More manufacturing is now taking place within sub-Saharan Africa. In most cases, the Active Pharmaceutical Ingredients (APIs) are imported and then combined with non-active ingredients to produce the finished drug.
This creates local employment and can reduce the cost of medicines, although the main cost remains the import of the APIs in the first place. The business of many African companies is based on the production of generics, although a large number have licensing arrangements with multinational companies to manufacture their drugs on a local basis.
There is little doubt that the African pharmaceutical market will grow more quickly than the continent's population or even its economy. To take one example, PricewaterhouseCoopers Nigeria (PwC Nigeria) predicts that the value of Nigeria's pharmaceutical imports will grow by 10.4% a year over the next five years, from $48im in 2013 to $789m a year by 2018. There are now more than 130 pharmaceutical companies in Nigeria. Nine of these are listed on the Nigerian Stock Exchange: Neimeth, Neros, Emzor, May & Baker Nigeria, Fidson, Drug-field, Nigerian German Chemical plc (NGC), Novartis and GSK.
Companies such as Cipla Medpro, Adcock Ingrams and Aspen Holdings make South Africa the premier pharmaceutical research and manufacturing location in Africa. Aspen is the biggest pharmaceutical manufacturer in Africa, with four factories in South Africa, one in Kenya and another in Tanzania, plus 12 scattered around the rest of the world. It manufacturers a wide range of drugs, including ARVs.
Another South African firm, Imperial Holdings, has made a string of recent acquisitions, including Eco Health, Pharmed, MDS Logistics and Imperial Health Sciences. In October, it also bought a 70% stake in Dutch firm Imres for 646m ($58.2m) in order to expand its consumer distribution network in Africa. Imres supplies drugs and other medical supplies to retailers, hospitals and NGOs.
Despite such success, just 15% of the 7,000 patents granted every year by South Africa's Companies and Intellectual Property Commission (CIPC) are awarded to South African companies.
In October, Cipla Medpro signed an exclusive deal with Teva Pharmaceutical Industries to market the latter's drugs in South Africa. Teva is the world's biggest manufacturer of generic drugs. Cipla Medpro is a South African firm that has been owned by Indian firm Cipla since its $51201 takeover last year. Its chief executive, Paul Miller, announced: "This...