How
Global Pharma Players Can Gain Traction in Africa
Africa is
expected to be the fastest growing pharmaceutical market in the world. But in
order to gain meaningful inroads there, global players must focus on
alternative models for growth that acknowledge Africa’s unique provider
networks, writes Lauren McHugh in this opinion piece. McHugh is an MBA/MPA
candidate at Wharton and Harvard’s Kennedy School of Government studying
innovations in African health care systems.
In this year’s Fortune 500 list, pharmaceutical producers and
wholesalers make up seven of the top 100 spots, with another two of the top 20
spots going to pharmacy retail chains. Part of their rise in the rankings over
the past decade comes from relentless industry consolidation. But in the
hyper-fragmented African pharma market, often cited as having the drug
industry’s most potential, I believe companies need to look to alternative
models for growth. Providing patients with knowledge, credibility and segmented
distribution can allow global players to capture a share of the $45 billion business
opportunity this
market is expected to represent by 2020.
Africa’s Fragmented Market
The U.S. is edging closer to duopoly in the pharmacy retail
sector, with CVS and Walgreens representing at least half of all drug retail
sales in most major American cities. The U.S. is also dominated by a steady
oligopoly among drug makers, where historically the top 10 producers dispense
nearly 60% of the country’s prescription drugs, according to data aggregator
IMS Health. The same sub-industries in Africa are made up of not dozens or
hundreds, but instead thousands of players.
The 10 largest pharmacy retail chains in Nigeria, Kenya and
Ghana manage 186 outlets for a population of almost a quarter of a billion
people. An estimated 15,000 mom-and pop pharmacy shops make up the bigger share
of the market in these three major economies. Their drugs are sourced from a
variety of suppliers: from the several hundred locally registered
pharmaceutical manufacturers across the continent, to larger manufacturers based
in India, China and Western regions.
In this environment, Big Pharma companies and retailers cannot
rely on their usual wholesale-based strategies. Instead, they will need to look
to the unique characteristics of African health care systems that can drive
scale.
Retailers Not Only as Point-of-Sale, But Also
Point-of-Care
Relative to demand, the supply of physicians in Sub-Saharan
Africa is extremely limited (one per 10,000 people versus 15 per 10,000
globally according to the World Bank). Even when geographic distance does not
preclude access, patients still face long wait times and high prices for
qualified care. Consumers often take matters into their own hands,
self-diagnosing or seeking treatment directly from pharmacists, pharmacy
technicians or pharmacy shop owners. Studies in Cameroon, Ghana and Uganda showed
50%-60% of patients or caretakers consult their local drug outlet as a first
line of care for treatment of certain health conditions.
Drug retailers looking to scale sustainably will need to play a
role in making legal prescription channels more convenient. HealthStore
Foundation, which manages over 60 franchises in Kenya, addresses this by
setting up micro-clinics run by registered nurses alongside many of their
shops. The model has created a legitimate means to drug access that patients are
willing to use: An academic study by
Yale and Texas Tech researchers found children living closer to a store
received more vaccinations and acute illness treatments. Telemedicine provider
HelloDoctor allows patients in Kenya to obtain prescriptions for certain
medications through phone-based medical consultations. For pharma producers and
retailers, these new modes of diagnosis may soon represent a major point of
origin for prescriptions.
Social Capital As a Key Form of Startup
Capital
Entering African markets often requires regaining the trust of a
skeptical consumer base. An estimated 30% of drugs in Africa are counterfeit, part of a
larger multi-billion dollar global fake drug trade. Unlicensed drug outlets are
also rife. In Kenya, the non-profit PSP4H estimates that 8,000 of the country’s
12,000 pharmacies operate without a license.
Living Goods, a network of ‘Avon-like’ door-to-door health
entrepreneurs in Uganda, Kenya and Zambia, borrows its social capital from the
communities in which it operates, rather than building it from scratch.
Respected female figures are elected by their neighbors as Living Goods’ health
agents. Local chiefs provide character references in place of collateral to
establish the credit-worthiness of these micro-franchise owners. Living Goods
then supplements the women’s local knowledge and relationships with technical
training on health and business, to develop a network of product and
information distributors. Using community relationships to deliver health care
services has allowed them to scale to five million people, together with BRAC
Community Health Promoters, and contribute to a 27% reduction in child
mortality, according to a university study.
Social capital can also be built over social media. Jacaranda
Health, which manages peri-urban maternity clinics outside of Nairobi,
maintains a Facebook group with several thousand followers. Hundreds of posts
on its page share patient testimonials, photos and “thank you” messages from
new mothers. Recently, they transitioned from one-on-one discharge counseling
to a group-based model, and are creating ways to facilitate group SMS
communications among these cohorts.
The means of building trust are not always explicit. Managers of
HealthStore Foundation noticed that the delivery vehicles driving to and from
their shops inadvertently helped build their credibility as suppliers. The
trucks signaled to customers living nearby that drugs were sourced from outside
the area, versus from within where counterfeits are rife. Customer feedback
proved an important channel for navigating the unwritten rules of building
patient buy-in.
Legislation As a Driver of Rural Distribution
To address the rural access gap, governments in Ethiopia, Kenya
and Mozambique (among others) provide legislative support for new cadres of
health professions. These begin at the health extension worker level, typically
requiring several months of training in the treatment of malaria, pneumonia,
and tuberculosis and other common diseases. Classifications reach as high as
clinical officer level, requiring three to four years of training and
permitting license holders to diagnose and treat a wider range of ailments.
Whereas
traditional medical degrees in Africa require five to six years of training,
paraprofessional roles offer greater possibilities for scale. Across east and
southern Africa (excluding South Africa), there are an estimated 250,000 community health
workers relative
to 35,000 physicians. In Ethiopia, members of the Health Extension Worker
program are permitted to administer anti-malaria drugs and antibiotics to treat
pneumonia in certain regions, as well as promote vaccines. Community health
workers are permitted to distribute anti-malarial drugs in a dozen other
African countries, and provide oral contraceptives in Kenya, Lesotho, Malawi
and Zimbabwe, according to UNICEF.
Drug marketing in the U.S. primarily targets physicians, on whom
drug companies have spent up top $24 billion in past years. Reaching the mass market
in Africa will require focusing on a much broader base of health care
providers. Local governments have recognized that the needs of patients’ center
around access, especially geographic. Drug companies that incorporate cadres of
health care professionals created to reach the underserved can extend their
distribution to an estimated additional 30% of the Sub Saharan African
population.
Locally Grown Ingenuities
With continued uncertainty in the U.S. over drug price regulation, pharma companies’ topline
growth calls for a sustained focus on international sales. In Africa, locally
grown ingenuities offer new delivery tactics for drug suppliers and retailers.
By contributing to the development of health care infrastructure, building
patients’ trust and adapting to Africa’s unique provider networks, these
players can better serve what is expected to be the fastest growing pharmaceutical
market in the world
http://knowledge.wharton.upenn.edu/article/global-pharma-players-can-gain-traction-africa/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2017-10-19
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