Dr Reddy's, Lupin, others mull expanding Africa operations

Change in South African regulation to drive further growth

Domestic pharmaceutical companies are expanding their Africa operations with product launches in new markets.

In FY17, Indian drugmakers exported medicines worth $3 billion to Africa and the continent is the second-largest export market for Indian companies after the United States.

According to health-care service provider QuintilesIMS, the overall African drug market is estimated to grow from $20 billion in 2016 to $30 billion by 2021. Much of the projected growth will come with a change in regulations, increase in health spending and a rise in demand for medicines to treat chronic and lifestyle-related ailments.

One such change in regulation came into force in June with the formation of the South African Health Products Regulatory Authority (Sahpra) and that is expected to quicken the pace of new product approvals in the country.

"The recent establishment of Sahpra could usher in a new and much more effective era for the local pharmaceutical sector as the existing Medicines Control Council (MCC) has struggled to cope with the volume of applications for new medicines and clinical trials. Based on industry figures, registering new products with the MCC took three to five years and in some cases even exceeded seven years. We are hopeful that the new body will streamline processes to deal with the backlog and by 2020 registrations will be competed in 18 months of submission," said Erik Roos, chief executive of Pharma Dynamics, Lupin's subsidiary in South Africa.

Factbox

• $30-bn: Size the African drug market  will reach by 2021, from from $20 billion in 2016, according to QuintilesIMS

• $3 bn: Worth of medicines Indian drugmakers exported to Africa in FY17

• 2nd-largest: Export market Africa is for Indian firms, after the US

South Africa is the biggest market for Indian pharma companies in the Africa continent and accounts for nearly a fifth of their exports to Africa. Cipla is the largest generic company in South Africa and Lupin and Sun Pharmaceutical also figure on the list of top generic drug makers.

In FY17, Pharma Dynamics crossed one billion revenue in local currency (about Rs 481 crore) for the first time and it is now looking to grow sales of its tuberculosis products and expand operations in parts of the continent. 

"Most of the African countries will increase their generic consumption and more than 70 per cent of the growth is likely to emanate from generic consumption. India has good potential to contribute big in the situation," said Udaya Bhaskar, director general of Pharmaceutical Export Promotion Council of India.

Others too are expanding their business. Torrent said it plans to launch 7-10 products in Africa each year and its focus markets include South Africa, Kenya, Tanzania and Zimbabwe. Dr Reddy's Laboratories (DRL) is tapping opportunities in French-speaking countries in Africa, which have seen limited Indian presence till now. 

Over the last few years, DRL has seen double-digit growth from Africa.

Other than South Africa, DRL is focused on North African countries such as Algeria, Egypt, Morocco and Tunisia. But North African market has its own challenges. "The industry is yet to come to terms with over 100 per cent depreciation of the Egyptian pounds in last six months. Although there are entry barriers in Algeria and Morocco, we are working towards addressing market needs with focus on complex generics and proprietary products. Some of our filings have already commenced in these markets," said M V Ramana, executive vice-president and head of branded markets (India and emerging countries).