Pharmaceutical MNCs new interest in Nigeria
As growth opportunities continue to move away from traditional pharmaceutical markets and growth patterns in developed markets continue to flatten, many multinational companies (MNCs) like Norvatis, Pfizer, Sanofi, Johnson & Johnson, etc. look toward Africa, including Nigeria for their expanding global footprint.
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 remains the biggest hurdles to growth in the African markets.
While most medicines produced locally are consumed domestically, Nigeria is responsible for about 60 percent of medicines consumed in Economic Community of West African States (ECOWAS) by volume, underlining huge sub-regional market of an estimated 600 million people, according to Pharmaceutical Manufacturing Group, Manufacturers’ Association of Nigeria (PMG-MAN).
Though estimates of Nigeria’s pharmaceutical market vary significantly, Business Monitor International (BMI) in 2009 put the size of the industry at $600 million. Furthermore, the African pharmaceutical market is anticipated to achieve a year-on-year growth rate of 10.6 percent by 2020, resulting in pharmaceutical sales of $45 billion in 2020.
A report titled “Pharma Emerging Markets 2.0: How emerging markets are driving the transformation of the Pharmaceutical Industry,” revealed that over the past five years, sales generated in emerging markets (Africa, including Nigeria) have doubled, totalling $191 billion in 2011 (representing approximately 20 percent of global market volume)
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.”
Despite Nigeria’s dominance within the ECOWAS sub-region in drug manufacturing, its quest to become self sufficient in drug production is bleak as it loses over N1.5 billion annually to the importation of Active Pharmaceutical Ingredients (APIs), raw materials used in finished pharmaceutical products which have direct effect in the diagnosis, treatment or prevention of diseases from India, United States of America, Germany, etc, experts have said.
As pharmaceutical companies in the country do not locally manufacture APIs such as Paracetamol powder, Ampicillin dry powder etc, the non-availability of active pharmaceutical ingredients would significantly cripple the nation’s pharmaceutical sector, threatening Nigeria’s pursuit to become one of the twenty leading economies by 2020.
Industry experts believe that addressing challenges such as dearth 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 will reposition the nation within the global pharmaceutical space.
With few pharmaceutical companies currently prepared to commit themselves to significant investments in local infrastructure, we believe that a pragmatic partnering approach involving local NGOs, governments, and distributors will further enhance the sector towards achieving its lofty dreams.