By Lexi Elo
As growth patterns in developed markets continue to flatten, multinational pharmaceutical firms such as Norvatis, Pfizer, Sanofi, Johnson & Johnson, are shifting their focus to finding new sources of revenues and profitability in Nigeria, Africa and emerging markets such as Brazil, Russia, India, China, Mexico, and Turkey.
With a growing middle class of expected annual disposable income in excess of $1 trillion by 2023, increasing awareness of healthier lifestyles, and a combined Gross Domestic Product (GDP) of $2.9 trillion, lack of healthcare infrastructure and unaffordability of medication as the biggest hurdles to growth in the African markets.
The African pharmaceutical market is expected to achieve a year-on-year growth rate of 10.6 percent by 2020, resulting in pharmaceutical sales of $45 billion in 2020.
This revelation, contained in a report titled “Pharma Emerging Markets 2.0: How emerging markets are driving the transformation of the Pharmaceutical Industry,” disclosed that over the past five years, sales generated in emerging markets have doubled, totalling $191 billion in 2011 (representing approximately 20 percent of global market volume)
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The report noted that pharmaceutical firms’ top initiatives to drive growth in emerging markets over the next five years include investing in local research, development and manufacturing, building local sales forces as well as close collaboration with governments.
According to the report “Many consider Africa to be the final frontier of emerging markets. The continent is vast, highly diverse, and full of great potential—but it also presents great challenges. Although sub-Saharan markets are currently embryonic, their expected relative increase in importance is significant and not far behind that of Southeast Asia.
“Top executives are already factoring this development into their business plans. While anti-infectives and anti-virals demonstrate strong short-term growth, they will be overtaken by treatments for lifestyle diseases in the long term. The market for oncological products is not expected to grow as fast in Africa as in other regions during the next five years. Partnerships that involve localized brands are very important in Africa.”
In Nigeria, out-of- pocket expenses for health care constituting over 90 percent of private spending and less than 5 percent (about 5.5 million) Nigerians covered by health insurance in public and private sector. This development has left majority of the country’s 160 million people without health insurance cover.
While this portends huge market for health insurance by Health Maintenance Organisation (HMOs) in the country, health experts believe that embracing community-based health insurance scheme (CBHIS) scheme would lead to increase in financial access, utilization of health services, resource mobilization and quality of health care services through community effort.
With 60 percent of drug manufacturing in ECOWAS sub-region taking place in Nigeria underlining the huge market, its quest to become self sufficient in drug production is threatened by continuous importation of active pharmaceutical ingredients (APIs) from India, United States of America and Germany, among others.
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Other challenge identified within emerging markets and Nigeria include lack of Intellectual Patent (IP) protection, price pressure, talent issues (e.g., recruitment, development, and retention), compliance challenges, supply chain and distribution issues, as well as lack of reimbursement and public funding.
“Few pharmaceutical companies are currently prepared to commit themselves to significant investments in local infrastructure. Instead, a pragmatic partnering approach involving local NGOs, governments, and distributors is preferred and will continue to be the most common strategy during the next five years,” the report added.
