Double-digit growth expected for EA’s pharmaceutical market

28Dec 2017
The Guardian Reporter
The Guardian
Double-digit growth expected for EA’s pharmaceutical market

Pharmaceutical markets in East Africa are experiencing rapid growth as governments and healthcare providers battle with the burden of diseases, like HIV, malaria, and tuberculosis.

While control and eradication of communicable diseases has been an ongoing priority area for governments, non-communicable diseases (NCDs) have now become an area of grave concern. As a result, pharmaceuticals in the region will now become more important than ever in the drive for improved healthcare.


That is according to a Frost & Sullivan analysis, “East African Pharmaceutical Market, Forecast to 2021,” which finds that the market should reach a value of US$3.54 billion in 2021, registering a compound annual growth rate (CAGR) of 10.6 per cent.


The study provides an analysis of current and expected market developments, drivers, restraints, and revenue forecasts across five countries, including Kenya, Tanzania, Ethiopia, Uganda, and Rwanda.


“Regulations in some East African nations are cumbersome; creating a need for clear and targeted policies that are effectively monitored and enforced,” noted Transformational Health Research Analyst Takudzwa Musiyarira. “Public-private partnerships should be established to ensure regulatory and funding mechanisms result in better health outcomes.”


Recent major developments in the East African pharmaceutical market include high growth in NCD segments, with oncology experiencing the fastest growth; and increasing local production to reduce reliance on donor aid and imports, while sustaining access to quality-assured medicine in the long term.


Others are establishment of regional treaties to encourage intra-region trade; Rwanda increasing national health expenditure and providing the highest rate of universal coverage in sub-Saharan Africa as well as investment in infrastructure and skills retention, resulting in increased diagnostic capabilities, earlier detection, and quicker treatment for chronic ailments.


“Branded participants such as GSK, Pfizer, Novartis, Roche, and AstraZeneca compete on pricing, product portfolios, and distribution networks,” noted Musiyarira. “As vaccine manufacturing becomes more important over the next decade, players should look to partner with governments in their vaccine rollout programmes.”


Meanwhile, Mallinckrodt - leading global specialty pharmaceutical company - has agreed to buy Sucampo Pharmaceuticals (SCMP) - a global biopharmaceutical company - for about $1.2 billion in cash to add a treatment for constipation and experimental medicines targeting rare diseases.

Mallinckrodt will begin a tender offer at US$18 a share, the companies said in a statement. Bloomberg News reported December 7 that Rockville, Maryland-based Sucampo was reviewing options including a sale of the business after receiving takeover interest. The purchase price is 89 per cent above the stock's recent low point on October 30.

Mallinckrodt has faced major setbacks in recent months, and is seeking to lessen its reliance on two products that together account for more than half of total sales: Acthar, a drug for autoimmune and rare diseases that has drawn controversy over its high price, and INOmax, an infant-respiratory treatment that lost a court ruling in September and could face generic versions.

Mallinckrodt's own generic-drugs business has suffered from pricing pressure, and, along with makers of opioids, the drugmaker is being probed by the government as part of an industrywide crackdown.

Sucampo sells Amitiza, a drug for chronic constipation and irritable bowel syndrome. The company has a licensing and collaboration agreement with Takeda Pharmaceutical Co. for Amitiza in countries including the U.S. and Canada, according to the company's website. It also has two drugs in late-stage clinical trials for rare diseases.

The company was founded by Ryuji Ueno and Sachiko Kuno, who remain controlling shareholders with a combined stake of more than 30 per cent. The company has grown organically and through deals including the purchase this year of rare disease business Vtesse for about US$200 million.

Deutsche Bank AG advised Mallinckrodt on the purchase, while Wachtell, Lipton, Rosen & Katz provided legal advice. Jefferies LLC served as Sucampo's financial advisor and Cooley LLP was legal advisor.

Holders with about 32 per cent of Sucampo's shares have agreed to tender their shares in the offer. Mallinckrodt expects the acquisition to add to adjusted diluted earnings per share by least 30 cents in 2018 and at least double that amount in 2019, assuming a first-quarter 2018 close.