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Niches for expansion of local product portfolios
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WTO TRIPS flexibilities until 2033 and the coming off patent of a high number of innovator molecules, there are a number of potential niches for expansion of local product portfolios that can be pursued.
One such niche is the neglected epidemics of non-communicable diseases such as cancer, hypertension and diabetes which are on the rise both globally and regionally but for which there is an enormous gap in access to medication. The continent, as Aikins, Boynton and Atanga (2010) note is facing a “neglected epidemic” of non-communicable disease owing to an exclusive focus on communicable diseases and an unexpected rise in chronic conditions such as diabetes and heart diseases. The “neglected epidemic”, however, presents an avenue for potential expansion of local production portfolio. The promise of this market lies in being less saturated and competitive relative to markets for HIV, tuberculosis and malaria medicines, where competition with Indian and Chinese producers is intense (Kardas-Nelson, 2015).
The medical devices sector constitutes another niche for potential expansion of local production. The sector is one of the fastest-growing industries in the world and according to one estimate, the value of the African market should exceed US$10 billion in 2020 (EAC, 2018). Yet, the healthcare market on the continent is almost entirely reliant on imports for medical devices, laboratory diagnostic equipment, dental products, clinical chemistry, healthcare IT, and diagnostics. Local manufacturers can, therefore, consider expanding their product portfolio to include both medical devices and consumable products such as imaging devices, monitoring devices, in-vitro diagnostics (IVD) and basic products. This might require collaboration among local manufacturers with large global companies for knowledge and technology transfer while developing or adapting technology to market requirements. Traditional medicines and natural products can also be a market niche for African pharmaceutical manufacturers given the continent’s rich biodiversity, long history of using such products and rising global market shares. Extracts from natural products and popular materials are potential candidates for APIs and could also be used as excipients in the drug formulation process. Indeed, given growing resistance of malaria parasites, mycobacteria and other bacterial infections to existing medications, traditional medicines and natural products can be a useful source in the search for new compounds.
Veterinary medicines also constitute a niche that local manufacturers can expand into. While the livestock sector is rapidly growing on the continent, there is an increasing prevalence of livestock diseases owing to the tropical climate. Even worse, there is an increasing incidence of zoonotic diseases which has dire public health implications and thus requires adequate prevention and control (EAC, 2018). Yet, veterinary medicines in Africa are largely imported. Other sources of veterinary products are informal and unregulated (Grasswitz et al, 2014). Local pharmaceutical manufacturers can step up to the challenge and expand their product portfolio into veterinary medicines, sustaining the livestock sector and safeguarding public health.
Pharmaceutical products for distinctive African health problems including neglected tropical diseases such as hookworm and schistosomiasis and environmental health challenges such as humidity and sun exposure also constitute a niche market for local manufacturing. For such regionally relevant diseases or environmental health challenges, there is either little or no treatment available or the products currently available are inadequate as large, research-intensive extra-regional multinational companies (MNCs) that have the capacity to develop such products largely have little incentive.
Further, the provision of excipients and packaging materials constitutes a viable market niche for local firms. To cater for the needs of the growing pharmaceutical industry, local firms can expand to the production of common excipients such as starch and starch derivatives and packaging materials such as glass bottles for suspensions or cartons for outer packaging, which are increasingly required but still mainly imported.
“... leveraging Africa’s natural resource endowments to uncover sustainable growth of pharmacy and other economic sectors”
Mr Seth Akweshie (Group Managing Director, FINACCO Group International)
“A recent statistic suggests about 70% of vaccines are manufactured in the developing world… We should also be looking at how can we scale up vaccine manufacturing in Africa.”
Ms Kirti Narsai (Director, HealthValue Consulting (Pty) Ltd)
Complex products such as vaccines, sterile preparations and blood products for which there is high regulation can also be a market niche for African firms that are already more advanced in terms of GMP adherence. Regarding vaccines, for instance, supply in Africa is almost totally external and highly influenced by the funding sources. The few low levels of local vaccine production on the continent are focused in Senegal, Egypt and South Africa. And whilst it is established that there is limited space for multiple African players as a result of more stringent regulatory requirements, high entry barriers, increasing cost and high risk of failures, a number of sub-regional players could be established with the right level of political and technical support, under a clear and funded regional policy and plan to develop the necessary ecosystem (UNIDO, 2017). Last but not least, the growing pharmaceutical industry also requires a well-established support service including repair and maintenance services for pharmaceutical equipment and laboratory instruments which are barely available in the region (EAC, 2018). The current shortage of support services on the continent negatively impacts the overall competitiveness of the sector as it leads to delays, extends downtime of equipment and increases the budget for maintenance and repairs. Local firms can step up to provide such urgently required services.
An analysis of the pharmaceutical industry in Africa, highlighting the strengths, weaknesses, opportunities and threats (SWOT) is depicted in Figure 6 right.
“As we think about boosting African capacity to manufacture let’s also remember the services that support that capacity and those are logistics, distribution, digitisation of the supply chain for traceability and visibility.”
Dr Daniella Munene (CEO, Pharmaceutical Society of Kenya)
Strengths
• Enabling strategic policy context and heightened political interest • Strengthening of regulatory capacity, albeit off a weak base • Existence of underutilised scientific and technical institutions • Increasing healthcare and pharmaceutical spending • Existence of established as well as a developing pharmaceutical production base • Massive investments in infrastructure • The continent is a free trade area with effect from January 2021 Weaknesses
• Ineffective and inadequate government support • Limited supporting industries for inputs and support services • Lack of coordinated policies and sector development strategies in most countries • High utility costs and unreliable supply • Limited availability of affordable and longer-term finance • Inadequate pharmaceutical human resources across the region • Weak and inconsistent regulatory procedures across borders • Limited availability of bioequivalence study centres in the region
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Opportunities
• Momentum of continental, regional and national initiatives to promote local pharmaceutical production • A larger budgetary allocation to the health sector • Extension in the use of public health-related WTO TRIPS flexibilities until 2033 • A high number of innovator molecules coming off patent • Public sector preference for generic medicines • Niches for expansion of local product portfolio – including traditional medicine, neglected tropical diseases and veterinary medicines
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Threats
• Cheap imports and penetration of sub-standard and counterfeit medicines • Poor enforcement by regulatory authorities • Unregulated parallel pharmaceutical trade • Negative perception of locally produced products • Brain drain – emigration of qualified and experienced staff
