The great allure of the sugar-coated pill

Africa's drug market holds great commercial appeal, but turning that into cash is harder than it looks

In sub-Saharan Africa, 22.5 million out of a population of 600 million are infected with AIDS, and 3 million people die each year of malaria.

The estimated 900 million people in Africa as a whole make up about 12 percent of the global population, but their annual consumption of drugs, valued at $10 billion, is only 1 percent of the world's total.

Most African countries are dependent on drug imports, so it is a pharmaceutical market full of potential.

Most African families spend little on health, one reason being that medical and health services are in great need of improvement. There is huge disparity between urban and rural areas in health services, and modern medical means coexist with traditional herbal treatment.

Many countries have a public health system, but apart from a few countries such as South Africa and Egypt, they lack sufficient facilities.

They only stock some commonly used antibiotics, antipyretics and pain-killers. Unable to manufacture pharmaceuticals due to a lack of supporting industry, raw materials and packaging materials, they rely on imports.

However, many African countries are increasing investment in health and spending more on drugs. So there are thus huge opportunities for China's pharmaceutical enterprises.

Imports of medical and pharmaceutical products from China have remained relatively stable. In 2009, traditional Chinese medicine accounted for 3.2 percent, Western medicine 62.9 percent, and medical equipment 33.9 percent.

Chinese exports to Africa are mainly pharmaceutical ingredients, with an increasing amount of prescription drugs, made up mostly of antibiotics and anti-infection drugs. The growth in biochemical drugs is more rapid. Heparin increased by 668.98 percent in 2009 compared with the previous year.

China's medical equipment exports to Africa also shot up in 2009 to total $373 million.

With Africa's economic growth and increasing population, its pharmaceutical consumption per capita will gradually increase. Chinese companies can take advantage of many years of experience and mature production technology, invest and set up factories in African countries, produce active pharmaceutical ingredients and pharmaceutical intermediates, or co-develop new products with African pharmaceutical companies.

Chinese companies should further explore the African pharmaceutical market with in-depth research. Currently, the vast majority of drugs in Africa are from Western countries, such as the United States, Britain, Germany, France and Italy. Japan and India have also made early inroads into the African market.

China's pharmaceuticals have not become the mainstream of medicine in Africa, because Africa has long endured the impact of colonial rule, and the pharmaceutical market has long been monopolized by Western countries.

On the other hand, Chinese medicine exporters have problems themselves. Some companies have not done in-depth research on product formulations and colors, so many of their products do not have a high degree of recognition and acceptance among Africans.

Chinese enterprises need to quickly create a good image for Chinese medicine products. Efforts should be made to develop products that the African market really needs, and channels need to be found that lead them to the mainstream consumer groups.

To get large orders from African governments, Chinese companies must first try to get their products included in the United Nations recommended medication directory and acquire recommended supplier qualification.

Building a pharmaceutical sales network in African countries is also one of the shortcuts Chinese companies can take.

Tasly Group based in Tianjin has become one of the pioneers in opening up sales networks in Africa. Chinese pharmaceutical enterprises can cooperate with these pioneers to open up their own sales channels.

During their exploration into the African market, Chinese companies should pay attention to four things:

First, they need to learn more about local policies and regulations to fully understand the investment environment.

Second, they need to choose the right local partners, which may yield twice the result for half the effort.

Third, the investment projects must meet local market needs, with good market prospects.

And finally, they need to better understand African culture, to help them avoid unnecessary friction caused by cultural differences.

The author is a researcher at China Chamber of Commerce for Import and Export of Medicine and Health Products under the Ministry of Commerce.

(China Daily Africa 07/05/2013 page9)