Pharmaceutical Investment in Africa and the opportunity it holds for making an impact into the lives of millions of people across the continent is often mis-understood. When it comes to the pharmaceutical market, Africa may be the only area where high growth is still achievable.
Due to its tropical climate, Africa is one of the largest reservoirs of infectious diseases and with the increasing adoption of Western lifestyle in Africa, there has been a paradigm shift that’s driving the demand for chronic prescription drugs. The sector has been an attractive one for Venture Capital in South Africa.
According to the team a Goldstein Research, Africa’s pharmaceutical industry jumped to USD 28.56 billion in 2017 from just USD 5.5 billion a decade earlier. That growth is continuing at a rapid pace: we predict the market will be worth USD 56 billion to USD 70 billion by 2030
Why is Pharmaceutical Investment in Africa an opportunity?
So what’s making Africa the hotspot for pharmaceutical growth? There are three main factors contributing to this exciting growth:
Urbanization: Cities enjoy better logistics infrastructures and healthcare capabilities, and Africa’s population is undergoing a massive shift.
By 2025, two-fifths of economic growth with come from 30 cities of two million people or more. These urban households will have more purchasing power and are quicker to adopt modern medicines.
Healthcare Capacity: Healthcare provision is becoming more efficient through new initiatives – and the introduction of innovative delivery models is increasing capacity even further.
Business Environment: To create a more supportive environment for business, governments are introducing price controls and import restrictions to encourage domestic drug manufacturing – causing the pharma industry to expand.
How Investors Can Get Involved
As one of the last markets that are showing genuinely high growth in the pharmaceutical industry, Africa is a great place for early investors to gain competitive advantage. If you’re looking to get involved, there are a few things to keep in mind to secure success within the market.
Pharmaceutical Investment in Africa will see growth
First, focus on pockets of growth. Due to Africa’s wide gaps between countries in terms of market size, growth trajectory and legal structure, it’s important for investors to focus on where the growth is happening, which at the moment appears to be Kenya and Nigeria.
However, the considering Pharmaceutical Investment in Africa, investors shouldn’t just focus on countries, but also in the cities themselves. As mentioned above, the increase in urbanization is key to the pharmaceutical market growing within Africa. As more citizens in cities adapt to modern medicines faster than those in the country, the opportunity continues to grow.
It’s also important to forge partnerships. Global pharmaceutical companies need local business partners – from manufacturers, to distributors – to help them navigate the continent’s many markets.
Additionally, partnerships with government are equally important, whether they involve working with medical opinion leaders to guide research priorities and secure funding, or collaborating with healthy ministries and nongovernmental organizations to provide public-awareness campaigns. Johnson & Johnson, for example, has partnered with the South African government to introduce an education program for maternal, newborn, and child health that operates via mobile-phone messaging.
Lastly, look at options that address supply and distribution challenges. In parts of Africa, supply and distribution mechanisms still pose some of the biggest challenges within the market. The ability to innovate the distribution channel and set up effective operations against this challenging backdrop is critical to capturing growth opportunities.
Overall, Africa is in a transition phase, and is quickly on its way to achieving adherence to global standards. While South Africa remains the best established region for pharmaceutical manufacturing in sub-Saharan Africa, the local manufacturing markets in East and West Africa are relatively well developed and positioned to grow.
Local production is regarded as a key strategy for sustained access to quality-assured medicines for the long term. And with healthcare coverage expected to expand to a greater proportion of the population through National Health Insurance (NHI) initiatives, it seems there will continue to be more and more opportunities within the pharmaceutical market within Africa.
Finding Investment For Your Pharmaceutical Business in Africa
Securing investment for a pharmaceutical business in Africa is a strategic endeavor that requires a comprehensive understanding of the unique challenges and opportunities within the healthcare sector. This essay outlines a strategic approach to finding investment for your pharmaceutical business in Africa, emphasizing the principles of impact investing. Additionally, it explores potential engagement with Caban Investments, a key player in impact venture capital in South Africa, and Caban Capital, offering corporate finance advisory services from a UK perspective.
- Comprehend the Healthcare Landscape:
Before delving into investment endeavors, it’s imperative to grasp the intricacies of the healthcare landscape in Africa. Understand the prevailing health challenges, access to healthcare, and the specific pharmaceutical needs of the population. This foundational knowledge will inform your business strategy and attract impact investors interested in addressing healthcare disparities.
- Research Impact Investment Firms:
Research impact investment firms with a focus on healthcare and pharmaceuticals in Africa. Caban Investments in South Africa is recognised for its commitment to impactful investments. Investigate their investment criteria, areas of emphasis within the healthcare sector, and their track record in supporting ventures aligned with pharmaceutical advancements.
- Align Values and Objectives:
Ensure that your pharmaceutical business aligns with the values and objectives of impact investors. Impact investing in healthcare often prioritises solutions that enhance accessibility, affordability, and the overall well-being of communities. Aligning your business objectives with the impact goals of firms like Caban Investments strengthens your case for investment.
- Build a Strong Knowledge Base:
In the dynamic field of pharmaceuticals, staying informed about market trends, regulatory frameworks, and emerging healthcare needs is critical. Equip yourself with a strong knowledge base to articulate your business’s value proposition and its potential impact on public health.
- Network and Engage with the Industry:
Actively engage with the pharmaceutical and healthcare community. Attend conferences, seminars, and networking events where you can connect with potential investors and industry professionals. Caban Investments may participate in forums related to healthcare impact investing, providing an opportunity for engagement.
- Explore Co-Investment Opportunities:
Impact investment firms often offer co-investment opportunities. Explore collaborative ventures where your pharmaceutical business can benefit from the expertise and financial support of established impact investors. Co-investing can enhance the positive impact of your business while attracting additional funding.
- Seek Guidance and Mentorship:
Connect with mentors and advisors with experience in pharmaceuticals, impact investing, and African healthcare. Their insights can offer valuable perspectives on navigating regulatory challenges, market dynamics, and impact measurement, ultimately contributing to a more robust investment strategy.
- Evaluate Risks and Returns:
Thoroughly assess the risks and returns associated with pharmaceutical ventures in Africa. Highlight the potential societal impact of your business, such as improving healthcare outcomes, addressing prevalent diseases, or enhancing access to essential medications. Demonstrating a clear understanding of the risk-return profile is crucial for attracting impact investors.
- Stay Adaptable and Responsive:
The pharmaceutical landscape is subject to regulatory changes, technological advancements, and evolving health priorities. Stay adaptable to these changes, ensuring your business model and investment strategy can respond to emerging opportunities and challenges in the dynamic African healthcare environment.
- Consider Caban Capital’s Advisory Services:
For strategic insights and financial guidance, consider engaging with Caban Capital’s corporate finance advisory services. Entrepreneurs in the pharmaceutical sector can benefit from expert advice on navigating financial landscapes, accessing capital, and optimizing business strategies, especially considering the nuanced nature of healthcare investments.
Securing investment for a pharmaceutical business in Africa requires a strategic and informed approach. By comprehending the healthcare landscape, researching impact investment firms, aligning values, building knowledge, networking, exploring co-investment opportunities, seeking guidance, evaluating risks and returns, staying adaptable, and considering corporate finance advisory services from firms like Caban Capital, entrepreneurs can actively contribute to the positive transformation of healthcare in Africa. This strategic blueprint not only enhances the likelihood of securing impactful investments but also positions pharmaceutical ventures as catalysts for improved health outcomes and societal well-being across the continent.
The Caban Group has compiled a significant infrastructure of service providers who support entrepreneurs with access to business finance, support with restructuring, access to grant funding and support in improving cashflow challenges. Our Corporate finance team in the UK supports the South African head office to ensure you have the best possible chance of securing the support your business requires. Contact the team at Caban through the contact form on the website or by emailing Info @ Caban.co.za
