Competition stiffens in generic drugs market as Biogaran enters
Nigeria’s pharmaceutical industry is set to welcome its latest entrant into the generic drugs market, which will in turn intensify competition crashing down prices to the benefit of consumers.
Generic drugs are made with the same active ingredient, strength, dosage form, and route of administration as the brand name version. They are many times cheaper than brand name drugs because they do not need to spend on clinical trials, marketing, and promotion of the drug.
However, generic drugs are required to undergo tests proving that they have the same efficacy as brand name drugs. For instance, Tylenol® is a brand name and the generic name is acetaminophen.
In a recent exclusive interview with Paschal Briere, president, Biogaran, a leading pharmaceutical company in France with specialty in the manufacture of generic drugs told BusinessDay that it has acquired Swisspha, a pharmaceutical company based in Lagos.
“We will buy the company and its shares. These are investments and we are going to invest more but we need to resume services as soon as possible, there is no inventory due to cash crunch and dollar scarcity so we have to resume inventory” said Briere.
This is Biogaran’s first investment in Africa and the second globally because it has established a factory in Brazil. Briere sees strong growth potential in Nigeria’s pharmaceutical industry, particularly in the generic segment.
According to the Pharmacists Council of Nigeria (PCN), as at 2013, there were 128 registered drug manufacturers, 1,534 retail pharmacies, 724 drug distributors and 300 drug importers in Nigeria. Nigeria has a total of 14,607 public and 9,034 private healthcare facilities.
However, it has been estimated that there are over 10,000 unregistered patent and proprietary medicine stores, which are thought to sell over the counter (OTC) products only.
Generic drugs are gaining traction in many African countries. In South Africa, Egypt, Algeria, Morocco, Nigeria, and Kenya, generics grew at an average compound annual growth rate (CAGR) of 22.3 percent between 2004 and 2011, considerably faster than the 13.4 percent for pharmaceuticals as a whole, according to a MacKinsey’s report “Generating value in generics: Finding the next five years of growth.”
“There will be a much stronger need for quality products in the future because one of the problems in Nigeria is a preponderance of counterfeit drugs. We want to make a difference between quality products and imported counterfeit product” said Briere.
Briere added, “so you have a vibrant pharmaceutical industry in Nigeria which is well known and there are five main players in the industry. I trust the market will grow by 10 percent every year especially if the economy resumes and there are good prospects for those doing a proper job in the next ten years, there will be no room for those that are not doing a proper job.”
This trend looks set to continue. Between 2010 and 2014, generics’ share of the market grew from 22 to 25 percent in Algeria, for instance, and from 23 to 28 percent in Morocco.
Several factors are responsible for this shift. First, physicians and pharmacists are getting used to prescribing generic drugs. Second, as national insurance programmes expand and more people gain access to health care, demand for generics will rise at the expense of costlier branded drugs.
Third, many governments are showing strong support for generics. For instance, South Africa requires pharmacists to inform private patients about generic alternatives when they purchase prescription drugs; Nigeria has a similar law; and Morocco aims to increase generics sales to 70 percent of publicly funded pharmaceuticals.
In this light Biogaran is set to reap the benefits latent in Nigeria’s pharmaceutical industry.
Brier said “the Biogaran brand has a portfolio of eight hundred products in France. The Biogaran model may be adapted, to make it workable in Nigeria and this is very important, we have strong knowledge in managing production facilities, and we have knowledge in finding new products for Swipha. We launch in France for example twenty to fifty products every year, so this may be adapted of course but Nigeria fits very well with what we use to do.”
STEPHEN ONYEKWELU