India’s crucial role in Africa’s pharmaceutical industry is beyond question. Overall, India now has the third-largest pharmaceuticals industry in the world and is the largest in terms of generics. By 2015, the industry is expected to be worth around $20bn.
African countries have been increasing their imports from India, and Indian companies, many based in South Africa, are garnering a larger slice of the continental market by the month.
The three Indian firms with the biggest presence in Africa are Ranbaxy, Cipla and Dr Reddy’s.
Ranbaxy is India’s biggest pharmaceutical firm and is truly global, operating in 46 countries and with customers in more than 125 countries. Its African subsidiary, set up in 1998, is South Africa’s fifth-largest generic company, thanks in part to its acquisition of pharmaceutical firm Be-Tabs in 2006.
Ranbaxy’s upbeat attitude about its future role in Africa is clear: “Africa has been a major growth story for Ranbaxy and we will continue to invest in the region to further expand our business,” said the firm in its 2011 Annual Report.
There are figures to back up Ranbaxy’s confidence. Its sales in Africa grew by 23% in 2011, to $189m while its sales in Nigeria grew 17% to $26m in 2011. The firm also launched nine new products last year, including Valaciclovir and Imipenem+Cilastatin. It has completed the upgrading of its plant in South Africa and has received approval from the Medicines Control Council (MCC) for a manufacturing facility in Roodepoort, South Africa.
With five subsidiaries, five representative offices and a workforce of nearly 1,000 people, Ranbaxy’s distribution network caters to 44 of the 54 countries in Africa.
Dr Reddy’s, another large Indian pharmaceuticals firm, has also made impressive progress in Africa. After entering the continent through a subsidiary, Dr Reddy’s entered the market directly in 2004.
It is now the 18th biggest generic company in South Africa in terms of value. Revenue for 2010 has been $9.4m, representing more than two-fold increase. Its top-selling products include Omez, Cifloc, Citraz, Amlate and DRL-Moxifloxacin, which account for more than half of its revenue.
Cipla Medpro South Africa, the South African subsidiary of the Indian firm Cipla, also recorded a 28% increase in revenue in the six months ended 30 June 2012 to R1,080bn ($123m). The company’s shares gained 31%. It is considered the fastest growing of South Africa’s top 10 pharmaceutical giants and the third-biggest pharmaceutical firm in the country. Cipla is currently investing $36m in upgrading its plant in Durban city.
Firms are also looking beyond South Africa and keen to break into other markets in the region. Ranbaxy, for example, is eager to strengthen its presence in Nigeria, the second-largest market for the pharmaceutical industry in Africa. It recently announced its intention to open a greenfield manufacturing plant in 2013. The plant should boost the firm’s liquid manufacturing capacity to 14m units annually and improve capacity to the tune of 100m units of tablet capsules per year. Ranbaxy is also seeking to capture a portion of Morocco’s market and in March opened a new manufacturing plant in Rabat to that end.
New drugs introduced
Some Indian companies have also successfully introduced new drugs to the African market recently. For example, in the spring of 2012, Ranbaxy introduced a new anti-malarial drug, Synriam. It is claimed to have a 95% cure rate and relieve symptoms of the illness. In September, Cipla’s new proposed drug to combat malaria was approved by the World Health Organisation as well.
Indian companies have adopted a number of common strategies to build their business presence in Africa. One aspect of their commercial approach that has gained particular attention is price slashing. In 2001, Cipla, for example, won considerable goodwill when it committed to drastically dropping the price of its ARVs, from over $10,000 a year to less than $400.
However, individual firms have also tailored their strategies to differentiate themselves from their competition. For example, Ranbaxy has endeavoured to establish itself as particularly research driven and an innovator in the pharmaceutical field as well as a leading distributor and manufacturer of drugs.