By NJIRAINI MUCHIRI
Pharmaceutical manufacturers in the region will continue to
miss out on the gravy train of the lucrative industry, which is expected
to grow at a rate of 12 per cent over the next five years.
A recent meeting in Nairobi that sought to explore ways to boost
production in the East African Community heard that local drug makers
are struggling to grow their market share in an environment that
continues to favour imports. Local manufacturers lack the capacity to
compete while governments have failed to offer incentives.
A report by research firm McKinsey shows that the value of
Africa’s pharmaceutical industry will grow to between $45 billion and
$65 billion by 2020, from $30 billion currently. In East Africa, the
industry is expected to double to $10 billion over the next four years.
The report shows that prescription drugs will grow at a 6 per
cent rate annually, generics at 9 per cent, over-the-counter medicines
at 6 per cent and medical devices at 11 per cent.
The growth will be driven by the convergence of demographic
changes, particularly urbanisation, increased wealth and healthcare
investment and rising demand for medicines, particularly to treat
chronic diseases.
But despite the anticipated growth, regional manufacturers’
market share will continue to stagnate at about 30 per cent. There are
about 65 pharmaceutical manufacturers in East Africa.
India and China remain the key sources of pharmaceutical imports
into East Africa, jointly accounting for about 45 per cent of the
total.
According to Christoph Spennemann, a senior official at the
United Nations Conference on Trade and Development, the biggest
challenge facing regional manufacturers is the lack of capital to invest
in improving product quality.
“Local companies need to invest in new and better production and
research facilities, but conventional banks are reluctant to finance
their projects because they see them as too risky,” he said in Nairobi.
High costs
Lack of financial support has made it impossible for
manufacturers to invest in research and development and in plants that
meet the international Good Manufacturing Practices standards.
Regional governments have also failed to offer tangible incentives and protect the industry from the onslaught of imports.
The Federation of East African Pharmaceutical Manufacturers
notes that governments have refused to impose taxes on imported
medicines that can be produced regionally in order to protect the local
industry.
The high cost of importing raw materials has not only driven up
the cost of doing business but is also responsible for making regionally
manufactured drugs expensive and uncompetitive.
More critically, East African governments continue to procrastinate on the issue of harmonisation of national drug regulations.
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