Bottlenecks represent huge opportunity

Faced with a dearth of medical aid, africa needs solutions, and chinese firms can step into the breach

Although Africa has made considerable economic progress in recent years, many of its countries still face huge bottlenecks in the development of medical and health services.

Revenue shortage has prompted many African governments to implement new policies on healthcare spending. Since most of these governments are unable to raise money on their own to develop their healthcare sector, they rely largely on imports of expensive medical equipment and medical services.

Nations such as the United States, Germany, Russia and India have established mature investment partnerships with African nations in the healthcare sector. But due to its large population, the health conditions in Africa still need substantial improvement. Hence there is still immense potential for Chinese companies to further cooperation in medical services and supplies in Africa.

According to estimates published by the World Health Organization and the World Bank, the African healthcare industry will need investment to the tune of $30 billion by 2016, especially in sub-Saharan Africa, where diseases such as AIDS and malaria are widespread. Despite growing awareness of healthcare prompted by rapid economic growth, many Africans lack speedy access to quality healthcare due to the shortage of medical resources.

The African pharmaceutical industry is particularly weak in research and development, and most of the available drugs are imported, especially those needed to treat the more than 26 million AIDS patients on the continent, representing two-thirds of the world's total. Every year, the number of tuberculosis patients in Africa increases by 2.4 million, while malaria treatment costs more than $10 billion.

However, due to lack of pharmaceutical laboratories, and coupled with the fact that many traditional donor countries are experiencing economic difficulties, medical aid has been harder to find than ever. So most African nations have to find new solutions, and it is not difficult to envisage the untapped potential for Chinese private pharmaceutical companies.

Beijing Holley-Cotec Pharmaceuticals uses wild Artemisia annua grass as raw material to extract dihydroartemisinin (product name Duo-Cotecxin). The product has become popular for curing malaria in Africa. The annual sales of the drug are around $30 million, and the company enjoys top billing in the East African market and second slot in the West African market.

The drug has also been widely recommended for use by the World Health Organization. Since 2006, Beijing Holley-Cotec has started to change its business model in Africa and is making greater efforts to integrate into the local community by recruiting local staff, and gradually establishing a good business reputation. This is a perfect example of Chinese companies seizing the right moment.

When it comes to medical aid, China has sent more than 20,000 medical personnel to 48 African countries over the past 50 years, and set up long-term medical centers in 35 countries. In addition, Chinese enterprises have built laboratories in Mali, Tanzania and Ethiopia, and provided clean water and purification technology in 11 countries.

The Chinese government also promised during the recent China-Africa Cooperation Forum to build 30 hospitals and 30 malaria prevention and treatment centers, provide medical equipment, anti-malaria drugs and train 3,000 African doctors and nurses.

Chinese doctors' ethics and medical skills have earned them a good reputation in Africa. Many Chinese doctors choose to stay and start their own clinics after completing their terms of service in Africa. In addition, some retired Chinese doctors have come from China and opened clinics in Africa.

Besides tens of thousands of cured patients, these private Chinese clinics have also made considerable economic gains. In Zambia, for example, in 2005 traditional Chinese medicine was accepted as legitimate form of treatment. The African nation has more than 22 TCM clinics and more than 70 registered TCM doctors, including doctors from Western nations.

There are already a large number of Chinese doctors running small hospitals and clinics in Africa, and Chinese medicine has proved to be more affordable to the local residents. This model is particularly suitable for Africa.

Large hospitals are scarce especially in sub-Saharan African countries. In southern Africa, there are some hospitals funded by Russian, Indian and South Korean investors, but they have a limited number of beds and doctors. European and American hospitals also charge high fees and are primarily designed for well-off customers.

Chinese clinics and small hospitals have managed to gain a foothold in Africa with relatively low fees and mature diagnostic services. After getting recognition from the local community, they recruit staff proficient in the business from China to expand their business, and then select local college students for internships, so as to create jobs to foster local medical talent. Many Africans who work in the Chinese clinics in Nigeria, Angola and Chad have mastered basic Chinese medical diagnosis and can operate CT and other medical equipment.

In order to better adapt to the African market, private investment in China-based clinics, small hospitals and pharmaceutical companies needs to be accelerated further. Localization strategies in Africa also need to be tweaked and should not focus only on medical services contracts signed by major clients such as large government agencies, multinational corporations, universities and police departments. More input is needed on local agricultural population-based community health services in Africa. Since Africa has a relatively low threshold of market access, providing services for more patients would also be a wiser choice for companies.

The author is a professor at the Nanjing University of Chinese Medicine.

(China Daily Africa 07/05/2013 page9)