Why big drug firms are seeking new markets in Africa

Faced with a saturated market and a drop in profits, big pharmaceutical companies are looking to the sub-Saharan African market to sustain their businesses as operations get tough in major markets.

The Big Pharma is also seeking to diversify from traditional tropical disease medicines, such as anti-malarials, and anti-retrovirals — for which sub-Saharan Africa has been a huge market — to drugs for non-communicable diseases such as diabetes, hypertension and cancer.

Merck Serono, the world’s oldest pharmaceutical, chemical and life sciences company, is leading the drive into the sub-Sahara Africa market, seeking partnerships and training medical personnel in Kenya, Uganda, Tanzania, Ethiopia and South Africa in oncology.

The programme will then be rolled out to the rest of Africa. The University of Nairobi will host the training which will initially involve nine physicians.

Africa, according to the World Health Organisation, lacks specialists to manage cancer and other non-communicable diseases, some of which are attributed to lifestyle. 

“The programme is part of Merck’s efforts to improve access to cancer care and strengthen the health care system in emerging markets,” said Rasha Kelej, Merck Serono’s chief social officer for the health care business.
Already, the company is sellin its cancer drug Erbitux.

But a report by audit firm PriceWaterhouseCoopers (PwC), Pharm 2020: From Vision to Decision, which attempts to look at survival strategies of pharmaceuticals beyond 2020, confirms that pharmacists are constrained by harsh price controls and greater government scrutiny in the major markets.

“They want new therapies that are clinically and economically better than the existing alternatives, together with hard, real-world outcomes data to back any claims about a medicine’s superiority,” the 2016 report says.

The mature markets generate 59 per cent of the revenues of pharmaceutical companies. Not so much is sold in Africa, as most people here prefer generic medicines.

In 2013, Merck sponsored 160 students from Makerere University’s College of Health Sciences for a specialised training in diabetes. The target is to train 1,000 medical students across universities in Africa to help manage the disease.

Merck is not alone in this. For the third year running, the Swedish government and drug manufacturers have held a medical exhibition in Kampala, showcasing the latest technologies in medical supplies targeting non-communicable diseases.

In 2011, GlaxoSmithKline employed a lower margin-high volume business model to drive sales in African markets.

That model saw the company slash prices of antibiotics and dewormers, which are meant to treat common tropical diseases, by half.

GSK also worked with Unicef to sell vaccines in East Africa and other parts of the continent.