Drug manufacturing offers you huge potential on the continent
The case for drug manufacturing on the African continent is very strong. For example, Africa is home to roughly 60 percent of all HIV/AIDS sufferers and close to 80 percent of the world‘s malaria sufferers, yet just less than two percent of the drugs for its diseases is locally manufactured.
For decades, Africa has sourced its drugs and medicines from the rest of the world. Europe, the Americas and South-East Asia (especially India and China) have been the continent‘s main suppliers. In recent years, due to their low labor costs and large supply of skilled talent, Indian and Chinese drug companies have been able to produce generic drugs and medicines that are cheap and affordable for millions of Africans. This low-cost advantage has made it difficult for drug manufacturing to really take off in Africa.
Note: Generic drugs are copies of brand-name drugs that have exactly the same qualities as the original drug. For example, Paracetamol is a chemical ingredient found in many brand-name painkillers, but is also sold as a generic drug (without a brand name). Because generic drug manufacturers do not spend anything on research and development of these drugs, they are able to sell at very low prices.
However, with the ratification of the World Trade Organization (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (also known as the TRIPS Agreement‘33), and the flexibilities allowed for Least Developed Countries (LDCs), Africans now have an advantage when it comes to manufacturing low-cost generic drugs and medicines.
A couple of African businesses and entrepreneurs are already taking advantage of the emerging opportunities by partnering with foreign drug manufacturers. However, setting up a manufacturing plant requires considerable capital, machinery, technology investment and skilled talent.
Business Concept
You will need to decide whether you are going to import drugs or manufacture them yourself, but first you really ought to be aware of the local competition and drug needs in your market. To get licensing for drug imports or manufacturing is no easy undertaking and has taken some African businesses months, or even a couple of years (depending on where you are located). So make sure you start with a through market analysis and a well-defined niche. When done properly, the outcome can be hugely profitable.
Niche Ideas
Contraceptive pills
Pregnancy test kits
Alternative medicine, which is a huge market in the West and Far East
Top Countries & Policy Guidance
This will work almost anywhere in Africa, but you may find huge discrepancies in the level of competition and related regulations. Rare niche ideas where the competitions is lower (see niches above) really work in Africa‘s most vibrant capital cities where people have adopted some sort of Western lifestyle and habits.
Ethiopia is currently promoting the manufacturing of drugs, so it is a location to consider if manufacturing is what you had in mind.
Action & Tips
The local public drug-regulating department – for example, an office such as the National Agency for Food and Drug Administration and Control (NAFDAC) in Nigeria– should be your very first point of contact. Here you will be able to get first-hand information about drug regulations and import rules and you can find out more about your market.
Warning: Some countries claim it takes a few months to get your drug import license and then it can take much longer, which can be hugely frustrating. Make sure you are talking to other drug importers and non-governmental stakeholders in your industry to find out more about their experiences.
Success Story
Emmanuel Katongole – Quality Chemicals Limited (Uganda)
Emmanuel Katongole identified a gap in the medicine supply market quite a while ago, in 1997, where he witnessed the domination of imported medicines from India and China. Emmanuel made a very decisive move by setting up a pharmaceutical manufacturing plant in Uganda and finally started operations in 2008.
He certainly had great perseverance – but it paid off. What started with an investment of US$30,000 has today become a company that is worth more than $100 million and has created jobs for 300 Ugandans. His company produces affordable, life-saving drugs for treating HIV and malaria, and is also the first African producer of antiretroviral and antimalarial drugs to be certified by the World Health Organization.
Emmanuel is keen on expanding the business to become a regional drug manufacturing giant supplying neighboring markets in South Sudan, Kenya, Rwanda and Burundi. His firm advice to young entrepreneurs is to stick to their dreams and not be distracted by too many alternatives. „Know [your dream] from A to Z and be able to articulate it very well… the sky can be the limit.‟