Investment Opportunities in the Pharmaceutical Sector

Advisory
Investment Opportunities in the
Pharmaceutical Sector Nigeria/Pakistan
A keynote address delivered by Farouk Gumel
- Partner, PwC Nigeria
June 2014
The Global Pharmaceutical
sector in 2020
PwC
The pharmaceutical market is anticipated to more than double to
US$1.3 trillion by 2020
The growth markets include, in descending order of size, China, Brazil, Russia, India, Mexico,
Turkey, Poland, Venezuela, Argentina, Indonesia, South Africa, Thailand, Romania, Egypt, Ukraine,
Pakistan and Vietnam.
Growth forecast of global pharmaceutical market
600
499
500
425
$ Billions
400
337
273
300
205 194
200
205
127
149
Sales in 2011
Sales in 2020
183
100
27 31
0
United States
Canada
EU-Big 5
Japan
Growth markets
ROW
S ource: PwC Pharma 2020 report
Investment Opportunities in the Pharmaceutical Sector - Nigeria/Pakistan •
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Our Pharma 2020 series has identified the forces of change and the
response required of the industry
Forces of Change
• Chronic disease is soaring
• Healthcare policy makers and
payers are increasingly
mandating what doctors can
prescribe
• The boundaries between
different forms of healthcare are
blurring
Required Response
Improve Research and
Development
productivity
Reduce costs
Tap the potential of
emerging economies
Switch from selling
medicines to managing
outcomes
• Emerging economies are driving
demand for medicines
• Governments are beginning to
focus on prevention rather than
treatment
Collaborations with
players inside and
outside the sector
• Regulators are more cautious
S ource: PwC Pharma 2020 report
Investment Opportunities in the Pharmaceutical Sector - Nigeria/Pakistan •
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Why Africa
PwC
Africa, the emerging market of the future…
Is now the time for multi-nationals to
be investing in Africa?
•
Africa could have the world’s largest workforce
by the middle of this century.
•
•
Africa’s urbanisation is circa 40%, which is
greater than India, but lagging China at circa 50%.
•
Wealth is being generated and distributed
less unevenly than before.
Africa’s investment potential is about more than just
resources, as it evolves and climbs the
consumption, urbanisation and
industrialisation curves, that the BRICs have
climbed.
•
Agricultureand food production in central Africa
could see Africa becoming the world’s food
basket.
•
Africa’s success would ensuresupply of scarce
resources to the rest of the world.
•
The growing demand for consumer goods is
largely unmet, as consumer spending increases with
2000
2011
the growing population and middle class.
Investment Opportunities in the Pharmaceutical Sector - Nigeria/Pakistan •
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A region with worlds second fastest growth…
T op Growers 2011 – 2015 :
GDP Growth (%)
Africa Economic Growth (%)
7
6
Nigeria
5.7
6.8%
6.9%
4
6.2
6.4
6.4
5.7
5.6
5.2
5
Zambia
5.6
5.9
5.0
4.8
4.3
3.9
3.5
Ghana
7.0%
Congo
7.0%
3.1
3
2
1
Tanzania
Mozambique
7.2%
-
7.7%
Africa
Ethiopia
Africa excluding Libya
8.1%
“In 2013, Africa maintained an average
Vietnam
7.2%
growth rate of about 4%. This compares
India
China
8.2%
positively to 3% for the global economy and
9.5%
underscores again the continent's resilience
to global and regional headwinds.”
Investment Opportunities in the Pharmaceutical Sector - Nigeria/Pakistan •
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Resources, key investment focus for emerging economies
Uga n da:
Ni geria:
• Growth not only from oil and gas, but
al so infrastructure, solid minerals,
agricultural,
industrial and
manufacturing
industries.
• Growi ng regional trade and investment
rol e as Nigerian companies expand into
A frica.
Gh a na:
• Mi n ing sector development spurred the
cou n try through much of last decade.
• Oi l n ow set to take off.
• Su ccess of the Jubilee oil field.
• Oi l i s spurringdevelopment, both
di rectly and in allied sectors – growth of
+10% expected for next few years.
• Regi onal hub for energy products –
Sou thern Sudan, Rwanda gas, Eastern
Con go oi l.
Ken ya:
• Growi ng sophistication in agriculture.
• In creased investment in rail, road and
pi peline infrastructure for the transport
of oi l and gas resources from Uganda
an d DRC.
Ta n zania/Mozambique:
• Stron g oil reserves and highly literate
y ou ng population.
• Di scov ery of gas resources in border
basin area, with potential reserves the
si ze of Saudi Arabia (300 trillion cubic
feet).
An gola:
Moza mbique:
• A ttractive portfolio of resources,
i n cluding oil, gold, copper and
di amonds.
• Coal i s spurring developments around
Tete.
Ga bon :
• Dev el oping coal corridor from Botswana
• In creased investment in agriculture and
i n frastructure.
S ource: Whitehouse and Associates
Inv estment Opportunities in the Pharmaceutical Sector - Nigeria/Pakistan •
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The Nigerian Health
Care System
PwC
Nigeria has critically low levels of human and infrastructure
resources for health care
Number of Beds per 100,000 People
35
Summary of Nigeria Health
System (per 1,000 persons)
30
Physician
0.4
25
Nursing and
midwifery
personnel
1.605
15
Pharmaceutical
personnel
0.105
10
Pharmacists
0.095
Laboratory Health
Workers
0.168
20
5
0
Nigeria
South
Africa
Algeria
Egypt
World
(median)
S ource: World Health Organisation, OECD (2013), Kaiser Family Foundation
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While no reliable data exists, various estimates have put the
amounts spent on medical tourism at between $500 million and
$800 million
•
•
•
Top medical tourist destinations
include India, Europe, the United
States and the Persian Gulf
The Indian High Commission
estimated that 47% (est. 18,000) of
Nigerians who visited India in 2012
did so to seek medical attention
spending $260m on treatment –
about $15,000 per medical tourist
Opportunities exist for investors
to take advantage of the gap in
Africa’s largest economy.
Brain
surgery
Cosmetic
surgery
Open heart
surgery
Major
Ailments
Eye
treatment
Cancer
Renal
transplants
S ource: SNH research, The International Medical Travel Journal
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Although there are over 130 pharmaceutical companies in Nigeria,
only 9 are listed on the stock exchange. There is little visibility on
the size of the other players.
Common Drugs Produced
•
Anti-malaria
•
Vaccines and antiretroviral
(ARV)
•
Antibiotics
•
Anti-helminthics
•
Oncology drugs
•
Diabetic drugs
S ource: Business Monitor International
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Imports will remain key to meeting growing local demand for
medicines in the country
Nigeria’s Pharmaceutical Imports Data and
Forecast($Mn)
900
800
Pharmaceutical
imports reached a
value of $481mn in
2013 and are
expected to gain
10.4% to reach
$789mn by 2018,
widening the
country's
pharmaceutical trade
deficit from 475mn
in 2013 to $778mn
in 2018.
Forecast
700
600
500
400
300
200
100
0
2012
2013
2014
2015
2016
2017
2018
S ource: Business Monitor International
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There have been many laudable efforts by NAFDAC – the main
regulatory body in Nigeria - to standardise the pharmaceutical
industry
•
NAFDAC must inspect factories anywhere in the world before it registers or renews the
registration of their products
•
Mandates all pharmaceutical companies to imprint unique numbers on drugs
•
Requires compulsory pre-shipment information from all importers before the arrival of their
products.
•
Collaborating with NHIS (National Health Insurance Scheme) to combat drugs counterfeiting
and the illegal sale of prescription drugs
•
Collaborating with the Pharmacist Council of Nigeria to close pharmaceutical companies
involved with illegal and fake drugs
•
Launched a Mobile Authentication Service (MAS) to check the authenticity of Pharmaceutical
products
S ource: Business Monitor International
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Nigeria – Pakistan Relations
PwC
Nigeria and Pakistan have some superficial features in common
NIGERIA
GDP (2013)
T otal Population
(2013)
Population growth
rate
PAKISTAN
$509.9 billion
174 million
2.8%
GDP (2012)
$225.1 billion
T otal Population
(2013)
180.4 million
Population growth
rate
1.8%
Health expenditure
(as a % of GDP)
6.1
Health expenditure
(as a % of GDP)
3.1
Number of beds per
100,000 people
5
Number of beds per
100,000 people
0.6
Ease of doing business
index (2013)
110
Ease of doing business
index (2013)
147
Size of
pharmaceutical
industry (2013)
$1.28billion
Size of
pharmaceutical
industry (2013)
$2.10 billion
Number of
pharmaceutical
companies
130+
Number of
pharmaceutical
companies
562+
S ource: World Bank, Business Monitor International
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Nigeria and Pakistan has similar disease burden with a significant
proportion of deaths attributable to communicable diseases…
Proportional mortality - Nigeria
Proportional mortality - Pakistan
Injuries
5%
1 2%
4%
3%
2%
7%
Injuries
8%
Cardiovascular
diseases
Cardiovascular
diseases
Cancers
Cancers
Respiratory
diseases
25%
46%
Respiratory
diseases
Diabetes
Diabetes
67 %
7%
Other NCDs
Communicable
and maternal
conditions
8% 1 %
5%
Other NCDs
Communicable
and maternal
conditions
S ource: World Health Organisation - NCD Country Profiles
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…with Malaria, Diarrhea and Dysentry being common amongst
Pakistanis and Nigerians
Main sources of Mortality
(infectious diseases) - Nigeria
2%1%
2%
Main sources of Mortality
(infectious diseases) - Pakistan
Malaria
3%
8%
Diarrhea
3%
3%
Pneumonia
5%
Acute
Respiratory
Infection
2%
Malaria
8%
Dysentry
Diarrhea
AIDS
8%
55%
CSM
15%
51%
Dysentry
Cholera
18%
Hepatitis
Measles
Neonatal
tetanus
Tuberculosis
16%
Others
S ource: World Health Organisation - NCD Country Profiles
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Nigeria-Pakistan relations dates back to the 1960s
Bilateral agreement
between Nigerian and
Pakistan to cooperate on
law enforcement,
particularly narcotics
shipping
Bilateral relations
between Nigeria
and Pakistan were
established
1960s
1984
The NigeriaPakistan Joint
Commission (NPJC)
was established
S ource: Public Information
The Nigeria-Pakistan
Joint Commission
(NPJC) was resuscitated
and began discussions on
improving trade and
economic relations
ensued
2010
2004
2014
Bilateral trade between Nigerian
and Pakistan peaked, reaching
$56 million.
Pakistan supported Nigeria’s
candidature at the 37th session of
the International Civil Aviation
Organisation
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The Pakistan Pharmaceutical Industry is expected to post steady
growth into the near future
Pharmaceutical Sales, Historical Data and Forecast (Pakistan)
5
1 3.2
1 3.9
Forecast
1 5 .1
1 4.5
1 5 .1
1 5 .1
16
14
1 2.4
4
1 1 .3
1 1 .3
1 1 .3
12
CAGR:
6%
1 0.4
10
3
8
2
6
4
1
2
0
0
2010
2011
2012
2013
2014
2015
Total Pharmaceutical sales ($ bn)
2016
2017
2018
2019
2020
Pharmaceutical Sales Per Capita ($)
S ource: Business Monitor International
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While Nigeria Pharmaceutical Industry is expected to grow at a
faster rate until 2020
Pharmaceutical Sales, Historical Data and Forecast (Nigeria)
3.5
Forecast
14
1 3.2
12
1 1 .9
CAGR:
11%
2.5
1 0.7
1 0.1
10
9 .4
8 .8
8 .1
8
7 .4
1.5
6 .5
6
5 .8
5 .2
4
0.5
2
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
-0.5
2020
0
Total Pharmaceutical sales ($ bn)
Pharmaceutical Sales Per Capita ($)
S ource: Business Monitor International
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A myriad issues and challenges continue to impact the
pharmaceutical sector of both countries
Nigeria
Pakistan
• Counterfeit drugs
• Lack of meaningful patent
legislation or pricing and
reimbursement
• High cost of raw materials
import
• Domestic patent law
notably below international
standards, with illegal and
widespread counterfeiting
• High registration fees for
imports
• Chronically under-funded
healthcare sector, reliant on
foreign aid
Key
Challenges
• Poor drug approval process
• Low R&D expenditure – 1%
of sales
• Increasing competition
from neighbouring Asian
countries
• Increasing costs of
Manpower and energy
S ource: Business Monitor International
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But in spite of these issues, pharmaceutical industries in both
countries can leverage identified strengths
NIGERIA
PAKISTAN
• Large market size in Nigeria
• Strong pharmaceutical base.
Pakistan’s pharmaceutical market
is the 10th largest in Asia Pacific.
• Strong demand/need for
improved management of
infectious disease
STRENGTHS
• Increased efforts to improve drug
distribution in other to reduce
opportunities for counterfeiting.
• Assistance from WHO
Prequalification team (PQT) to
demonstrate compliance with
Good Manufacturing Practice
(GMP)
• Significant local pharmaceutical
manufacturing industry/strong
manufacturing capacity
• Presence of over 525
pharmaceuticals manufacturing
with 17 of them in Nigeria
• Strong financial position with
ability to scale up
S ource: Business Monitor International
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Emerging Opportunities
PwC
There has been many speculations of the future direction and plans
to foster Nigeria-Pakistan pharmaceutical relations
The resuscitated Nigeria-
Nigeria targets $3b Pharma
Pakistan Joint Commission to
import from Pakistan by the
review moribund agreements
end of 2015
in the agriculture, textile and
The Nation Newspaper/ 27-04-13
pharmaceutical sectors
Punch Newspaper/ 01-04-14
Pakistani Pharmaceutical
companies have been urged to
export their products to Nigeria
The Nation Newspaper/ 27-04-13
S ource: Public Information
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In order to make the most of these future growth opportunities,
Nigeria and Pakistan can collaborate in the areas of
• Information exchange through
– Research and Development (R&D)
– Student Exchange Programmes
• Strategic outsourcing (including contract manufacturing, information
technology (IT))
• Patent licensing of local manufacturers
• Innovative and cost-effective repackaging and drug enhancement
• Appropriate Government incentives to encourage partnerships with local
drug manufacturers
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THANK YOU!!!
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