Opportunities in Africa’s pharmaceutical landscape

Opportunities in Africa’s pharmaceutical landscape

As African nations seek to improve market access and ease of business, opportunities exist in the continent’s pharmaceutical sector.

The African Union (AU) and the New Partnership for Africa’s Development (NEPAD) are seeking to address the enormous medical burden that plagues their continent. As many African states are beginning to see significant GDP growth rates it is, one would hope, only so long that curable diseases will continue to plague the continent. Organizations are working to encourage African governments to find ways to make pharmaceutical markets across sub-Saharan Africa more hospitable. Research and development is key and, as much as African governments seek to provide the conditions for R&D, it is also necessary for large vaccine and drug firms to take the first bold steps into these developing African markets.

Traditional aid to the developing world is changing. There has been a growing sense that western government funded aid has failed. Despite approximately $2.3 trillion having been given to the African continent in development aid since the 1960s, 70% of the sub-Saharan African continent still lived on less than $2 a day in 2008. Furthermore, curable diseases like Malaria and Tuberculosis continue to plague the continent. Every year there are 9 million new cases of TB, and a resulting 1.6 million deaths.

Recognition of the limited success of donor and government aid packages has put increasing pressure on western governments to cut back on international aid budgets and rethink their relationship to developing countries. As such, the UK government has recently taken the contentious decision to end aid to South Africa by 2015. In replacement for financial aid, the advice made by leading World Bank figures like Paul Collier is to encourage African governments to build their capacity and scale up investment in order to effectively harness their natural resources and prevent aid dependency.

This advice is being applied to healthcare development across Africa. Several organisations are encouraging private investment in healthcare by seeking to increase the market capacity. Pharmaceutical investment is limited by trade restrictions, Research and Development issues, procurement and supplies problems and limited medical infrastructure. The ‘Global Strategy on Public Health, Innovation and Intellectual Property’ is a leading initiative encouraging and coordinating the development of needed drugs and vaccines across the continent. The initiative has been signed by 192 countries, and the emphasis is on creating action plans that encourage medicinal training and innovation to support ‘needs-driven research’.

Alongside actively seeking to improve market conditions, there is a growing African middle class that is driving demand and organically creating a market. 33 million Africans are considered to be part of an expanding sector of the population that are able to spend between $2 and $20 per day. As a result, pharmaceutical spending is expected to almost double to $30 billion by 2016. The opportunity for multinational pharmaceutical companies to engage with these growing middle class markets, predominantly located in the urban areas, should improve the overall market capacity. In turn, this will allow pharmaceutical firms to also engage with the poorer, rural areas where access to medical infrastructure is traditionally less developed.

As sub-Saharan Africa markets expand, and government funded aid lessens, pressure to generate income from the private sector will increase. As these initiatives that seek to coordinate medical progress and build the market capacity develop, large firms should feel they can take the lead in funding vaccine development across the African continent. Drug and vaccine companies should note that the development model is changing and that they are becoming a core element in the relationship between the developed and the developing world. This development model will be based on mutual benefit between the multinationals and the populations suffering from these curable diseases, rather than on an antiquated post-colonial relationship which caused aid dependency and had limited success.

About Author