By Lexi Elo
The healthcare industry is set for huge growth, particularly in Africa as Sub-Saharan Africa’s healthcare market is estimated to hit $35 billion by 2016, according to International Finance Cooperation, an arm of World Bank Group report.
The report titled “The Business of Health in Africa” revealed that with resultant growth resulting in massive opportunities for people involved in the healthcare industry, resulting demand in hospital equipment, medical devices and pharmaceuticals the healthcare market in the sub region is poised for substantial growth.
According to the report “Health care provision accounts for half the investment opportunity, with the remainder split across the distribution and retail, pharmaceutical and medical product manufacturing, insurance and medical education. These investments will fund capacity expansion, new businesses and renovation of existing assets.
“About half of these investments are expected to be made by for-profit entities, the remaining portion of private sector being equally spread between social enterprises and nongovernmental organisation (NGOs). The vast majority of the investment opportunities in the near term will be the SME sector. Only a quarter of the opportunities are expected to have a project size larger than $3million. Ultimately, the vigour of the private health sector in Sub-Saharan Africa will rely on the commitment, creativity, and integrity of the people of Africa.”
The World Health Organisation (WHO) reveal that Sub-Saharan region alone accounts for 11 percent of the world’s population yet bears 24 percent of global disease burden and commands less than one percent of global health expenditure.
The growth potentials within the Sub-Saharan Africa healthcare is coming as huge opportunities are in the offing for local drug manufacturers including Fidson Healthcare Plc GlaxoSmithKline, Pfizer Nigeria and East Africa region (NEAR), Evans Medicals, Swipha, and Neimeth Pharmaceuticals, to grow their revenues on the back of recent surge in non-communicable diseases (NCDs).
Lured by an emerging middle class, rising disease burden, especially NCDs such as cardiovascular and respiratory disorders, cancer and diabetes, major pharmaceutical companies are increasingly looking to harness Africa’s opportunity by producing drugs to address these medical conditions.
Although the total size of African market may seem small compared to other global regions, analysts believe major big cities within the continent including Lagos hold the key to unlocking pharmaceutical industry’s lucrative potential. In these areas, increasing wealth, coupled with stronger health system infrastructure and rising demand for drugs treating chronic diseases are driving demand for pharmaceuticals products.
“Urban centres have the highest concentration of the segments of the population that are more likely to be relatively wealthy, more likely to be educated and also possibly more likely to suffer from the chronic diseases of affluence that are becoming increasingly important in Africa,” Sarah Rickwood, director of Thought Leadership at IMS Health told CNN.
An IMS report titled “Africa: A ripe opportunity,” reveal that by 2020, the market could represent a $45 billion opportunity for drug makers, spurred in part by robust economic growth and demographic changes.
While infectious illnesses like HIV/AIDS, malaria, tuberculosis still remain a huge problem, the continent is also projected to experience a surge in demand for treatment of NCDs in the coming years. The WHO estimates that by 2020 the biggest increases in NCD deaths will occur in Africa.
As major market-leading multinationals like Sanofi and GlaxoSmithKline having a strong presence in Africa, diverse drug manufacturers have made significant inroads in recent years. Indian and Chinese companies have more than doubled their imports to Africa over the last decade.
With India being the world’s third largest producer of pharmaceutical products by volume with an annual turnover estimated at over $20 billion, latest findings by BusinessDay reveal that the value of Indian Pharma products exported to Nigeria stood at $307 million as at March 31, 2012.
As investment in more specialised diagnosis centres, relating to cardiovascular and oncological diseases has continued to improve the level of patient diagnosis, increasing levels of affordability have spurred demand for prescribed chronic medicines.
While overall projections are optimistic, regulatory delays and continued proliferation of parallel imports and counterfeit products remain a primary market restraint. These restraints are however forecast to have a diminished effect in the long-term, as a result of sustained regulatory reform and improved regulatory efficiency.
Health investors believe the healthcare sector appears to be well placed to take advantage of both the expected growth on the African continent and the relatively high proportion of global disease in Africa.