Ghana’s pharmaceutical industry outperforms regional markets – Report

Drugs…despite importation of majority of drugs and counterfeit medicines

The pharmaceutical industry in Ghana continues to outperform markets in the sub-region, despite the fact that the country imports majority of its drugs, a survey report by the Business Monitor International (BMI) a marketing research company has said.

The country is also grappling with the influx of counterfeit drugs.

The BMI also predicts strong growth for the industry throughout a 10 year forecast period.

While the report finds that Ghana turns to imports for the majority of its pharmaceuticals and medical devices, it notes that there is political drive to improve the country’s domestic manufacturing capabilities.

“Not only would such improvements reduce the expensive import bill, but would also limit the influx of counterfeit drugs, reduce costs and pave the way for Ghana to become a regional exporter of essential drugs”, it says.

According to the report, Ghana’s headline expenditure projections for pharmaceuticals would rise from GH¢480 million or $311 million in 2011 to GH¢572 million or $319 million in 2012; an increase of more than 19.1 per cent in local currency terms and more than 2.6 per cent in US dollar terms.

The report indicates that the local currency forecast increased from the fourth quarter of 2012 due to new funding and finance agreements boosting demand.

Its forecast on healthcare headline expenditure says the cost will rise from GH¢2.68 billion, an equivalent of $1.73 billion in 2011 to GH¢3.14 billion or $1.75 billion in 2012; an increase of over 17.4 per cent  in local currency terms and more than 1.1 per cent in US dollar terms.

“The US dollar forecast went up from the fourth quarter of 2012, on account of changed foreign currency expectations,” the report said.

It also notes that headline expenditure for medical devices will increase from GH¢113 million or $73 million in 2011 to GH¢130 million or $72 million in 2012; an increase of over+14.9 per cent in local currency terms and less than 1.0 per cent in US dollar terms.

“Local currency forecast increased following government investments in medical devices,” it said.

On the country’s tottering national health insurance system, the report cites the announcement by the National Health Insurance Authority (NHIA) in November 2012 that it plans to review the reimbursement price of essential drugs covered under the National Health Insurance Scheme (NHIS). The NHIA is undertaking this review alongside the industry, the report noted, adding that “price increases are supposed to be implemented biannually, but it has been two years since the last rise.”

According to the report, several international agencies have announced funding for healthcare projects in Ghana this quarter.

“The EU is to offer Ghana a €97 million grant to fund healthcare programmes; the USAID signed agreements with regional governments for a scheme to support nutritional health in women of child-bearing age and young children; and the United Nations Industrial Development Organisation (UNIDO) will implement a €1 million project (funds to be split between Kenya and Ghana) to support local production of essential drugs,” it says.

A World Bank report of 2012 based on a study conducted in 2010 has predicted that the country’s National Health Insurance Scheme (NHIS) could go bankrupt as early as 2013.

According to the report, “the system has serious structural and operational inefficiencies and is on a trajectory to go bankrupt as early as 2013.”

The report observed that for the NHIS to expand enrollment and become sustainable, more public resources will be needed.

It warned that “the system is too inefficient to absorb significant new resources, however; without major reforms, some of which lie outside the purview of the NHIS, it is difficult to argue for major increases in funding, particularly given Ghana’s fragile macroeonomic/fiscal situation.”

Assessing the pharmaceuticals industry’s risk and reward ratings, the BMI report indicated that Ghana’s score was stable this quarter, remaining in 18th position among the 30 key markets in the Middle East and Africa (MEA) surveyed in its first quarter 2013 pharmaceutical risk/reward ratings (RRR) matrix.

“Broadly speaking, Ghana is seen as having strong long-term potential for drugmakers, although low per capita spending on pharmaceuticals, coupled with widespread counterfeiting activities, will continue to moderate its RRR ranking through downward pressure on its industry rewards score,” it said.

China and India have been identified as the two major sources of fake drugs into Ghana.

When sought the views of Mr. Bright Simons, developer of the mobile technology mPedigree, an SMS application that detects the authenticity of medicines, he says the marketing and distribution segments of Ghana’s pharmaceutical industry are growing rapidly, with new entrants fast developing strong sourcing connections and expertise in India and the Far East.

“The lifestyle category of products has seen incredible growth over the last two decades, as non-communicable diseases outpace infectious diseases in terms of the economic impact of disease. Manufacturing on the other hand has not seen much growth. It was exciting to see Ayrton taken over by Adcock Ingram, as this signalled the potential of international mergers and acquisitions to help capitalise the industry. That notwithstanding, manufacturing of ethicals are falling, and so far we still do not have a single WHO pre-qualified facility capable of supplying drugs to the big international buyers such as the Global Fund,” he said.

According to Simons, the herbal industry is still in limbo as different players fail to agree on ground rules. Regulators believe efficacy studies are timely, critical, and necessary. But the producers continue to insist on loosening of regulation. There is deep and massive concern over the liberalisation of the sector, with Ghanaian players resentful of entrants, especially from the Indian sub-continent and the Far East.

On the situation of fake drugs he admits that while no comprehensive study has so far been conducted, many experts believe that up to 20% of all medicines in circulation are fake.

“It is true that sampling activities involving some specific therapeutic categories of medicines such as anti-malarials have turned up results showing rates of less than 10% for substandard anti-malarials, and in some specific sub-categories even less than 5%. But the weakness of national surveillance systems suggest strongly that for accuracy any survey results must be multiplied by a few factors to compensate,” he said.

Asked what the cost is to the country’s economy from the influx of fake drugs, he said a study conducted by the Business Coalition Against Counterfeiting & Illicit Trade in 2008/2009 suggested that the direct monetary cost is in the region of $200 million, “but there are definitely second and third-order effects that may bring the total cost to even multiples of this figure,” he added.

Mr. Simons also believes that capital is the biggest constraint for manufacturers of drugs in Ghana, even ahead of marketing and procurement challenges in the public sector.

“Technical capacity is also weak since this segment of the industry has become much too endogenous, with many players continuing to practice management philosophies that prevent the co-option of critical talent outside the comfort of their immediate social circles. Unlike most other products, buyers of medicines are heavily disadvantaged when evaluating the efficacy of the product, limiting the market’s usual capacity to drive competition and efficiency,” he said, however, adding that, “while distribution and marketing has improved, there are still no major nationwide retail chains, thus limiting the uptake of supply chain technologies and management practices that can quicken access to quality, affordable, medicines.”

By Emmanuel K. Dogbevi

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