Opportunities and Challenges in Africa’s Pharmaceutical Industry
The slower growth in developed Western economies presents an opportunity for investment in Africa for healthcare and pharmaceutical companies.
A 2015 report by McKinsey & Company states that in the years between 2003 and 2013, the value of Africa’s pharmaceutical industry increased by almost 5 times. The market is projected to double in value from US$ 20 billion to between US$ 40 billion and US$ 60 billion by 2020. This growth is speculated to be the result of urbanisation, increased healthcare capacity and an increased focus on domestic drug manufacture in the region.
However, potential investors face several challenges that are unique to the continent. Operationally, due to electricity and resource constraints in some countries, it may be difficult to ensure the required temperature-controlled environments in storing and distributing products. Under-developed infrastructure may also be a hindrance to the delivery of pharmaceutical products to those who need it most. This, coupled with often rigid and inflexible regulations, is a significant obstacle to new entrants into the market.
A notable challenge is the World Trade Organization patent exemption that overseas companies face in least developed countries. This exemption means that countries under the classification of “least developed”, most of them in Africa, can import lower cost generic drugs without infringing existing patents.
To overcome these obstacles, pharmaceutical companies may consider partnerships with research departments at African universities and local companies. The familiarity with local conditions and domestic expertise may make research easier, minimise costs and improve access to medication. Admittedly, there is likely to be a sizeable capital outlay for overseas companies at first but the benefits both to the companies and the countries in which they will operate will make it worth it.
For more information, please contact Sipho Mudau.
 Tania Holt, Mehdi Lahrichi and Jorge Santos d Silva ‘Africa: A continent of opportunity for pharma and patients’ (2015). Available at: http://www.mckinsey.com/insights/health_systems_and_services/africa_a_continent_of_opportunity_for_pharma_and_patients
 “Trends shaping pharma industry in Africa”, 23 October 2015. Available at: http://www.howwemadeitinafrica.com/trends-shaping-pharma-industry-in-africa/52375/
 Uganda Calls for continued drug patent exemption (2015) Voice of America. Available at: http://www.voanews.com/content/uganda-calls-for-continued-drug-patent-exemption/3028439.html