African continent’s geographical connect together with the  demand for pharmaceuticals and healthcare opens up lucrative  business opportunities for Indian companies in drug manufacture and marketing. Africa  thus has become an  indispensable destination for the  Indian drug companies.

GBI Research, in its latest report estimates that the South African pharmaceutical industry will grow from a value of US$3.8 billion in 2011 to $ 7 billion in 2018 with a Compound Annual Growth Rate (CAGR) of 9.2 percent.

It  was Cipla in 2001 which  created history in Africa  to supply  the anti-HIV drug in a  generic combination of   Lamivudine, Stavudine and Nevirapine at $ 350 per drug to Medicines Sans Frontiers (MSF) to distribute it  free to patients in African countries.

Other Indian pharma companies including  Ranbaxy, Dr. Reddy’s Labs,  Strides Arcolab, Bal Pharma, Micro Labs, Aurbindo Pharma have made a mark in the region.

In 2007, the African Union (AU) implemented the Pharmaceutical Manufacturing Plan for Africa to support the establishment of a pharmaceutical manufacturing industry by boosting local production of medicines and strengthening R&D.

Even for multinational companies including  Pfizer, Glaxo SmithKline, Novo Nordisk, Sanofi  and the  African continent offers a promising window of opportunity for pharmaceutical expansion.

South African-based Aspen Pharmacare, which has manufacturing facilities valued in excess of Rs one  billion and which produce approximately six billion tablets per annum, is suitably positioned to manufacture and supply product across Africa. With its South African presence established, Aspen has been actively engaged in securing strategic alliances with international partners, including those based in Africa, in a bid to increase its geographic footprint in this territory.

The main  reasons for South Africa’s  rapid growth are the availability of cost-effective and skilled labour, high quality infrastructure, and the introduction of the South African Health Products Regulatory Authority (SAHPRA).

South Africa’s healthcare sector is set to witness a number of new healthcare reform plans in the future, with the primary objective being to reduce the growing drug expenditure by increasing the use of generics. The healthcare system aims to cover the entire population under the National Health Insurance (NHI) scheme, which it will start implementing in a small population of 10 districts by 2012.

The  GBI Research report says  that generics accounted for over 60 per cent of the volume of the pharmaceutical market in 2011. Government reforms have encouraged the manufacture and use of generic drugs as a tool to limit drug expenditure and provide low-cost effective public healthcare. The combination of government healthcare policies and numerous active generic manufacturing companies points to an increased generic market share in the forecast period.

According to the  report the South African pharmaceutical market is expected to almost double in the next six years due to profitable government contracts for HIV/AIDS and tuberculosis medications.

Though it was once dismissed as low-profit, the country’s pharmaceutical industry is now regarded as having great potential and is attracting the attention of some of the sector’s big players.

To tackle South Africa’s crippling problem with HIV/AIDS and TB, the government is awarding tenders that promise steady returns for two to three years to companies offering appropriate treatments.

The African nation has the highest proportion of people with HIV/AIDS in the world. According to figures from 2010, over five million residents have the virus and around 40 percent of deaths in that year were related to HIV/AIDS.

To aid the fight against the epidemic, the government receives international support from organisations such as the Global Fund, the President's Emergency Plan For AIDS Relief (PEPFAR) and the EU.

The national government is also in the process of introducing a new regulatory body with the goal of speeding up the drug registration process.

The South African Health Products Regulatory Authority (SAHPRA) will replace the current healthcare body, the Medicines Control Council (MCC), in a transition that is hoped to be complete within the year.

The new organisation will have a greater range of responsibilities, including the approval and licensing of pharmaceuticals and medical devices, as well as carrying out evaluations for safety and efficacy.

The Southern African Clinicians Society previously condemned the MCC as the single biggest barrier to the providing of Fixed Dose Combinations (FDCs) for the treatment of HIV/AIDS due to lengthy delays in the registration process that has left the country unable to introduce some cheaper generic medications.

In the meanwhile according to an Espicom study, in terms of disease burden, the two major causes of death are TB and influenza & pneumonia. The the study points out  is a reflection of the country’s dire healthcare problems, where the standard of provision is often little more than basic, particularly in rural areas.

Other prominent causes of mortality are ill-defined causes and unnatural causes, an indication of the violence that is prominent in some areas. In terms of disease prevalence, communicable diseases with a high incidence include HIV/AIDS, malaria and TB, whilst non-communicable diseases such as cancer are on the rise. Regarding HIV/AIDS, South Africa provides an antiretroviral treatment (ART) programme, with nearly 1.6 million people receiving treatment by mid-2011, compared to 1.3 million in 2010.

While the secondary and tertiary hospital sectors are highly advanced, they are unaffordable for the majority of the population. Primary healthcare provision has become a priority, although access is still very limited for the very poor and provision in rural areas is extremely patchy. Facilities exist, but mismanagement, poor organisation and chronic staff shortages often mean they are underused or lie idle.

In 2011, there were over 400 hospitals managed by the public sector, which represented an increase of 2.2 per cent  over 2010. Of these, 91 public hospitals were located in Eastern Cape, followed by KwaZulu-Natal (76). In 2010, there were over 200 hospitals managed by the private sector, which represented an increase of 2.4 per cent  over 2009. Of these, 84 private hospitals were located in Gauteng, followed by Western Cape (34) and KwaZulu-Natal (33).

Domestic pharmaceutical companies produce, almost exclusively, generic pharmaceuticals, which are mainly targeted at the local market. Very little is exported and what is normally makes its way to other African countries. The government has earmarked the South African pharmaceutical industry as an area of growth. At the same time  preference will be given to local companies when it comes to national tenders for the supply of medicine. International tendering exists, but does not always work in favour of international companies. However, as pressure mounts to cut costs, the government could be tempted to procure more drugs from countries like India and China, which can provide a higher volume of drugs for the same tender price compared to local companies.

The pharmaceutical industry is the largest of its kind in Africa, and has been identified by government as a key driver of economic growth, ensuring affordable healthcare is available to the private and public health sector.

While the industry remains dominated by local companies, a number of multinationals distribute and some have become involved in local manufacturing. The country has a relatively well-developed industry, comprising a complex network of manufacturers, distributors and dispensers. Domestic companies produce, almost exclusively, generic pharmaceuticals, which are mainly targeted at the local market.

The  Government has earmarked the South African pharmaceutical industry as an area of growth. Preference will be given to local companies when it comes to national tenders for the supply of medicine. Change is likely to continue in the areas of funding and industry structure with a view to providing increased access to healthcare to all South Africans as efficiently and cost-effectively as possible.