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Africa Launch Study

An analysis of 49 countries in sub-Saharan Africa to develop a continent-wide investment strategy for a company with no prior activity in the region

Situation

Major pharmaceutical companies have traditionally viewed Africa within a corporate social responsibility (CSR) framework. Pharmaceutical companies began CSR activities in the region during the AIDS crisis of the 1990s, which spurred them to engage in donation programs for ARV drugs. CSR is defined by the United Nations Industrial Development Organization as “a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.” While CSR activities can support business outcomes by bolstering competitive advantages such as enhanced access to markets and improved reputation, they are not directly linked to a company’s bottom line – nor are they financially sustainable.

Today, ARV drugs are available to virtually all population segments in sub-Saharan Africa. Moreover, the region is changing. According to IMS Health, pharmaceutical spending in Africa is expected to reach $30 billion USD by 2016, driven by a 10.6 percent annual growth rate that is second only to Asia and in line with Latin America. By 2020, pharmaceutical spending in the region will have more than doubled from current levels to $45 billion USD.

Taking these projections into consideration, a pharmaceutical company with no prior activity in sub-Saharan Africa appointed Axios to investigate the commercial potential of markets in the region for its product portfolio, identify and prioritize markets for investment, and formulate a launch strategy for the region.

Solution 

Axios began by considering macroeconomic indicators of all 49 countries in sub-Saharan Africa. Based on an estimation of the size of the patient population that could afford specialty care treatment and indicators measuring the capacity of health systems and the risk of potential investments, the top 20 countries were prioritized. This sample was then narrowed down to six countries following an analysis of revenue potential, competitive landscape, reimbursement coverage, registration timelines, out-ofpocket healthcare expenditure, and eligible patients for target products.

Face-to-face interviews with key opinion leaders (KOLs) were conducted in each of the six prioritized countries to gather insights on the role of the public and private sectors, the capacity of specialists, patient education and adherence, drug registration processes, and treatment practices. The product-eligible population was segmented by ability to pay, and revenue potential estimates were refined. Finally, in each prioritized market, Axios developed specific operational models and pricing recommendations for the launch of key products.

Results

Africa’s middle class is rising in tandem with demand for chronic disease treatments, suggesting a lucrative opportunity for pharmaceutical companies. However, entering markets where the majority of patients pay for medicines out-of-pocket requires detailed local-level knowledge. In combining high-level modeling with country-level insights from key stakeholders, Axios was able to provide strategic recommendations on where and how a pharmaceutical company should enter the sub-Saharan African region.

By viewing Africa through a commercial lens, companies are taking part in a new paradigm in which Africa is considered not only a region for philanthropic activities but also a compelling place to do business.