CHINESE PHARMA COMPANIES TURN TO AFRICA FOR RISING EXPORT AND INVESTMENT OPPORTUNITIESDecember 1st, 2012
BY WANG FANGQING, IN SHANGHAI
THE CHINESE pharmaceutical sector is pushing hard to secure sales in sub-Saharan Africa – seeing it as a softer and growing export market, compared to stagnating mature markets in Europe and north America. It is for want of trying. Western markets have long been a target for Chinese medicine manufacturers, but the strict market approval rules in the European Union (EU) and US have generally restricted Chinese companies to exporting active pharmaceuticals ingredients and intermediates, rather than completed drugs. So, seeing a growing demand for drugs in sub-Saharan Africa, Chinese companies have decided to grasp the opportunity.
In October this year, the Wuhan-based Humanwell Healthcare Group, a Shanghai Stock Exchange-listed manufacturer known for making abortion pills and traditional Chinese medicine (TCM) products, said it will invest Chinese Yuan Renminbi CNY130 million (USD20.5 million) to build a plant in Mali, aiming to supply west Africa with TCM syrup and large volume parenterals.
“The African market is very important because it is part of our global strategy, which already includes the US market and the south eastern [Asia] market,” said Jiang Zhenghan, business manager at Humanwell.
His company has already shown it is prepared to invest abroad. In 2010, it invested USD33 million to establish a PuraCap plant in New Jersey – the Chinese company controls US-listed PuraCap.
Humanwell is not alone. Also in Wuhan, the capital city of Hubei province, Lihua Import&Export, a medicines and medical device dealer, is making profits through selling antibiotics in Africa.
“Antibiotics and analgesics are our best selling drugs. Chinese-made drugs are popular in Africa because of affordable price and good quality,” said Wang Yang, sales manager at Lihua.
He added once reason for targeting sub-Saharan Africa is the comparatively low number of local pharma companies, and this was a major factor explaining the company’s expanding African sales, especially in west Africa.
As well as antibiotics, Wang said arthritis medicine is also popular in wet parts of African, where consumers suffering from different types of arthritis exacerbated by long rainy seasons. “About 50% of our drugs to Africa are for arthritis,” Wang said.
Wuhan customs said that central China’s Hubei province alone exported record levels of medicine to Africa from January to July this year, up 123.8% year-on-year to USD10.4 million.
And nationally, the value of China-made standard medicinal drugs exported to Africa grew 14.29% year-on-year during the first half of 2012, compared with a growth of 1.63% to the EU, according to China Chamber of Commerce for Import & Export of Medicines & Health Products, a state-run organisation based in Beijing.
It has suggested a strategy for ambitious Chinese firms who wish to secure major orders from African governments – namely that they first become World Health Organisation-certified suppliers to international organisations who offer drugs in the region for free.
Having secured a reputation for supplying reliable drugs for AIDS, malaria, avian flu and tuberculosis in Africa, for instance, Chinese companies are then better placed to secure contracts with local health services.
Shanghai-based Fosun Pharma has shown how this can work. Its subsidiary – Guilin, Guangxi province-based Guilin Pharma – was certified in 2011 by the WHO as an artesunate (injection) supplier for treating malaria. As a result, in July Fosun announced it would build a manufacturing plant in Abidjan, the Ivory Coast, to develop topical artemisinin and antibiotics, targeting 17 French speaking African countries, also including Cameroon, Gabon and Chad.
The Chamber also advises that Chinese companies should establish local sales networks, such as that operated by Tasly, a Tianjin-based TCM manufacturer that has local offices in Johannesburg, South Africa.
Tasly has developed a danshen dripping pill, a cardiotonic that is in Phase III clinical trials in the US, and is already covered by national health insurance in South Africa.
“Africa has about 900 million people, but the annual consumption of drugs only account for less than 1% in the global market, so the potential growth is huge,” a director at the Chamber told Manufacturing Chemist.
“Also, the market relies heavily on imported drugs, providing a great opportunity for Chinese firms,” he added.
However, he noted despite the recent growing trade with African countries, Chinese manufacturers still have work ahead to ensure their drugs more widely accepted in the region as major treatments.
Poor quality is one major reason, he said. “Low-end and poor quality drugs have undermined Chinese companies’ reputation, which needs an urgent fix,” he said.
These include counterfeits and the problem has prompted the Chamber to lobby the Chinese government to crack down on the sale of fakes to Africa, because of the damage it does to the country’s legitimate pharma sector.
According to a recent study funded by the US National Institutes of Health, up to 42% of anti-malaria drugs in southeast Asia and sub-Saharan Africa are poor quality or fake, and many of them are made in China.
“Also, the African drug market has long been dominated by western countries, as well as [having to compete with] Japan and India, who are the new players. Chinese companies need a long way to go,” he added.