Dr Feng Zhao

Manager, Health Division

Human Development Department, African Development Bank

(title )

Opportunities and Challenges:

Africa Pharmaceutical

Sector

1

Challenges of the African

pharmaceutical sector

In SSA, on average only 38% of essential drugs are available in public facilities

• Current weaknesses of the pharmaceutical sector

- Limited local production

- Inadequate supply chain

- Weak procurement systems

- Counterfeited or sub-standard pharmaceutical products

2

Mapping of pharmaceutical manufacturing capacity in Africa

3

Libya

Tunisia

Algeria

Morocco

Western Sahara

Guinea

Bissau

Mauritania

Egypt

Chad

NigerEritrea

Sudan

Central African

RepublicNigeria

Mali

Senegal

Liberia

Togo

Cameroon

EthiopiaSomalia

DjiboutiGambia

Sierra Leone

Guinea

Ivory

Coast

Benin

Zaire

Uganda

GabonKenya

Burkina

GhanaEquatorial

Guinea

Congo

Rwanda

Tanzania

MozambiqueAngola

Zambia

Burundi

Malawi

MadagascarBotswana

ZimbabweNamibia

South Africa

Lesotho

Swaziland

▪ Total of 129 companies

identified

▪ Most companies locate

to Egypt, SA, Nigeria,

Morocco and Algeria

▪ Estimated average sales

for identified companies

of ~USD 90 million/year

▪ Total of 129 companies

identified

▪ Most companies locate

to Egypt, SA, Nigeria,

Morocco and Algeria

▪ Estimated average sales

for identified companies

of ~USD 90 million/year

Cape Verde

Pharmaceutical manufacturing

Industry size and participants

• Size of African pharmaceutical market

– SSA: 0.6 % of the global market or US$ 3.8 billion USD (IFC, 2007)

– Recent estimates for the continent’s market: US$ 8 to 10 Billion

• Nigeria market: US$ 2.5 Billion in 2011 (IMS Health)

• South Africa market US$ 4 Billion (IMS Health).

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$ (

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Global Pharmaceutical Top Markets 2009

Range of products manufactured in Africa

• Limited range in most countries

– Simple analgesics and sedatives, antimalarials, older generation antibiotics, anti-helminthics, first generation anti-hypertensives, anti-diabetics and neuro-psychiatric drugs, nutraceuticals, cough and cold preparations,

– Significant latent potential market

5

Reliance on Import

• Products mostly imported

– HIV/AIDS: 80 % of ARV finished formulations in Africa are imported (mostly from India)

– Only 1 company in Africa is certified by WHO for an anti-malarial and therefore can access the donor funded markets

• Inputs mostly imported

– Design, construction, machinery and equipment, laboratory equipment and reagents, raw materials including API, aluminium foil for blister packaging, other labelling materials and excipients.

– 95% of the continent’s API needs are met by imports.

6

Efficiency of production

• Economics of pharmaceutical manufacturing are complex

– Efficiency of production is key to competitiveness

• Substantial efficiency gains are possible

– Estimated to about +30%

– Efficiency gains require expertise, buy in across the organization from senior management to production staff, and a culture of efficient production

7

Policy and legislative landscape

• National drug policy is in place in most African countries

– Promote access to safe, effective quality medicines at affordable prices

– Promote the rationale use of medicines and promotion of EML / EDL

– Develop the local industry via the promotion of the local production of essential medicines.

• Regulatory Oversight: Most African countries don’t meet basic minimum requirements.

8

Supporting industries and associated infrastructure

• Lack of clinical research organizations and bioequivalence centres

• Fragmented and inefficient distribution chains

• Unreliable and very expensive utilities

• Regular supply interruptions

• Unsupportive financial and legal infrastructure

• Lack of specialized skills

• Lack of a reliable supply of market intelligence services

9

Skilled Human Resources

• Pharmaceutical manufacturing system requires specialised skills in pharmacy, chemistry, biological sciences, engineering, life sciences, management, ICT

• Several ongoing initiatives to increase the human resources for the pharmaceutical manufacturing system (e.g. WHO’s Essential Medicines Group)

10

Access to Finance

• Access to affordable investment capital – Key challenge is the ability to make the requisite investments to upgrade

to international GMP standards

• Main funding options – Traditional bank debt financing

– Equity financing

– Finance from international sources

• Alternative sources of funds – Local private equity and venture capital investors

– Initial public offerings on certain national stock exchanges

– International private equity and venture capital investors

– IFIs

– Not-for-profit international organizations

– Pharmaceutical collaborative partners 11

Challenges in the value chain

12

Opportunities for pharmaceutical

industry’s growth in Africa

Pharmaindustry growth

1.3 billion population by

2020

A combined GDP of 2.9

trillion USD

Healthcare expenditure of

around 200 billion USD

A pharmaceutical market

valued at an estimated 23

billion USD,

50 percent of households

will have a disposable

income of more than 20 USD

per day;

Investments in healthcare

reforms

Economic factors Medical factors

The patent expiries of many

leading medicines

The growth of the

pandemics and increasing

numbers of people on

treatment

An improving health

insurance and coverage

environment, and a

consequent increase in the

number of people with

access to healthcare

An ageing population and a

consequent increase in

lifestyle diseases

13

The AfDB and the pharmaceutical sector

• The Bank is working with and governments and the private sector to build the pharmaceutical industry and associated services: – Ensure affordable medicines

– Make the sector an engine for economic growth and job creation.

• Examples of Bank’s activities in the sector: – Ongoing discussions on supporting ARV production line of the

continent

– Partnership with NEPAD to support sustainable access to medicines in Africa through the African Medicines Regulatory Harmonization (AMRH) program

– Partnership with the African Network for Drugs and Diagnostics Innovation (ANDI) to revitalize the pharmaceutical sector in Africa through a regional operation

– Pan-Africa region project to finance the revitalization of Africa’s pharmaceutical sector.