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• Medical Products
• DRC: The new platform for growth in Africa
• Better labs, better health care in Africa
• Kenya: Fight against malaria a community affair

Africa is next on Big Pharma's emerging markets growth curve

 

- Africa forecast to be a $45 bln pharma market by 2020
- Rise in chronic disease means more need for Western drugs
- Sanofi, Novartis, GSK among firms investing more in Africa

PARIS, Feb 12 (Reuters) : 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 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.

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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, whose African presence dates back to 1971, is addressing the issue by emphasising 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.

 

Medical Products

 

The healthcare sector in Africa is showing signs of remarkable improvement as the quality of hospitals and the availability of qualified doctors has dramatically improved over the last few years. By making the transformation from traditional medicine to a modern and well structured healthcare system, many African countries have been able to meet the growing demands for quality healthcare services for their people.

The Council for Health Services Accreditation for Southern Africa (COHASA) has been accrediting many hospitals under its jurisdiction that meet the applicable predetermined and published standards. However, Africa’s healthcare industry is characterized by a huge division between the private and public sectors both in terms of facilities and funding. Perhaps the biggest problem facing the public sector currently is the rising incidence of HIV/AIDS, which is and will continue to place considerable strain on the public health system in many African countries.

As a result, there exist immense opportunities for the supply of a wide range of hospital equipment, instrumentation, machinery and allied medical products. Most of the requirements of the healthcare sector in Africa are imported from Dubai. Being a price-sensitive market, African buyers are always on the lookout for high quality, competitively priced goods to meet their requirements.

 

 

DRC: The new platform for growth in Africa

 

The DRC with an estimated population of 65 million has the second largest land area in Sub-Saharan Africa. It is rich in natural and human resources and in need of foreign direct investment to re-build an economy stagnated by prolonged civil war.

The DRC with an estimated population of 65 million has the second largest land area in Sub-Saharan Africa. It is rich in natural and human resources and in need of foreign direct investment to re-build an economy stagnated by prolonged civil war.

Given its vastness and turbulent history, the Democratic Republic of Congo (DRC) may be perceived as a tough country in which to do business. Few people would suggest it lacks potential for investment given the number of top companies operating in sectors such as banking, telecommunications, mining, retail, and oil.

Prof. Mathias Buabua, the man at the helm of DRC's National Investment Promotion Agency, ANAPI, isn't too perturbed by negative perception, or even the lowly ranking the country got in the World Bank's Doing Business report. "The DRC is still attracting foreign direct investment in many sectors, and particularly in mining," he assures.

Nevertheless the government has taken in it's stride the mammoth task of inspiring confidence in potential local and international investors through the adoption of wide ranging measures, including the implementation of appropriate mining, forestry and investment codes.

DRC's robust mining sector was booming until the global financial crisis hit last year - dramatically changing the economic environment due to fallen international commodity prices, tightened credit and dampened investor confidence.

"We are diversifying the economy to include other sectors that can offer a safety net during hard times," Buabua said to investors attending a business conference in South Africa in October, 2009.

The conference organised by the Cape Chamber of Commerce in association with Nedbank, the Nepad Council and the Private French Market Consultants was aimed at promoting investment opportunities in the DRC.

According to John Ilunga, deputy chief executive of DRC's Investment Promotion Fund (FPI), Special Economic Zones will be established to facilitate access to essential infrastructure, land and simplified mechanisms for business registration and operation. "The SEZ's will allow pursuing of options to improve the overall business environment, thereby attracting investments in critical sectors." he said.

The FPI, which is mandated to fund investment projects, has disbursed over US$40 million to 91 projects since last year.

Forming partnerships
Private sector participation is critical for sustained economic growth and the DRC is seeking areas of cooperation with private investors in various countries, including South Africa. Jo-Ann Johnston, chief director for trade and sector development at the Provincial Government of the Western Cape acknowledged the potential for growth and investment in the DRC.

"90% of the Western Cape economy is SMME based with rapid growth recorded in ICT, agriculture, education, clothing, mining and retail sectors," says Johnston. She pinpointed ICT as having a niche which would particularly benefit the DRC.

The trade balance between the two countries remains in favour of South Africa, a situation the DRC would prefer improved. So far, 32 bilateral agreements have been signed between the DRC and South Africa including an agreement on economic cooperation, a convention on the avoidance of double taxation and fiscal evasion with respect to income tax; and an agreement on mutual promotion and protection of investment.

"There are many bankable projects across the economic sectors. We are urging South Africans and other investors to stop the "wait and see strategy" and form joint ventures with Congolese businesses. A good start would be to invest in public private partnerships to build infrastructure in identified corridors in southern Africa in order to facilitate further private investment." said Muzungu Diakolo, head of the Economic Unit at the DRC embassy in South Africa.

Big companies investing in the DRC include mobile services providers Vodacom, Zain and MTN. Others are Standard bank, Rawbank, Ecobank, and mining giant BHP Billiton.

Flagship opportunities
A wealth of unique opportunities exist in the DRC and it's central geographical location makes for easy connections to the rest of the continent. Coupled with the legal and regulatory mechanisms in place, the country is a destination investors should be watching keenly.

DRC has a myriad of natural resources waiting to be tapped (both above and below the ground.) Straddling the equator and spanning two tropical zones, it's climate is also favourable for agribusiness development.

"We want to resuscitate all agricultural sub-sectors from growing of food and cash crops; biofuels production, dairy farming and processing to aquaculture. Congo must be one of the few places in the world where fish are allowed to die of old age" said Mathias Buabua while describing the potential in aquaculture.

"Small-scale farmers are producing fruit, such as mango, and the crop is thrown away because it can't reach the market, or be processed," he added.

DRC's agriculture sector, the mainstay of the economy, has grown by an average of 2% per year, consistently lagging population growth at an average annual rate of 3%. The transportation infrastructure has also declined over the years, and in particular the road network through which produce is distributed around the country.

"Infrastructure is core to facilitate inter-trade, promote growth and enable investments," says Nepad Council's secretariat director Moses Mwanjirah while calling for regional integration of infrastructure projects in the Southern Africa Development Community (SADC).

Mwanjirah said the management of water resources in the SADC (currently chaired by DRC president Joseph Kabila) region is centre to agricultural competitiveness, which is currently stifled by over-dependence on rainfall for irrigation purposes.

Great possibilities abound in Congo's forest, the largest in Africa. It has remained largely intact due to the lack of viable transportation infrastructure in the country's hinterland. Consequently, timber exploitation has been underdeveloped and undertaken by only a few companies. Opportunities include transportation services, production and selling of wooden poles for power lines, industrial processing, manufacturing of medicines from indigenous plants and production of paper.

The country's vast natural resources reserves include metals such as ascobalt, copper, gold, and precious stones including diamonds. Minerals account for the vast majority of the exports and represent the single largest source of foreign direct investment. The mining industry which suffered during the war appeared to be recovering given the high prices of minerals in global markets before the financial crisis. Opportunities in the sector include boosting copper and diamond production, exploitation of methane gas in Lake Kivu, oil prospecting and exploration; and transport infrastructure.

DRC has inadequate physical infrastructure due to neglected development caused by challenges in the country's recent history. The multi-billion dollar chinese-Congolese agreement signed in 2008 could provide critically needed resources for infrastructure development, but there are still many other short and long-term opportunities for investors to take advantage of. These include the establishment of transport companies, upgrading of existing harbours, airports; and building of national and regional roads and railways; and residential and commercial buildings.

"The energy sector will require massive investment to ensure the undeveloped oil reserves and hydroelectric potential is realised," said Buabua when he commented on the potential of the country to supply power to the rest of Africa in the future.

ANAPI's pick
"There is a crisis of raw materials in the East and West, and the DRC has huge energy and mining potential. The telecommunications sector has been quite successful but there's need for installation of fixed lines. Agri-business is a good bet - the DRC-South African land deal allowing SA farmers to grow crops in DRC is a watershed. We can resolve our own food shortage issues as well as feed our neighbouring desert countries. In fact, opportunities exist across all the sectors," said Buabua.

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Better labs, better health care in Africa

A new organisation aims to sharply improve the quality of African laboratories, allowing health professionals to better track, treat and test for diseases. It's called the African Society for Laboratory Medicine, or ASLM.   "It's basically an independent, not-for-profit entity that is organised on the continent of Africa to focus on the growing demand for really high quality medical and research laboratories throughout Africa," says Dr. Blair Holladay, executive vice-president of the American Society for Clinical Pathology. The ASCP has helped train many African lab technicians

"The laboratory serves as 70% of the information that's used for a patient to be treated for disease. So without a laboratory or without the infrastructure set-up, over 70% of diseases cannot be treated effectively and/or even treated. So patients go untreated," he says.

 

The U.S. Centers for Disease Control and Prevention and Dr. John Nkengasong, director of its laboratory program, started efforts to form the ASLM about a year and a half ago. Now, many policymakers, health and lab professionals, African ministers and international officials are involved.

 

Holladay says, "That Pan-African society is a body that works for Africa to address the lack of laboratory bodies in Africa and helping for the advancement and the needs for the workforce of the laboratory system, so we can strengthen and lead to a better systematic standardization in African laboratories."

Holladay says African lab workers will be trained on the latest techniques and equipment. They in turn will train others until labs across the continent are improved.

 

"The treatment and prevention of the majority of significant illnesses," he says, "can really be improved by confirmation in the laboratory of that diagnosis, monitoring the patient day after day and making sure the diagnosis has actually been made and there's been clinical intervention as a result of that diagnosis. And lastly, the laboratories are also involved in surveillance and monitoring the trends for both morbidity and mortality of diseases."

 

The African Society for Laboratory Medicine was launched at a meeting in Addis Ababa in mid-March. Dr. Nkengasong, chairman of the Board of Directors at ASLM, says he expects work to begin around July.

 

 

Kenya: Fight against malaria a community affair

29 April 2011

On 25 April World Malaria Day was observed worldwide, but as the world works to eliminate malaria deaths by 2015, sub-Saharan Africa is still struggling to confront the continent's number-one killer of children under the age of five years old.

 

In Malindi, Kenya the fight against malaria is a community affair. The city of about 150 000 is on Kenya's coast, in one of the country's two hotspots for the disease. For residents of Malindi, malaria is not only a threat to their lives and their children; it is a threat to their livelihoods.

The coastal city is a popular destination for Italian beachgoers, and its economy is based almost entirely on tourism. The threat of losing those tourists is a constant reality for the resorts and restaurants in the region.

 

Fighting malaria in Kenya is a challenge, with the potent, but controversial chemical DDT banned by the government. So when members of the Malindi community sought to tackle the problem, they realised they would need to involve the city's residents.

"There was the malaria," said Kazungu Tuva, chairman of PUMMA, a community organization dedicated to eradicating malaria in Malindi. "It was in a high risk of killing people. Many people were dying, mostly children under five and pregnant mothers. So as the community, we saw there is something we can do to volunteer so that we can assist in fighting malaria. So we organized the community and we set groups."

PUMMA was founded in 2002 by a coalition of local organisations. The name is short for "Punguza Umbu Sahau Malaria," a Swahili phrase that means "Eradicate Mosquitos, Forget Malaria."

 

To that end, PUMMA employs a number of Mosquito Scouts - residents who look for mosquito breeding sites in assigned areas throughout Malindi. The Mosquito Scouts work closely with PUMMA and Kenya's Ministry of Health to report mosquitos and deliver samples for testing.

Riziki Ramadhani, a mother of four who has been a malaria scout for five years, said, "We are doing neighbourhood campaigns, we are going to the villages and the school clubs. Sometimes we do door-to-door and sometimes we make a baraza [community gathering]. We are taught the importance of controlling malaria and to sleep under a treated net and to keep the environment in good condition."

 

The work of the Mosquito Scouts is financed by the Swiss organization Biovision. Each scout is paid about $90 per month for their work. For Ramadhani, being a Mosquito Scout has been an important opportunity for her and her children.

 

"When we spray, we finish and we collect the adult mosquito then we record them," said Ramadhani. "The work is fine. I've sent my children to schools."

The scouts have also introduced innovative methods for reducing mosquito reproduction. The most effective has been the use of small fish in ponds and pools to eat the larvae of breeding mosquitos. The deputy director of the Kenya Medical Research Institute, Dr. Charles Mbogo, explains how the strategy was developed.

"The idea came from the Mosquito Scouts after scouting for mosquito larvae in the hotel industry," he said. "Most of the hotels have these fish and when they sample there all the time there is no mosquito. They were asking us why and we informed them that actually the fish do eat the larvae. So they started introducing them into some of the areas where there were no fish and immediately we started seeing a big decline in the mosquito populations."

The work of PUMMA and the Mosquito Scouts has proven effective in recent years. Data from the Malindi District - which includes the city and its surrounding areas - shows a 20% drop in malaria cases reported from 2006 until 2010. But there is still much work to be done. More than 100 000 malaria cases were reported last year and more than 40 000 were children under five years old.

 

One of the largest challenges is the hundreds of pools sitting behind the gates of Malindi's resorts and vacation villas. As Mbogo explains, many of the city's wealthier residents live there for part of the year, leaving behind large empty pools which become breeding grounds during the rainy seasons.

"It's a big problem. We have what we call the abandoned swimming pools. That means nobody lives there. Now they have been left with water there and the mosquitos breed there. So we need to do something about that," said Mbogo.

 

There are more than 400 private cottages and villas owned by part-time residents of Malindi. PUMMA has begun to reach out to these residents, who are slowly beginning to take part in the group's efforts. While PUMMA and the Mosquito Scouts have access to some vacation homes and resorts for testing and mosquito reduction, many more remain locked for much of the year.

 

But PUMMA is not giving up. On 9 April, Malindi celebrated its 8th annual Mosquito Day. Local students, non-governmental organizations, health officials and Mosquito Scouts marched through the city singing songs and encouraging the community to take part in the fight against malaria.

A World Malaria Day report by USAID and the President's Malaria Initiative revealed that in less than five years reported malaria cases have been cut in half in more than 40 countries worldwide, and deaths related to malaria are estimated to have fallen by nearly 150 000. Global efforts are estimated to save 485 children each day from dying from malaria.

 

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