a small share of African pharmaceuticals is shipped outside the region, mainly to the EU, Yemen, and the United States.
What countries in Africa have the biggest market?
Statista has data for which countries import the most pharmaceuticals. However, it was as of 2014.
Algeria imported over $2.6 billion in pharmaceuticals. Whereas South Africa had the most significant value of pharmaceutical exports, with $380 million in pharmaceutical exports during that year.
What companies are the big players in this space?
The ICH Good Clinical Practice lists Pharma companies in South Africa here. In this list, you recognise popular names such as AstraZeneca, Pfizer, Johnson&Johnson and more. In addition, Pharmpproach.com have provided a list of Pharma companies with addresses in Nigeria here.
Aspen is the largest pharma company in Africa, and they made a deal with Johnson & Johnson to formulate and distribute COVID-19 vaccines in Africa. Since the Johnson & Johnson vaccine is only one shot, it allows for more significant distribution in rural areas.
What startups have been recognised in this space?
- Ilara Health
Ilara Health provides accessible and affordable diagnostics to the disadvantaged, who are reportedly up to 500 million people in Africa. They partner with companies using artificial intelligence and robotics to lower the overall cost of diagnostics and integrate these companies’ devices onto their platform. Ilara Health procures tech-powered diagnostic equipment at affordable prices and makes the same equipment available to healthcare facilities, who then pay over an agreed period. They recently raised $3.75 million in Series A funding based in Kenya.
- Dabadoc
Dabadoc connects patients with doctors, enhancing the doctor discovery process and enabling patients to find the proper care. Axa Assurance Maroc and Orange bought majority shares in 2018. Four years before then, Seedstars had named DabaDoc the best start-up in Morocco.
- Rema Medical Technologies
REMA started in 2017 as a social media platform to improve the quality of medical decisions by connecting doctors across Africa. In 2018, Sedric won Seedstars’ pitch competition in Cameroon. The remote medical assistance service REMA provides is being used by more than 7,000 doctors across Benin, Niger, Congo, Kinshasa, Guinea, Senegal, Mali, Algeria and Burkina Faso.
How can I invest in the Pharmaceutical Industry?
Africa’s pharmaceutical industry has great potential for boosting economic growth and creating jobs. The growing numbers of Africans with significant disposable income and spending power, the strong demographic dynamics, including fast urbanization, steady economic growth in most parts of the continent, and improved infrastructure in both rural and urban areas are all potential drivers of Africa’s pharmaceutical boom.
- Invest via the stock market
There are only a few pharma stocks available, but you may be open to investing in one of them after some research. Here are some that we could find:
- Aspen Pharmacare Holdings Ltd – (South Africa)
- Adcock Ingram Holdings Limited – (South Africa)
- Ascendis Health – (South Africa)
- Invest as a manufacturer
There is clear momentum in Africa for developing the pharmaceutical industry. African Heads of State stressed the potential for local production and technology transfer in the Pharmaceutical Manufacturing Plan for Africa. Developing the pharmaceutical industry on the continent would contribute to removing financial barriers to medicines and improving access to essential medicines. Still, the conditions for the private sector to bloom have not been met.
You will need to ensure that you have access to affordable financing, technology and technical know-how, adequate human resource capacity, good procurement and supply chain systems and high investments in research and development as well as intellectual property. No single sector, government department, or organisation on its own can achieve these goals.
- Open a pharmacy
Opening a pharmacy is a great way to earn income by providing the area you serve with the drugs that it needs. However, it does not serve the problem of increasing the local production of drugs. Regardless, it is still a great investment and can help prevent countries from running out of medication as some African countries did, during the pandemic.
What are the risks associated with investing in this industry?
Growing competition from generic pharmaceuticals
A patent cliff is when a pharmaceutical firm’s revenues could drop significantly or “fall off a cliff” when one or more established products go off-patent since these products can be replicated and sold at much cheaper prices by competitors.
Impending patent cliffs aren’t great for major pharmaceutical manufacturers but are good for generic pharmaceutical manufacturers and consumers looking for lower prices on medicine. For major manufacturers, these patent cliffs will pose a significant risk to their earnings. For the rest of the industry, the effect will likely be significantly disruptive and could open new opportunities for smaller manufacturers.
Pharmaceutical fraud
Pharmaceutical fraud is a major problem, the False Claims Act aims to prevent and incentivise whistle-blowers to come forward about potential average sales price fraud, clinical trial fraud and good manufacturing practices fraud. It has calmed down during the pandemic, but it is still an issue that plagues the industry.
Data breaches and other cybersecurity threats
As consumer data is becoming more valuable, the number of cyberattacks is also increasing. On the manufacturing side, increased use of internet-connected manufacturing technology, like industrial IoT sensors, increases the vulnerability of manufacturing facilities.
Companies will need to invest more in cybersecurity and policies in the office and for remote workers, to avoid a detrimental data breach
Supply chain disruptions
The lean supply is not equipped to deal with sudden shocks or issues with production caused by events like a pandemic. Therefore, long manufacturing lead times and unpredictable demand are likely to cause disruption.
1 Comment
Thank you so much for this opportunity