Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


Drugmakers eye Africa's middle classes

12 February 2013, 12:40

Paris - For pharmaceutical companies, Africa is changing.

Not only is the continent's economic growth grabbing attention in boardrooms but the shifting nature of its disease burden is luring Big Pharma, as new opportunities open up for treating chronic diseases afflicting the middle classes, rather than just fire-fighting infection.

European companies, in particular, hope to reap rewards by investing early in a region where many of them already have historic commercial ties.

Violence in Mali and Algeria have put Africa in the headlines in recent weeks but Sanofi (SASY.PA) of France - the international drug company with the biggest sales in Africa - is still pushing ahead with a third factory in Algeria.

"Africa is becoming an extremely interesting market and we'll continue to expand our commercial presence there," Chief Executive Chris Viehbacher told Reuters.

According to IMS data, by 2016 pharmaceutical spending in Africa is expected to reach $30 billion, driven by a 10.6 percent annual growth rate that is second only to Asia and in line with Latin America.

By 2020 the market will have more than doubled from current levels to $45 billion.

Although it is likely to remain a niche market, the promise of Africa is that it will continue to grow in the next decade as Asia and Latin America start to reach maturity.

It is that potential for the continent to act as a hedge against slowing long-term growth in established emerging markets that appeals to Novartis Chief Executive Joe Jimenez.

"We're thinking hard about what happens when those emerging markets start to slow because they are not going to continue growing at the rate that they're growing forever - and a place where we're putting a lot of our attention is Africa," he said.

The growth will be fuelled by increasing economic wealth and demand for treatments for chronic diseases in a more urban, middle-class population.

Non-communicable diseases - like heart disease, lung disorders, diabetes and cancer - are expected to account for 46 percent of all deaths in sub-Saharan Africa by 2030, up from 28 percent in 2008, according to the World Bank.

It is a major shift for the pharmaceutical industry, whose main role has been supplying drugs for infectious diseases such as malaria and HIV in Africa, often on a humanitarian basis.

It also signals a turnaround from the public relations disaster that followed a 1998 lawsuit by 39 multinational drugmakers against Nelson Mandela's South Africa over the supply of generic versions of patented HIV treatments.

Missing links

Still, Western multinationals face plenty of hurdles in the form of bureaucracy, corruption as well as a lack of regulation and infrastructure as they try to tap this promising market.

"Drug manufacturing does not happen in a void. And the expertise needed, such as training, the links between universities and industry, regulatory framework, is often missing in Africa," said Christoph Spennemann, a legal expert at the United Nations Conference on Trade and Development.

Western companies also have to deal with cut-price competition from drugs imported from India and China, the volume of which has more than doubled in recent years.

Indian drugmakers have made particular inroads in Anglophone Africa, while Chinese firms have benefited from healthcare projects funded by China across the continent.

British drugmaker GlaxoSmithKline (GSK.L), whose African presence dates back to 1971, is addressing the issue by emphasizing volume over profits. It aims to lift drug volumes in Africa fivefold in five years by accepting lower prices.

"It's still very challenging and there are still all sorts of issues, but gradually ... Africa is coming," said GSK CEO Andrew Witty.

GSK is also betting on growing over-the-counter (OTC) sales and plans to raise its holding in its Nigerian consumer products unit, which sells painkiller Panadol and Sensodyne toothpaste, to 80 percent in $98 million deal.

The broad approach towards prescription and OTC drugs reflects the uneven structure of the African market.

On one hand there is the emergence in large cities of a well-off middle class that can increasingly afford to pay for western medicines, including modern drugs that may cost tens of thousands of dollars. Two-thirds of the pharmaceutical market opportunity in Angola, for example, is in the capital Luanda.

But affluent, urban Africans are still outnumbered by those living in poor rural areas with very limited healthcare service.

Lagos and Cairo are two of the biggest high-growth cities for African drug sales. Another is Algiers, currently a priority for Sanofi, which has been in Africa since 1953.

The French company already runs two factories in Algeria and is investing 70 million euros ($93 million) to build a new plant in the outskirts of the capital.

CEO Viehbacher said he is forging ahead with the investment despite the recent hostage crisis in Algeria because the two existing plants simply cannot cope with local demand. ($1 = 0.7474 euros)

- Reuters


Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Nigeria @ 56: Words to my green f...

A leader’s job is not to dictate, but rather to be respected, admired and be a trustee, of the land we love, with so much potential, a land which should be freer than free. Its still a long way to fufilling our destiny! Read more...

Submitted by
Isaac Asabor263
Recession: An opportunity for Nig...

The recession should be seen as an opportunity for the country’s promotion as long as we all collectively conduct ourselves in a patriotic manner, writes Isaac Asabor.  Read more...

Submitted by
Black and White

We want to imitate the whites in everything because we are ignorant of our inherent originality and content. We spend all our Naira to acquire his inventions because we so oblivious of our natural endowments that we allow him have it for free. Read more...

Submitted by
Nate Nat
Adamawa State University Mubi: A ...

ADSU integrity forum has accused the Sunday Joshua Wugira, a lawyer, of adopting unorthodox tactics by abusing his privilege by attacking the integrity of ADSU Vice Chancellor Dr. Moses Zira Zaruwa, writes a News24 reader. Read more...

Submitted by
Abdulsalam Jubril
My Country Nigeria (Part One)

Poetry by Abdulsalam Jubril.

Submitted by
Abdulsalam Jubril
Recession, dearth in leadership a...

Every leader has the opportunity to become great and making himself immortal in the lives and hearts of people for generations to come. Will Mr. President seize this opportunity?, questions Abdulsalam Jubril. Read more...