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African Biopharma Market Presents Long-term Opportunities
The African pharmaceutical market is growing at approximately a 10% compound annual growth rate and is expected to reach $42 billion by 2020, according to IMS Health. Such numbers are attracting pharmaceutical companies looking to expand their global footprint. To be successful in this very fragmented and emerging market, however, manufacturers of biologics must be aware of the many challenges that drug companies face when entering this region, as well as the issues specifically associated with these very sophisticated therapeutics. Most importantly, those firms that want to benefit from the anticipated growth in Africa must be willing to overcome the challenges and start investing in having a presence today, or risk being outcompeted by local and international firms in the future, says Dan Rosen, consultant with IMS Health’s Thought Leadership Group.
Targeting the right markets
Making such general assumptions and ignoring the fact that Africa is comprised of more than 50 distinct countries is a big mistake for biopharmaceutical manufacturers looking to enter Africa. There are big differences between the countries in the northern, middle, and southern parts of Africa, differences from country to country, and even differences within countries on a tribal basis. The region can also be viewed from the perspectives of language, religion and cultural ties, English and French colonial histories, and trade blocks. Companies must also consider the public (government and non-government organization [NGO]-funded markets) and private markets within countries.
In addition, because biologics tend to be very expensive, biopharma manufacturers must carefully consider their target markets, according to Sarah Rickman, director of the IMS Thought Leadership Group. “Except for vaccines and insulins, most biologics will only be purchased privately by wealthier individuals that have insurance,” she adds. Countries with such populations include Algeria, South Africa, and some sections of Egypt, and the larger sub-Saharan African countries. Within these countries, the facilities where the people who can afford biologics drugs can get treatment are typically concentrated in cities with larger populations.
Vaccines for the prevention of infectious diseases and insulin products, which are currently in demand due to a growing epidemic of Type II diabetes, particularly in Kenya and South Africa, are often purchased by governments and NGOs at reduced prices. Biologics manufacturers should not ignore the potential opportunities in selling to governments, though. “While the margins are often much lower, the volumes are much larger than is possible in the private sector and there is real potential to establish brand recognition,” Rickman explains.
She also suggests that biopharmaceutical manufacturers be prepared for the fact they won’t be doing “business as usual” in Africa and pick their battles very carefully. For Rosen, that means looking at the 5-10 largest markets and focusing on the largest cities within them.
The lack of an adequate distribution system is another factor that pharmaceutical companies must be willing to address, either by investing in the supply chain directly or finding partners to assist them. “Often people in Africa pay higher prices for original branded drugs than anywhere else in the world due to the numerous markups that occur as the products travel from the manufacturer to the patient. Therefore both availability and price are critical issues. Drug manufacturers must ensure that their products are not only getting to patients, but are at relatively affordable prices,” Rosen asserts.
There are added complexities for biopharmaceuticals. For example, supply chain concerns are exacerbated for biologics because of cold chain issues. “Often there are no facilities with reliable temperature controls, which complicates the shipment of many biotherapeutics,” comments Rickman. She adds that needle reuse/collection is another concern with biologics.
There is also a lack of doctors that are trained to diagnose diseases that require treatment with biologics drugs, such as autoimmune and oncology-related diseases. “Highly trained specialists are required to prescribe biologics drugs, as are facilities with the capabilities to administer them, and there are very few of both in Africa currently,” says Rosen. He notes, however, that the latter issue is beginning to be addressed, with venture capital groups investing in the construction of private hospitals in large population centers. Nonprofits are doing so as well, such as Aga Khan Health Services, which has constructed health care facilities in Kenya, Tanzania, and Uganda, as well as many other developing nations.
Importance of going local
Need to act now