Owing to the unprecedented changes taking place in the global landscape for pharmaceuticals particularly with regard to increased regulatory hurdles and growing competition from emerging markets, Indian industry experts fear that the emerging market players from Asia and Africa will be cutting into the market space of Indian companies, giving cut throat competition in the generic space in the global markets.

“It is high time that Indian government and Indian pharma industry understood the changing global market dynamics. Unlike earlier the global market scenario has changed drastically and even the smaller countries from Africa and Asia are now gaining ground to compete with Indian companies in the generic space. This will ultimately affect our exports, further slowing the growth process in the coming days,” cautioned Dr. P.V. Appaji, former Director, Pharmexcil.

As already, the Indian pharmaceutical exports have touched all-time low with slight negative growth a year ago, experts fear that unless the pharmaceutical industry members and the government come together with some concrete measures, the slowdown in export growth will stay for a longer time, which would result greater loss for the pharma sector in the country.

According to Dr. Appaji, with growing competition even smaller countries in Asia and Africa are now trying to establish generic manufacturing bases on par with International standards. They are not just meeting their domestic needs but also exporting to western countries at competitive prices. “In Asia, smaller countries like Bangladesh, Turkey, Malaysia and Indonesia are slowly picking up their manufacturing bases. Similarly even in Africa there are countries like Nigeria, South Africa and others are establishing their own manufacturing bases on the lines of Indian Industry,” said Appaji.

Changing trends in Africa
As majority policy-makers have now realised that providing Africa with affordable health care could be realized if pharmaceutical products were produced on the African continent, most of the smaller countries in this continent have now started attracting pharmaceutical investors and have changed their domestic regulatory systems to suit their needs.

Until now most of the countries in Africa were dependent on imports from low cost supplying countries like India, China and some other countries, however now the trend has changed as they have realised that the healthcare challenges faced by their continent can be overcome only if they are able to produce its own medicines.

In view of this, recently the African and Chinese delegations had come together at the Roundtable on China-Africa Health Cooperation to discuss how Africa can start producing health care products on the continent. This could help African countries provide their citizens with a stable supply of quality medicines.

Feng Zhao of the African Development Bank said that producing locally could bring many benefits for the continent. "If you look at the pharmaceutical sector now, the size is very small compared to the global overall size. Africa is now less than one percent of the global share. It has a great potential to grow, the average growth rate is expected to be more than 10 per cent,” noted Zhao.

The sector would also create high quality jobs and bring more technology to the continent since many years now; African continent has been suffering frequent bouts of many preventable diseases, such as malaria and tuberculosis. But the medicines to treat these diseases are imported from outside the continent. And the cost of those imports weighs heavily on the health care budgets of many African countries.

But producing health care products in Africa comes with many challenges, says Janet Byaruhanga of the African Union Health Office. “Our health systems are not adequate enough to address some of the challenges that the continent is facing. That includes human resources for health that includes the facilities in terms of hospitals, clinics, laboratories and all of those things. Then we also have issues around low funding because the health sector is considered more of a social sector. It does not get enough funding, both from the government or even the donors," Byaruhanga stated.

Although China has much experience in producing its own pharmaceutical products, the country still faces a lot of negative perception towards their medicines, as the World Health Organization hasn't approved most of them yet.

Dr. Ray Yip, who directs the Chinese branch of the Bill and Melinda Gates Foundation, said it will probably take 20 to 30 years before Africa produces high quality health products, as the industry is in its initial stages.

"Many countries, in early days, they are going for low cost and their quality doesn’t always meet the global standard. Then gradually they move up the value chain. And they start producing better products,” explains Yip.

For Africa to become a major player in the pharmaceutical sector, it has to start partnerships with companies outside the continent that have the technology, the people and the intellectual property.

The African Union has started a pharmaceutical manufacturing plan for Africa to promote private-public partnerships to push the pharmaceutical sector.

African market
If one takes a broad view of the African market, in the recent years, many advanced nations have offered ripe opportunities for the African nations to boost their domestic manufacturing bases. In view of this, many local governments in Africa have come forward with various models to boost the pharma business in their region.

As growth opportunities continue to move away from the traditional pharmaceutical markets, most multinationals are looking toward Africa for expanding their global footprint. Though Africa is a continent having huge potential, the challenges for developing a viable market strategy is formidable. Understanding the dynamics and underlying demographics will be the key to ensuring a sustainable business model for the future.

According to an IMS Health study, African region will become an important economic force in future. Particularly the pharma and biotechnology sectors are expected to contribute major growth for this region. In 2016, pharmaceutical spend in Africa was US$30 billion. This value is driven by a 10.6 per cent compound annual growth rate (CAGR) through 2016, second only to Asia Pacific (12.5 per cent) and in line with Latin America (10.5 per cent) during this period. Spurred by a convergence of demographic changes, increased wealth and healthcare investment, and rising demand for drugs to treat chronic diseases, this market potentially represents a US$45 billion opportunity by 2020.

The pharmaceutical growth is a reflection of economic strength accompanied by increasing healthcare spending. Sub-Saharan Africa (SSA), excluding South Africa, is notable in this regard, according to the Economist Intelligence Unit, its economies are growing faster than anywhere else in the world and this trend is expected to continue.

The appeal of Africa lies not in its size–the continent accounts for just three percent of the global economy–but in the dynamics that drive sustainable growth at a time when the major established pharmaceutical markets face a more uncertain future. The recent demographic shifts show that there is an increasing number of working-age Africans, a rising middle class which accounts for 34 per cent of the continent’s inhabitants, and an urban population expected to exceed that of China’s and India’s by 2050.

Alongside the increasing economic wealth is a notable rise in healthcare spending, which has grown at a CAGR of 9.6 per cent since 2000 (across 49 African countries). Fuelled by government, non-government organizations (NGOs) and private sector investment, this has largely focused on strengthening health system infrastructure, capacity building, treatment provision and specialized services. Real gross domestic product (GDP) is expected to grow at five per cent per annum through 2017. This trend of rising healthcare spending is expected to continue.

The changing economic profile of Africa is also linked to an increased demand for chronic care drugs, reflecting a marked shift in the burden of illness towards non communicable diseases (NCDs) and the continued impact of human immune deficiency virus and acquired immune deficiency syndrome (HIV/AIDS) on the continent. The NCD proportional contribution to the healthcare burden is forecast notwithstanding its growth potential, Africa presents a complex, multifaceted set of markets, which are highly heterogeneous in terms of pharmaceutical growth, language and trading blocs.

Consequently, the opportunities they offer are also quite variable. Understanding the nuances and navigating the challenges is key to establishing successful and sustainable operations.

To date, three types of pharmaceutical industry players have a track record of success, defined as sustainable revenue-generating business operation: innovative multinational companies (MNCs), Indian and Chinese pharmaceutical companies, and local manufacturers in Northern and South Africa.

African pharma companies
In African region, the success of local pharmaceutical companies is contingent on their ability to attract MNCs into research and development (R&D) licensing arrangements, a strategy which endorses their production capabilities. Local companies in South and Northern Africa have been leaders in their domestic markets. For example, Aspen (South Africa), Adcock Ingram (South Africa), EIPICO (Egypt), Saidal (Algeria) and Cipla Medpro (South Africa) have combined licensed originator brands and their own branded generic products.

Aspen is now Africa’s largest domestic pharmaceutical company with a strong reputation for quality products. Aspen’s maturity in the domestic market resulted from a strong partnership with GSK which included product licensing arrangements as well as skills and equity transfer. Cipla Medico, a local company in South Africa, is the third largest pharmaceutical company in South Africa by value and is expanding to Botswana and Namibia.

MNCs in Africa
Most of the major pharmaceutical companies in Africa are MNCs. They have had a presence in Africa for a number of years. Among the first companies (or precursors of today’s companies) to enter the continent were Abbott (South Africa, 1930s), Sanofi-Aventis (Morocco, 1953), Novartis (Egypt, 1962), Pfizer (Morocco, 1963) and GSK (Nigeria, 1971).

MNCs have predominantly focused and succeeded in marketing, branded innovative and generics drugs to the private sector in urban areas. Products have typically targeted in demand therapy areas, such as vaccines, anti-infectives and anti-diabetics, with sales mainly concentrated in Northern and South Africa. Few opportunities have been realized in the public sector although MNCs have had some success through tendering, particularly in the more established markets such as South Africa to rise by 21 per cent through 2030.

While continuing to struggle with infectious and parasitic illnesses, Africa is expected to experience the largest increase in death rates from cardiovascular (CV) disease, cancer, respiratory disease and diabetes over the next 10 years, resulting in greater demand for healthcare services and appropriate medicines.

The combination of economic strength and an expanding middle class is already driving a demand for medicines across Africa. For example, in Algeria, Morocco and Tunisia, a rise in wealth has triggered demand for chronic medicine consumption .In Algeria, the chronic medicine to essential medicine ratio increased by 72 per cent from 2002 to 2011, accompanied by a total Gross National Income (GNI) increase of 70 per cent. A similar trend is likely to emerge in other countries, such as Kenya and Botswana, where NCDs have been declared a national priority at the ministerial level.

Among the major MNCs Sanofi are the most successful pharma company in Africa to date and the only major top 10 pharmaceutical company to explicitly report its sales in the African continent.

Pharma market scenario in Asia
Asia has been the global hub for pharmaceutical manufacturing both for API, formulations. Particularly, China, India, South Korea, Japan, Bangladesh and even some of the south eastern and south Asian countries have now started venturing into manufacturing of APIs and formulations.

The two major countries India and China have been influencing the global world with their low cost and high quality generic medicines. If China is a leader in supplying cheaper API’s India is formulating high quality low cost medicines and supplying to the global markets.

According to S.V. Krishna Prasad, Managing Director and CEO of Cito Healthcare, of late most of the governments in the third world countries have also opened their markets for new investors and providing incentives in terms of tax benefits and free land allocations to the pharma and biotechnology entrepreneurs. “Asian and African countries are providing the best platforms for pharma and biotechnology industry to flourish. Not only the cost factor and human resources availability, these countries are hugely burdened with diseases and provide ample opportunism for pharma companies to develop newer drugs,” opined, Krishna Prasad.

According to Krishna Prasad, Anti-Retrovirals are one of the major examples for flourishing Asia and Africa's business relationships. Asia, more importantly, India has one of the finest and big volume producers of the Anti-AIDS drugs manufacturing and exporting organizations. PEPFAR has taken this initiative much further towards a win-win situation. In spite of few constraints in exports from Asia, the continent has been cost-effective, qualitative and compliant even to WHO requirements of both virals and ARVs.

India, Bangla pharma industry
In South Asia, India is the leader and other countries like Sri Lanka, Bangladesh, Pakistan and Afghanistan are slowly picking up. Particularly Bangladesh is leading after India in the south. Though at a nascent stage, Bangladesh holds huge potential for the Indian pharma companies to tap. Since a huge potential exists for developing trade and economic relations between the two countries, both the nations should move ahead to tap the emerging opportunities, aver experts.

While on the one hand, India being a well established country in pharma segment can assist Bangladesh to grow, on the other Indian companies can gain from exports, they point out. Having India in its neighbourhood with a strong base in the pharma sector, Bangladesh is a big importer of pharma and infrastructure raw materials from India for its domestic consumption and commercial purposes. Bangladesh is importing huge quantities of APIs from India for its domestic pharma industry needs.

As the country is aiming to develop its own API manufacturing base, it could well utilize the services of India and can enter into joint ventures with Indian companies for technology transfer and sharing other aspects of the industry.

Over the years, India and Bangladesh have taken a number of initiatives to remove “invisible” trade barriers such as elimination of tariffs and non-tariff restrictions at the unilateral, bilateral, and regional levels. India has become Bangladesh’s largest trading partner in South Asia.

Having recognized the huge potential of the budding pharmaceutical sector in Bangladesh, India with its well established and globally renowned pharmaceutical base can play a vital role in terms of technology transfer, providing training, imparting knowledge on various related subjects of pharma and biotechnology and thereby can develop mutual trade relations.

With a view to improving trade relations among the two nations, five years back, the Pharmaceutical Export Promotion Council of India (Pharmexcil) had lead a delegation to Dhaka and even participated at an international pharmaceutical trade expo in Dhaka to showcase India’s capabilities.“In the recent years, India has improved its API exports to Bangladesh. Though some companies in Bangladesh are strong in manufacturing in certain generics, they are weak in molecule segment. Their APIs industry has not yet grown and totally import oriented. Most of their companies are importing APIs from India and China,” said Dr. P.V. Appaji.

Though the domestic market at present is growing at a rate of about 15-20 per cent per year in Bangladesh, the country is lagging behind due to acute infrastructure deficiency. Bangladesh pharmaceutical industry still lacks independent and efficient production capabilities of processing & packaging machineries, raw materials etc. Taking this as an advantage, the Indian pharma players can build a strong business relationship with Bangladeshi companies to help them build infrastructure and in turn Indian companies can gain from exports.

Pakistan pharma industry
Compared to India, Pakistan’s global trade in pharma is minuscule. Expressing his opinion on Pakistan pharma industry, Krishna Prasad said that many Pakistani authorities are willing to build relations with Indian pharma particularly in the clinical trials. “Both High Commissioner Salman Bashir and Ubaid-Ur-Rehman Naizamani, Counceller/Head of Chancery have shown lot of interest in clinical trials and wanted to align their manufacturers and universities in line with Indian outfits," he said.

According Prasad, Pakistan too is a potential place for manufacturing bulk actives, pharmaceutical formulations as the disease burden increases as the population gets older, the environmental factors contributing to the health factors etc.

The Pakistani pharma industry is poised for growth. As per the 2011 statistics, there is an increasing trend visible in 2012 and 2013. Almost all the drugs in the country are under prize control. Overall market size of pharma industry of Pakistan is US$1.64 billion.

About 38 per cent of Pakistani population is bearing the burden of communicable disease. Another 19 per cent population is suffering with non-communicable disease. About 12 per cent population in the country bears the burden of reproductive healthcare while 11 per cent people are suffering from cardiovascular and diabetes diseases. Injuries contribute 11 per cent and nutritional and endocrine deficiencies contribute to six per cent and three per cent population are suffering from neuropsychiatric diseases.

Having said this, Pakistan greatly needs to upgrade its pharmaceutical industry to combat its diseases. In fact the national pharma industry in Pakistan is showing progressive growth over the last one decade. The industry has invested substantially to upgrade itself in the last few years and today the majority of the industry is following Good Manufacturing Practices (GMP), in accordance with the domestic as well as international guidance. The Pakistani industry is slowly building the capacity to manufacture a variety of product ranging from simple pills to sophisticated biotech, oncology and value- added generic compounds. Currently 90 per cent of Pakistan’s demand of finished medicine is met by its local industry.