Joining forces can help Chinese, Indian drugmakers achieve healthy growth in Africa

By Hu Weijia Source:Global Times Published: 2017/8/24 22:03:40

Africa needs to import nearly 97 percent of the medicines it consumes, according to a China Trade News report on Thursday. For drugmakers in China and India, which are enthusiastic about beefing up their presence in the continent, it is worth considering joint investment in local pharmaceutical industries to relieve the acute shortage of medicines there.

The high incidence of infectious disease is a major cause of mortality in Africa. For instance, Sub-Saharan Africa is the region that is hardest hit by HIV, accounting for more than 70 percent of the global burden of HIV infection, according to the UN. In this context, local authorities have begun to pay more attention to the development of the local health care industry and encourage investment by foreign companies in the pharmaceutical sector.

Africa may be the only virgin territory where high growth is still achievable for pharmaceutical companies. Pharmaceutical prospects in the continent are attracting growing interest from industry giants from developed countries such as US-based Pfizer and Switzerland-based Novartis. Those companies together account for about 70 percent of the market share in Africa and thus have the edge in the localization of production.

India is also telling a good story in exploiting African market. Some Indian hospital groups are setting up operations in Africa, and pharmaceuticals have become one of India's main exports to Africa. Medicines from India have a price advantage but the technical capability of their producers lags that of Western competitors. Counterfeit drugs manufactured in India have been pushed into various African countries, and the "Made in India" label thus to some extent has become synonymous with low costs and low quality.

Also, when there is a growing pool of Chinese drugmakers with an interest in Africa, Indian medical producers doing business in the continent are likely to face fierce competition in the low and middle segments of the market.

Indian and Chinese players will lose the game against Western competitors in Africa if they wage a fierce price war with each other.

The best way to counter the power of Western pharmaceutical giants is cooperation between the two emerging countries. Joint investment by Chinese and Indian players will enhance their capability in research and development. In addition, China and India are both important contributors of economic aid to Sub-Saharan countries. Pharmaceutical companies from those two countries can take advantage of health-aid funding to enhance their medical service in the continent.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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