opportunity for indian pharmaceutical sector in africa

8/4/2019 Opportunity for Indian Pharmaceutical Sector in Africa

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Presented by: Akankshya Bishwal

Gaurav KhuranaItisha SharmaNitish mahendru

Toolika kumarSachin garg


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AFRICA Africa was the birthplace of thehuman species between 8 millionand 5 million years ago.People across the continent areremarkably diverse by just about any measure Africa is the world's second largestand second most populous continent. Africa isnt one economy. Its home to54(including Madagascar and otherisland groups) nations, each with itsown policies and attitudes towardmultinational companies, as well asits own languages, currency, andtraditions.


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AFRICAN ECONOMY- THEN ANDNOW

Africas growth accelerated rapidly after 2000 andcontinued even during the global recession.Over the past decade, Africas real GDP grew by 4.7% a year,on average twice the pace of its growth in the 1980s and1990s.Previously once the economy had picked up during the1970s oil boom, but when oil prices fell, it began to slow. While political troubles, wars, natural disasters, and poor

policies could slow Africa down, the prospects forconsumer-facing companies are bright.Though Africas growth rate slowed to 2% in 2009, itbounced back to nearly 5% in 2010, and in 2011 it is likely totouch 5.2%.


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WHY AFRICA? African appeals to potential investors for a host of reasons.Natural resources have been catalyst for Africas growth. Widest range of minerals.The continent has grown steadily at 5.6 percent between2001 and 2008 due to combination of structural economicand political reforms.Increased foreign direct investment inflow and stable

macroeconomic conditions.The African challengers (40 African multinationalcompanies) have outperformed the Nikkei 225, DAX 30 andS&P 500on revenue and profit margin.


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REASONS FOR GROWTH IN AFRICAOne, several African countries, such as Angola andMozambique, halted deadly hostilities, creating thepolitical stability necessary for growth. The number of serious conflicts in Africa those in which deaths exceed1,000 people a year declined from an average of 4.8 a yearin the 1990s to 2.6 in 2000s.Secondly, Economies became healthier as governmentsshrank budget deficits, trimmed foreign debt, and broughtdown inflation.Several governments adopted market-friendly policies.They privatized state-owned enterprises, reduced tradebarriers, cut corporate taxes, and strengthened regulatory and legal systems.


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Growth in Africa As Africas economies progress, opportunities are opening insectors such as retailing, telecommunications, banking,infrastructure-related industries, resource-related businesses,and all along the agricultural value chain.Consider that telecom companies in Africa have added 316million subscribers more than the entire U.S. population since 2000.

Smart multinational companies are busy planting their stakes inthe ground. Nokia and Coca-Cola have distribution networks innearly every African country.

Unilever has a presence in 20 African nations, Nestl in 19,Standard Chartered Bank in 14, Barclays in 12, and SocitGnrale in 15. Homegrown giants are expanding: Ecobank andSouth African Breweries each operate in over 30 Africancountries, while MTN and Shoprite are in 16 African countrieseach. Companies that enter Africa now, we believe, can shapeindustry structures, segment markets, and establish brands.


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INDIAN PHARMACEUTICAL

COMPANIES: OverviewThe Indian pharmaceutical sector has come a long way, being almostnon-existent before 1970 to a prominent provider of healthcareproducts, meeting almost 95 per cent of the countrys pharmaceuticalsneeds

Now it ranks very high in the third world, in terms of technology,quality and range of medicines manufactured.The Indian Pharmaceutical sector is highly fragmented with more than20,000 registered units with severe price competition and governmentprice control. It has expanded drastically in the last two decadesTechnologically strong and totally self-reliant, the pharmaceutical

industry in India has low costs of production, low R&D costs,innovative scientific manpower, strength of national laboratories andan increasing balance of trade.India's pharmaceutical industry has transformed itself over the pastthree decades from almost non-existent to the second-largest in the

world by volume, with revenues of $3 billion (two billion euros) .


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TOP 10 PHARMACEUTICAL

COMPANIES OF INDIARank Company Revenue

(Rs.crore)1 Cipla 4,198.96

2 Ranbaxy 4162.253 Dr. Reddy Laboratories 3763.724 Sun Pharmaceuticals 2463.595 Lupin Ltd. 2215.526 Aurobindo Pharma 2081.197 Glaxosmithkline 1773.418 Cadilla Healthcare 16139 Aventis Pharma 983.8010 Ipca Laboratories 980.44


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PHARMACEUTICAL COMPANIES IN

AFRICA African countries are also still fighting against whatthey perceive as unfair practices in the internationalpharmaceutical industry.Medical experimentation occurs in Africa on many medications, but once approved, access to the drug isdifficult.

Patents on medications have prevented access tomedications as well as the growth in research for moreaffordable alternatives.


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NAMES OF AFRICAN PHARMA

COMPANIES Aspen Pharmacare Adcock Ingram Holdings

Immuniti Holdings

These domestic pharma companies will be discussed inthese slides time and again


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Indian companies in africaCompanies like Lupin, Ranbaxy,Dr.reddys Laboratories have beenmajor players in Africa.Sonke Pharmaceuticals, a joint venturebetween Ranbaxy (Pty) Ltd and

Community Investment Holdings(CIH), has bagged a 913.5 million rand(about Rs 605 crore) order from thegovernment for supply of drugs forprevention and treatment of AIDS, it isthe second-largest local supplier of generic ARV medication in South

Africa. Gurgaon-based Ranbaxy holds amajority 70 per cent stake in Sonke.Sonke Pharmaceuticals has launched16 products till date, eight of which aremanufactured locally in South Africa.


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the second largest, Cipla, is listed on the JohannesburgStock Exchange.Unlike most multinational companies, India's "big three"pharmaceuticals -- Ranbaxy, Cipla and Dr Reddy's -- havecarefully cultivated their local credentials by bringingSouth Africans into the top corporate echelons.They've been very strategic in terms of how they'vepositioned themselves in South Africa and using South Africa as a launch pad into Africa.Cheap generic drugs have been the catalysts of that growth,and Africa has been a key market, buying 14 percent of India's $8-billion pharmaceutical exports in 2009.


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GUJARAT PHARMA COMPANIES IN

AFRICAMid sized pharma companies more interested in Africa.Pharmaceutical export of the state has increased by 30-40percent.For small and mid-sized companies who do not have adequateinfrastructure to meet the European Union or US Food andDrugs Administration(USFDA) countries in Africa offer goodbusiness opportunity.Lincoln Pharmaceutical Ltd, the Rs 130 crore firm which hasdrug registrations for about 100 formulations in more than 10

African countries exported drugs worth Rs 40 crore to Africa in2010-11 and has set an export target of Rs 65 crore for thisfinancial year.Gujarat-based firms like Astra Lifecare have gone in forbackward integration to support their business in Africa.


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Opportunities in Africa African market at the same time is hugely dependent onimports. Africa offers good business opportunity companies who donot have adequate infrastructure. Astra Lifecare started off as drugs trading and marketingcompany with operations in East African countries likeUganda, Tanzania, Kenya, Rwanda among others. It then went ahead and set up an export-oriented-unit (EOU) atBavla near Ahmedabad that would manufactureformulations, this development shows a wide scope forpharmaceutical business in Africa.


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like Cadila Pharmaceuticals have also decided to utilise theopportunity thrown open by the governments of the African nations that are promoting domestic pharmamanufacturing by introducing friendly policies, incentives,and investments in the industry.The Ahmedabad based privately held company has is all setto step into Rwandan soil. CSM Global Pharma, a joint

venture between Cadila Pharma and US-based HoltzmanGroup will invest $65 million to set up a pharmaceuticalmanufacturing facility in Kigali, Rwanda in association with the Rwandan Development Board (RDB).


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COMPETETION IN AFRICAN

MARKETChina- India dazzles but China remains ahead

Across all parameters, China is winning the game hands down,except that Indian companies at times look like theyve decided

to sidestep the competition and create their own opportunities.Chinese are utilising Africas incredible mineral wealth to createinfrastructure, improve transport links and connectivity andestablish entire systems in healthcare and education.China has also launched a $5-billion venture capital fund and put

aside another $1 billion to help small & medium enterprises setup operations in Africas special economic zones. , Chinese investments in the continent would touch $50 billion,

while trade would soar to $300 billion.


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Domestic Pharma companies- competition

Adcock Ingram Holdings, a South african Pharma company secured 10 % share of Pvt pharmaceutical companies inSouth Africa R 1504 million in 2010. Aspen Pharmacare- In 2008 a tender worth $526 million was launched to provide its health department's anti-AIDSdrugs for two years, giving preference to companies withlocal operations. Aspen bagged the lions share out of it.Immuniti Holdings is another important domestic playerin African Pharma sector.


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WHY CHINESE ARE AHEADCompared to China, India was hesitant about investing into Africa. While India opened up over the past decade, the chinesehave 10-year headstart on India.

While we have given a $250 million line of credit to Africancountries, Chinese have already over $5 billion to spend and thefact is that money talks.Most of Chinas FDI in Africa is led by state owned enterprisesand involve an exchange of infrestructure development in returnfor mineral rights.

They are not scared of failing as they do not have shared holdersto account to, they come with their state owned enterprisesbacked with chinese treasury.China might be winning the battle but the war for Africa is farfrom over.


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CONCLUSIONConsumer demand is strong. Companies that desire revenues and profits, webelieve, can no longer ignore Africa. Question has shifted from- Should oneinvest in Africa to managing the risk of not being in africa Africa has a very new and untouched market and offers opportunity to bothsmall and middle level companies to make it big.HIV/AIDS and the role of Indian pharma companies in lowering the prices of HIV treatment has strengthened Indias place in African market to someextent.The top players in Pharma sector have already expanded to Africa, once a Basicinfrastructure of a company is built, possibility of growth is more.Not just China and domestic market, other nations likeBrazilians, French andBritish are also in this competition for African market. Africa today is where India was 40 years ago and China was 20 years ago, withthis vast reserve of natural resources, cheap and accessible labour and boomingopportunities, Africa has a long way to go.


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opportunity for indian pharmaceutical sector in africa

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