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West Africa Ghana Nigeria Specific Pharmaceutical Industry

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Prospects and Challenges in West Africa’s Healthcare and Pharmaceutical Sector
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West Africa Ghana Nigeria Specific Pharmaceutical Industry

  1. 1. Opportunities and Challenges in West Africa’s Healthcare and Pharmaceutical Sector Dr Aneek Gupta D r. A neek Gupta
  2. 2. Focus Points Focus Points Ghana & Nigeria – Macroeconomic Overview Pharmaceutical Industry in Ghana & Nigeria Overview Ghana & Nigeria Pharmaceutical Market Trends and Forecasts Pharmaceutical Market Segmentation by Therapeutic Area Therapeutic Area Growth Analysis Key Drivers & Restraints Pharmaceutical Procurement Process Competitive Analysis by Company Type Ghanaian Pharmaceutical Industry – Detailed Overview Key Mergers, Acquisitions & Partnerships Future Directions for Pharmaceutical Companies in Ghana & Nigeria Nigerian Pharmaceutical Industry – Detailed Overview D r. A neek Gupta
  3. 3. Pharmaceutical Industry in Ghana & Nigeria Overview Market Stage Growth Market Revenue $1.63 B (2013) (2013) Market Size for Last Year of Study Period $3.12 B (2018) Base Year Market Growth Rate 14.0% Compound Annual Growth Rate 13.9% (CAGR, 2013–2018) Customer Price Sensitivity 9 (scale:1 [low] to 10 [High]) Degree of Technical Change 6 (scale:1 [low] to 10 [High]) Total Pharmaceutical Industry: Market Engineering Measurements, Ghana & Nigeria, 2013 Market Overview Note: All figures are rounded. The base year is 2013. Stable IncreasingDecreasing (2013) Prescription Pharmaceutical Segment Revenue 65.9% (2013) OTC Pharmaceutical Segment Revenue 34.1% (2013) Number of Registered Market Participants 185 (approximately) (active market competitors in 2013) D r. A neek Gupta
  4. 4. Ghana & Nigeria Pharmaceutical Market Trends and Forecasts Key TrendsKey TrendsKey TrendsKey Trends Robust industry growth expected toRobust industry growth expected toRobust industry growth expected toRobust industry growth expected to near 14% p.a. in the next 5 years,near 14% p.a. in the next 5 years,near 14% p.a. in the next 5 years,near 14% p.a. in the next 5 years, underpinned by:underpinned by:underpinned by:underpinned by: Continuous burden of infectiousContinuous burden of infectiousContinuous burden of infectiousContinuous burden of infectious diseases including malaria, TB anddiseases including malaria, TB anddiseases including malaria, TB anddiseases including malaria, TB and AIDS among others drives demandAIDS among others drives demandAIDS among others drives demandAIDS among others drives demand for antifor antifor antifor anti----infectivesinfectivesinfectivesinfectives Increased incidence of NCDsIncreased incidence of NCDsIncreased incidence of NCDsIncreased incidence of NCDs including diabetes, hypertensionincluding diabetes, hypertensionincluding diabetes, hypertensionincluding diabetes, hypertension and cancer drives demand forand cancer drives demand forand cancer drives demand forand cancer drives demand for chronic prescription drugs.chronic prescription drugs.chronic prescription drugs.chronic prescription drugs. OTC segment expected to witnessOTC segment expected to witnessOTC segment expected to witnessOTC segment expected to witness growth mainly for antigrowth mainly for antigrowth mainly for antigrowth mainly for anti----infectivesinfectivesinfectivesinfectives,,,, analgesics and vitaminsanalgesics and vitaminsanalgesics and vitaminsanalgesics and vitamins Rapid increase in uptake ofRapid increase in uptake ofRapid increase in uptake ofRapid increase in uptake of generics anticipated owing togenerics anticipated owing togenerics anticipated owing togenerics anticipated owing to increased NHIS coverage.increased NHIS coverage.increased NHIS coverage.increased NHIS coverage. 100% NHIS coverage in Ghana100% NHIS coverage in Ghana100% NHIS coverage in Ghana100% NHIS coverage in Ghana expected to boost prescriptionexpected to boost prescriptionexpected to boost prescriptionexpected to boost prescription drugsdrugsdrugsdrugs Pharmaceutical Industry in Ghana & Nigeria: Revenue ForecastPharmaceutical Industry in Ghana & Nigeria: Revenue ForecastPharmaceutical Industry in Ghana & Nigeria: Revenue ForecastPharmaceutical Industry in Ghana & Nigeria: Revenue Forecast Key SegmentsKey SegmentsKey SegmentsKey Segments 75% 25% 44.3% 34.1% 21.6% Sales BreakdownSales BreakdownSales BreakdownSales Breakdown bybybyby ExclusivityExclusivityExclusivityExclusivity Status, 2013Status, 2013Status, 2013Status, 2013 RevenueRevenueRevenueRevenue Breakdown by GeographicBreakdown by GeographicBreakdown by GeographicBreakdown by Geographic Region, 2013Region, 2013Region, 2013Region, 2013 2.4% 7 Governments to encourage local production of essential medicines to improve capacity utilization and reduce imports 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenue 1.11 1.26 1.43 1.63 1.85 2.09 2.40 2.73 3.12 Growth Rate - 13.5 13.5 14.0 13.5 13.0 14.8 13.8 14.3 GrowthRate(%) Revenue($Billion) CAGR (2013 – 2018) = 13.9% Branded Nigeria Ghana OTC Generic CAGR (2013 – 2018) = 13.9% D r. A neek Gupta
  5. 5. Per Cent Revenue Forecast by Region Ghana is expected to witness higher growth than Nigeria because of increased NHIS coverage and well-defined regulatory guidelines. 0.0 25.0 50.0 75.0 100.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ghana 27.3 25.0 26.7 25.0 27.8 28.6 29.2 29.6 29.0 Nigeria 72.7 75.0 73.3 75.0 72.2 71.4 70.8 70.4 71.0 Revenue(%) Year Total Pharmaceutical Industry: Per Cent Revenue Forecast by Region, Ghana & Nigeria, 2010– 2018 Note: All figures are rounded. The base year is 2013. D r. A neek Gupta
  6. 6. Pharmaceutical Market Segmentation by Therapeutic Area Anti-infectives 25.8% Cardiovascular 11.9% Diabetes 6.2% Respiratory 5.6% CNS 4.4% Oncology 3.5% Others 7.9% OTC 34.7% Total Pharmaceutical Industry: Per Cent Sales Breakdown by Therapeutic Segment, Ghana & Nigeria, 2013 Although anti-infectives constitute the largest segment of the prescriptive pharmaceutical market, a marked shift in the burden of illness towards lifestyle diseases is expected. Note: Others include dermatology, gastrointestinal, and rheumatology. Note: All figures are rounded. The base year is 2013. D r. A neek Gupta
  7. 7. Therapeutic Area Growth Analysis Total Pharmaceutical Industry: Therapeutic Segment Growth Analysis, Ghana & Nigeria, 2014–2018 Anti-infectives 2% 4% 6% 8% 10% 12% 14% Cardiovascular Diabetes Respiratory CNS Declining Fast Growing Growing Source: Frost & Sullivan Oncology Note: Bubble size represents market value Continuous burden of anti-infectives is expected to contribute to significantly high growth of this segment throughout the forecast period. The relatively lesser incidence of respiratory diseases coupled with lack of technological expertise for the production of certain drug types is expected to restrict the growth of this segment. This is the fastest growing segment. Early diagnosis, coupled with increasing awareness, is expected to fuel the growth of this segment. 20% Fast Growing CAGR Fast Growing Fast Growing Increasing awareness of mental conditions and efforts to protect mental health of people are expected to drive growth in the long-term. The increasing rate of urbanisation and adoption of western life style are expected to result in an increasing incidence of NCDs, including cardiovascular disease and diabetes. D r. A neek Gupta
  8. 8. Drivers Continuous burden of infectious diseases Increasing incidence of NCDs Increased healthcare spending Weak regulatory policies Weak distribution systems Poor diagnosis and patient awareness Restraints Pharmaceutical Industry in Ghana & Nigeria – Key Drivers and Restraints • Largest reservoir of malaria, TB and AIDS • Recent outbreak of Ebola virus • Increased public health coverage (90%) • Expanded program on immunization (EPI) • Increasing adoption of western lifestyle • NCDs to constitute 21% by 2030 • Steep rise in chronic drugs to essential medicines ratio • Pharmaceutical spending in Africa to reach $35 billion by 2018 • Implementation of NHIS to improve access and availability of drugs • FDI in Africa expected to double by 2016 • Inadequate number of pharmacies and private clinics • Counterfeit drugs and illegitimate drug trading • Drug registration process time consuming and open to corruption • Absence of structured pricing system poses challenge to public sector • Private sector challenged by high out- of –pocket spending • Poor knowledge of diagnostic procedures • Patients skeptical about use of modern medicines • Lack of trained doctors and nurses Source: Frost & Sullivan D r. A neek Gupta
  9. 9. Pharmaceutical Procurement Process Local Manufacturers Generic Companies Distributors Branded Companies Manufacturer Representatives Direct Sales Distributors Teaching hospitals, private hospitals, clinics, pharmacies, and chemical sellers Total Pharmaceutical Industry: Procurement Process, Ghana & Nigeria, 2013 Key Takeaway: Engaging in strategic partnerships with local distributors is crucial for effective product distribution in Ghana and Nigeria. End User D r. A neek Gupta
  10. 10. • Efforts have been made to ensure quality production • The WHO and UNITAID have offered technical assistance and capacity building to Nigerian drug makers in achieving GMP standards and WHO pre-qualification Branded companies predominantly target the private sector, especially for in-demand therapies Increasing incidence of NCDs to fuel demand for specialty pharmaceuticals driving growth of MNCs Importers include Indian and Chinese generic pharmaceutical companies. Indian generic companies, which sell drugs mostly through NGOs and government tenders, fare much better than their Chinese counterparts. Local manufacturers sell own brands besides distributing brands of MNCs and importers High cost of local APIs poses challenge to local manufacturers Only a handful of local companies have gained WHO pre-qualification status Competitive Analysis by Company Type Importers 36.7% Branded companies 34.5% Local manufacturers 28.8% Per Cent Sales Breakdown by Tiers of Competition, Ghana & Nigeria, 2013 D r. A neek Gupta
  11. 11. Key Success Factors Key Success Factors Competitive Pricing Competitive Pricing Good product quality Good product quality Well- established distribution network Well- established distribution network Marketing Strategies Marketing Strategies Brand Recognition/ Loyalty Brand Recognition/ Loyalty Total Pharmaceutical Industry: Key Competitive Factors, Ghana and Nigeria D r. A neek Gupta
  12. 12. Ghanaian Pharmaceutical Industry Overview OTC 28.8% Generic 71.1% Branded 28.9%Prescription 71.2% Pharmaceutical Industry:Pharmaceutical Industry:Pharmaceutical Industry:Pharmaceutical Industry: Per Cent RevenuePer Cent RevenuePer Cent RevenuePer Cent Revenue bybybyby Product Segment, Ghana, 2013Product Segment, Ghana, 2013Product Segment, Ghana, 2013Product Segment, Ghana, 2013 Pharmaceutical Industry:Pharmaceutical Industry:Pharmaceutical Industry:Pharmaceutical Industry: Per Cent RevenuePer Cent RevenuePer Cent RevenuePer Cent Revenue bybybyby Imported andImported andImported andImported and LocallyLocallyLocallyLocally PPPProduced Pharmaceuticals, Ghana, 2013roduced Pharmaceuticals, Ghana, 2013roduced Pharmaceuticals, Ghana, 2013roduced Pharmaceuticals, Ghana, 2013 Locally manufactured 34.0% Imported 66.0% The OTC product segment is considerable, attributing to inaccessibility issues with prescription pharmaceuticals in certain regions, increased focus of the local participants on the OTC sector, and heavy advertising of OTC drugs. Ghana has approximately 55 registered pharmaceutical manufacturers producing finished dose formulations. Few companies equipped with the capabilities to produce APIs. La Gray Chemical Company is one such example. Well-developed NHIS and major donor funding for the provision of essential drugs 10-15% of locally produced drugs exported to other West African countries. Unregistered products account for 4% of the market; exact share of counterfeit drugs unknown Acute respiratory infections, malnutrition, anemia, diarrhea, and measles account for 50% of all childhood hospitalisation and 30% of childhood deaths. Note: All figures are rounded. The base year is 2013. D r. A neek Gupta
  13. 13. Ghana – Market Analysis by Product Segment 50.6% 20.6% 28.8% Generic Branded OTC • Local manufacturers primarily focus on OTC. • Key products include combination analgesics, tonics, vitamins, cold and flu preparations • High cost of imports, APIs and intermediates to drive growth of OTC segment • Increased NHIS coverage could result in slightly lesser growth • Increasing incidence of NCDs drive growth in this segment • Significant proportion of Ghanaian population are brand loyal • Growth of niche therapy areas such as oncology and CNS expected to increase uptake of branded drugs • Increasing patient awareness to contribute to growth • Traditionally largest segment comprising half the market • Key suppliers include importers from India and China • Local manufacturers produce drugs for PEDs • Cent percent NHIS coverage – major growth driver • Generic companies likely to win tenders in public sector, particularly in diabetes and cardiovascular segments • Expected to witness highest growth, representing almost 60% by 2018 Note: All figures are rounded. The base year is 2013 D r. A neek Gupta
  14. 14. Ghanaian Pharmaceutical Industry— Procurement and Supply Management Tertiary level (Central authorities) Secondary level (District and regional) Primary level (Community and rural areas) PublicPublicPublicPublicSectorSectorSectorSector PharmaceuticalPharmaceuticalPharmaceuticalPharmaceutical ProcurementProcurementProcurementProcurement The Ministry of Health (MOH) Procurement Department is responsible for the overall steering and management of the public sector drug procurement. The Ghanaian health service (GHS), a service delivery agency under the MOH, is responsible for the allocation of resources and liaison with the private sector. Public sector procurement comprises 3 levels. o Tertiary-level services are provided by central authorities that include the major public teaching hospitals (Korle Bu, Komfo Anokye and Tamale) via tendering o secondary-level services are offered by district and regional institutions. o Primary-level services are provided by community and sub-district/rural institutions Pharmaceutical Industry: Public Sector Drug Procurement, Ghana, 2013 D r. A neek Gupta
  15. 15. Ghanaian Pharmaceutical Industry—Procurement and Supply Management (continued) • Drugs that address local PEDs and financed through TGF are procured via ICB. • WHO pre-qualification and registration with FDB is required for a product to qualify for ICB. • Drug needs assessment is done by the following agencies: o ARVs – Ghana Office of UNAIDS and WHO o Anti-malarials – Ghana National Malarial Control Program o TB drugs – Ghana National TB Program and WHO o NTD drugs – Ghana MOH and WHO International Competitive Bidding (ICB) Pharmaceutical Industry: Public Sector Procurement Process, Ghana, 2013 • Conducted for essential drugs not provided through TGF • Product qualifications include FDB product registration and GMP registration. • Nearly 1% of ARVs and anti- malarial drugs are procured through NCB. National Competitive Bidding (NCB) • Large number of vaccines and medical devices such as disposables and condoms are donated through UNICEF and USAID as well as ITNs through NGOs. • Additionally, the research industry donates a significant chunk of medicines, although the exact amount is unknown. Donations • The MoH Central Medical Stores maintains large supplies of drugs targeting PEDs. • Whenever there is an acute supply shortage or lengthy delay in ICB- and NCB-based procurements, MoH fulfils drug procurement orders through shopping. • A huge amount of essential drugs are procured through shopping. Shopping D r. A neek Gupta
  16. 16. Ghanaian Pharmaceutical Industry - Distribution DistributionDistribution • Drugs procured publically via ICB/NCB are distributed by the MoH’s Central Medical Stores. • Transported to the district medical stores managed by district health authorities • Dispensed from public health centers • Anti-retrovirals, medicines for HIV/AIDS, TB, and NTDs are distributed by the public sector and confirmed by the Ghana Standard Treatment Guidelines. • Few NTD drugs produced locally; vast majority imported via ICB/ NCB and distributed through the public sector • Drugs procured publically via ICB/NCB are distributed by the MoH’s Central Medical Stores. • Transported to the district medical stores managed by district health authorities • Dispensed from public health centers • Anti-retrovirals, medicines for HIV/AIDS, TB, and NTDs are distributed by the public sector and confirmed by the Ghana Standard Treatment Guidelines. • Few NTD drugs produced locally; vast majority imported via ICB/ NCB and distributed through the public sector • Highly chaotic with thousands of intermediaries involved • Local companies forced to create own distribution agencies to ensure product supply at fair prices • Anti-malarials, particularly Artemesinin- based combination therapy (ACTs), are distributed at subsidised rates • Malaria largely treated outside the public health system ; ACT anti-malarials dispensed as OTC products. • ITNs imported from donors represent an integral part of malaria treatment • Highly chaotic with thousands of intermediaries involved • Local companies forced to create own distribution agencies to ensure product supply at fair prices • Anti-malarials, particularly Artemesinin- based combination therapy (ACTs), are distributed at subsidised rates • Malaria largely treated outside the public health system ; ACT anti-malarials dispensed as OTC products. • ITNs imported from donors represent an integral part of malaria treatment Public SectorPublic Sector Private SectorPrivate Sector D r. A neek Gupta
  17. 17. Ghanaian Pharmaceutical Industry—Demand Analysis • Local manufacturers producing drugs for malaria, TB and HIV export to other parts of West Africa. • Large-scale manufacturers compelled to produce under capacity as the local pharmaceutical market is primarily focused on the OTC non-essential products. • Local pharmaceutical industry strives to address PEDs and control population morbidity. • Supply of medicines for PEDs through TGF funding and ICB procedure is as follows: o ARVs heavily dependent on Indian suppliers o Anti-malarial ACTs largely supplied from India and China o TB drugs predominantly supplied through IDA o Drugs for NTDs are principally imported. • Besides traditional oral and topical formulations, Ghana also has local capacity for the production of parenteral fluids (Intravenous Infusions Limited and San Bao Company Limited). • Vaccines and injectables imported mostly through ICB/ NCB as well as drug donations • Increasing investment by MNCs and Indian companies in local pharmaceutical production Local Pharmaceutical Market: Industry Capacity Utilisation, Ghana, 2013 48.0% 100%0% (Capacity Utilization Potential) D r. A neek Gupta
  18. 18. Ghanaian Pharmaceutical Industry – Competitive Landscape Rank Branded Companies Generic Companies Local Manufacturers 1 2 3 4 5 Other Noticeable Participants Novartis, Jansen-Cilag Glenmark, Serum Institute of India, Mepha Danadams Pharmaceuticals Ltd., La Gray Chemical Company Pharmaceutical Industry: Key Market Participants, Ghana, 2013 D r. A neek Gupta
  19. 19. Ghanaian Pharmaceutical Industry— SWOT Analysis Source: Frost & Sullivan • Under-utilisation of local pharmaceutical manufacturing capacity often by 50% • Limited incentives for PED drug production; hence heavy reliance on OTC drugs • High cost of locally-manufactured products • Unable to conduct bio-equivalence studies required for WHO pre-qualification • Large variation in local ex-manufacturing prices for comparative products • Lack of consensus regarding TRIPS implementation and compulsory licensing. • Imported raw material expense and supply shortages • VAT on imported manufacturing materials • Influx of low-cost Asian generics • Parallel pharmaceutical trade • Continued proliferation of counterfeit pharmaceuticals • Price sensitivity of the total pharmaceutical industry. • Unmet human resource development needs • Lack of focus on pharmaceutical R&D issues Strengths Opportunities Weaknesses Threats • Well-functioning pharmaceutical regulation systems in place • One of the strongest pharmaceutical industries in the Economic Community of West African States (ECOWAS) • High degree of economic and political stability in Africa • Cent per cent public health coverage • Established local manufacturing industry • Existence of public budget for products that address priority endemic diseases • WHO pre-qualification enables better access of local producers to international markets • Utilisation of the ‘marginal preference scheme’ applied to tenders • Access to external funding sources and technical assistance • Creation of local API, excipient, and packaging material production • Access to the President's Special Initiative Programme • Effective lobbying of PMAG and WAPMA on important local industry issues D r. A neek Gupta
  20. 20. Nigerian Pharmaceutical Industry Overview Pharmaceutical Industry: Per Cent Revenue by Product Segment, Nigeria, 2013 Pharmaceutical Industry: Per Cent Revenue by Imported and Locally Produced Pharmaceuticals, Nigeria, 2013 Locally manufactured 30.0% Imported 70.0% The OTC product segment is quite large as a significant proportion of population yet to be covered under NHIS operational since 2005. Nigeria has over 10,000 unregistered patent and proprietary drug stores selling OTC products only Vibrant pharmaceutical industry employing about 500,000 people in manufacturing and distribution According to the Pharmacists Council of Nigeria, there are 128 registered drug manufacturers, 724 drug distributors, 1,543 retail pharmacies, and 292 drug importers in Nigeria. Only 50% of population covered under NHIS Nigerian pharmaceutical industry is quite susceptible to parallel trading. It is estimated that nearly 17% of essential generic medicines and as high as 30% of anti-malarials are routinely faked in Nigeria. ARVs, ACTs, and anti-TB drugs considered life-saving drugs, the government strives to encourage local production of these medicines Note: All figures are rounded. The base year is 2013 OTC 39.4% Generic 62.9% Branded 37.1% Prescription 60.6% D r. A neek Gupta
  21. 21. Nigeria – Market Analysis by Product Segment 38.1% 22.5% 39.4% Generics Branded OTC • OTC segment quite large as people practice self-medication • Anti-malarial ACTs, analgesics, and multivitamins constitute a large share • Increasing demand for vitamins and health supplements drive growth • Over 10,000 unregistered stores selling OTC drugs • High out-of-pocket payment by patients is likely to restrict use of premium branded drugs • Branded drugs more commonly used in private sector by brand-loyal customers • Increasing incidence of life-style diseases and absence of cheaper generic equivalents to drive growth of this segment • Smaller as compared to Ghana as consumers are price-sensitive • 70% of generics imported while 30% produced locally • Anti-infectives, cardiovascular and diabetes are key therapeutic segments • Expected to witness high growth – CAGR 14.6% Note: All figures are rounded. The base year is 2013. D r. A neek Gupta
  22. 22. Nigerian Pharmaceutical Industry— Procurement and Supply Management Tertiary healthcare under Federal Government Secondary healthcare controlled by the State MOH Primary healthcare controlled by the Local Government Areas Pharmaceutical Industry: Public Sector Drug Procurement, Nigeria, 2013 Public Sector Pharmaceutical Procurement The federal government is responsible for over all policy formulation and technical guidance to all healthcare providers. Public sector procurement comprises 3 levels oThe tertiary healthcare centres (University teaching hospitals) and federal medical centres located in 36 states procure drugs and supplies from the federal government. oThe secondary level healthcare comprised of state hospitals is supplied by the State MoH, which also offers technical support to the local government areas (LGAs). oThe primary level healthcare services are taken care of by the LGAs. • The private sector, NGOs, and traditional health practitioners provide service across the healthcare delivery system. D r. A neek Gupta
  23. 23. Nigeria Pharmaceutical Industry—Procurement and Supply Management (continued) • BPP established in 2007 by the Public Procurement Act (PPA) is responsible for the overall steering and management • Aims to ensure accountability, integrity, and transparency in the procurement process, establishment of pricing standards and benchmarks • Frames policies and guidelines for the approval of the National Council on Public Procurement (NCPP) • Right to debar any supplier, service provider or, contractor in case of violation of the Act. The Bureau of Public Procurement (BPP) Pharmaceutical Industry: Public Sector Procurement Process, Nigeria, 2013 • Provision of PPA that grants a margin of preference while evaluating tenders, comparing bids from domestic and foreign companies. • Margins of preference applies only to tenders procured under ICB. • It is required that the bidding documents clearly state the preference and furnish information required to establish the eligibility of a bid for such preference. Domestic Preference Policy D r. A neek Gupta
  24. 24. Nigerian Pharmaceutical Industry - Distribution DistributionDistribution • Traditionally 3 different warehouses – The Central Central Medical Stores, the Federal Medical Stores (FMS), and the State Medical Stores • Currently, all integrated into one – the Central Medical Stores with one branch in Oshodi and another in Abhuja. • A mega distribution consensus model was framed to improve distribution • Drugs collected from the FMS in Oshodi are distributed directly to health institutions across the country • Drug distribution to pharmacists is prevented, thereby promoting rational drug use. • Traditionally 3 different warehouses – The Central Central Medical Stores, the Federal Medical Stores (FMS), and the State Medical Stores • Currently, all integrated into one – the Central Medical Stores with one branch in Oshodi and another in Abhuja. • A mega distribution consensus model was framed to improve distribution • Drugs collected from the FMS in Oshodi are distributed directly to health institutions across the country • Drug distribution to pharmacists is prevented, thereby promoting rational drug use. • Local manufacturers and importers have their own distribution channels to supply medicines • Drugs are traded in unregistered and unlicensed premises, and sometimes by non- pharmacists • A predominant hub of counterfeit drugs - 17% of essential generic drugs and 30% of anti-malarials are routinely faked • NAFDAC strives to tackle this problem through radio frequency identification (RFID) technology for logistics and tagging to detect fake medicines • Local manufacturers and importers have their own distribution channels to supply medicines • Drugs are traded in unregistered and unlicensed premises, and sometimes by non- pharmacists • A predominant hub of counterfeit drugs - 17% of essential generic drugs and 30% of anti-malarials are routinely faked • NAFDAC strives to tackle this problem through radio frequency identification (RFID) technology for logistics and tagging to detect fake medicines Public SectorPublic Sector Private SectorPrivate Sector Source: Frost & Sullivan D r. A neek Gupta
  25. 25. Nigerian Pharmaceutical Industry—Distribution (continued) FACTORY/EXPORT Mega Distribution Wholesalers Wholesalers Wholesalers Retailers Clinics Hospitals Retailers Clinics Hospitals Retailers Clinics Hospitals Regional Hub – SW Regional Hub – SE Regional Hub – North Regional Hubs Pharmaceutical Industry: Public Sector Drug Procurement—Mega Distribution Company Consensus Model, Nigeria, 2013 D r. A neek Gupta
  26. 26. Nigerian Pharmaceutical Industry—Demand Analysis • Local industry meets 30% of demand while 70% is imported from India and China • Local manufacturers produce tablets, capsules, ointments, liquid preparations, creams, lotions, and ophthalmic preparations • Fluctuations in capacity demand are attributed to low purchasing power within the population and the irregular government purchase of drugs and delayed payments • Drugs locally produced in Nigeria represent as much as 60% of the pharmaceutical production in the ECOWAS region. • Judicious efforts to increase utilization rate of available capacity include: o Upgrading of facilities of local drug manufacturers to obtain the WHO pre-qualification status o In 2010, 6 Nigerian companies gained WHO pre-qualification for supply of ARVs, anti-malarials and anti-TB drugs o Ban imposed by Nigerian FMoH on the import of certain essential medicines to attain self-sufficiency and reduce parallel trade o Revised ECOWAS tariff structure for import of drugs: essential medicines, industry machinery and equipment - 0% tariff; raw materials and other capital goods – 5% tariff; intermediates – 10%; finished goods – 20% tariff; finished products with adequate local capacity – 50% tariff Local Pharmaceutical Market: Industry Capacity Utilisation, Nigeria, 2013 42.0% 100%0% (Capacity Utilization Potential) D r. A neek Gupta
  27. 27. Nigerian Pharmaceutical Industry – Competitive Landscape Rank Branded Companies Generic Companies Local Manufacturers 1 2 3 4 5 Other Noticeable Participants AstraZeneca, Jansen-Cilag, Eli Lilly Nigeria German Chemicals Plc, Greenlife Pharmaceuticals Ltd. Juhel Nigeria Ltd., Swipha, Neimeth International Pharmaceuticals Plc. Pharmaceutical Industry: Key Market Participants, Nigeria, 2013 Source: Frost & Sullivan D r. A neek Gupta
  28. 28. • Current capacity utilisation rate in Nigeria is only 45%. • Access to affordable funding for local manufacturers is hampered by high bank interest rates. • High cost of locally manufactured products than those imported • Unable to conduct bio-equivalence studies required for WHO pre-qualification • Large variation in local ex-manufacturing prices for comparative products • Weak purchasing power threatens scope for marketing drugs. • VAT on imported manufacturing materials • Influx of low-cost Asian generics • Parallel pharmaceutical trade • Continued proliferation of counterfeit pharmaceuticals • Price sensitivity of the total pharmaceutical industry • Failure to address loopholes in the distribution system • Lack of focus on pharmaceutical R&D issues StrengthsStrengthsStrengthsStrengths OpportunitiesOpportunitiesOpportunitiesOpportunities WeaknessesWeaknessesWeaknessesWeaknesses ThreatsThreatsThreatsThreats • More than 60% of pharmaceutical production in ECOWAS countries is domiciled in Nigeria. • Attainment of WHO cGMP and pre-qualification status by certain companies enables participation in international tenders. • High degree of economic and political stability • Established local manufacturing industry – technical skills, trained manpower, and basic manufacturing infrastructure already exists. • Large market size, strong demand and need for better management of anti-infectives (malaria, AIDS, and TB) • Positive economic growth and macroeconomic stability in recent years • Judicious efforts taken by NAFDAC to reduce counterfeit trade • Government ban of imports of certain essential medicines for which there is adequate capacity and technical skills • Establishment of NHIS scheme to provide universal health coverage by 2015 Nigerian Pharmaceutical Industry— SWOT Analysis D r. A neek Gupta
  29. 29. Key Mergers, Acquisitions & Partnerships Value: Undisclosed Year of Deal: February 2014 Key Reason: • Imperial Health Sciences, the Life Sciences division of Imperial Logistics, a leading distribution company in South Africa, bought 53% stake in WWCV. • By this deal, Imperial Logistics is expected to leverage the well- established supply chain network of WWCV in Nigeria, thereby pioneering into the healthcare space. Value: $86.0 million Year of Deal: July 2012 Key Reason: • Bought the manufacturing facility and sales and distribution infrastructure of Cosme Farma • Adcock Ingram strives to expand its presence in the Indian pharmaceutical market by leveraging Cosme Farma’s strong sales forces and nearly 60 well- established brands in dermatology gynecology, among others. Value: Undisclosed Year of Deal: May 2012 Key Reason: • Sanofi Aventis acquired Medreich’s portfolio of branded generics in Sub- Saharan Africa • Med Reich being the leading generic pharmaceutical company, Sanofi has managed to significantly increase its market shares in the generic pharmaceuticals segment by this acquisition. Adcock Ingram – Cosme Farma Imperial Logistics – Worldwide Commercial Ventures Limited (WWCV) Sanofi aventis – Medreich Pharmaceutical Industry: Key Mergers, Acquisitions & Partnerships, Ghana & Nigeria, 2012 - 2014 D r. A neek Gupta
  30. 30. Future Directions for Pharmaceutical Companies in Ghana & Nigeria 22 Foreign traders in Africa are expected to bolster their distribution channels by engaging in strategic partnerships with local trustworthy stakeholders. 33 Given the immense growth potential and business opportunities, it is expected that companies would invest significantly in their marketing capabilities, patient awareness programmes, and treatment support services to enhance brand loyalty. 11 Branded companies are expected to adopt a differential pricing strategy specific to patient segments and geographies in Africa to make treatment affordable to a large group of patients, thereby significantly expanding their customer base. D r. A neek Gupta
  31. 31. Foreign Companies to Bolster Distribution Channels •Addressing loopholes in supply chain and distribution channels •Technical Training of distributors and retailers •Pharmacists influence choice of customers and brand image Branded Companies to adopt Differential Pricing Strategy •Revisiting cost of commodity generics •Close coordination with NGOs to penetrate rural areas Game-changing Strategies for the success of market participants •Patient support programs for technically challenging formulations •Investing in R&D and engaging local patient groups •Bar codes and holograms to track counterfeits Enhance Patient Awareness and Treatment Support Services Future Directions for Pharmaceutical Companies in Ghana & Nigeria (continued) •Engage in strategic partnerships with trustworthy local stakeholders •Training of physicians and nurses •Detailing by medical representatives •Continual medical education (CME) programs •Advisory/Advocacy Boards •Corporate Social Responsibility (CSR) D r. A neek Gupta
  32. 32. Dr Aneek Gupta ThanksThanks D r. A neek Gupta

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